Case Summary: Goddard-Watts v Goddard-Watts [2019] EWHC 3367 (Fam)

Facts

• In June 2010 the first
  financial remedies order was made by consent. It provided that W should
  receive the former matrimonial home in England and a lump sum of £4
  million. W later discovered that H had failed to disclose two valuable
  trusts of which H was the principal beneficiary. That led to her
  successful application before Mr Justice Moor in 2015 to set aside the
  consent order.
• The first
  rehearing of W’s application took place before Mr Justice Moylan (as he
  then was), who adopted the “Kingdon approach” of isolating the
  undisclosed assets, dealing with them and, leaving the remainder of the
  original order unaltered. Moylan J concluded that W should receive a
  further £6.22 million.
• The
  case before Mr Justice Holman therefore was the second application in the
  same matrimonial financial remedy proceedings to set aside a final
  financial remedies order on the grounds of material non-disclosure, a
  scenario which Holman J described as “vanishingly rare and probably
  unique”.
• W’s
  case was that H had deliberately and dishonestly failed to disclose
  discussions about the sale of one of his companies that were taking place
  contemporaneously with the financial remedies proceedings. The sale eventually
  took place in 2018, and the contract provided for a ‘buy back’ option
  which, if exercised, meant that H’s total shares in the company would be
  worth £81.75 million – the same shares for which Moylan J, in November
  2016, had valued at about £16.14 million. W’s case was not that the shares
  had simply grown in value, but rather that there had been material
  non-disclosure by H.

Issues

• Holman J therefore had to decide two
  questions:
  • (i) whether there had been
    non-disclosure;
  • (ii) whether the
    non-disclosure was material.

Held, setting aside the order

• and that this behaviour amounted to fraud.
• In answer to the second question Holman J noted
  that the court’s approach to materiality depends on whether the non-disclosure
  is fraudulent or innocent.
  • In cases of innocent non-disclosure, an order could
    only be set aside for non-fraudulent non-disclosure if the court would have
    made a substantially different order if the relevant facts had been disclosed.
  • However, in cases of fraudulent non-disclosure the
    general principle could be summarised as “fraud unravels all”. The test was, therefore,
    whether the court could be satisfied that at the time when Moylan J made his
    order, he would not have made a significantly different order if he had
    known then what the court knew at the set aside hearing. Further, the burden of
    satisfying the court of this lies with the perpetrator of the non-disclosure.
• Having found that H’s non-disclosure was deliberate
  and fraudulent, Holman J applied the latter test and was not satisfied that
  Moylan J would not have made a significantly different order, although he
  “readily accepted” that he might have done. Consequently, Holman J set aside
  the order made by Moylan J and held that there was to be a fresh determination
  of the W’s application for financial remedies.
• Holman J then concluded by imploring the parties to
  settle so as to end the “vortex of profligate spending and
  mutual destruction”.