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10: Sharland and Gohil – Honesty is the best policy

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10: Sharland and Gohil – Honesty is the best policy
Leave your thoughts John Darnton

By John Darnton

In the last few days the Supreme Court has given its encouragement to the use of ‘out of court’ settlement processes in family disputes which can include negotiation between solicitors, the use of collaborative law, mediation and arbitration.

Giving her judgment in the case of Sharland v Sharland Lady Hale stated:

‘It is in everyone’s interests that matrimonial claims should be settled by agreement rather than by an adversarial battle in Court. The financial resources of the family are not whittled away by the often substantial legal costs involved. The emotional resources of the family are not concentrated on conflict. The future relationship between the adult parties is not soured, or further soured, by that conflict. This is not only good for them but also for their children whatever their ages, and for the wider family. It is for these reasons that there are processes, both within the procedures of the family court and independent of them, for helping the parties to reach agreement on the practical consequences of the breakdown of their relationship.’

Even when court proceedings have been started the court is required to ‘manage the case’ and encourage the parties to use non-court disputes resolution procedures where appropriate.

A cornerstone of a successful settlement is trust which will usually only arise where each person has been open and transparent about their financial and other relevant circumstances. A lack of candour about say a future inheritance or a developing relationship will invariably cause problems.

In case this was ever in doubt, the Supreme Court stressed that there was a clear duty on each person involved in this type of a dispute to give ‘full and frank disclosure’. Lady Hale emphasised that this principle applied just as much to exchanges of information leading up to the making of a consent order (i.e. one made with the agreement of the parties) as it did to contested hearing where the parties attended court and gave oral evidence.

On the same day as Lady Hale gave her judgment in Sharland the Supreme Court also handed down its decision in the case of Gohil v Gohil. That was another case involving what the court found to be a dishonest husband. In that case the wife was also successful in overturning an earlier order. The husband was found guilty of “material non-disclosure”.

The circumstances in the cases of Sharland and Gohil were extreme but not necessarily exceptional. It is by no mean unusual for people to be suspicious about what the other party had said about their financial circumstances and to look back and wonder if they have been ‘led up the garden path’ but when is it possible to try and reopen a financial consent order when there is reason to believe that one of the parties has been less than candid in the information they have given about their financial circumstances? Does it make a difference? Has the non-disclosure been ‘material’?

In his judgment in Gohil Lord Neuberger drew a distinction between different types of cases. His guidance was as follows:

‘In other words, where a party’s non-disclosure was inadvertent, there is no presumption that it was material and the onus is on the other party to show that proper disclosure would, on the balance of probabilities, have led to a different order; whereas where a party’s non-disclosure was intentional, it is deemed to be material, so that it can be presumed that proper disclosure would have led to a different order, unless that party can show, on the balance of probabilities, that it would not have done so.’

The reason why this distinction is considered important is that the court attaches importance to consent orders. As was said as long ago as 1985 consent orders were not to be set aside on the ground of non-disclosure, if the disclosure would not have made any substantial difference to the order which the court would have made. Consent orders leading to a clean break between the couple were much to be encouraged, and were therefore ‘not to be lightly overthrown’.

Of course, setting aside an earlier financial order is only part of the battle. Once the earlier order has been set aside, it may still be necessary to continue with proceedings through the court to achieve a fresh adjudication.

19 October 2015

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