Deliberate Non-Disclosure of Likely Third-Party Gifts Presumed Material in Financial Remedy Set-Asides; Outright Gifts Not Reclaimable Absent Condition or Operative Mistake

Case: De La Sala & Anor v De La Sala & Ors
Citation: [2026] EWCA Civ 282
Court: England and Wales Court of Appeal (Civil Division)
Date: 17 March 2026

1) Introduction

This decision concerns two linked appeals arising out of financial remedy proceedings following the breakdown of a long marriage. The central controversy was the husband’s non-disclosure, during negotiations culminating in a March 2022 consent order, that he knew the wife’s parents/mother were likely to gift him a very substantial sum (at least AUS$20,000,000 / US$14,777,180). After the consent order, the husband in fact received gifts totalling US$34,777,180 (US$14,777,180 in July 2022 and US$20,000,000 in August 2022).

The husband appealed against the setting aside of the consent order for deliberate material non-disclosure. Separately, the wife’s mother (joined as “the Intervenor”) appealed against the dismissal of her claim to recover the gifts from the husband, advancing (i) “failure of basis” (a conditionality/shared-understanding case) and (ii) equitable mistake (under Pitt v Holt).

The Court of Appeal (Moylan LJ, Nugee LJ, Andrews LJ) dismissed both appeals. The judgment is significant for: (a) reaffirming and applying the Sharland approach to deliberate non-disclosure—materiality is presumed and the burden falls on the non-discloser to prove the “would have made no significant difference” exception; (b) clarifying that a spouse’s suspicions/forecasts about the other’s resources do not dilute the duty of full and frank disclosure; and (c) underscoring the difficulty for third-party donors to unwind outright gifts merely because family proceedings later compel sharing.

2) Summary of the Judgment

2.1 Husband’s appeal (set aside for non-disclosure) — dismissed

The Court upheld the setting aside of the March 2022 consent order. HHJ Hess (sitting as a Deputy High Court Judge) had found that the husband deliberately failed to disclose that by late 2020/early 2021 (and at least by July 2021) he knew he was likely to receive a substantial gift from the wife’s parents/mother, including knowledge of the likely size of the first tranche (AUS$20,000,000 / US$14,777,180). The Court of Appeal agreed that:

  • Deliberate non-disclosure engages the Sharland v Sharland [2015] UKSC 60, [2016] AC 871 principle: materiality is presumed.
  • The husband failed to discharge the burden of proving the “Sharland exception”, i.e. that disclosure would not have led to a substantially/significantly different outcome.
  • The prospective receipt of ~US$14.77m (let alone the subsequent US$20m) “completely changed the landscape” relative to disclosed resources of £3.6m–£6.2m.

2.2 Intervenor’s appeal (recovery of gifts) — dismissed

The Court upheld the judge’s rejection of both restitutionary and equitable routes to recover the gifts:

  • Failure of basis / condition: the gifts were found to be outright gifts, not subject to any implied condition that the wife must not benefit.
  • Equitable mistake: on the evidence and findings, any mistaken belief/assumption was not shown to be causative; and in any event it was not unconscionable for the husband to retain the gifts merely because a court might later compel him to share.

3) Analysis

3.1 Precedents Cited

A) The disclosure duty and set-aside jurisdiction

The Court’s treatment of the husband’s appeal is anchored in the classic trilogy of authorities on disclosure in financial remedies:

  • Jenkins v Livesey [1985] AC 424 (“Livesey”)
    Livesey supplies (i) the duty of “full and frank disclosure of all material facts” owed to the other party and to the court (linked to the court’s s.25 MCA 1973 task), and (ii) the “tail warning”: not every non-disclosure justifies setting aside; only where it led to an order “substantially different” from that which would have been made. The Court of Appeal emphasised (following the judgment) that “substantial” in Livesey is contrasted with “relatively minor”—it is not a licence to set an unduly high threshold that would undermine disclosure.
  • Sharland v Sharland [2015] UKSC 60, [2016] AC 871 (“Sharland”)
    Sharland distinguishes deliberate/fraudulent non-disclosure from inadvertent error. Lady Hale held that a party practising deception “cannot be allowed to deny its materiality”, and that the burden lies on the perpetrator to satisfy the court that (a) the fraud would not have influenced a reasonable person to agree and (b) the court would not have made a significantly different order. Moylan LJ applied this directly: deliberate non-disclosure is “deemed” material unless the non-discloser proves otherwise.
  • Gohil v Gohil (No 2) [2015] UKSC 61, [2016] AC 849 (“Gohil”)
    Gohil was used to defeat the husband’s contention that the wife’s earlier assertions/expectations about future “family largesse” meant there was no “relevant” non-disclosure. Lord Wilson’s key proposition—“One spouse cannot exonerate the other from complying with his or her duty to the court”—was treated as dispositive of any attempt to dilute disclosure because the other side “suspected”, “expected”, or even expressly stated that money would come.

The Court also addressed a misstep in advocacy by distinguishing Barder v Caluori [1998] AC 20 (“Barder”) from non-disclosure set-asides: the “undermined the whole basis of the order” language belongs to Barder (supervening events), not to Sharland/Livesey non-disclosure. Foreseeability is central to Barder; it is not the test for deliberate non-disclosure.

Two further cited authorities sharpened the structure of the materiality inquiry:

  • Hayward v Zurich Insurance Co plc [2015] EWCA Civ 327, [2015] Lloyd's Rep IR 585 (“Hayward”)
    Raised via Gohil to show why “eyes wide open” settlement logic from civil deceit cases does not map neatly onto matrimonial disclosure, because the court itself is disabled from performing its statutory function when deceived.
  • Goddard-Watts v Goddard-Watts [2019] EWHC 3367 (Fam) [2020] 1 FLR 885
    Cited for the point that, where deliberate non-disclosure is established, it is not enough for the perpetrator to show the disclosure might not have changed the outcome; the test is whether it would not have led to a substantially different order.

B) Implied conditions, “failure of basis”, and donor restitution

The Intervenor’s “failure of basis” case was pleaded and argued as a conditionality case, seeking an implied condition that the wife must not benefit. The judge’s reasoning (upheld on appeal) engaged:

  • Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206
    The Intervenor relied on MacKinnon LJ’s “officious bystander” test for implying terms (by analogy) to imply a condition into a gift. The court rejected the analogy on the facts: the evidence did not support that such a condition was “so obvious it went without saying”.
  • Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149
    Raised in argument on appeal to broaden “failure of basis” beyond strict conditionality (objective shared basis). Nugee LJ held that these “interesting and difficult” questions did not arise because the Intervenor’s pleaded case was strictly conditionality (“if the condition was not fulfilled the [husband] must return”), and the trial judge’s finding of outright gifts defeated that case.

C) Equitable mistake and the high threshold for rescission of gifts

The Intervenor’s alternative attempt to set aside the gifts relied on:

  • Pitt v Holt [2013] UKSC 26, [2013] 2 AC 108
    The controlling framework: the donor must show a causative mistake “of so serious a character as to render it unjust” for the donee to retain the property, and the court must assess gravity and unconscionability objectively, intensely focused on the facts. Nugee LJ applied Pitt to conclude (i) causation was not established on the findings/evidence and (ii) in any event the mistake was not sufficiently grave and did not make retention unconscionable.
  • Ogilvie v Littleboy (1897) 13 TLR 399 and Ogilvie v Allen (1899) 15 TLR 294
    Cited through Pitt as the historical articulation of the “unjust to retain” test.
  • Gibbon v Mitchell [1990] 1 WLR 1304
    Mentioned via Pitt in the discussion of “effects” vs “consequences”; the Court adopted Pitt’s preference for focusing on causative mistake of sufficient gravity rather than rigid categorisation.
  • re Sprintroom Ltd [2019] EWCA Civ 932
    Cited for appellate restraint: the unconscionability/gravity assessment is evaluative and only disturbed on narrow grounds.

The Court also referenced Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 and Smith v Kay (1859) 7 HL Cas 750 via Sharland’s analogy to rescission for fraudulent misrepresentation (“fraud unravels all”).

3.2 Legal Reasoning

A) Why the husband’s non-disclosure was treated as material

The Court’s reasoning is a direct application of Sharland’s burden-shifting architecture:

  • Step 1: Establish deliberate non-disclosure.
    The first-instance judge made strong factual findings: the husband knew long before March 2022 that a substantial gift was likely; he failed to disclose it; and (together with the Intervenor and siblings) attempted to mislead the court by coordinating a false narrative linking the July 2022 gift to a cancer diagnosis and suppressing March 2022 correspondence. Those findings were not the subject of a successful challenge in the husband’s appeal (which focused on materiality).
  • Step 2: Presume materiality (Sharland).
    Once deliberate non-disclosure is established, the court starts from the position that the consent order should be set aside unless the non-discloser proves the Sharland exception.
  • Step 3: Reject the “wife expected it anyway” argument (Gohil).
    The husband relied heavily on the wife’s July 2020 Position Statement predicting the husband would “continue to benefit” from her parents’ largesse. The Court held that suspicion/forecast is not equivalent to disclosure of an established fact (the known likely gift of AUS$20m/US$14.77m), and does not relieve the non-discloser of the duty.
  • Step 4: Reject counterfactual defences.
    The husband argued that had he disclosed, the gift would not have been made, so disclosure could not have affected the outcome. The Court treated this as speculative and legally misdirected: the duty was to disclose what the husband knew; hypothetical donor reactions and timing disputes do not prove that the 2022 order would not have been significantly different.
  • Step 5: Assess “difference” in the real context—resources transform needs.
    The disclosed 2022 resources were £3.6m–£6.2m; adding a prospective ~£11.2m (US$14.77m) “totally transforms the case”. The Court stressed that needs are assessed relative to resources; it was therefore unpersuasive to say “needs were met” on the 2022 picture. The Court also noted that even the husband’s counsel accepted, when pressed, that a justification for the 2022 payment could morph into “sharing” rather than needs—underscoring that the whole framing of the case would have been different.

B) Why the Intervenor could not reclaim the gifts

(i) Failure of basis / implied condition

The Intervenor’s pleaded case was that the husband’s right to retain the gifts was conditional on the wife not benefiting, and that this condition was so obvious it went without saying. The Court upheld the trial judge’s finding that the gifts were outright:

  • The contemporaneous letter accompanying the first gift contained no condition and positively communicated an unconditional gift (“we wish to gift you AUD$20m… Use this wisely…”).
  • Most damagingly, the Intervenor’s own oral evidence acknowledged the money was the husband’s and she could not “police” its use, even if he voluntarily benefited the wife.
  • Given those facts, an implied condition analysis (even by analogy with Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206) could not succeed.

Nugee LJ further held that attempts to broaden “failure of basis” into a more general unjust enrichment doctrine (as discussed in Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149) could not rescue the appeal because the case pleaded and run below was strictly conditionality-based, and the factual finding of outright gifts was fatal.

(ii) Equitable mistake under Pitt v Holt

The Intervenor’s “mistake” was framed as believing/assuming the divorce proceedings were concluded such that the wife could not claim against gifts to the husband. The Court identified two fundamental weaknesses:

  • Causation was not established.
    On the findings, the Intervenor wanted the husband to have the money and treated it as his to take when he wished; the July 2022 payment was driven (on the evidence) by concern following a cancer diagnosis rather than by a demonstrated “coast is clear” belief that legally insulated the gift.
  • In any event, unconscionability/gravity was not made out.
    The Intervenor did not misunderstand the legal nature of the transaction (she understood it was an outright gift). A donor’s wish to prevent an ex-spouse benefiting does not, without more, make it “unjust” for the donee to retain the gift if a court later compels some sharing. The trial judge’s conclusion that the claim “does not get off the ground” was an evaluative judgment well within the proper ambit of Pitt v Holt, and not appealable under the restrained approach summarised in re Sprintroom Ltd [2019] EWCA Civ 932.

3.3 Impact

A) Financial remedy practice: disclosure must include known, likely future receipts

While the duty of disclosure is not new, this case reinforces in a fact-pattern of “anticipated gifts” that:

  • Knowledge of a likely substantial third-party gift is disclosable where it may affect negotiations and the court’s s.25 evaluation.
  • Deliberate suppression of such information will usually unravel a consent order unless the non-discloser can prove the Sharland exception.
  • Attempting to rely on the other spouse’s predictions or “eyes open” compromise language is unlikely to work given Gohil v Gohil (No 2) [2015] UKSC 61, [2016] AC 849.

B) Third-party donors: outright gifts are difficult to unwind

The Intervenor’s failed appeal underscores a practical legal risk: if donors choose an outright gift to a spouse/ex-spouse, the donor may be unable to reclaim it merely because later litigation results in compelled sharing. Preventative structuring (conditions, trusts, loans, or explicit documentation) may be essential—because once characterised as an outright gift, courts will be slow to imply conditions or to deploy equitable mistake to reverse it.

C) Litigation conduct and credibility consequences

The first instance findings included deliberate coordination to mislead and suppression/deletion of communications. Although the Court of Appeal’s ratio is doctrinal (Livesey/Sharland/Gohil; Pitt), the case illustrates that credibility findings can decisively shape outcomes in both set-aside and third-party restitution claims.

4) Complex Concepts Simplified

  • “Full and frank disclosure”: In financial remedy cases, each party must disclose all financial information that could matter to the court’s decision. This is a duty owed to the court as well as the other party.
  • Material non-disclosure: Non-disclosure is “material” if proper disclosure would have led to a substantially/significantly different order—not merely where the missing fact is interesting.
  • Sharland burden shift (deliberate cases): If non-disclosure is intentional/deliberate, the court presumes it mattered. The non-discloser must prove it would not have changed the result.
  • Barder event: A major unforeseen event after an order that undermines its foundation. Foreseeability is key there—but it is not the test for deliberate non-disclosure.
  • “Failure of basis”: A restitution concept: if a transfer is made on a shared basis that later fails, repayment may be ordered. In this case, the pleaded “basis” was a strict condition (wife must not benefit), which the court found did not exist.
  • Equitable mistake (Pitt v Holt): Equity can unwind a voluntary transfer for a serious causative mistake if it would be unconscionable for the recipient to keep the property. The threshold is high; disappointed expectations or non-causative beliefs are insufficient.
  • Implied condition / “officious bystander”: A contractual tool for implying terms so obvious they go without saying. The court refused to import that logic to contradict the facts and language of an outright gift.

5) Conclusion

De La Sala is a robust application of the Supreme Court’s non-disclosure jurisprudence to anticipated third-party gifts. It confirms that in deliberate non-disclosure cases the court will presume materiality (Sharland), and that the non-discloser bears the heavy burden of proving that disclosure would not have produced a significantly different order. It also clarifies that a spouse’s suspicion or prediction about undisclosed resources does not dilute the duty of disclosure (Gohil).

On the Intervenor’s appeal, the decision provides a clear warning: an outright gift is not easily reversible through implied conditions, “failure of basis”, or equitable mistake merely because subsequent family litigation might force some sharing. Donor intention to exclude an estranged family member from benefiting is not, without more, a juridical lever to undo an unconditional transfer.