Divorces: full financial disclosure needed

Two Supreme Court rulings on the 14th October have reiterated the need for full and frank disclosure of financial circumstances and assets in divorce cases, a leading South West law firm says.

The two cases concerned women who said that their husbands had not revealed the full extent of their financial assets when their original divorce cases were settled.  Both cases are now likely to return to the High Court.

In one case, Alison Sharland accepted a settlement of £10 million and 30% of the shareholding in her husband’s business believing that to represent half of his wealth.  However, when it transpired that her husband’s company may be due to be floated on the Stock Exchange via an IPO and that his wealth would therefore be significantly higher, Ms Sharland appealed against the decision, eventually taking it to the Supreme Court.  The Court ruled that the case was “one of fraud”, adding that “it would be extraordinary if the victim of a fraudulent misrepresentation in a matrimonial case was in a worse position than the victim of fraud in an ordinary contract case.”

In the second case, Varsha Gohil had accepted a settlement from her husband when they divorced in 2002.  However, when Mr Gohil was tried for money laundering in 2010, it emerged that he had greater assets than he had disclosed.  The Supreme Court ruled that the original settlement could be overturned as there had been “material non-disclosure”.

Commenting on the rulings, Liz Allen, top ranked divorce solicitor and head of family law at Stephens Scown, said: “These cases strike a significant victory for the women concerned – but they don’t necessarily open the floodgates for lots of other claimants.  These cases were extreme examples where the sums involved were very high.  It was the scale of the non-disclosure that made the difference.

“The rulings do underline the centrality of full and frank disclosure in divorce cases (as in court cases of any kind).  If a settlement is reached on the basis of false or incomplete information such that the court’s decision would likely to have been different had the full facts been known at the time, then there are grounds for settlements to be set aside and considered again.

“However, it is a question of degree.  Where lower sums are involved, it may prove simply unrealistic to attempt to pursue them due to the legal costs.”

Stephens Scown has over 270 staff, including more than 50 partners, across its offices in Exeter, Truro and St Austell. For more information visit www.stephens-scown.co.uk