14 OCT 2015
Gohil v Gohil  UKSC 61
(Supreme Court, Lord Neuberger P, Lady Hale DP, Lords Clarke, Wilson, Sumption, Reed and Hodge, 14 October 2015)
[The judicially approved judgment and accompanying headnote has now published in Family Law Reports  2 FLR 1289]
Please see attached file below for the full judgment.
Background to the appeal
The appellant ("the wife") used to be married to the respondent ("the husband"), a former solicitor. In2002, the wife petitioned for a divorce. In response to her financial claims, the husband asserted thatall of his ostensible wealth represented assets held on behalf of his clients [4-6]. In 2004, the wife'sclaims were settled at a Financial Dispute Resolution (“FDR”) meeting. The settlement order (“the2004 Order”) provided that the husband should make a lump sum payment in final settlement of thewife's capital claims (which was eventually paid), and periodical annual payments (which the husbandstopped paying in 2008). The 2004 Order included a recital that "the [wife] believes that the [husband]has not provided full and frank disclosure of his financial circumstances (although this is disputed bythe [husband]), but is compromising her claims in the terms set out in this consent order despite this inorder to achieve finality" (“the Recital”) [7-9]. In 2007, the wife applied by notice issued within thedivorce proceedings to set aside the 2004 Order on the ground that the husband had fraudulentlyfailed to disclose his assets. These proceedings were delayed, largely because in 2008 the husband wascharged with serious money-laundering offences dating from mid-2005. He was eventually convictedand committed to prison in 2011, and confiscation proceedings against him are ongoing [10-11].
In September 2012, after an eight-day hearing, Moylan J set aside the 2004 Order [12-14]. His decisionwas made on the basis both that (a) there had been material non-disclosure by the husband when the2004 Order was made and, had he made full disclosure, the outcome would have been different, and(b) because the wife’s evidence satisfied the criteria in Ladd v Marshall (which govern when freshevidence may be adduced on appeal) it followed that her application should be allowed [24-25].
The Court of Appeal allowed the husband’s appeal. It held that Moylan J had incorrectly applied theLadd criteria and was wrong to allow the wife’s application on that basis . However, it held that theLadd criteria were relevant in order to establish what evidence the wife could adduce in order toestablish material non-disclosure by the husband. Applying those criteria to the evidence beforeMoylan J, and discounting other inadmissible evidence, the Court of Appeal concluded that there wasno admissible evidence to support Moylan J’s conclusions on material non-disclosure [26-29].
The Supreme Court unanimously allows Mrs Gohil’s appeal and reinstates Moylan J’s order. LordWilson (with whom Lord Neuberger, Lady Hale, Lord Clarke, Lord Sumption, Lord Reed and LordHodge agree) gives the leading judgment. Lord Neuberger gives a short concurring judgment.
Reasons for the judgment
The husband had suggested that, as a judge of the High Court, Moylan J did not have jurisdiction to set aside an order of the High Court. This argument was not pursued in the Court of Appeal, but theSupreme Court makes the following observations: (a) the Court of Appeal has long recognised that it isan inappropriate forum for inquiries into non-disclosure issues raised in proceedings for the settingaside of a financial order; (b) this is shown by the present case, where an intensive fact-finding hearingwas necessary; (c) there is an urgent need for definitive confirmation of the High Court’s jurisdictionto set aside a financial order made in that court; (d) the Supreme Court endorses the conclusion of theFamily Procedure Rule Committee in relation to its “Setting Aside Working Party”, set out in theminutes of its meeting on 20 April 2015 [16-18].
Words such as those used in the Recital have no legal effect in a financial order in divorce proceedings.The husband owed a duty to the court to make full and frank disclosure of his resources, withoutwhich the court would be disabled from discharging its duty under s. 25(2) of the Matrimonial CausesAct 1973. One spouse cannot exonerate the other from complying with this duty [19-22].
Criteria in Ladd v Marshall
The Ladd criteria have no relevance to the determination of an application to set aside a financial orderon grounds of fraudulent non-disclosure . The Court of Appeal was wrong to accept an argumentthat the criteria should apply to determine what evidence could be adduced because: (a) the Court ofAppeal would not have conducted the necessary fact-finding exercise, so the criteria for determiningthe admissibility of evidence in that court were irrelevant; (b) the first Ladd criterion presupposes thatthere has been a trial whereas, in this case, the wife’s first opportunity to adduce the evidence was at thehearing before Moylan J; (c) the argument would not apply to an application to set aside a financialorder made by a district judge and the evidential criteria should not depend on the level of court, and(d) the argument ignores the fact that, had the wife’s claims proceeded to trial in 2004, the duty wouldhave lain on the husband, not on her, to explain his resources . In light of the erroneous approachto the admissibility of the wife’s evidence, the dismissal of her set aside application cannot stand .
To decide whether Moylan J’s order could be reinstated, it was necessary to consider what admissibleevidence was before him and ask whether he would properly have found that the husband had beenguilty of material non-disclosure in 2004 [33-35]. Through no fault of his own, Moylan J had relied onevidence from the husband’s criminal proceedings obtained from sources outside the UK (which hadsince been held inadmissible and had been discounted by the Court of Appeal) [13-15, 33]. However,even if Moylan J had referred only to the remaining admissible evidence [36-40], he would, in the lightof his findings on it, still have concluded that the husband was guilty of material non-disclosure .
Lord Neuberger agrees that Moylan J’s order can be reinstated. Several factors make it clear that thematerial non-disclosure issue should not be remitted, provided that there is no risk of injustice to thehusband [49-55]. The court has to be satisfied that: (a) Moylan J would have decided that there hadbeen material non-disclosure even if he had not received the inadmissible evidence; or (b) looking atthe totality of the admissible evidence, it could safely be concluded that there had been material nondisclosure;or (c) if the issue was remitted, the judge could only realistically come to that conclusion inlight of the totality of the admissible evidence [56-57]. For the reasons given by Lord Wilson, all threeof these requirements were satisfied [58-61].
References in square brackets are to paragraphs in the judgment
Michaelmas Term  UKSC 61
On appeal from:  EWCA Civ 274
Before Lord Neuberger, President Lady Hale, Deputy President Lord Clarke Lord Wilson Lord Sumption Lord Reed Lord Hodge
JUDGMENT GIVEN ON14 October 2015
Heard on 8, 9 and 10 June 2015
Sally Harrison QC and Samantha Hillas (Instructed by Irwin Mitchell LLP) for the Appellant (Gohil)
James Turner QC and George Gordon (Instructed by Duncan Lewis Solicitors) for the Respondent (Gohil)
Gohil v Gohil  UKSC 61