S v S (Rev 2)

Material non-disclosure does not justify setting aside a financial settlement unless it led, or would have led, to an order substantially different from the order made. The court assesses materiality by reference to the circumstances when disclosure should have been given, while considering what the court would have done had the true facts been known. Relevant financial information includes foreseeable future resources. Where future events remain uncertain, the court may adjourn to obtain greater certainty rather than speculate. Dishonest non-disclosure is serious, but it is not necessarily material if the resulting order would have been substantially the same.

The wife applied to resume financial remedy proceedings after the parties had reached Heads of Agreement, approved by the court on 13 July 2012, and a draft order had been approved but not sealed. She alleged that the husband had failed to disclose extensive planning by his company for a possible initial public offering in early 2013.

The husband accepted that the agreement should be sealed, denying both non-disclosure and materiality. The central questions were whether he had failed in his duty of full and frank disclosure and, if so, whether the non-disclosure justified reopening the settlement.

1. Non-disclosure. The husband’s evidence in July 2012 seriously misrepresented the state of the company’s IPO planning. Documents later disclosed showed extensive and active preparations for an early-2013 offering. The court found that the husband had given dishonest evidence and suppressed relevant documents.
2. Duty of disclosure. Full and frank disclosure was required because, without it, the court could not lawfully or properly exercise its discretion under Matrimonial Causes Act 1973, section 25(1). The duty extended to information relevant to the court’s assessment of foreseeable future resources. The court adopted the approach stated in Bokor-Ingram v Bokor-Ingram [2009] 2 FLR 922.
3. Materiality. Applying Livesey (formerly Jenkins) v Jenkins [1985] FLR 813, the question was whether the absence of full and frank disclosure had led to an order substantially different from the order that would have been made had disclosure occurred. Materiality was assessed at the time of the non-disclosure, although later events were relevant to determining what order would have been made.
4. Had the IPO planning been disclosed, the court would probably have rejected the husband’s explanation and adjourned the proceedings to determine whether an IPO occurred, its terms, valuation, share price and lock-in arrangements. This would have reduced speculation. No IPO ultimately occurred, and there was no evidence of an imminent IPO.
5. The wife’s settlement nevertheless gave her a substantial share of liquid assets, a continuing entitlement to 30% of the net proceeds whenever the husband realised his shares, and protection against the future dilution of their matrimonial character. The order that would have been made after proper disclosure would not have been substantially different.
6. The wife’s application to reopen the proceedings was dismissed. The draft order was directed to be sealed forthwith. Costs were reserved for determination after hand-down.

The judgment concerned a further application in the same financial remedy proceedings. The earlier hearing concluded with Heads of Agreement approved by the court, followed by approval of an unsealed draft order. The present application to resume the proceedings was dismissed.