A Stern Warning From The Supreme Court In England To Spouses Who Hide Their Assets

On 14 October 2015, the Supreme Court of England ("SC") gave judgments in two different cases that have been making headlines. The facts and legal arguments were different, but the takeaway was the same - where a party has been wronged by the material non-disclosure of the other in reaching a financial settlement, the court will find a way to have the order overturned, whether by appeal or by an application to the lower court that decided the original action (within the divorce proceedings or by way of fresh action).

Gohil v Gohil

In Gohil v Gohil [2015] UKSC 61, W successfully appealed the Court of Appeal's ("CA") decision ([2014] EWCA Civ 274) to overturn Moylan J's order to set aside.

The Facts

The couple married in 1990, had three children and divorced in 2004.

H was a partner in a law firm but told the court and W he was impecunious. In light of this, the parties agreed, with the court's approval, that H would pay W a lump sum of GBP 270,000, plus GBP 6,000 per annum spousal maintenance. By 2007, W had fresh evidence and made an application in the divorce proceedings to set aside the order on the ground of H's fraudulent non-disclosure, which was ultimately successful. Meanwhile, H was convicted of money-laundering offences.

H appealed Moylan J's order to set aside, citing lack of jurisdiction and relying on Ladd v Marshall [1954] 1 WLR 1489 regarding the admissibility of new evidence on appeal.

Jurisdiction

Before the CA, H contended that MoylanJ had no jurisdiction as a high court judge to set aside the order, saying the application should have been brought by appeal. The CA side-stepped the issue by treating W's application as a fresh action per de Lasala v de Lasala [1980] AC 546, which says that where a consent order has finally disposed of the issues raised between the parties, the only means to have it set aside on grounds of fraud or mistake is by way of appeal or a fresh action.

The SC lifted that roadblock by saying that in relation to financial orders in divorce proceedings, an application can be made within those proceedings (endorsed by the SC in Sharland v Sharland [2015] UKSC 60). In so doing, the SC endorsed proposals of the Family Procedure Rule Committee (tasked with reviewing this issue) insofar as they have said that (i) there should be a power for the High Court and the family court to set aside its own orders in relation to financial remedies; (ii) such applications should be made to the level of judge that made...