Sharland – it’s not about the money, it’s about principle

consent order fees

It’s not often that I believe someone who’s in a position where they have to say “it’s not about the money”. It generally is. But I’m leaning towards believing Mrs Sharland.

The full judgment in the Sharland v Sharland case is here. Some media are reporting that Mrs Sharland received £10million as a settlement when her husband was worth around £600million. This is not in fact the case.

Mr and Mrs Sharland settled their case part way through the final hearing after they had both given evidence in court but before some of their other witnesses (in this case their respective valuers of the husband’s business) had given their evidence.

It isn’t uncommon for people to settle part way through a hearing. But not a lot of money is saved settling at that stage in legal fees etc and so certainly Mr and Mrs Sharland must’ve thought it was better, for some other reason, to settle than to continue with the hearing and have a judge decide how the assets should be divided.

Settlement in a matrimonial cases requires both sides to agree and also for the court to agree that the settlement seems fair. It wasn’t just down to Mrs Sharland. But perhaps she was persuaded, whilst listening to her husband giving his evidence, that her valuation of the husband’s business was a little optimistic. If you read the judgment you will see references to the statements the husband did in fact make to the court about the premise on which the business had been valued. Those statements were later found to be significantly misleading.

I want to pause there for a moment. This isn’t about how much a wife should “get”.  Mr and Mrs Sharland had been married a long time (still are married in fact and have been since 1993). They have three children. Mr Sharland set up a business during that marriage which has done very well. Marriage is a partnership. The deal is you’re in it together and just like any other partnership if one of you wants to bring it to an end you have to split the assets of that partnership fairly. You don’t need to have the same role but each one is normally equally valuable. And value isn’t necessarily measured as money. Most of us understand that.

A woman or man working part time to enable him/her to drop off and collect the children from school, do their homework with them, look after them during the school holiday, do the shopping, clean the home etc etc makes a valuable contribution to a family. In fact it is invaluable. Try managing without him/her if you don’t believe me.

Similarly, a woman or man who goes out and works to earn enough to pay for the mortgage, holidays, food, bills, clothes, Christmas and birthday presents, shoes, meals out etc etc deserves recognition for his/her invaluable contribution.

Families come in all shapes and sizes. In some both parents share the role of homemaker and also both work. Others are more traditional where one works and one is in charge of running the home.

Either way it is a team. Does the balance in that team suddenly shift when one begins to earn large sums of money? No it does not.

Most people would understand that as well. Can you imagine sitting down with your civil partner/spouse after say 10 years of marriage who you have supported whilst he/she climbs up the career ladder, to discuss how he/she will now keep more of the financial rewards for him/herself from now on?

At what point do you think that would that be fair? If he/she is promoted and now earns over say £50,000 per year – should he/she be allowed to keep the surplus to him/herself regardless of the sacrifices of you, the spouse/partner who has helped him/her get there? No – is that too low? How about £100,000? Or £150,000? At what point does it become reasonable for him/her to depart from sharing what the two of you together have helped build/achieve?

For me the answer is simple. You can’t change the rules half way through the game when you think you’re going to lose. If you make a promise to share everything then that is what you must do.

On the other hand if you want to enter into an agreement – before getting married or having children probably – which spells out what may happen in the event that one of you benefits from financial success and you both go into that marriage/partnership happy with that arrangement, then so be it.

I don’t think the sums involved in this case make a scrap of difference to the fundamental principle of sharing in a marriage/civil partnership and I don’t know any divorce lawyers who do either.

There are well known reasons why sometimes it is not fair to divide assets of a marriage/civil partnership equally.

If some of the assets are inherited they are not automatically shared. In fact they are not usually shared.

If one person really needs more than half they are divided unequally. This is not uncommon where the assets are limited.

If one person has brought a special contribution to the marriage then this can result in a division more weighted in his/her favour. This is more likely to be where one partner/spouse perhaps already had property or other assets at the start of the relationship and tends to be less important as the years roll by.

So, the principle is that unless there is a good reason it wouldn’t be considered fair, the assets of a marriage will be shared equally.

That is a good principle.

And to be fair that is all Mrs Sharland wanted. And it is what she thought she was getting no doubt when she settled at that hearing. Mr Sharland, on the other hand, knew differently. He knew he was planning sell his business. He knew things were going on behind the scenes which would, if they came off, make the business worth closer to £600million rather than £60million. And he owned about half of the shares.

Prior to settlement Mrs Sharland’s valuer valued Mr Sharland’s shares in his business at between £22million and £30million after tax. Mr Sharland said between around £6.5million and £8million after tax.

They had another £17million in cash and properties, bits and bobs etc. So £8.5million each. This is important. Because Mrs Sharland received her half of the £17million plus another £1.5million. The extra £1.5million was effectively instead of a 20% of her husband’s share in the business. She received only 30% plus this one off £1.5million in lieu of the other 20%.

As far as all were concerned at the hearing (apart from Mr Sharland) those shares were worth at best £30million and at worst £6.5 million. 20% of £30million is £6million and 20% of £6.5million is £1.3million. So I would conclude from those figures that Mrs Sharman was persuaded to settle for almost the lowest value of the shares.

She still kept 30% of the shares but the really important bit in all of this is that having relied on the husband’s evidence to the court, she gave away 20% back to him in return for £1.5million.

That was in July 2012. Before the court had time to seal the order (so pretty soon after the hearing) it came out in the press that Mr Sharland was planning to float the company and that it was estimated to be worth not £60million but between $750million and $1billion (£600million approximately). Mr Sharland has a substantial shareholding (around 51%) and so his share was worth possibly not £6.5million or even £30million but a whopping £300million. Which meant that taking £1.5million for 20% of that (even allowing for tax) was a poor deal. They could have been worth as much as £60million.

So why don’t I think this was about money then? Well Mrs Sharland is still left with a vast amount of money by almost anyone’s standards. She had £10 million in the bank and she would still (under the original deal) have received 30% of £300million on sale of the company. She was never going to be hard up.

But she had been duped. She’d been lied to and because of that lie she had compromised. And I completely understand why she has persevered with this case. I do believe it was about the principle and about equality and not letting anyone get away with telling blatant lies to the court and to a spouse or partner without consequence.

I don’t understand on the other hand what on earth possessed Mr Sharland to mislead the court. He could not have failed to realise that his wife would soon find out that the valuations were flawed. She was bound to when the cheque she received was for a lot more than she was expecting.

Unless that is the point. I am assuming that a cheque would “just arrive”. I am forgetting that with an equal share in the business Mrs Sharland would have a significant say in how that business was run or sold.

Was Mr Sharland motivated to lie not by wanting more money but by wanting to remain in control?

Mrs Sharland brought her appeal she says not because of wanting more money but on the principle that she deserved equality.

The media will no doubt now try to paint a picture of Mrs Sharland as an undeserving gold digger. But I believe her. And in the end whether you do or not, her tenacity has served us all well because how many people have the financial wherewithal to challenge deceit to the Supreme court?

Thanks to Mrs Sharland (and Mrs Gohil) it is now absolutely clear that there is no scope for lying, fraud or misrepresentation in divorce, no matter how much or how little is at stake. Hiding the truth is as bad as coming out and telling an outright lie. And it is as fatal to a consent order in divorce as it is in any other area of law – as it should be.

There is another reason I don’t think it’s about the money. This case needs to go back to court now to be decided on the facts. And I can’t help but think that if Mrs Sharland had done nothing, had allowed the order to be sealed and the business to be sold, her cheque would have arrived an awful lot sooner than it will now – and would most likely have been for a lot more.

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