The ex-wife of a millionaire IT entrepreneur has failed in an attempt to gain a greater share of her husband’s assets, despite three judges finding he was ‘dishonest’, ‘fraudulent’, and had perjured himself.
The Court of Appeal, by a majority of 2:1, found businessman Charles Sharland had been guilty of fraudulent misrepresentation during the settlement of financial provision arrangements following his divorce from his wife Alison.
But the court found that his dishonesty and non-disclosure would not have materially affected the outcome of the case and the wife would not have received a substantially different sum had the court been told the full facts.
The Sharlands married in 1993 and separated in 2010. During the divorce proceedings the parties reached an agreement to split the matrimonial assets. The settlement gave the wife around £10.355m in cash and properties and the husband about £5.64m.
He owned 63% of the share capital of a software company he founded. Under the terms of the settlement, Mrs Sharland would get 30% of the profits of any sale of the shares.
After the settlement had been agreed, Mrs Sharland discovered that her husband had failed to disclose that, contrary to what he said in evidence, he was planning to float the company on the stock exchange.
Mrs Sharland argued that had she known the true position, she would not have settled in the terms that she did, and sought the order to be set aside.
Giving judgment, Lord Justice Moore-Bick said Mr Sharland’s ‘deplorable’ conduct was ‘deliberate and dishonest’, but found it had not resulted in an order significantly different from that which the court would have come to.
Agreeing, Lady Justice Macur said with his ‘deceit’ throughout the proceedings and negotiations, Sharland had ‘perjured’ himself and that it had ‘tainted’ the agreement reached.
‘It is inevitable therefore that the husband is and will be, rightly subject to the opprobrium of this and the lower court and law-abiding members of the public… and may be subject to criminal prosecution, civil contempt proceedings and/or a costs penalty,’ she said.
But she said: ‘The audacity and extensive practice of deceit cannot be determinative of the degree of its materiality to the substance of an order of the court.’
Dissenting, Lord Justice Briggs said Sharland’s ‘fraudulent’ behaviour had undermined the agreement, such that the agreement should be set aside. He said the process by which the judgment had been obtained involved a ‘serious abuse of process’.
Briggs argued there is a public interest in protecting the court’s processes from fraud, which he said transcends other case management issues such as ‘finality, economy and speed’.
Commenting on the outcome, Ros Bever, partner at Irwin Mitchell representing Mrs Sharland, said her client had accepted a settlement based on inaccurate information and plans to seek permission to appeal to the Supreme Court.
She said: ‘This case is not just about Mrs Sharland achieving justice, it is about ensuring that the courts send out a powerful message that dishonesty will not be tolerated, proving that fairness will prevail in divorce settlements.’
Bever said the case is the latest in a line of high-profile cases, including Petrodel v Prest, and Young v Young, where spouses have seemingly defied the principles of fairness in divorce settlements, often using their businesses to disguise their wealth.
‘We believe that this case now needs to be examined at the highest level in order to protect future claimants from fraudulent and dishonest behaviour. The husband would not get away with this behaviour in the commercial courts so why should it be acceptable in the family court?’ said Bever.
But Beth Wilkins, partner at JMW Solicitors acting for Mr Sharland said the judgment is a ‘commonsense outcome’.
‘The wife settled on the basis that she took slightly more of the liquid capital and a percentage of what would be achieved on the realisation of the business share holding,’ said Wilkins.
‘The case has been portrayed as the dishonest man getting away with it, but it’s not how it is at all,’ she insisted.
‘At any time in the future, Mrs Sharland gets 30% of the value of the shares and she’s already got the lion’s share of the assets. This lady did very well.’
Read the full judgment.