UK supreme court to examine effect of fraud in divorce settlements

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Alison Sharland received £10m from her ex-husband when they divorced, believing it was half his fortune, before coming to the conclusion that his Manchester software company was worth many more millions of pounds.

On Monday her case that she should have received significantly more from her former husband, Charles, opened in the Supreme Court. The 48-year-old from Wilmslow is bringing her action in conjunction with another woman who also believes her ex-husband concealed the true value of her wealth.

Varsha Gohil settled for £270,000 plus a car from her former husband, Bhadresh, in 2004 but it later became clear that her husband, who was tried and jailed for fraud and money-laundering sums of up to £37m, had not given the court accurate information about his finances.

In an extended, three-day hearing, the Supreme Court is this week examining their claims for significantly larger payouts. They allege they have been shortchanged and denied justice amid suggestions that such behavior happens regularly in high-value divorce cases – and they argue that all ex-spouses should be entitled to reopen negotiations in a concluded divorce agreement.

A fear of “floodgates opening” and thousands of ex-partners attempting to renegotiate divorce settlements did not constitute legal grounds for refusing Alison Sharland’s request, her counsel, Martin Pointer QC, told the Supreme Court. “The resources had all been built up during the marriage. This was a plain case for equal sharing.”

Alison Sharland had accepted £10.35m in cash and properties from her ex-husband in the settlement but it later emerged that the shares in his company AppSense were worth considerably more than previously revealed.

One estimate put the firm’s value at $1bn (£656m), although lawyers at the time told the court that it was worth between £31m and £47m. Charles Sharland was found in an earlier case to have “laid a false trail by his dishonest evidence” and to have hidden the fact that he was considering floating the firm.

At the court of appeal the judges had agreed that Charles Sharland’s non-disclosure had been deliberate but two of the three believed they should not overturn the original settlement because although his evidence was “seriously misleading” it would not have led to a significantly different outcome.

Bhadresh Gohil, the appeal court had found, was an “out-and-out rogue involved in financial criminality on an eye-watering scale”. The couple has three grown-up children who remain financially dependent on their mother.

Sally Harrison QC, counsel for his former wife, told the justices: “Despite these findings, [Varsha Gohil] has no financial remedy to secure a fair distribution of the assets which the parties owned in 2004.

“Throughout the proceedings the husband denied that he had any assets,” she added. “The wife would be deprived of a fair hearing and a fair outcome if the order were to stand.”

The court of appeal had previously ruled in Bhadresh Gohil’s favour, saying that because the courts were not allowed to use evidence from the husband’s criminal trial, held in open court but not released by the Crown Prosecution Service, they could not prove that he was being dishonest in the original proceedings.

Ros Bever, a partner in the family and divorce law team at Irwin Mitchell, said: “This is yet another case in which an unfair settlement has been agreed because of one party being dishonest and not sharing all the details of their wealth to the courts.

“Both cases raise serious issues about how the courts should handle cases where information shared with the court and used to agree a divorce settlement is later found to be false or incomplete.”

She added: “Dishonesty in any legal proceedings should not be tolerated. The family court should not be an exception. There are numerous legal arguments to be heard by the Supreme Court but we hope that ultimately justice will be done and will be seen to be done.”

Some lawyers implied that the threat of perjury charges might be necessary to ensure that divorcing couples give accurate testimony as they fight over how to divide the assets from their relationship.

Charmaine Hast, head of family law at Wedlake Bell solicitors, said: “Not disclosing assets in divorce makes a mockery of the court system. Perhaps criminal sanctions will evoke the standard that the courts expect and deserve. That way however much money you have, it matters not.”

Ayesha Vardag, a prominent divorce specialist, said the case highlighted the need for greater honesty in declared. “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,” she said.

“Equally nobody wants unending action, reopening a case because someone forgot to mention that they owned something petty. The guidance from the supreme court is likely to affect extremely many cases.” Judgment is expected to be reserved until later this year.