'Fraud unravels all'

Published 15 February 2016

"Fraud unravels all" was the general principle applied in the recent Supreme Court cases of Sharland and Gohil. These cases concerned matrimonial proceedings where the appellants were seeking permission to apply to set aside financial remedy consent orders because of fraud on the part of their spouses.

The Supreme Court ruled that the appellants should be given permission to apply and that if assets had been fraudulently concealed by the appellants' spouses, the Court could set aside the order that had previously been made, notwithstanding the fact that the order gave effect to a settlement agreement reached by the parties.

What consequence for professional negligence claims against matrimonial solicitors?

We hope this will lead to a decrease in the number of claims made by disgruntled divorcees against their professional advisers. Historically, claims against matrimonial solicitors have largely come from divorcees who are unhappy with the financial settlement their solicitor has negotiated for them. However, following the decisions in Sharland and Gohil and depending of course on the outcome of these cases, a divorcee who is dissatisfied with their financial settlement may now revisit the agreement reached, if it appears there has been fraudulent concealment of assets. This provides an alternative to simply suing the solicitor for failing to adequately advise

Incidentally, in contrast to the decision in Sharland and Gohil, the Court of Appeal ruled this year in Hayward v Zurich that a settlement agreement in a personal injury claim could not be set aside on the basis that the defendants subsequently believed the claim had been dishonestly advanced. However, permission to appeal this decision was granted in August, so watch this space.