This case has now been reported in full in The Weekly Law Reports as Sharland v Sharland [2015] 3 WLR 1070, SC(E).

HUSBAND AND WIFE — Financial provision — Consent order — Disclosure of material facts — Parties reaching agreement on financial provision — Before consent order sealed wife discovering non-disclosure by husband and applying for order not to be sealed and financial provision hearing to be resumed — Judge finding husband had been dishonest and seriously misled court — Application refused on ground that husband’s non-disclosure not material and sealing order — Whether consent order to be set aside

Sharland v Sharland

[2015] UKSC 60; [2015] WLR (D) 408

SC: Lord Neuberger of Abbotsbury PSC, Baroness Hale of Richmond DPSC, Lord Clarke of Stone-cum-Ebony, Lord Wilson, Lord Sumption, Lord Reed, Lord Hodge JJSC: 14 October 2015

A court in matrimonial proceedings cannot make a consent order without the valid consent of the parties, but if there were a good reason which vitiated a party’s consent that might be good reason for setting aside a consent order. The non-disclosure of a material fact which undermined the whole basis on which a consent order had been made was a vitiating factor which was ground for setting aside the order. A party who had practised deception with a view to a particular end which had been attained by it, could not be allowed to deny its materiality.

The Supreme Court so held, allowing an appeal by the wife, Alison Kate Sharland, from a decision on 10 February 2014 of the Court of Appeal (Moore-Bick and Macur LJJ, Briggs LJ dissenting) [2014] 2 FLR 89 to dismiss the wife’s appeal from a decision on 29 April 2013 of Sir Hugh Bennett sitting as a judge of the Family Division [2013] 2 FLR 1598, refusing the wife’s application for a draft consent order based on an agreement between her and the husband, Charles Alan Sharland, not to be sealed and for the hearing on ancillary relief to be resumed.

The husband held a substantial shareholding in a successful computer software company. In the ancillary relief proceedings the main dispute between the parties concerned the value and distribution between them of that shareholding. Both parties gave evidence at the hearing before the judge but the hearing was ended when the parties reached an agreement and the judge approved the draft consent order. Before the order was sealed the wife discovered that, contrary to what the husband had said in evidence, he had been actively preparing to sell the company and that it was valued far in excess of the value relied on in court. She invited the judge not to seal the consent order and to resume the hearing. The judge held that it was “absolutely plain” that the husband’s evidence had been “seriously misleading” and “dishonest”, but nevertheless ordered that the consent order be perfected on the ground that it was not substantially different from the order which he would have made had there been full disclosure at the outset, and hence the non-disclosure was not now material.

BARONESS HALE OF RICHMOND DPSC (with whom the other members of the court agreed) said that it was not possible for an agreement between the parties in ancillary relief proceedings to oust the jurisdiction of the court. That was a rule of public policy. An agreement to compromise an ancillary relief application did not give rise to a contract enforceable in law. In family proceedings there was always a duty of full and frank disclosure. Matrimonial cases were different from ordinary civil cases in that the binding effect of a settlement in a consent order stemmed from the court’s order and not from the prior agreement between the parties. It did not however follow that the parties’ agreement was not a sine qua non of a consent order. Quite the reverse: the court could not make a consent order without the valid consent of the parties. If there were a reason which vitiated a party’s consent there might also be good reason to set aside the order. In matrimonial cases innocent misrepresentation as to a material fact was a vitiating factor and the court could set aide the order because the undisclosed fact undermined the whole basis on which the order had been made: see Jenkins v Livesey (formerly Jenkins) [1985] AC 424.

The present case was a case of fraud. It would be extraordinary if the victim of a fraudulent misrepresentation, which had led her to compromise her claim to financial remedies in a matrimonial case, were in a worse position than the victim of fraudulent misrepresentation in an ordinary contract case, including a contract to settle a civil claim. A party who had practised deception with a view to a particular end, which had been attained by it, could not be allowed to deny its materiality. The appeal would be allowed. The consent order should not be perfected and the matter should be returned to the Family Division for further directions. The fact that this order had not been perfected made no difference. The principles applicable were the same whether or not the order agreed upon by the parties and the court had been sealed.

Appearances

Martin Pointer QC and Peter Mitchell (instructed by Irwin Mitchell LLP, Manchester) for the wife.

Nicholas Francis QC and Nicholas Allen (instructed by JMV Solicitors, Manchester) for the husband.

Reported by: Shirani Herbert, Barrister

© 2015. The Incorporated Council of Law Reporting for England and Wales.