EK v DK & Ors

Where a financial remedy consent order has been procured by deliberate non-disclosure or fraudulent misrepresentation, the perpetrator bears the burden of showing that the fraud would not have influenced a reasonable person and that the court would not have made a significantly different order. Deliberate concealment of information concerning liquidity, intended purchases or material litigation may vitiate consent even where the concealed matter does not itself establish a presently owned asset or a precise increase in value. The victim is entitled to reopen the case for negotiation or rehearing with the material facts disclosed. The court must assess whether the information was relevant to the parties’ decision-making and to the court’s approval of the settlement.

EK applied to set aside a March 2018 consent order resolving financial remedy proceedings between her and DK. The settlement provided for property, staged lump-sum payments, periodical payments and a clean break. EK alleged that DK had deliberately concealed his preparations to purchase a substantial property, his access to significant borrowing, and material information about pending overseas litigation. She argued that the concealment affected both the valuation of the business and, importantly, DK’s liquidity. DK denied fraudulent non-disclosure and contended that the application reflected buyer’s remorse and post-settlement commercial success. The central issue was whether the consent order had been obtained through dishonest non-disclosure sufficient to require it to be set aside.

1. Application granted. The March 2018 consent order was set aside in its entirety. The case was to be reopened for a fresh disclosure process, negotiation or rehearing.
2. The court adopted the approach in Sharland v Sharland and Gohill v Gohill. Where non-disclosure is innocent or negligent, the applicant must establish that proper disclosure would have led to a substantially different order. Where the representation or non-disclosure is intentional or fraudulent, it is deemed material. The perpetrator must show that the fraud would not have influenced a reasonable person and that the court would not have made a significantly different order.
3. DK had a continuing duty of full and frank disclosure until the final order was made. He had been negotiating the purchase of a substantial property, had made a sealed bid, had sought funding and had arranged a memorandum of sale at about the time the consent order was approved. His evidence that the opportunity arose only after the hearing was false. The concealment was deliberate and concerned both liquidity and his ability to meet his own housing needs.
4. DK had also been deliberately misleading about the overseas litigation. The court found that he knew more about the prospects and timing of the arbitration than he disclosed, including that the prospects had been assessed as approximately even and that the award was imminent. The litigation was a central valuation issue, but the property concealment alone was sufficient to set aside the order.
5. The court rejected the argument that there had to be a single undisclosed asset or a precise calculation of additional value. The wife had been deprived of a properly informed negotiation and full and fair hearing. Issues concerning later business success, post-separation contribution and the yacht were left for the rehearing; no findings were made on the yacht issue.

This was a first-instance decision of the High Court (Family Division). The judgment does not state any further appellate history.