This is a guest post written by the super Zoe Saunders, who has saved me the trouble of having to digest the judgments of the Supreme Court in Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015] UKSC 61. Zoe sets out the facts and a legal analysis of the cases, and then answers some very useful FAQs for people who are going through or have been through financial proceedings on divorce and who might be wondering if this affects them.

Do please read the FAQs – these cases do not necessarily mean you can have a second bash at getting the outcome you wanted just because you believe your ex lied.

Zoe is a barrister at St John’s Chambers, who specialises in financial matters after a relationship ends. She tweets as @ZASaunders.


There has been a lot of excitement about the effect of these two cases. I have seen newspaper articles suggesting that there will be thousands of other cases reopened as a result – I think the reality is somewhat different.

So What’s It All About?
In brief here is what these two cases say :

Sharland :
Background facts:-
Long marriage, 3 children (one with lifelong special needs); parties’ assets comprised significant liquid capital (c. £17 million) and a company the value of which was in dispute, but was expected to be significant. In the months before trial, and in the course of preparing accountant’s reports as to the value of the company, the husband (‘H’) repeatedly lied about whether the company had plans to float. His evidence at trial was that no flotation was planned, but was possible within 3 – 7 years.
Part-way through the trial, the parties settled, with the wife (‘W’) agreeing to take cash of £10 million together with 30% of the proceeds of the company flotation, whenever that occurred. In fact, plans for a flotation were well advanced and were being actively pursued at the time of the trial; something of which the wife became aware through media reports a few weeks after the trial (and before the approved order had been sealed).
Eight months after the original agreement, the trial judge was faced with two applications:-
(i) The wife’s application for directions for a resumption of the trial (and so, in effect, to set aside the agreement); and
(ii) The husband’s application for notice to show cause why the previously approved order should not be sealed.

Sir Hugh Bennett held that the husband had been guilty of “laying a false trail” and of dishonesty. He nevertheless accepted the husband’s unchallenged evidence that no flotation had then taken place and none was in prospect. He held that he could not have made the order he approved in July had he known the truth, but would have been forced to adjourn to await developments. However, since no flotation had actually then occurred, the agreement embodied an outcome which was the likely result of the trial, and so the wife had failed to establish that the husband’s dishonesty had resulted in a substantially different order than that which would have resulted had the truth been known.

By a majority (Briggs LJ dissenting), the Court of Appeal upheld the order of Sir Hugh Bennett and dismissed the wife’s appeal.

The Supreme Court allowed the appeal, and agreed with the reasoning in the dissenting judgment of Briggs LJ in the Court of Appeal.

What does this say about the law?:-
1. As well established an agreement to compromise financial claims on divorce does not give rise to a contract enforceable in law. A consent order in matrimonial proceedings derives its authority from the court and not from the consent of the parties (whereas in ordinary civil proceedings, the consent order derives its authority from the contract made between the parties). The parties cannot, by their agreement, oust the jurisdiction of the court and only the court can effect a clean break between them;
2. The duty to disclose all relevant facts continues after agreement has been reached until the court itself has made its order;
3. The power to set aside an order arises when there has been fraud, mistake or material non-disclosure;
4. For cases of innocent or negligent non-disclosure or misstatement, Livesey v. Jenkins remains good law: the court has the power to set aside an order where it can be shown by the person seeking to set aside that:-
a. The non-disclosure or misstatement vitiates the agreement or order (for instance because it induced the Applicant to enter into the agreement, or it undermined the whole basis on which the order was made); and
b. had the non-disclosure or misstatement not occurred, the court would have made a substantially different order from that which it did make;
5. Cases of fraud are different. It will be assumed that test in (4a) & (4b) above is met and the victim will be entitled to have the order set aside unless the perpetrator of the fraud can establish that, at the time the court made the consent order:
a. the fraud would not have influenced a reasonable person to agree to it; and
b. had it known then what it knows now, the court would not have made a significantly different order, whether or not the parties had agreed to it.
6. On the facts of this case, having established fraud, W was entitled to re-open the case, and to seek to negotiate a new settlement or a rehearing when all the relevant facts were known;
7. On the facts of this case, W did not need to cross-examine H, since the documents he disclosed revealed that he had deceived the court;
8. The Family Procedure Rules Committee should ensure that the Family Procedure Rules 2010 are revised so as to include the principle that an application to set-aside an order should be made to a court of the level which made the order, and not by way of appeal;
9. The fact that the setting-aside of an order can be justified does not necessarily mean that renewed financial proceedings must start from scratch. It may be possible to isolate the issues to which the non-disclosure or misrepresentation relates and deal only with those. The court retains enormous flexibility to enable the procedure to fit the case.

Gohil – Summary
Background facts:
Throughout the original proceedings Mrs Gohil (‘W’) complained consistently that her husband (‘H’) had not given complete disclosure, but nonetheless, in 2004 compromised her claims at FDR in order to achieve finality. Three years later, she applied to set aside the order contending again that there had been material non-disclosure. The set-aside application was significantly delayed by H’s prosecution and conviction for money-laundering. In 2012, Moylan J found H guilty of material non-disclosure and set aside part of the original order to allow W to pursue further claims. He based his decision in part on evidence from H’s father, and in part on evidence which the CPS had been ordered to disclose and which they had obtained in large part from overseas pursuant to requests made under the Crime (International Co-operation) Act 2003. By the time of the appeal to the Supreme Court it was accepted that the evidence obtained by the CPS under the 2003 was inadmissible before Moylan J.

The Court of Appeal allowed an appeal by H, holding that Moylan J had no admissible evidence of material non-disclosure before him upon which he could rely to support his findings. Aside from that which was inadmissible under the 2003 Act, the other evidence did not satisfy the criteria for fresh evidence on appeal set out in Ladd v. Marshall, and so should not have been admitted.

The Supreme Court held:-
1. The duty to give disclosure which is full and frank is owed to the court, and without it the court cannot discharge its statutory duty under Section 25(2) of the Matrimonial Causes Act 1973. One spouse cannot exonerate the other from complying with his or her duty to the court;
2. An application to set aside an order in matrimonial proceedings for material non-disclosure was not an appeal, but a separate action within the matrimonial proceedings. The criteria in Ladd v. Marshall for the admission of fresh evidence on appeal does not apply. The argument that it does was based on the mistaken concept that the proper course for W was to have proceeded to trial and presented her evidence there. That was wrong, because the onus of proving H’s wealth was never on W; it was always H, pursuant to his duty to give full and frank disclosure;
3. There was sufficient admissible evidence before Moylan J to enable him to find that the husband was guilty of material non-disclosure, and his order would be restored, with the application remitted to him for disposal of W’s extant claims.

So What Does This Mean In Practice?:
The duty to give full and frank disclosure is of critical importance – it continues throughout proceedings until a final order has been made.

If the duty of full and frank disclosure has not been complied with an order can be set aside, but the test for whether the order should be set aside is different for innocent or negligent non-disclosure and deliberate or fraudulent non-disclosure: see points (4) & (5) above.

If an order is set aside the court doesn’t necessarily have to start from scratch – it can deal with the specific issues which were tainted by non-disclosure only.

To set aside an order for non-disclosure an application should be made back to the original court and level of judge who dealt with the matrimonial proceedings – it is important to bear in mind that the rules have not yet caught up with these judgments so there are likely to be rule changes soon.

I Think My Husband / Wife Lied When He / She Gave Evidence, Can I Set The Order Aside?
Not necessarily – one of the critical issues will be proving that they lied. This is not always straightforward and care will have to be given before making allegations of fraud or deliberate dishonesty.
The second critical issue will be a careful consideration of whether their lies made any difference to the outcome of the case. Even in cases of fraud the court will be looking at whether it is proportionate to re-open the case.

My Consent Order Is About To Be Approved But I Have Lied About My Assets, Should I Keep My Fingers Crossed And Hope?
No, obviously – as a barrister would I say anything else?! Even if you couldn’t care less about the duty of full and frank disclosure, the net result of these cases is that you will always be looking over your shoulder. If your ex finds out about the dishonesty you run the risk of the whole case being reopened and facing the obvious consequences of your damaged credibility, as well as potentially punitive costs orders.

My Consent Order Is About To Be Approved But I Have Just Found A Bank Account with £1 In That I Had Honestly Forgotten About, Should I Keep My Fingers Crossed And Hope?
No – in this case better safe than sorry. Even if the accidental non-disclosure is minimal it is clear that your duty of full and frank disclosure is still on-going – you will need to inform your spouse and provide full disclosure.

My Consent Order Is About To Be Approved But I Have Just Won £1,000,000 On The Lottery, Should I Keep My Fingers Crossed And Hope?
Again – no. As above you have a duty to disclose. This is why not to play the lottery during your divorce unless you fancy sharing any proceeds, see also, gambling, premium bonds, etc.

Zoë Saunders

Financial Remedies: Nicholas v Nicholas no longer good law

Christopher Sharp QCThis is a guest blog post by Christopher Sharp QC, barrister and Head of Family Practice Group at St John’s Chambers. Christopher is a leading silk on the Western Circuit, known well for his expertise in high value ancillary relief cases.




In a very significant decision by a majority of the Court of Appeal dealing with the ability of the Court in financial remedy cases to make orders directly against the assets of a company that is the alter ego of one spouse to satisfy the entitlement of the other, Nicholas v Nicholas (1984) FLR 285 has not been followed and all the decisions following it have been held to be wrong. As a consequence, Munby J’s decision in Mubarak v Mubarak (No.1) [2001] 1 F.L.R. 673 has been overruled and W v H (Family Division: Without Notice Orders) [2001] 1 All E.R. 300 is overruled in part. To the extent that Mostyn J followed Nicholas in Kremen (formerly Agrest) v Agrest [2010] EWHC 3091 (Fam), [2011] 2 F.L.R. 490 and in Hope v Krejci [2012] EWHC 1780 (Fam) and treated company law principles as inapplicable in family cases, the court disagreed, so Kremen and Hope are doubted.

Accordingly a property adjustment order under s.24(1(a) of the MCA 1973 cannot be made against the property of a company unless there are legitimate grounds for piercing the company veil, including a finding to the necessary extent of impropriety (and not simply the obfuscating and dissembling conduct in which the husband had indulged in the instant case). The principles set out in Salomon v Salomon & Co Ltd [1897] A.C. 22 were stated to apply to all jurisdictions and the principles of legal personality had to be respected.

Thorpe LJ, in a vigorous dissenting judgment, pointed out that the principles in Nicholas had stood and been followed by the most specialist judges of the Division for three decades. It had been, he said, a relatively early pronouncement of the power necessary to enable the judge in financial provision cases to do justice. He went on:

“If this court now concludes that all these cases were wrongly decided they present an open road and a fast car to the money maker who disapproves of the principles developed by the House of Lords that now govern the exercise of the judicial discretion in big money cases.”

In a final passage in his judgment in response to Rimer LJ’s judgment (delivered for the majority) he concluded:

“64.       In this case the reality is plain. So long as the marriage lasted, the husband’s companies were milked to provide him and his family with an extravagant lifestyle. That was only possible because the companies were wholly owned and controlled by the husband and there were no third party interests. Of course in so operating them husband ignored all company law requirements and checks.

65.       Once the marriage broke down, the husband resorted to an array of strategies, of varying degrees of ingenuity and dishonesty, in order to deprive his wife of her accustomed affluence. Amongst them is his invocation of company law measures in an endeavour to achieve his irresponsible and selfish ends. If the law permits him so to do it defeats the Family Division judge’s overriding duty to achieve a fair result. However, the majority were very clear that the practice of the Family Division to ignore the basic tenets of company law, and the fact that companies are separate legal entities has to cease.”

However, the majority were very clear that the practice of the Family Division to ignore the basic tenets of company law, and the fact that companies are separate legal entities has to cease.

Patten LJ agreeing with Rimer LJ said this:

“160.    What needs to be emphasised is that the provisions of s.24(1)(a) of the Matrimonial Causes Act 1973 do not give the court power to disapply the established principles of legal and beneficial ownership or of company law. On the contrary, those principles were plainly intended to define the limits of the court’s jurisdiction under the statute and Moylan J was wrong to give the words “entitled, either in possession or reversion” any wider meaning. Married couples who choose to vest assets beneficially in a company for what the judge described as conventional reasons including wealth protection and the avoidance of tax cannot ignore the legal consequences of their actions in less happy times.

161.    I wish particularly to support Rimer LJ’s criticism of the dicta in Nicholas and his view that these cannot be relied upon as a correct statement of the law following the decision of this court in Adams v. Cape Industries plc. They have led judges of the Family Division to adopt and develop an approach to company owned assets in ancillary relief applications which amounts almost to a separate system of legal rules unaffected by the relevant principles of English property and company law. That must now cease.”

Rimer LJ himself, after a lengthy judgment that reviews both the conventional company law authorities and the manner in which the Family Division has found ways around the strict application of those principles, concluded in this way:


154.    I have made clear my views on the ‘veil piercing’ issue, but shall summarise them. Salomon is House of Lords authority affirming the distinction between the separate legal personalities of a company and its corporators. It makes no difference to such distinction that the company has a single corporator with total control over its affairs. It is a feature of the principle that a company’s assets belong beneficially to the company and that its corporators have no interest in, or entitlement to, them. It is a further feature of it that such assets cannot be looked to in order to satisfy the personal obligations of the corporators, any more than the latters’ personal assets can be looked to in order to satisfy the obligations of the company. In special circumstances, in particular in the winding up of an insolvent company, there may be a statutory basis for requiring the corporators to contribute personally to the company’s assets, for example if they have misapplied its assets or engaged in wrongful or fraudulent trading (see sections 212 to 214 of the Insolvency Act 1986). Exceptions of that nature are, however, irrelevant for present purposes.

155.    Subject to exceptions such as those, and to cases in which it is legitimate to pierce the corporate veil, the separate corporate identity of a company is a fact of legal life that all courts are required to recognise and respect, whatever jurisdiction they are exercising. It is not open to a court, simply because it regards it as just and convenient, to disregard such separate identity and to appropriate the assets of a company in satisfaction either of the monetary claims of its corporator’s creditors or of the monetary ancillary relief claims of its corporator’s spouse. Salomon precludes any such approach; and the same was made clear by the House of Lords in Woolfson and by the Court of Appeal in Adams, Ord and VTB. The obiter dicta in Nicholas to different effect are inconsistent with Salomon, Woolfson, Adams, Ord and VTB and advance no reasoning why a different principle should apply in the family jurisdiction as compared with other jurisdictions. The Salomon principle must apply equally to  all jurisdictions. A one-man company does not metamorphose into the one-man simply because the person with a wish to abstract its assets is his wife.

156.    Woolfson, Adams, Ord, Ben Hashem and VTB show that there may be factual circumstances in which it will be legitimate for the court to pierce a company’s corporate veil and, to an appropriate extent, disregard the fact of its separate identity from that of its corporators. They all, however, affirm that that can only be done in limited circumstances, central to which is the demonstration of relevant impropriety in the corporators’ use of the company. The rationale for such an exceptional jurisdiction is that the controllers of the company have so used the fact of its separate identity for improper purposes that it may be appropriate for the court disregard its separate identity in order that its controllers may not derive the advantage from such abuse that they intended to achieve. It is perhaps a relative of the principle that a wrongdoer cannot ordinarily be allowed to profit from his own wrong. The jurisdiction, whilst of interest to legal theorists, is an exceptional one and there are few reported decisions where it has been applied (including, in particular, in family proceedings). Just as there is no rational ground for regarding the family courts as exempt from Salomon, so is there no rational ground for regarding them as exempt from the need to be satisfied as to the conditions affirmed in VTB before piercing of a corporate veil. The dicta in Nicholas cannot stand with the principles explained in Woolfson, Adams, Ord, Ben Hashem and VTB and they should no longer be regarded as of any authority. Insofar as Mostyn J has, in Kremen and Hope, treated those principles as inapplicable in family cases,  and instead supported the Nicholas dicta, I would respectfully disagree with him.”

The consequences of this decision are plain. It will be much harder to enforce against the assets of a liable spouse who has tied up his assets (which may well include the matrimonial home) in a company, and against a determined opponent, the possibility of the court being able to do justice will be much impaired.

[Edited 31/10/12 Minor amendments made for clarification]

Book Review: Financial Remedies Under The Family Procedure Rules 2010 & The @eGlance Guide

Zoe SaundersThis review is a guest post written by  Zoe Saunders, barrister at St John’s Chambers, Bristol. Zoe has particular expertise in cohabitation disputes, including applications for financial provision for children and trusts of land issues, and financial remedies on divorce. You can also find Zoe on twitter (@ZASaunders).

Financial Remedies Under the Family Procedure Rules 2010 by Singer, Mostyn, Marks & Smith 

Financial RemediesThis is a really useful book for anyone who does what we must now call ‘financial remedies’ formerly known as ancillary relief. The commentary on each chapter is likely to continue to be useful long after one has gained familiarity with the overall structure of the news rules and for those who are not yet familiar with the new FPR they are a really helpful guide to the most important changes.

The book is clearly laid out with commentary on the relevant sections of the rules preceding the rules themselves. It is a neat volume which is much more portable than the red book. It is clearly aimed at practitioners but does manage to balance adequate explanation without being excessively detailed.

Purchase of the book (£95 from Class Legal) also gives you access to the www.familyprocedure.com website which contains the full text and updates. One minor quibble is that it would be useful to see exactly what has been updated without re-reading the whole section, but other than that it is a useful resource and means that you can access the text without the physical book, which can be handy for when other members of chambers borrow it without asking! In my view although expensive I think this book is a worthwhile purchase.


We also got access to the @eGlance site for which you can get a discounted 12month subscription on purchase of the book (£30 off the usual £85 cost).

@eGlance suffers from two major flaws – the first of which is that it is not Apple compatible, which in the brave new world of ipads seems to me to be a really fundamental error and one which I think the authors / publishers really should get a grip on as soon as possible. The second flaw it that the user-interface looks like something which was designed 20 years ago and hasn’t been touched since.

In my view these two errors run the risk of putting off potential users, which would be a real shame, because once you get past the initial impression and start to actually use the software it is really pretty impressive. It has pretty much everything you could really ask for in a programme designed to help with anything from big money downwards. You can print off information and calculations and I suspect that it could become a really invaluable tool, if you can repress the urge to snigger every time you load it!

Both the Financial Remedies book and the @eGlance software can be purchased through Class Legal.