20 June 2019 - Events
Certainty is undoubtedly a priority for the majority of people who have finally come to the end of lengthy, costly and exhausting financial proceedings. Courts are aware of the of importance finality, which is why appeals are only available in limited circumstances, why a ‘clean break is to be encouraged wherever possible' (as per Sir Mark Potter in VB v JP  EWHC 112 (Fam)) and why there is a high threshold to cross when persuading the court to set aside an order. In Hamilton v Al Fayed  EMLR 15 (paragraph 11) Lord Phillips MR in identified the tension that exists between ‘the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result'. The tension he described is illustrated by two recent Court of Appeal decisions, concerning applications to set aside consent orders on the basis of non disclosure (Gohil v Gohil  EWCA Civ 274 and Sharland v Sharland  EWCA Civ 95). These cases show how certainty can sometimes come at a high price. In both cases the courts had sympathy with the wives' applications, and both cases involved issues of public policy (in relation to criminal activity in the first and fraudulent non disclosure in the second), and yet in both cases the applications for set aside were refused. Gohil v Gohil In the original financial remedy proceedings, Mrs Gohil was resolute that her then husband had not given full and frank disclosure. She asserted that Mr Gohil's expenditure and lifestyle indicated that his financial worth was significantly greater than his disclosure suggested. However, Mrs Gohil had difficulty proving her case, and the parties came to a final agreement in 2004. Mrs Gohil's concerns were made plain on the face of the agreement, which recorded her belief that he had not provided full and frank disclosure but compromised her claims to achieve finality. In November 2010, following a Crown Court trial, Mr Gohil was found to have been involved in fraud and money laundering amounting to over $37 million. Armed with this information (albeit facing a realm of difficulties in relation to using evidence from the criminal proceedings in the family proceedings), Mrs Gohil applied to have the final consent order set aside on the grounds of alleged serious non-disclosure, fraud and misrepresentation by Mr Gohil. The High Court found that Mr Gohil had failed to make full and frank disclosure in 2004 and that had the court known then what it knows now it would have made a different order. Moylan J came to his decision because of the ‘combined effect of all the new evidence', attributing significant weight to ‘the evidence from the criminal proceedings'. He held that it was ‘extremely unlikely' that Mr Gohil's financial disclosure in 2004 was full and frank. Moylan J only set aside the clean break clause, as he was concerned that setting aside the lump sum order might make it vulnerable to a restraint order in the criminal proceedings. He ordered a fifteen day re-hearing of Mrs Gohil's financial remedy application, indicating that the court at that stage may decide to set aside the remainder of the consent order and make an alternative order. Mr Gohil appealed Moylan J's decision. The Court of Appeal held that the correct test to apply when considering whether a consent order should be set aside for material non-disclosure (which originates from Livesy v Jenkins  FLR 813) is as follows: 1. That there has been, as a matter of fact, material non-disclosure; and 2. As a result, the Court made an order which is substantially different from the order which would have been made if proper disclosure had been given. Although McFarlane LJ, who gave the lead judgment, acknowledged that Mr Gohil was ‘an out and out rogue', and said that he had sympathy for Mrs Gohil, and indeed, Moylan J, he found that it was not open to the court to make a finding of material non disclosure, and so it was wrong to set aside the order. There should have been a full fact finding hearing regarding the non disclosure; it was not for Moylan J to make that decision on the limited evidence available — particularly as it transpired that the evidence from the criminal proceedings was not admissible. Sharland v Sharland In Sharland v Sharland the wife was able to show that there had been fraudulent non disclosure as a matter of fact, but she failed the second part of the test to set aside an order, and so her application was also refused. Mr Sharland owned two thirds of the shares in a company which he valued at £50m and Mrs Sharland valued at £75m. During the first instance trial (which did not run its course as the parties reached a settlement part of the way through), Mr Sharland said the company might be floated on the New York stock exchange but it was unlikely to be in the next three years and probably not until five to seven years in the future. After the parties reached an agreement by consent, Mrs Sharland found out that in the months before the trial Mr Sharland had been in active preparations for a flotation of his company. Mrs Sharland made an application to the court to set aside the agreement she had made with Mr Sharland on the basis of his non-disclosure about the IPO preparations. She argued that had she known of the IPO preparations, she would not have agreed to settle on the terms that were agreed. By the time the application was heard by the Court of Appeal, it had become clear that the flotation would not take place. As a result, although the Court found that Mr Sharland was ‘a man who had lied to the court and misled both the wife and the judge' his failure to give full and frank disclosure did not lead the court to make an order that was ‘substantially different from the Order it would have made if such disclosure had taken place'. The relevant question is whether the non-disclosure made any difference to the outcome and, in this case, the court said it had not. Briggs LJ gave the dissenting judgment and said ‘the now undisputed fact that the husband's conduct was fraudulent is a cardinal aspect of this appeal'. He felt that the fact that the wife had given up her right to a full hearing by being fraudulently induced to settle meant that she should now be able to have that full hearing. He said ‘the husband's fraud undermined both the parties' agreement and the consent order which followed ought to have been the end of the matter, and to have led to the setting aside of the consent order, and an order for a new (or perhaps resumed) hearing'. The price of certainty Certainty is clearly an objective which the family justice system must strive for. However, in the cases discussed in this article, has the balance between certainty and justice tipped too far in favour of the former? There is a fine balance between to be reached and, as demonstrated by the dissenting judgment of Briggs LJ in Sharland v Sharland, it is not one on which everyone agrees.