Supreme Court rules that dishonesty will not be tolerated

Posted on: October 19th, 2015

Sharland (Appellant) v Sharland (Respondent) [2015] UKSC 60 and Gohil (Appellant) v Gohil (Respondent) [2015] UKSC 61

It is a firmly established principle in commercial cases that the English courts will not tolerate dishonesty, and material non-disclosure of assets during for instance injunctive proceedings can lead to the offending party being committed to prison. In a recent landmark ruling, the Supreme Court has confirmed that the same principle firmly applies to cases being heard in the family courts. The decision demonstrates that parties’ duty of full and frank disclosure to opposing parties and to the court is sacrosanct.

The test case was brought by two women claiming they had been duped into accepting unfair divorce settlements by their former spouses who had given false evidence to the court in order to conceal their assets and true net worth. Alison Sharland and Varsha Gohil had each accepted a divorce settlement with their husbands which had been approved by the court. When it transpired that the husbands had provided material non-disclosure of their financial circumstances, with the deliberate intent of concealing assets, each woman asked the court to reassess their settlements.

The court drew from the analogy of the remedies available for misrepresentation and non-disclosure in contract and held that the family courts are no exception to the general principle that fraud unravels all. Where a consent order has been procured by the dishonesty or fraud of one spouse, and impaired the financial settlement agreed to by the other spouse, it should be set aside and the terms of the settlement renegotiated.

PCB Litigation has a long and successful track record of acting in fraud cases, in both the commercial and matrimonial arenas. As is often the case in matters of fraud, speed is of the essence. In this case, once the dishonesty of the husbands had transpired, the women acted with relative speed to apply to the courts for relief. Any delay in doing so may prejudice the preservation and recovery of assets before they are concealed, so victims of such frauds should seek advice on their position at the earliest opportunity.