Supreme Court delivers landmark divorce settlement ruling

Samantha Newton, solicitor at Thrings, comments:

The Supreme Court has today handed down two potentially landmark decisions which could pave the way for more parties seeking to re-open their financial settlements in cases of material non-disclosure.

The Court has found in favour of Alison Sharland and Varsha Gohil following cases of fraudulent non-disclosure by their husbands, allowing Mrs Sharland’s case to be re-heard and re-instating the order setting aside the consent order of Mrs Gohil.

Currently, a party to matrimonial proceedings can apply to the court to set aside a financial order if there has been fraud, mistake or non-disclosure or misrepresentation of material facts. However, the case law – and most notably the case of Livesy (formerly Jenkins) v Jenkins – has historically limited the success of such non-disclosure cases to situations where the absence of the information has led to a different outcome than would have been reached had the information been disclosed. Whilst affirming that decision, Lady Justice Hale emphasised that the case of Livesy was not a case of fraud. 

The Supreme Court ruling makes it clear that ‘where a party’s non disclosure was intentional, it is deemed to be material, so that it is presumed that proper disclosure would have led to a different order, unless that party can show, on the balance of probabilities, that it would not have done so’. The onus will therefore now fall on the deceiving party to show that their non-disclosure would not have affected the court’s decision in order to avoid an order being set aside.  

The judgments also provide a useful discussion of the procedure to be followed by parties seeking to challenge a final order and as to how such applications should be made – including illustrating that new proceedings will not always need to start from scratch. The Supreme Court expressly supported the suggestions of the Family Procedure Rule Committee’s working party who are currently considering how best to formulate a clear procedure for those looking to set aside financial orders, including in relation to the level of court likely to hear such an application. This is likely to lead to a change of the Family Procedure Rules.

How this will impact cases going forward remains to be seen. However it is clear that it has readdressed the need for clarity surrounding the procedure in set aside cases in the family court in terms of helping streamline cases and minimising costs. It remains paramount that parties to a divorce disclose assets in a full and frank manner, to ensure the terms of an order are underpinned by a full appreciation of the circumstances and assets of each case.

If you would like to discuss this issue further, please contact Samantha Newton or another member of Thrings’ Family team.

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