Sharland (Appellant) v Sharland (Respondent) - [2015] UKSC 60

Michaelmas Term

[2015] UKSC 60

On appeal from: [2014] EWCA Civ 95

JUDGMENT

Sharland (Appellant) v Sharland (Respondent)

before

Lord Neuberger, President

Lady Hale, Deputy President
Lord Clarke
Lord Wilson
Lord Sumption
Lord Reed
Lord Hodge

JUDGMENT GIVEN ON

14 October 2015

Heard on 8, 9 and 10 June 2015

Appellant (Sharland) Respondent (Sharland)
Martin Pointer QC Nicholas Francis QC

Peter Mitchell Nicholas Allen

(Instructed by Irwin (Instructed by JMW LLP)
Mitchell LLP)
LADY HALE: (with whom Lord Neuberger, Lord Clarke, Lord Wilson, Lord
Sumption, Lord Reed and Lord Hodge agree)
1. What is the impact of fraud upon a financial settlement which is agreed between a divorcing husband and wife, especially where, as will almost always be
the case, that agreement is embodied in a court order? Does “fraud unravel all”, as
is normally the case when agreements are embodied in court orders, or is there some special magic about orders made in matrimonial proceedings, which means that they are different? This case happens to concern a husband and wife in divorce proceedings, but the same questions would also arise in judicial separation proceedings, and between same sex partners who are either married or in a civil partnership in divorce, dissolution or separation proceedings. They entail consideration, in particular, of the leading case on non-disclosure in matrimonial financial proceedings, Livesey (formerly Jenkins) v Jenkins [1985] AC 424
(“Livesey”).
The facts
2. The husband and wife (who are not yet divorced) were married in 1993 and separated 17 years later, in 2010, having had three children together. When their financial proceedings were heard, in July 2012, the children were aged 17, 15 and
12. The wife has been the children’s primary carer throughout the marriage and she
anticipates that she will remain responsible for the care of their elder son, who has severe autism, for the rest of her life. Sadly, the parties also cannot agree about matters relating to the future care of their son and so there are also proceedings in the Court of Protection about him.
3. The husband is a computer software entrepreneur. He has developed a very successful software business, AppSense Holdings Ltd, in which he holds a substantial shareholding. The value and manner of distribution between them of this shareholding was the principal matter in dispute between the parties. It was not in dispute that, in addition to that shareholding, there were liquid assets of some £17m,
of which around £13.8m was in cash, £2m in the parties’ three homes, and the
balance in other assets and investments.
4. It is only necessary to give a brief outline of the dispute about the value of

AppSense and the husband’s shareholding in it. In early 2011, Goldman Sachs had
paid US$70m for a 33.5% share in the company. The wife contended that this valued the company as a whole at around US$255m and the husband's remaining shares at around US$132m. The husband contended that the development of the company was not going according…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] UKSC 60
Decision Date

CaseChat Overview and Summary

The case of Sharland (Appellant) v Sharland (Respondent) involved a dispute between divorcing spouses over the value of a software company's shares and the appropriate division of assets. The husband had misled the court about the company's prospects for an Initial Public Offering (IPO), leading to an agreement on asset division that was not reflective of the true financial situation. The wife sought to set aside the consent order, arguing that the husband's fraud was material and should not be allowed to stand. The High Court and the Court of Appeal had previously dismissed the wife's appeal, holding that the husband's fraud did not necessarily entitle her to have the order set aside. The wife appealed to the Supreme Court.

The legal issues before the court were whether fraud in matrimonial financial proceedings should unravel a consent order and, if so, under what circumstances. The court considered whether the general principle that "fraud unravels all" applied to consent orders in matrimonial cases and whether the wife had been deprived of a fair hearing due to the husband's fraud. The court also examined the procedural mechanisms available to challenge a consent order on the basis of fraud.

The Supreme Court held that the husband's fraud was indeed material and that the consent order should be set aside. The court found that the husband's deception about the company's IPO prospects had significantly influenced the court's decision in July 2012 and that the order would not have been made in the same form had the truth been known. The court further held that the wife was entitled to a full and fair hearing of her claims, which was denied when the husband's fraud was revealed. The Supreme Court allowed the appeal, set aside the consent order, and remitted the case to the High Court for further directions.

In terms of procedural issues, the court clarified that challenges to final orders in family proceedings can be brought either by appeal or by an application to a first instance judge within the original proceedings. The court noted that while the finality of judgments is a key principle, there are circumstances where an order can be set aside, such as in cases of fraud or material non-disclosure. The court emphasized the flexibility of financial remedy proceedings to tailor the procedure to the specific case, allowing for efficient resolution of the issues raised by the fraud.

Orders