Supreme Court gives clarification on applicability of Ladd v Marshall

The UK Supreme Court has, today, handed down judgment in two appeals brought by ex-wives against divorce settlements following alleged material non-disclosure on the part of their ex-husbands - Gohil v Gohil [2015] UKSC 61 and Sharland v Sharland [2015] UKSC 60.

Gohil

In Gohil, the Supreme Court re-instated the trial judge’s decision to set aside a financial order made in 2004 in divorce proceedings on grounds it had been obtained by material non-disclosure. In doing so it found the trial judge would have found the ex-husband guilty of material non-disclosure even if he had referred only to the admissible evidence. It also considered there was no need to remit the issue of whether or not the non-disclosure was material given this would not involve an ‘unavoidable injustice’ to the ex-husband.

Sharland

In Sharland, the Supreme Court set aside a financial settlement consent order on grounds of fraud, stating that there was no ‘special magic’ about orders made in matrimonial proceedings which means that they are different to other court orders when it comes to the effect of fraud.

Issues of interest to DR lawyers

The cases are of some interest to general dispute resolution lawyers (ie those who do not specialise in family law) due to the Supreme Court’s findings on various issues, including:

• the Ladd v Marshall criteria are only applicable to determining which evidence or material the parties can rely on in seeking to prove their case. In other words, the Ladd criteria are not relevant to the determination of the substantive issue itself, in this case, the application to set aside the financial order in the divorce proceedings. In Gohil, although the trial judge had mistakenly held that, since the ex-wife had adduced evidence which satisfied the Ladd criteria, she was entitled to have the financial order set aside. (However, as it turned out, the same conclusion was correctly reached through that judge’s separate recognition that the ex-wife needed to and had established, even on the basis of the admissible evidence only, material non-disclosure on the part of the ex-husband) (Gohil)
• the first Ladd criterion (namely that the evidence could not have been obtained without reasonable diligence for use at the trial) ‘presupposes that there has already been a trial’ (Gohil)
• a re-hearing of whether or not there had been material non-disclosure would, in the circumstances, not be ‘consonant with one aspect of the overriding objective of the CPR identified in [CPR 1.1(2)(e)], namely that the court (including the Court of Appeal) should allot to the wife’s application only an appropriate share of the resources of the Family Division in the light of its need to allot resources to other cases’ (Gohil)
• per Gohil, a court is under a duty to survey the factual disputes between various parties and witnesses and, in doing so, be aware that, among other things:
  • ‘a person who has been dishonest in relation to one matter may well be telling the truth in relation to another matter’
  • ‘the silence of one party in face of the other party’s evidence may convert that evidence into proof in relation to matter which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence’ (R v Inland Revenue Comrs, Ex p TC Coombs & Co [1991] 2 AC 283). Here, the Supreme Court agreed with the trial judge’s inference that ‘had the husband been willing truthfully to explain their source, the trail would be likely to have led to the discovery of other assets which ought to have been disclosed in 2004’
• summary judgment is unlikely to be appropriate in cases involving allegations of non-disclosure (Gohil)
• ‘fraud unravels all’—there is no ‘special magic’ about orders made in matrimonial proceedings which means that they are different to other court orders (Sharland)
• although finding the analogy instructive, the Supreme Court considered that it is was not necessary to decide in Sharland whether the greater flexibility that the court now has in cases of innocent or negligent misrepresentation in contract law, restricting a victim’s right to rescind the agreement, should also apply to such misrepresentations or non-disclosure in consent orders in civil or family cases

Issues of interest to family lawyers and key points from the judgments

Family lawyers interested in wider points with implications for family lawyers and their clients and those interested in the key points from each judgment can read our post on our family blog here.

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