At a final hearing in divorce proceedings between an IT entrepreneur and his wife, it was agreed that there be an equal division of the matrimonial assets with the wife receiving a greater share of the liquid assets, but a lesser share of the business. The value of the company was in dispute, the husband contending that it was worth £50m and the wife suggesting that it was worth £75m.During the proceedings the husband gave evidence that a stock market floatation was unlikely.
Settlement terms were agreed with the wife receiving £10.35m in cash and properties and the husband £5.64m. The husband was to pay the wife 30% of the net proceeds of sale of any business shares.
When the wife subsequently discovered that plans were being made for a stock market floatation at the time of the final hearing despite the husband’s representations to the court to the contrary and that the business had been valued at between $750m and $1bn. She appealed.
Her appeal was dismissed despite her husband’s deliberate and dishonest non-disclosure.
Lord Justice Moore-Bick found that it would be “inconceivable that the circumstances as now disclosed would not have been relevant to the wife’s decision to compromise the litigation, and (more importantly) to the court’s approval of the Heads of Agreement and draft order. If the facts had been known, the court would have had little option but to adjourn the proceedings pending the possible IPO”.However, despite this finding he considered that as no stock market floatation had, in fact taken place, the order that would have been made would not have been substantially different from what had been agreed.Therefore despite the fact that the husband had not been full and frank with his disclosure and his non-disclosure was deliberate and dishonest, the non-disclosure was not material.
Lady Justice Macur, agreeing found that although the husband had been deceitful and had perjured himself, his behaviour could not determine the level of its materiality to the substance of a court order.
Dissenting Lord Justice Briggs considered that the husband’s behaviour “undermined”” the agreement and that it should therefore be set aside.He believed that it was in the public interests to protect the court process from fraud.
Read the Judgement here S v S (Rev 2)  EWHC 991 (Fam)
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