Fraud in a financial remedy case
In financial remedy proceedings, it is of course quite common that a party may be ‘economical’ with the truth. It is also not unusual for them to fail to make full disclosure of their means. However, there are very few reported financial remedy cases in which there is an allegation of fraud (a finding that a financial remedy order has been obtained by fraud will usually result in the order being struck out). One hopes that this means that fraud is a relative rarity in financial remedy proceedings.
It does happen, however, as the recent case Neil v Neil demonstrates.
The facts and evidence in Neil were quite complicated, so I am going to do a considerable amount of simplification in order to keep this post to a reasonable length.
The case concerned a husband and wife who began cohabiting in about 1992 but did not marry until 2007. They have one child, who is now grown up. They separated in January 2014, when the husband moved out of the matrimonial home.
The parties then reached an agreement in mediation, whereby the former matrimonial home would be sold and the net proceeds divided equally, with the proviso that the wife would receive the first £1 million from the sale to enable her to purchase a house for herself and the child. If this amounted to more than 50% of the equity, the difference would be reflected as a charge on her new property in the husband’s favour. This charge would be realised only if she sold the property or remarried.
The agreement also stated that “spousal maintenance was not considered necessary, due to their professional careers, substantial and equal incomes and assets”.
Of course, an agreement reached in mediation is not final until it is incorporated into a court order. The wife, therefore, instructed solicitors to obtain a consent order. However, she instructed them not to include a provision for a chargeback on her new property, as she said that that had “been agreed between us”, and to include a provision for a nominal maintenance order in her favour. The husband, meanwhile, agreed to pay the sum of £5,500 a month towards the expenses of the former matrimonial home, until it was sold.
The wife’s solicitors sent a draft order to the husband. The husband did not instruct lawyers and refused to respond. The wife managed to get the husband to sign the draft, although he did not read it properly. The draft was returned to the wife’s solicitors, who forwarded it to the court.
Meanwhile, the wife had been endeavouring to obtain a £900,000 mortgage, so that she could buy a new property. To do this, she told the bank that she was receiving maintenance from the husband of £5,500 per month, which he would pay until she remarried. The bank required confirmation of this, and the wife, therefore, asked her solicitors to retrieve the draft order from the court, so that it could be amended to include the maintenance order. The amendment was made, the new draft order was apparently signed by both parties (although the husband denied signing it), it was sent to the court, and an order was duly made, in July 2015.
The former matrimonial home was sold, the net proceeds amounting to £1,348,930. The wife proceeded to buy her new home. However, she only paid the husband £100,000 and did not execute a charge on her new property in favour of the husband.
OK, at this point I’m going to skip ahead to September 2017, by when the husband had instructed solicitors. He issued an application for the July 2015 order to be set aside, on the grounds that it was not in the terms of the agreement. The application was eventually heard by Mr Justice Moor last month.
Mr Justice Moor made a number of “very serious findings” against the wife, including that she had, without the husband’s knowledge, amended the agreement reached in mediation, as set out in the first draft order, to delete the chargeback and include nominal maintenance, and that she had had the order amended to include the maintenance order, without the husband’s agreement. In short, the wife had “been thoroughly dishonest.” It, therefore, followed that the husband was entitled to have the order set aside.
The full judgment can be found here.
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