London is set to maintain its cosy reputation as the divorce capital of the world after yesterday's Supreme Court ruling, which gives divorcees the right to go back to the negotiating table if their ex has lied about or hidden their wealth.
The highest court in the land has backed Alison Sharland and Varsha Gohil, who argued that their divorce settlements should be overturned due to their ex-husbands' fraudulent non-disclosure of assets.
The ruling could pave the way for more divorcees to renegotiate their settlements and is expected to act as a deterrent for sneaky spouses hoping to squirrel away assets.
“This decision redefines the principles and says that the English legal system will uphold justice,” Ros Bever at Irwin Mitchell, the lawyer representing the two women, told City A.M.
“In cases involving fraudulent non-disclosure, there is a clear burden on the perpetrator to set out their evidence.”
Alison Sharland accepted a deal from her ex-husband Charles, the founder and chairman of IT firm AppSense, in 2012, which amounted to £10m in property and cash if she agreed to accept 30 per cent of proceeds from any sale of his shares in his company.
But it later emerged that he had misled her and the courts over the value of his business and plans for a future stock market flotation. Instead of being valued at between £31m and £47m, Appsense was estimated by the financial press as being ready to float at a value of $1bn (£650m).
Meanwhile Varsha Gohil accepted £270,000 and a car as a settlement in 2004, but it emerged after a separate criminal trial that her ex-husband Bhadresh, who was jailed for 10 years in 2010 on money-laundering offences, had concealed his wealth from her.
Dan Chalmers, solicitor at Moore Blatch, expects the case to have wider ramifications on divorce proceedings.
“The decision could potentially pave the way for more people to renegotiate their settlements.
“It could also serve to act as a deterrent to people thinking about concealing assets,” he said. “In smaller cases, where someone could be withholding a pension or a property, it could have a far greater effect if the asset is hidden.”
But the judgement – touted in the media as a landmark ruling and an outright victory for ex-wives – comes with caveats.
For a start, the Supreme Court has not awarded a new settlement but has passed the case back to the family court, so the ex-wives should brace themselves for more legal wranglings.
Bever is hoping for a new settlement for the two women within the next 12 months, as she says there will be a “narrower argument” for the court to dissect this time around.
But bearing in mind that Gohil has been battling her case since 2004, the legal fees from a complicated divorce such as this can be hefty to say the least, with the outcome unknown.
“This ruling will have a trickle-down effect, but the question is whether people have the money to take their case to court,” warned Lois Langton, partner and head of family law at Howard Kennedy.
Langton also challenges the assumption that a revised settlement means a better settlement.
“This might be a legal victory but they may not do any better financially,” she said.
James Brown, a partner with JMW Solicitors, representing Mr Sharland, echoed her sentiment.
“It is perhaps ironic that Mrs Sharland may actually end up with less as a result of the ongoing legal action than originally agreed more than three years ago,” he said.
Ever-mounting legal fees aside, the Supreme Court decision is about morals, not money.
In her ruling, Supreme Court judge Brenda Hale said Sharland had been “deprived of a full and fair hearing of her claims” because of his “fraud”.
PRINCIPLE AND JUSTICE
“These cases were about a matter of principle and justice for both women and the issues raised in the Supreme Court will have implications in many other cases, including those with less money at stake,” said Bever.
“At the heart of these cases is a simple message: if you want finality in your divorce settlement (whether you agree it, or whether it is imposed by the court), don’t lie.”
The complicated field of divorce law has put a number of splits into the limelight in recent years.
Earlier this year, the Supreme Court ruled that Kathleen Wyatt had a right to claim a settlement from millionaire Ecotricity founder Dale Vince, 20 years after they divorced.
Other high-profile cases include that of now-deceased businessman Scott Young, whose wife Michelle received £20m but claimed that he had hidden away up to £700m in offshore accounts. Heather Mills received £24.3m after divorcing Beatle Sir Paul McCartney in 2008 and hedge fund boss Sir Chris Hohn paid £337m to his ex-wife Jamie last year.