Facts
- In June 2010 the first financial remedies order was made by consent. It provided that W should receive the former matrimonial home in England and a lump sum of £4 million. W later discovered that H had failed to disclose two valuable trusts of which H was the principal beneficiary. That led to her successful application before Mr Justice Moor in 2015 to set aside the consent order.
- The first rehearing of W’s application took place before Mr Justice Moylan (as he then was), who adopted the “Kingdon approach” of isolating the undisclosed assets, dealing with them and, leaving the remainder of the original order unaltered. Moylan J concluded that W should receive a further £6.22 million.
- The case before Mr Justice Holman therefore was the second application in the same matrimonial financial remedy proceedings to set aside a final financial remedies order on the grounds of material non-disclosure, a scenario which Holman J described as “vanishingly rare and probably unique”.
- W’s case was that H had deliberately and dishonestly failed to disclose discussions about the sale of one of his companies that were taking place contemporaneously with the financial remedies proceedings. The sale eventually took place in 2018, and the contract provided for a ‘buy back’ option which, if exercised, meant that H’s total shares in the company would be worth £81.75 million – the same shares for which Moylan J, in November 2016, had valued at about £16.14 million. W’s case was not that the shares had simply grown in value, but rather that there had been material non-disclosure by H.
Issues
- Holman J therefore had to decide two questions:
- (i) whether there had been non-disclosure;
- (ii) whether the non-disclosure was material.
Held, setting aside the order
- and that this behaviour amounted to fraud.
- In answer to the second question Holman J noted that the court’s approach to materiality depends on whether the non-disclosure is fraudulent or innocent.
- In cases of innocent non-disclosure, an order could only be set aside for non-fraudulent non-disclosure if the court would have made a substantially different order if the relevant facts had been disclosed.
- However, in cases of fraudulent non-disclosure the general principle could be summarised as “fraud unravels all”. The test was, therefore, whether the court could be satisfied that at the time when Moylan J made his order, he would not have made a significantly different order if he had known then what the court knew at the set aside hearing. Further, the burden of satisfying the court of this lies with the perpetrator of the non-disclosure.
- Having found that H’s non-disclosure was deliberate and fraudulent, Holman J applied the latter test and was not satisfied that Moylan J would not have made a significantly different order, although he “readily accepted” that he might have done. Consequently, Holman J set aside the order made by Moylan J and held that there was to be a fresh determination of the W’s application for financial remedies.
- Holman J then concluded by imploring the parties to settle so as to end the “vortex of profligate spending and mutual destruction”.