Don’t Play Hide And Seek With Your Financial Assets On Divorce
Each of the wives succeeded in setting aside the financial agreements they had made on divorce because their husbands had not disclosed the full extent of their financial assets on divorce.
Mrs Sharland agreed a financial settlement with her former husband in conjunction with their divorce although she later discovered that he had significantly misrepresented the financial benefit that he would obtain from shares in which he had an interest.
On making this discovery, Mrs Sharland asked the Court to overturn the financial agreement she had previously reached with her husband on the basis that Mr Sharland's non-disclosure about the shares rendered the agreement that had been reached to be unfair.
Initially, Mrs Sharland did not succeed with this claim although subsequently the agreement was set aside because the husband's fraud had rendered the agreement invalid. It was considered that as a direct result of the husband misrepresenting his financial position, Mrs Sharland had been deprived of a full and fair Court hearing to deal with financial matters on divorce.
Mrs Gohil had also reached a financial agreement with her husband as part of their divorce. Thereafter, she found out that her husband had concealed the full extent of his financial assets at the time the agreement was made. Mrs Gohil succeeded in obtaining a Court Order that Mr Gohil's non-disclosure was sufficient enough for the previous agreement to be set-aside. On this basis, the negotiations concerning division of the finances started afresh.
The key principle from these two cases is that as part of the divorce process, each spouse is obliged and indeed expected to provide full, frank and transparent disclosure of their financial circumstances. Further, if one spouse is aware that the other spouse has not provided full financial disclosure, one spouse cannot exonerate the other from complying with their duty to provide this information.
If full financial disclosure is not provided then it is clear from these two cases that each spouse will incur additional and considerable expense and undoubtedly, delay, in reaching a financial settlement whilst the Court and the other spouse set about determining what the true extent of the financial assets may be.