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Honesty is the Best Policy

View profile for Andrew Robinson
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Two recent Supreme Court decisions have emphasised how important it is to be honest about your financial position when negotiating a settlement in the event of separation and divorce.

The basic principle is that, in order to achieve a fair settlement, it is vital that both husband and wife (and the court) are fully aware of the overall financial circumstances. After all, if you do not know how much money your husband (or wife) has, how can you know what you are giving up?

Despite this, historically the case law seemed to suggest that in order to set aside a court order on the basis that wrong or misleading information had been provided, you not only had to prove this as a fact but you also had to prove that the court order would have been different if the correct information had been provided. This appeared to apply even where it was absolutely clear that the “victim” had been wilfully misled by his or her spouse.

Financial dishonesty during Divorce

In the two cases in question, Mr Sharland and Mr Gohill had both been economical with the truth at the time the original orders were made. Mr Sharland’s case was compromised on the basis that the value of his business shares were worth no more than 32 million whereas evidence later arose suggesting that he was in active preparation for an initial public offering of the company which could have resulted in a share value in excess of 750 million US Dollars. Mr Gohill appeared to have been a thoroughly shady character who subsequently (and perhaps unsurprisingly) ended up being sentenced to 10 years for fraud and money laundering. During his criminal trial it became clear that his wealth had far exceeded that disclosed.

In essence, the Judgments in the two cases appear to have introduced the following changes to the way that such cases will be considered as laid out below:-

  •  If there has been innocent non-disclosure, the spouse seeking to re-open the matter to achieve a more favourable settlement must both show the detail of the non-disclosure and must show that, had this been available, there would have been a different outcome.
  • If there is deliberate non-disclosure, it will be assumed that such disclosure would be material (ie would produce a different outcome). The miscreant will have to prove that the omitted information would not have made a difference. This quite properly puts the burden of proof on the wrongdoer.
  • Importantly, it is not for the wronged spouse to overcome a particularly high hurdle about what represents evidence of non-disclosure. Rather, a judge considering any application simply has to look at all admissible evidence and decide on a balance of probabilities, whether there has been any omissions or misleading information provided.

Conclusion

The conclusion to be drawn from all this is that if you are going through negotiations on separation or divorce then you must be absolutely honest about your financial position. If you are not honest you can only expect that a court will set aside any order reached. This may lead to a further court case many years later.

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