Sharland v Sharland

Factual and Procedural Background

The Plaintiff and Defendant married in 1993, separated in 2010, and have three children, one of whom has severe autism. The Defendant, a software entrepreneur, holds a substantial shareholding in Company A. Apart from that holding, the parties owned liquid assets of approximately £17 million.

At trial in July 2012, the principal dispute concerned the value of the Defendant’s shares. Both sides instructed valuation experts who proceeded on the premise that no Initial Public Offering (IPO) was imminent. After the parties themselves gave evidence, they reached an agreement that was expressed in a draft consent order: the Plaintiff would receive more than £10 million in cash and property, plus 30 % of the net proceeds of any future sale of the Defendant’s shares; a trust would be created for their eldest child; and the Defendant would pay ongoing child support.

Before the order was sealed, press reports suggested that Company A was actively preparing for an IPO at a valuation far exceeding the figures used in court. The Plaintiff applied to prevent sealing and requested the resumption of the hearing, alleging material non-disclosure. The trial judge concluded that the Defendant’s evidence about the absence of an imminent IPO was dishonest and “seriously misleading,” yet nevertheless perfected the draft order, reasoning that full disclosure would not have led to a substantially different outcome.

The Court of Appeal (majority) upheld that decision, finding that the trial judge had applied the correct test derived from Livesey v Jenkins. The Plaintiff appealed to the Supreme Court.

Legal Issues Presented

1. Whether fraud or material non-disclosure by a party to matrimonial financial remedy proceedings requires the court to set aside a consent order.
2. Whether the burden lies on the victim or on the perpetrator of the fraud to show that disclosure would (or would not) have produced a substantially different order.
3. What procedural route is available for challenging a consent order obtained by fraud when the order has not yet been sealed.

Arguments of the Parties

Plaintiff's Arguments

• The Defendant’s fraudulent misrepresentation about plans for an IPO fundamentally undermined the valuation evidence and the Plaintiff’s agreement to accept 30 % of future proceeds.
• Applying the principle that “fraud unravels all,” the draft consent order should be set aside and the case reheard.
• The Plaintiff should not bear the burden of proving that full disclosure would have produced a different result; the Defendant should bear that burden.

Defendant's Arguments

• The trial judge was functus officio once the agreement was reached and therefore lacked power to reopen the matter.
• Even if there was non-disclosure, it was not material because, in hindsight, no IPO occurred and the perfected order mirrors what the judge would have done with full knowledge.
• The Plaintiff failed to cross-examine the Defendant on his affidavit and therefore did not disprove his updated evidence.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Fraud Unravels All. Judge Hale held that principles applicable to fraudulent misrepresentation in ordinary contract law apply equally—or with greater force—in matrimonial finance. The court cannot perform its statutory duty when it has itself been deceived.

2. Materiality Presumed, Burden on Perpetrator. Once fraud is shown, it is for the perpetrator (the Defendant) to prove that the deceit would have made no difference to the order. Placing the burden on the victim was an error.

3. Trial Judge’s Misstep. The first-instance judge found the Defendant’s evidence dishonest yet declined to set aside the consent order, reasoning that disclosure would not have altered the outcome. That approach ignored the Defendant’s ability to influence the IPO timetable and deprived the Plaintiff of a fair hearing.

4. Appropriate Remedy. Having determined that the order was tainted, the judge should have refused to perfect it and directed a rehearing. Re-making the decision immediately, without full evidence and without giving the Plaintiff the opportunity to negotiate or present her case, was procedurally unfair.

5. Procedural Flexibility. Although the draft order was unsealed, the same principles would apply even if it had been. An application to set aside may proceed either by appeal or by application at first instance; recent statutory and rule changes confirm the family court’s power to rescind its own orders.

Holding and Implications

APPEAL ALLOWED. The draft consent order of 19 July 2012 is not to be perfected; the matter is remitted to the High Court (Family Division) for further directions.

Implications: The decision re-affirms that fraudulent non-disclosure will normally mandate setting aside a matrimonial consent order, with the burden on the wrongdoer to show irrelevance. It clarifies procedural routes for challenging tainted orders and underscores the court’s flexibility to isolate and revisit only the affected issues. No new precedent was created on asset valuation or tapering awards, which remain open for determination at rehearing.