Land options must be part of divorce disclosure

The full disclosure of total assets in all divorce cases – including land options agreed with housing companies or developers - are to become crucial for  farm and land owners after a recent landmark judgment in the Supreme Court, warns William Kaye, family law partner at Harrowells.

Land owners who mislead the courts and their spouses by concealing assets in divorce cases, or fail to disclose ‘wealth-accelerators’ such as land options which may lead to substantial income, risk ‘punitive settlements’ in re-hearings and being reported to the police for perjury.

His warning follows a ruling that two wives can return to the High Court for a re-hearing on the financial settlements of their divorces because their husbands had misled them and the court about their assets. Earlier Court of Appeal decisions said that, while the husbands had not provided the full financial picture, the agreed settlements should stand as the court would not have ordered different ones if truth had been known.

Ms Sharland, 48, Cheshire, believed the £10m settlement she accepted from her husband Charles, a software entrepreneur, represented half of his wealth. It later became clear that he had lied about his company's value, which the financial press estimated at £600m, when the figure used in the divorce was £47m.

Ms Gohil, 50, London, divorced her husband Bhadresh in 2002 and received £270,000 and a car. In 2010, Mr Gohil was convicted and jailed of money laundering. At his criminal trial, evidence showed he had failed to disclose his true wealth during divorce proceedings.

 William Kaye, an accredited specialist member of Resolution for advanced financial provision and international child abduction, says  “The latest judgment says  ‘fraud unravels all’ which means that, where misrepresentation is discovered, any agreed settlement will be set aside unless the ‘fraudster’ can show that the fraud would not have affected the award. It shifts the burden of proof on the fraudulent party to establish this, which for most cases, will be very difficult to do.

“The judgment is more pertinent to all new divorce cases where there will be far greater emphasis on providing full financial disclosure given the enormous consequences of not doing so, including being landed with the other party’s legal bill.

“One potential pitfall for farm and land owners is if they neglect to declare land options because they think the value will not be fully realised until planning consent is granted, whether it is for a housing estate, a wind farm or to launch a farm shop.

“This is important because we can expect the judgment to be applied strictly and those who fail to be open about their wealth, even if it is not substantial, risk having ‘punitive settlements’ placed on them and being reported to the police for perjury.”