RATIO—Where one of the parties to a divorce settlement was guilty of fraudulent non-disclosure, the court’s order should be set aside unless the fraudster proves it made no difference to the agreement and order. Fraud is distinguished from other material non-disclosure cases, where the burden of proving a “substantial difference” is on the aggrieved party as laid down in Livesey v Jenkins. (Lady Hale, with whom all six other Justices agreed, §§29-33);
OBITER—An application to set aside the order can and should be made to the family court rather than by way of appeal (Lady Hale, with whom all the Justices agreed, §42).
The Supreme Court has today given two judgments (Sharland v Sharland, and Gohil v Gohil) about re-opening divorce settlements on the grounds of fraud. Sharland lays down a new test in cases involving fraud, which should mean more settlements are reopened in future.
Alison Sharland agreed a divorce settlement with her husband, who’d told the court he had no plans to float a company of which he owned about two-thirds. But then she realised that in truth, he was already preparing for an initial public offer—which made his shares more valuable than they’d seemed. The divorce judge found that he’d acted fraudulently, but refused to set aside the divorce settlement and hold a fresh hearing, because in fact the IPO had not gone ahead, and now seemed unlikely; so the court was unlikely to order a different settlement, after all. The Court of Appeal upheld that ruling (though Lord Justice Briggs dissented, saying in effect that “fraud unravels all”).
Varsha Gohil always thought her husband (who was a solicitor) was concealing his assets, but she reached a divorce settlement with him so as to achieve finality. Later, though, she went back to court alleging non-disclosure. Then her husband was charged with, and then convicted of, money laundering—and sentenced to ten years in prison. The judge set aside the divorce settlement, because he would probably have made a different order had he known of the fraud. But the Court of Appeal reversed this, saying the judge had applied the wrong approach, and relied on material obtained in the criminal case which (because of a separate Court of Appeal ruling) was not admissible evidence in the divorce.
The Supreme Court has allowed both women’s appeals today. In Sharland, in a unanimous judgment (all seven Justices agreeing with Lady Hale) the court held that Briggs LJ has been correct in the Court of Appeal. Fraud does indeed “unravel all”.
Where fraud is established, that in itself will normally mean a financial order on divorce should be set aside (paragraph 32 of the Sharland judgment). The only exception is where the fraudulent husband can satisfy the court that knowledge of the fraud would have made no difference either to his wife or the the court (para. 33).
This approach modifies the principles that apply in cases of innocent or negligent non-disclosure, laid down in the 1980s in Livesey v Jenkins. As Lady Hale said (§32),
a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality.
She went on (§35)—
The wife was entitled to re-open the case, when she might seek to negotiate a new settlement or a rehearing of her claims when all the relevant facts were known. Thus, in my view, Briggs LJ was also correct in the third reason that he gave for allowing the appeal. The wife had been deprived of a full and fair hearing of her claims.
It’s actually in the Gohil judgment that Lord Neuberger explains most clearly the legal importance of Lady Hale’s approach in Sharland (see §44 of Gohil).
If there had been … non-disclosure, but it had been accidental or negligent, the wife would also have had to establish that the effect of the non-disclosure was such that the 2004 order was substantially different from the order which would have been made (or agreed) if the husband had afforded proper disclosure—see per Lord Brandon in Livesey v Jenkins  AC 424, 445. However, as the non-disclosure alleged by the wife in this case is said to be intentional, then, if there was such non-disclosure, the 2004 order should be set aside, unless the husband could satisfy the court that the 2004 order would have been agreed and made in any event—see per Lady Hale in Sharland v Sharland  UKSC 60, paras 29-33.
Separately, however, the judge conducted the correct exercise and held that it yielded the same conclusion … Moylan J did conduct a full fact-finding hearing and did find as a fact, no doubt on the balance of probabilities, that the husband had been guilty of non-disclosure. He also found–as to which there could be no live dispute–that the non-disclosure was “material” …
That last finding was of course unnecessary, applying Lady Hale’s new Sharland approach in fraud cases.
Nor was the Moylan J’s ruling entirely dependent on the inadmissible criminal evidence (§42)—
I conclude that, even if he had referred only to the evidence admissible before him, Moylan J would still properly have found the husband to have been guilty of material non-disclosure in 2004; that his order dated 25 September 2012 should therefore be reinstated; and that the wife’s claim for further capital provision should therefore proceed before him.
An interesting additional point in the judgment relates to recital 14 to the consent order giving effect to the divorce settlement, which said—
And upon it being recorded that the petitioner [wife] believes that the first respondent [husband] has not provided full and frank disclosure of his financial circumstances (although this is disputed by the first respondent); but is compromising her claims in the terms set out in this consent order despite this, in order to achieve finality.
This was obviously included by the husband’s lawyers to try to protect him from any later “comeback” from Mrs Gohil, Lord Wilson said. But the husband had a duty to make full and frank disclosure to the court—a duty that the parties could not wish away by any agreement. Lord Wilson concluded that (§22)
In the present context, namely that of a financial order in divorce proceedings, a form of words such as recital 14 has no legal effect.
In terms of procedure, both judgments strongly suggest (Gohil, §18; Sharland, §42) that applications to reopen divorce settlements on grounds of fraud should be made to the family court, which has power to set aside its own financial orders—and not by appeal.
He agrees with me that article 51 of the UN Charter permits defence against an imminent attack from a non-state organisation. A state, he writes
does not have to wait for the attack before taking action. The legality of pre-emptive self-defence, where necessary and proportionate, is recognised by international law.
On whether this strike was in fact necessary and proportionate, he says that depends on the nature and imminence of the threat; and seems to accept that there are limits on what detail the government can disclose. He says:
On the publicly available information, it is impossible to dispute the advice given by the attorney-general that, in substantive terms, the drone strike was a lawful response to a grave terrorist threat.
He suggests two safeguards, though. First,
The rule of law requires, as a minimum, a public statement of the general criteria to be applied in deciding on drone strikes, and the procedure to be followed in making such decisions. The government needs to publish such guidelines without further delay …
This seems to be a reasonable idea, though I’m not sure drone strikes per se are really what need to be covered. The issue here, surely, is the targeting of lethal force on a specific individual by any means, where this is thought necessary for British self-defence outside an existing theatre of armed conflict. Not all drone strikes (since they may not involve the targeting of individuals at all), and not just drone strikes.
I’m more doubtful about Pannick’s second proposal. He writes—
There is a strong argument that the rule of law requires that before a drone strike designed to kill a terrorist target takes place, the necessity and proportionality must be approved not just by politicians and generals, but also by an independent judicial authority, albeit that such a review may need to occur in very urgent circumstances and so only limited scrutiny is possible.
First, I wonder why he thinks this applies in this sort of case and not to every choice of target by British forces, where people are likely to die—including civilians. Second, I wonder if it’s realistic. Whether a strike is proportionate depends on the extent of the risk to civilians, which is something that might have to be judged in a matter of a very few minutes.
Third, I wonder whether his idea would satisfy anyone, really. If people find it hard to trust the government on this without seeing all the Attorney General’s advice, why should they trust this judge without seeing his or her full on-the-spot ruling? Finally, I wonder if it’s even appropriate. Aren’t judgements like this—if and when military force should be used to defend us—what we have ministers and Prime Ministers for, rather than judges?
The last time Inner Temple’s library was wrecked, it was Hitler’s bombs that did it. On the night of the 10th—11th of May 1941, London faced the most devastating attack of the Blitz. That night, the House of Commons chamber was left a smoking shell. St Clement’s Dane’s, on the Strand, was gutted. Much of Fleet Street was on fire. And according to Clare Rider,
Temple Church and almost everything in it, including stained glass, altar, reredos, organ, pews, books and pulpit, were devastated … fires raged through the Hall, Library, Master’s House, Crown Office Row and what remained of Harcourt Buildings.
… fires continued to burn throughout the following day. Only when they were finally extinguished could the extent of the damage to the Inner Temple buildings be assessed. It must have been a depressing sight.
After Hitler was dead, our civilisation and the rule of law saved, it was decided to build a new library
worthy of the site and the historical importance of the Inn
as Inner Temple put it in 1947. The new library, like all the reconstruction work, was funded mainly by the public through the War Damage Commission. Clare Rider tells us that
The Library was opened by the Treasurer, Sir Patrick Spence, in a formal ceremony on 21st April 1958 attended by the Lord Chancellor [David Maxwell Fyfe, Viscount Kilmuir—Carl]. The Law Times of 2nd May recorded that ‘those who were present on the occasion cannot fail to be impressed both with its general design and with the workmanship which has been bestowed on its furnishings and equipment’ …
Nor can anyone fail to be impressed by the library today. It allows barristers and students to do legal research work of the highest standard, and provides services to barristers outside London. I was there only last week, doing international law research I could do nowhere else. It’s also a fine interior that deserves to be left alone.
Yet now, fifty-seven years after it was built, Inner Temple library faces a new threat—this time, shockingly, from Inner Temple itself. The plan is to spend £16 million and close the library for 18 months in order to get rid of five of its rooms, together with its fine gallery; to install a depressing plaster ceiling to lour over what remains; to take away half the spaces for readers to sit and work, and to remove 25,000 books.
The idea’s to make way for education and training rooms and a 120-seat “auditorium” to be hired out at a profit. Private Eye (No. 1400) said about the plan—
In a rush to monetise their prime slice of City real estate, scheming elders at the Honourable Society of the Inner Temple are pushing ahead with plans to create a lucrative commercial training complex – even if it means taking the sledgehammer to one of the oldest libraries in London.
How could anyone do it? On a speculative punt, it would spoil a permanent professional and educational asset and a true centre of excellence—and instead assemble something that’ll be “state of the art” only on the day it opens. That a library might be intentionally damaged in the interests of “education and training” makes “education and training” a sinister phrase. The library is the best education and training resource the Inn will ever have, and should not be cut down at all. It should be enhanced and preserved.
Is it even intended that any revenue the auditorium might earn should be paid to the public purse? It ought to be, since any profit would be made from the destruction of an asset public money bought for Inner Temple.
This goes beyond the interests of the Inner Temple, or of the Bar. To wreck this outstanding library would not merely be deliberate vandalism. Nor would it just be anti-professional, anti-intellectual and anti-educational. It would insult the people, who built it, and this country’s history. What Hitler destroyed and the public rebuilt shouldendure.
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