Top judges to rule on whether divorce can be a ‘cheats’ charter’

Frances Gibb | The Times

A test case in the Supreme Court may mean that ex-wives have the last laugh

Two ex-wives who say they were deceived by husbands into accepting “unfair” divorce payouts went to the Supreme Court this week to have their settlements set aside. Alison Sharland, 48, from Wilmslow, Cheshire, and Varsha Gohil, 50, from north London, both maintain that their ex-husbands misled judges as to their true worth.

The test case before seven justices of the Supreme Court is being keenly watched as a test of the courts’ attitude to dishonesty that could also open the way to dozens more challenges over divorce settlements. Ros Bever, a specialist divorce lawyer at the law firm Irwin Mitchell, which is handling both cases, said: “We believe the position that both women find themselves in is unfair and that is why we are taking their cases to the Supreme Court.

“To both women these cases are about a matter of principle and justice,” she added. “Dishonesty in any legal proceedings should not be tolerated; the family court should not be an exception and we look forward to putting our cases forward to the Supreme Court judges. Both cases raise serious issues about how the courts should handle situations where information shared with the court and used to agree a divorce settlement is later found to be false or incomplete.”

Mrs Sharland accepted more than £10 million in cash and properties from her former husband, Charles. She agreed to what she believed was a fair settlement based on a 50-50 starting point after 17 years of marriage. However, she said it later became apparent that her ex-husband had misled her and the courts over the value of his business and his plans for a future IPO flotation. Instead of being valued at between £31 million and £47 million, his AppSense business was reported as being ready to float at a value of $1 billion. The Court of Appeal agreed that his non-disclosure had been deliberate, but two of the three judges believed they should not overturn the original settlement because — despite his evidence being “seriously misleading” — it would not have made a significant difference to the outcome.

Opening the Supreme Court challenge this week, Martin Pointer, QC, told the justices in written argument that “this was a serious case of non-disclosure on the part of the husband”. He noted that Sir Hugh Bennett, the judge in the High Court who first heard the case, described the behaviour as “dishonest”, saying Mr Sharland had “chosen to suppress” documents about the flotation. “Why,” Sir Hugh had asked. “The answer is obvious — because he did not want the wife or the court to know the true facts. He thus gave dishonest evidence, no doubt in the hope that this might lessen his exposure to the court’s discretionary powers.”

In the second case, Mr Justice Moylan in the High Court ruled in June 2012 that Mrs Gohil’s husband, Bhadresh, had failed properly to disclose his financial circumstances and agreed to scrap the settlement in which she accepted £270,000 plus a car from her husband. Mr Gohil had been convicted of money laundering after their divorce, justices heard. However his lawyers then took the case to the Court of Appeal, which ruled in his favour. The court said that it was unable to prove that he was being dishonest in the original proceedings — not least because the courts were not allowed to use evidence from Mr Gohil’s criminal trial, held in open court but not released by the Crown Prosecution Service.

Mark Harper, partner at Hughes Fowler Carruthers, said: “To lie during a divorce proceeding is surprisingly easy, but if people lie, the court system can’t function.” He added: “A surprising number of people do hide money. Because it’s 50-50 [in a divorce] of what can be found. This is a very important case for the general public. Is one lie enough to tear up an agreement, or does it only matter if the lie was material? If the women won, many people might head for the courts to seek to have settlements set aside, he said. “Such a ruling might also be a ‘snooper’s charter’, encouraging people to delve into their spouses’ affairs.”

Catherine Thomas, managing director of Vardags, said: “The divorce system at present encourages a cheat’s charter: in practical terms the penalties for lying to the courts are so low that many consider it worth the gamble. “Equally nobody wants unending litigation, reopening a case because someone forgot to mention that they owned something petty.”

Lawyers agree that whatever the ruling, it will be far-reaching. Beth Wilkins, of JMW Solicitors, who acted for Mr Sharland, said: ‘The fact that the Supreme Court have chosen to hear this case indicates that they are concerned to deter litigants from misrepresenting facts. Their dilemma must be how to strike balance between cases where such misrepresentation makes a material difference.” But they also had to avoid “opening the floodgates for every dissatisfied spouse to try to renegotiate their settlement, putting enormous pressure on the already over-stretched family court’s resources”.

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