Setting aside a financial order due to non-disclosure

Non-disclosure in financial remedy proceedings

When financial remedy proceedings are initiated, both parties are legally obliged to provide full and frank disclosure of their finances in their Form E.

Failure to do so may result in the party being penalised by the court. If their non-disclosure becomes known following the conclusion of financial remedy proceedings, the other party may be able to have the order set aside.

In Sharland v Sharland [2015] UKSC 60, Lady Hale (as she was then) distinguished deliberate, fraudulent non-disclosure from unintentional non-disclosure.

Fraudulent non-disclosure

There is a general principle that “fraud unravels all”, as reiterated by Lady Hale in Sharland v Sharland. This means that the court will generally set aside an agreement if it is satisfied that there has been fraudulent, i.e. intentional, misrepresentation or non-disclosure.

However, there is a potential defence to set aside on the basis of fraud. If the perpetrator of the fraud can demonstrate that the fraud would not have influenced a ‘reasonable person’ to agree to an order, nor would the court have made a significantly

different order if it had the relevant information, the court may choose not to set aside the order.

Material Non-Disclosure

Where a party has failed to disclose facts unintentionally or negligently, rather than fraudulently, the disclosure must have been ‘material’ to the court’s decision for the order to be set aside.

In Gohil v Gohil [2015] UKSC 61, the court held that, unlike fraudulent non-disclosure, inadvertent non-disclosure will not be presumed to be material, and the burden of proof is on the other party to demonstrate its materiality.

There is no formulaic or one-size-fits-all approach to determine this, and what is ‘material’ will be considered on a case-by-case basis. For example, in Livesey (formerly Jenkins) v Jenkins [1985] 1 AC 424 the wife’s failure to disclose her engagement and subsequent remarriage was found to be material to the court’s original order. The wife’s non-disclosure was not fraudulent, but it undermined the basis on which the original order was made.

The Kingdon Approach to non-Disclosure

Where non-disclosure is fraudulent or material, the court may completely set aside the order. However, the courts have significant discretion and flexibility to achieve ‘fairness’ once non-disclosure has been discovered. Rather than set aside the whole order and start from scratch, they may take a more limited approach as per Kingdon v Kingdon [2010] EWCA Civ 1251 and make an amendment to the order to address the undisclosed assets. In Kingdon, the order was not set aside. Instead, the wife was awarded an additional lump sum to reflect her share in the husband’s undisclosed assets.

However, in Goddard-Watts v Goddard-Watts [2023] EWCA Civ 115 the court confirmed that Kingdon reinforces the principle that the court has ultimate discretion as to which approach to take, to be determined on the facts of each case, but it should not be elevated into principle as a specific approach to follow. The court also emphasised that the approach in Kingdon considered that the husband had sought to benefit from his non-disclosure and the subsequent application to set aside the original order.

Whilst it may be possible to isolate the issues caused by non-disclosure and rectify them with an addition or amendment to the original order, non-disclosure may be so far-reaching that the entire financial landscape must be reconsidered.

If you suspect your spouse may not have fully disclosed their assets and you are unhappy with your financial settlement, contact Vardags today for a free initial consultation with one of our expert divorce solicitors.  

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