Fraud appeal going to Supreme Court

Divorce | 9 Sep 2014 0

Marilyn Stowe and I tend to agree on most things relating to family law, but the case of Sharland v Sharland was a rare exception. I wrote about the case here back in February after the Court of Appeal dismissed the wife’s appeal (the case was originally known simply as S v S) and Marilyn replied to my post, giving her differing views.

To briefly recap, the case involved a wife’s claim for financial provision following divorce. On the fourth day of the final hearing, by which time both parties had given evidence, an agreement was reached and the hearing was therefore brought to an end. A draft order setting out the terms of the agreement was subsequently drawn up, and was approved by the judge.

However, the wife’s solicitors then made an urgent request to the court not to seal the order, and in due course the wife made an application to resume the hearing of her claim on the grounds that her agreement to the proposed order had been obtained by fraudulent non-disclosure on the part of the husband. The matters which it was said he had failed to disclose concerned arrangements then being made to float on one of the New York stock exchanges a company, of which he owned about two thirds of the shares.

The judge found that any order which would have been made if proper disclosure had taken place would not have been substantially different from the original agreement incorporated into the draft order which he had approved. Accordingly, notwithstanding that the husband was guilty of non-disclosure, in all the circumstances he concluded that the non-disclosure was not material, and therefore the wife’s application was dismissed.

The wife appealed to the Court of Appeal, but the Court of Appeal dismissed her appeal, by a two to one majority. Lord Justice Moore-Bick and Lady Justice Macur essentially agreed with the original judge that, whilst the husband had been guilty of fraudulent non-disclosure it did not make any material difference to the outcome and therefore there was no point in re-opening the settlement. Dissenting, Lord Justice Briggs basically said that whenever there is a fraud, the judgment should be set aside.

With the proviso that the result of the case really would not have been any different if the husband had made full disclosure, I agreed with the majority of the Court of Appeal. The husband had gained nothing, and could be dealt with for his fraud in the form of costs penalties, proceedings for contempt or even criminal prosecution. Basically, I thought: what is the point of setting aside the judgment, only to (eventually) replace it with a similar one, merely for a point of principle?

Marilyn took a different view. She agreed with Lord Justice Briggs. A fraudster should never profit, she said, and the order should therefore have been immediately set aside.

The Supreme Court (Lords Kerr, Wilson and Hodge) has now granted Mrs Sharland permission to appeal against the Court of Appeal’s decision. I, along no doubt with Marilyn and many other family lawyers, await with considerable interest the Supreme Court’s decision. Unfortunately, it is going to be a rather lengthy wait, as the Supreme Court is not due to hear the case until next June, and it will probably be some months after that before the judgment is actually handed down.

The blog team at Stowe is a group of writers who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. Guest contributors also regularly contribute to share their knowledge.

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