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Divorcing couples must not lie about their finances, or their settlement could challenged

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A landmark divorce ruling in the Supreme Court says that ex wives (and husbands) can challenge divorce agreements where their ex has lied about their money and assets.

Q. What’s the court case about?

A. The case was taken to the Supreme Court by two women, Alison Sharland and Varshi Gohil. Alison Sharland separated from her husband in 2010 after getting married in 1993. They have three children, one of whom has severe autism and who will need care throughout his life. Her husband is an entrepreneur. When they were getting divorced, his business was valued on the basis that there were no plans for it to IPO (float on the stock exchange).

As the divorce agreement was being drawn up, Alison Sharland found out that her husband’s firm was being valued for a flotation at a far higher amount than had been declared.

At the time that the first appeal against the settlement was being considered, the company hadn’t floated and a flotation wasn’t in prospect and the judge didn’t find in favour of Mrs Sharland.

Varshi Gohil was married to a solicitor who petitioned for divorce in 2002. Her husband said, when they got divorced, that much of his wealth was money held on behalf of his clients. She was given a lump sum plus regular payments until she was 2008, but it was recorded in the settlement that she thought her husband had been dishonest.

In 2007 Varsha Gohil applied to the court to get the settlement set aside. In 2008 her ex husband was charged with money laundering and was convicted in 2011. In 2012 a judge set aside the financial settlement but when her ex husband appealed against this decision in 2012, the Court of Appeal found in his favour.

Q. What did the Supreme Court decide?

A. The Supreme Court, in both cases, said that the ex wives should have their financial settlements ‘set aside’ because their ex husbands had not been honest about their financial situation at the time.

Ros Bever of law firm Irwin Mitchell, which acted for the two women, said: “This judgment sends out the clear message that dishonesty will not be tolerated. Both women found themselves in an unfair situation where they were duped into accepting a smaller settlement than they may have been entitled to.

“Both husbands denied their dishonesty and hid behind highly technical arguments to avoid the consequences.  In both cases, the Supreme Court has seen through those arguments to expose the true picture.

Q. What does this mean for other couples?

A. It could mean that other former couples try and get their financial settlements set aside.

Solicitor Ros Bever said: “These cases were about a matter of principle and justice for both women and the issues raised in the Supreme Court will have implications in many other cases, including those with less money at stake.

“It’s inevitable that other wives, husbands or civil partners who feel that they too have been misled during divorce proceedings will seek to bring their cases back to court, and we can expect to see a significant rise in the number of challenges to existing divorce settlements.”