Family Law Hub

Gohil v Gohil [2014] EWCA Civ 274

Case where financial remedy proceedings had concluded in 2004 with the wife agreeing to a clean break despite her suspicions that the husband had not made a full disclosure of his assets.

  • In a tweet: No jurisdiction to set aside only on basis that new evidence available – must follow Livesey

    Summary: You may remember this case because, previously, we have covered an application made by Mrs Gohil ("W") for the disclosure of financial information relating to her husband ("H") from the CPS and to be able to use that information within her divorce and financial proceedings. The husband (a solicitor) had, unbeknown to W, been engaged in money laundering to an eye watering extent – he was convicted of fraud and money laundering offences to the tune of £37million and sentenced to ten years imprisonment. Throughout her own financial proceedings, W had always had reservations about the extent of H's disclosure and had highlighted the disparity between his alleged income compared to his affluent lifestyle. She attended the criminal proceedings and uncovered a lot of pertinent information; however, much of that information had come via the "mutual legal assistance" scheme from the governments of other countries. Although Moylan J had at first instance ordered the CPS to disclose the information, the Court of Appeal had overturned that ruling emphasising that, for mutual legal assistance to continue to be successful, the material obtained had to remain purely in the proceedings it was intended for.  

    So, back to the start. Despite W's reservations as to H's disclosure, she consented to compromise her financial claims by way of a consent order following an FDR. The consent order records her dissatisfaction with H's disclosure but, clearly, she made a pragmatic decision at that time. During those proceedings, W's knowledge of H's financial situation could be characterised as: 

    • "known knowns" – the limited disclosure provided by H; 
    •  "unknown knowns" – assets which were known to exist but the ownership of which was disputed; and 
    • "unknown unknowns" – H's fraud and money laundering activities 

    In 2006, W applied for an upward variation of her maintenance and enforcement of various terms of the consent order. She also applied, unsuccessfully, for leave to appeal out of time against the consent order. In 2007, W applied to set aside the consent order on the grounds of H's material non-disclosure, fraud and misrepresentation. Procedurally, everything become very complicated at that point because of the disclosure point I mentioned earlier. Indeed, it took five years before judgment was given on W's set aside application.  

    As said above, Moylan J had initially ordered the CPS to disclose the financial information which W sought. After that judgment but before the Court of Appeal judgment, he determined W's set aside application (reported at [2012] EWHC 2897 (Fam)). His decision was therefore made without recourse to the disclosure that had been ordered from the criminal proceedings and which, as a result of the Court of Appeal decision, would not in the event take place. However, he did anticipate that such disclosure would be made.  

    Moylan J set aside the clean break provision of the consent order, holding: 

    "In my judgment, the wife can seek to set the substantive order aside on the basis either: 

    That there has been non-disclosure which had led to the court making an order which is substantially different from the order which would have been made if proper disclosure had been made: Lord Brandon in Livesey v Jenkins [1985] FLR 813 at 830; and/or

    That there is new evidence which is such as "would probably have an important influence on the result of the case": Denning LJ (as he then was) in Ladd v Marshall."

    He listed a 15 day hearing for June 2014 for the re-hearing of W's application, envisaging that the court could, if it saw fit, set aside the remainder of the order and substitute a fresh provision. (NB: this approach was adopted due to concern that, in light of the decision in Independent Trustee Services Limited v GP Noble Trustees Limited and others & Susan Morris [2012] 3 All ER 201, were the entirety of the consent order set aside now and prior to a determination of what order should replace it, the original financial provision, including the lump sum that had already been paid from H to W, might become caught by the restraint order made against H in the criminal proceedings). 

    H appealed the set aside of the clean break provision.  

    Held: H's appeal was allowed and W's application to set aside was dismissed.  

    Lord Justice McFarlane delivered the leading judgment. He reminded practitioners that: 

    "The jurisdiction of a court in family proceedings to set aside a final order for financial provision, whether following a trial or a consent order, as a result of material non-disclosure was confirmed by the House of Lords in Livesey v Jenkins." 

    (Livesey v Jenkins has of course also been very recently re-affirmed in S v S (or Sharland v Sharland) [2014] EWCA Civ 95, a case we covered in last month's update).

    Ladd v Marshall, he said, was entirely focused on the principles to be applied to an application made to the Court of Appeal to introduce fresh evidence at the appellate stage. As such, the case could only provide a useful guide for a court considering a similar request to submit fresh evidence in support of an application to set aside an order under the principles described in Livesey v Jenkins. It was quite clear that there was no authority to support the view that Ladd v Marshall could be used to found an alternative jurisdiction upon which a court could set aside an existing order simply on the ground that fresh evidence existed which was of sufficient quality to justify being accepted into the court process. To hold otherwise, McFarlane LJ said, would be to substantially lower the Livesey v Jenkins threshold.  

    So, having taken Ladd v Marshall out of the equation, McFarlane LJ turned his attention to see if the consent order could be set aside in accordance with Livesey v Jenkins. He found that there are two distinct stages to a set aside application:  

    • a determination, as a matter of fact (i.e. a fact finding exercise), as to whether or not there has been material non-disclosure; and 
    • if non-disclosure is found, a determination as to whether or not the original order should be set aside. 

    He advised that any consideration of whether fresh evidence should be admitted had to take place within the first stage fact finding exercise and, ideally, as a preliminary point.  

    Consequently, we see a clear indication being given that unless and until a finding of material non-disclosure has been made, any power to set the original order aside does not arise. 

    Turning to the circumstances of the case, McFarlane LJ returned to Moylan J's original set aside judgment and noted that the judge had expressed himself to be satisfied that H had failed to make full and frank disclosure of his resources in 2004 and that that failure had been material to the court process. Moylan J had reached this conclusion, not on the basis of identifying a specific failure by H to disclose a material fact or facts, but by looking at the combined effect of all the new evidence, especially that which had come from the criminal proceedings. On that basis, he had concluded that it was "extremely unlikely" that H's finances had been as he had disclosed (i.e. Moylan J had looked at the extent of H's criminal activities post-2004 and concluded that they were of such a character and scale that they must have been going on before 2004. Taking this "combined effect" approach was not good enough, McFarlane LJ said. And the specific findings that Moylan J had made about H's disclosure fell short of the robust evidence needed to justify setting aside the consent order.  

    The remainder of the material relied upon by Moylan J in support of his finding of material non-disclosure had also been drawn from the criminal process. Of course, Moylan J's expectation had been that the evidence from the criminal proceedings would in due course become available for use in the family proceedings. He did not anticipate the Court of Appeal overturning his decision but, as they had, the family court now could not rely on the information that had been disclosed in the criminal trial.  

    The presentation of the fresh evidence had, in McFarlane LJ's words, given W "her day in court" but only in the first instance, to the extent of the court examining the preliminary questions of: 

    • whether or not there had been material non-disclosure; and 
    • whether the consent order should be set aside.  

    Moylan J  had erred by having jumped from admitting the fresh evidence to making an order setting aside the consent order – there had been no proper fact finding hearing – and the findings of fact made had been based on material which was not available to the court.  

    H's appeal was therefore allowed and W's set aside application was dismissed. She also lost the costs orders she had obtained in Moylan J's previous set aside order.  

    Comment 

    I'm not sure that Mrs Gohil will take much comfort from Lord Justice McFarlane's expressions of sympathy that he had with the position she was in or by describing the husband as an "out and out rouge". We see, yet again, that set aside applications are technical creatures and (high) hoops must be jumped through if there is to be any prospect of success. Here, it would seem, for the sake of a one-day fact finding hearing, Mrs Gohil lost a significant advantage in these long-running proceedings.

Case note, published: 28/04/2014

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See also

  • Financial remedy proceedings had concluded in 2004 with the wife agreeing to a clean break despite her suspicions that the husband had not made a full disclosure of his assets. In 2007 the husband was found guilty of money laundering on a huge scale and was sentenced to 10 years in prison. During the criminal trial the wife learnt that non-disclosure had indeed occurred and applied to have the 2004 order set aside. Mr Justice Moylan, at first instance, did set aside one paragraph of the order, saying that he was satisfied that the husband had failed to give full and frank disclosure of his true financial circumstances during the course of the substantive ancillary relief proceedings, and that his failure was of sufficient materiality to justify granting the wife's application for a rehearing of her claim for financial relief. He was also satisfied that the principles of Ladd v Marshall were established in this case. The husband appealed on the bases that included: 1) A judge at first instance has no jurisdiction to set aside an order granting substantive financial relief made by another judge of equivalent status at first instance; 2) In any event, the judge, sitting at first instance, had no jurisdiction to proceed (as he purported to do) on the basis of the principles set out in Ladd v Marshall (which authority sets out principles upon which an appellate court may admit fresh evidence); 3) If the judge did have jurisdiction to set aside the original order on the basis of material non-disclosure, he could only properly exercise that jurisdiction once it had been proved that material non-disclosure had occurred. The appeal was allowed. Judgment, 13/03/2014, free

Published: 28/04/2014

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