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8.10.21

Applying to set aside unfair financial remedy orders

I think I’ve been cheated in my divorce settlement, what do I do?

My ex-spouse did not tell the truth about their finances when we settled our divorce, can anything be done?

How long do I have to do something about my unfair divorce financial settlement?

Can the financial settlement from my divorce be set aside?

These are some of the questions you might find yourself asking post-divorce. This post will consider when and how you might be able to revisit a settlement and seek redress.

The aim of financial remedy proceedings, from the court’s perspective, is to result in the fair division of the assets belonging to both parties to a divorce. However, the courts do not always achieve that goal. Instead, the result can be a financial settlement which is potentially unbalanced, overly harsh on one party, and/or that undervalues or ignores assets available for division. Chief amongst the causes of unfair settlements is ‘material non-disclosure’; one party acting dishonestly during the proceedings by undervaluing their assets, or failing to disclose certain assets entirely. During financial remedy proceedings both parties are under an ongoing duty to the court of full and frank disclosure of assets. If, despite this, you have fallen victim to dishonest or recklessly poor financial disclosure from your ex-spouse, what can be done?

Power to set aside a financial remedy order

The court has the power to decide to ‘set aside’ (effectively cancel) a financial remedy order entirely. There are two broad categories into which these powers fall. The first recognises that there was a misunderstanding at the time the order was made. Within this category, the court may only set aside the order if it can be demonstrated that, at the time the original order was made, there was either:

  1. Fraud, fraudulent non-disclosure, or misrepresentation of material facts;
  2. Inadvertent or negligent non-disclosure of material facts; or
  3. Mistake.

The second category concerns a change of circumstances after the order has been made. The court may set aside an order where a subsequent event has invalidated its underlying basis (for example, where it becomes clear that one party is no longer in any need of a house, after the other party has been ordered to provide them with one). However, these cases are rare and fact-specific. For more information about this category, see the previous post about these scenarios (known as ‘Barder events; after the case of that name) here.

Set aside of a financial remedy order on the basis of fraudulent non-disclosure or misrepresentation

If it can be demonstrated to the court that there was fraudulent non-disclosure during proceedings leading to a financial remedy order, then generally that order will be set aside. In the words of the Supreme Court’s Lady Hale giving judgment in the case of Sharland v Sharland [2015] UKSC 60, “Fraud unravels all”.

The only exception to this principle is if the party accused of fraud can convince the court both that the fraud would not have influenced a reasonable person to agree to the terms of the order, and that the court would not have made a significantly different order if the court had known at the time what it now knows. Therefore, the presence of fraud does not guarantee to the order will be set aside, however the presumption will be that the respondent’s fraud (once proven by the applicant) will result in an order being set aside unless the respondent makes a successful rebuttal.

Set aside of a financial remedy order on the basis of negligent or inadvertent non-disclosure

The bar for setting aside an order because of negligent or inadvertent non-disclosure is a higher one than for fraudulent non-disclosure. As in the case of Jenkins v Livesey (formerly Jenkins) [1985] A.C. 424, the court will only set aside an order for negligent non-disclosure where the order the court would have made, had it been aware of the facts that were not disclosed, would have been substantially different from the one it actually made. In that case, the wife had failed to disclose her engagement and later in the litigation, her remarriage (remarriage being a key factor the court takes into account when making adequate financial provision for the parties after divorce).

Moreover, the court issued a warning in Livesey, expressly telling potential applicants that applying to have a financial order set aside on the basis of negligent non-disclosure of a relatively minor matter would incur the court’s displeasure. It warned that such applicants might have summary dismissal and/or costs orders made against them.

Consequently, it is only recommended to apply for an order to be set aside if the negligent non-disclosure during the process was material in nature. However, what counts as a material non-disclosure varies from case to case, often requires detailed analysis of the financial situation at the time of the original order, and is almost always a point of contention between the parties.   

Set aside of a financial remedy order on the basis of mistake

 'Mistake' in this sense refers to a scenario where the court, through no fault of the parties, is not furnished with the true facts at the time the order is made. As with negligence or inadvertence, for the court to set aside an order based on mistake, the applicant must show that a substantially different order would have been made, if the true facts were known.

The applicant must also show that, at the time of the making of the original order:

  1. it was not their fault that the court did not have the true facts; and
  2. they could not have reasonably established the true facts.

The application to set aside must be made reasonably promptly in the circumstances, and it must be shown that the application does not prejudice any third parties who have, in good faith, acquired any interests in property due to the subject matter of the original order.

Based on the number of caveats, it is clear that the courts are very reluctant to allow the setting aside of an order based on mistake. However, succeeding in an application to set aside based on mistake is merely rare, not impossible.

How to proceed

If you think that your  financial remedy order was made on the basis of fraudulent, negligent non-disclosure, or mistake, then we recommend you obtain independent legal advice.

 

Click here to see how Brett Wilson LLP's family law solicitors can assist you in seeking to set aside a financial remedy order.


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Legal Disclaimer

Articles are intended as an introduction to the topic and do not constitute legal advice.


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