Sharland and Gohil: a right to a full and fair hearing
Alison Sharland and Varsha Gohil have won their appeals to the Supreme Court and have been permitted to have the final orders determining their financial applications against their ex-husbands set aside due to non-disclosure.
The decisions have already been heralded as opening the floodgates to litigation in the family courts, but what do these decisions really mean in practice?
What is a set aside application?
Unsurprisingly, a final order should provide finality in respect of the financial position for parties to a divorce. However, a set aside application can be made where there has been fraud, mistake, undue influence or a failure to provide full and frank disclosure. This will ensure that the applicant is afforded the opportunity to have a full and fair hearing of their financial claim.
What level of non-disclosure needs to be established?
The non-disclosure must be material, and so of significant weight in the context of the parties’ financial circumstances.
Will the decisions apply to all final orders?
The decisions will apply to final orders made on the basis of consent or those imposed by a judge at the conclusion of a final hearing.
Both Sharland and Gohil were originally settled as consent orders, on the basis of negotiation and agreement reached between the parties. In reaching an agreement the wives had each compromised their claims so as to achieve finality. However, the husbands’ fraudulent non-disclosure invalidated the basis on which these agreements had been reached.
The decisions will also apply in cases where the final order is made by a judge at the conclusion of a final hearing. This is because throughout the proceedings each party has a duty to provide full and frank disclosure to the court. The court, in turn, has a statutory duty to conduct an independent assessment considering factors including income, earning capacity, property, financial needs, standard of living and conduct of the parties. In cases where there has been material non-disclosure, neither duty has been, or can be, properly carried out.
The court’s duty to carry out an independent assessment applies whether or not an agreement by negotiation has been reached between the parties.
What evidence is permissible in an application to set aside an order?
The decision in Gohil has confirmed that the applicant in a set aside application does not need to demonstrate that the evidence which is being relied upon could not have been obtained with reasonable diligence for use at the original hearing. This is because:
- In cases concluded by way of consent a final hearing will either not take place or will not be concluded. It is therefore inappropriate to apply rules (or restrictions) in respect of fresh evidence on the set aside application.
- The court considering the set aside application should not conduct a fact finding exercise in respect of the type of evidence, and should only consider the weight of the evidence in terms of whether or not there has been material non-disclosure.
- In cases where there has been material non-disclosure a party will have failed in their duties of disclosure. If an application to set aside is successful the court will then re-examine the case and the onus will remain on that party to provide disclosure and so the relevant evidence.
Who needs to prove what?
Where non-disclosure has been accidental or negligent there is no presumption that it was material and the onus is on the party making the application to set aside to show that proper disclosure would, on the balance of probabilities, have led to a different order.
Where there has been non-disclosure as a result of dishonesty the onus is on the fraudulent party to satisfy the court that the fraud would not have influenced the final outcome.
What procedure is required in applying to set aside an order?
There is a currently a “Setting Aside Working Party” seeking to provide clarity as to the correct procedure to be adopted, and so whether an application should be made as a new application to the family court or an appeal to a higher level court.
What are the other implications of these decisions?
This is a reminder that the duties of ongoing, full and frank financial disclosure are very serious. The failure to comply the first time round can have serious consequences years and even decades later.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.