Legal

EXCLUSIVE GUEST ARTICLE: Kingsley Napley On The Sharland, Gohil Divorce And Financial Orders Case

Charlotte Bradley, Kingsley Napley , Head of family law, 16 October 2015

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A major divorce case ruling this week in London, concerning the vexed issue of dishonesty around the disclosure of asset values, has triggered a rush of commentary. Here is a guest analysis by law firm Kingsley Napley.

This week the Supreme Court unanimously allowed two separate appeals by wives who had argued that their divorce financial orders should be overturned due to their husbands’ dishonest disclosure at the time they agreed their financial settlements. A number of law firms have already reacted to the decision (see here) and in this item, law firm Kingsley Napley explores some of the specific details arising from the case. The article is written by Charlotte Bradley, head of family law. The views of the author are not necessarily shared by the editors of this publication but they are most grateful for this contribution to debate. Readers are most welcome to respond. 

The decisions of Mrs Sharland and Mrs Gohil's cases will have a significant effect on the divorce landscape from now on with lessons both for those who are already divorced and spouses currently embarking on that path, as well as their advisors. 

The facts
The differences between the wealth of each wife are stark. In Mrs Sharland’s case, she had accepted a financial settlement comprising of £10 million ($15.4 million) cash and property, and in the future (if the husband’s company sold) 30 per cent of the net sale proceeds of his shares. Prior to the settlement, both parties had had the company and the shares valued. The husband’s valuers said the company was worth £60 million with his shares between £6.6 million and £8 million whereas Mrs Sharland’s accountants valued the shares between £22 million and £32 million. But crucially both valuers were working on the basis that there was no planned company sale. 

Shortly after the judge approved the final financial agreement, reports appeared in the press that the company was actively being prepared for an IPO with an expected value for the company of $750 million - $1.0 billion. Subsequent litigation showed that, prior to and during the negotiations, the husband had been in discussions with investment bankers and had been actively preparing to launch the company on the stock market. In this subsequent litigation he was found to have misled the company valuers and given dishonest evidence to the court.

In Mrs Gohil’s case, back in 2004 she had accepted a settlement of £270,000 plus a car (as well as maintenance) following claims by the husband, a solicitor, that all his apparent wealth was held on behalf of others. She subsequently applied to set aside that order for non-disclosure shortly before the husband was charged with serious money laundering offences (which resulted in Mr Gohil receiving in 2011 a prison sentence of ten years). 

Both wives argued that their divorce settlements should not be upheld as they were unfair, and were fraudulently obtained because their husbands had not provided full and frank financial disclosure. They argued that, had they known the true picture of their husbands’ finances, they would not have entered into the agreements they did.  

The decisions prior to the Supreme Court
In Sharland, while it was accepted that the husband had not given full disclosure, the judge dismissed Mrs Sharland’s appeal against the financial settlement being made into a final order on the basis that the IPO had not actually taken place (and on the husband’s case was no longer being contemplated) and her award therefore would not have been substantially different than actually agreed. The Court of Appeal confirmed the judge’s decision.

As to Gohil, while the first judge accepted Mrs Gohill’s appeal against the original settlement, the Court of Appeal did not agree, saying the original settlement should stand on the basis that the court could not use inadmissible evidence (evidence from the criminal trial proving that the husband was being dishonest) in the financial proceedings.  

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