‘No-fault divorce’ means couples no longer need to support the irretrievable breakdown of their marriage with a supporting fact and ‘blame’ the other.  Whilst the reason for the marriage breakdown is not usually relevant,  conduct in financial remedy proceedings may be taken into account if in the opinion of the court it would be inequitable to disregard it (section 25(2)(g), Matrimonial Causes Act 1973).

Conduct in financial remedy proceedings

In this insight we explain what amounts to conduct in financial remedy proceedings. For an overview of the court procedure if a spouse raises conduct in divorce proceedings see our insight

What is conduct?

In OG v AG [2020] EWFC 52, Mostyn J observed ‘Times have changed. The financial remedy court is no longer a court of morals.  Conduct should be taken into account not only where is it inequitable to disregard but only where its impact is financially measurable.  It is unprincipled for the court to stick a finger in the air and arbitrarily to fine a party for what it regards as immoral conduct’.

Mostyn also observed that there are four types of conduct:

  • Gross and obvious personal misconduct requiring a financial consequence if it is to be reflected in the award.
  • Wanton and reckless dissipation of assets leading to add-back.
  • Litigation misconduct leading to a costs order.
  • Non-disclosure leading to inferences being drawn about the extent of the assets.

Personal conduct

The following are examples of personal conduct it would ‘in the opinion of the court be inequitable to disregard’.

In Jones v Jones [1975] 2 ALL ER 12 the husband had attacked the wife with the result that she was virtually unemployable.

In Neil v Neil [2019] EWHC 3330 (Fam), [2020] 1 FLR 1095 the husband was entitled to have part of a consent order, which provided for maintenance payments of £5,500 to be paid to the wife, set aside, in the circumstances where the order had been obtained through fraud and/or dishonesty on the part of the wife.

In FRB v DCA [2020] EWHC 754 (Fam), Cohen J found that the wife’s conduct in allowing the husband to believe that he was her child’s biological father, so inducing him to commit to the child emotionally and financially, did amount to conduct that was inequitable to disregard. However, he did not reduce the wife’s sharing award, as the husband had provided seriously deficient disclosure. He effectively offset the wife’s non-financial conduct against the husband’s litigation misconduct.

Domestic Abuse Act 2021

The role of the Domestic Abuse Act 2021 (DDA 2021) in proceedings for financial orders is developing.

In DP v EP [2023] EWFC 6, the Family Court made findings against the wife of economic abuse (section 1(4), DAA 2021) and conduct that it was inequitable to disregard. During their long marriage, the wife had bought and sold assets, deliberately concealing her actions from the husband who was illiterate and trusted her to manage his assets. Where the wife’s conduct had financially measurable consequences, the requisite amount was added back to the wife’s assets and a fair outcome was represented by a percentage split of 53:47 in the husband’s favour.

Add-back or re-attribution of assets

If one party has or continues to recklessly or irresponsibly waste or dissipate assets the court can use its discretion to ‘add- back’ or notionally attribute such wasted assets to the party responsible for the dissipation of the assets when considering the overall position of the parties. However, as highlighted by Mostyn J in BJ v MJ (Financial Order: Overseas Trust) [2011] EWHC 2709 (Fam) (at para [51]), ‘…the problem with this technique is that it does not re-create any actual money. It is in truth a process of penalisation. In my judgment it should be applied very cautiously indeed and only where the dissipation is demonstrably wanton’.

In ABX v SBK (DX intervening) [2018] EWFC 81 Francis J highlighted that in considering add back issues, each case will be very fact specific, adding that ‘ I venture to suggest that there were very few cases indeed which do not fall into ‘big money’ category where arguments over add back are likely to be worthwhile’.

To succeed on an add back the expenditure must be ‘wanton’ or ‘reckless’. In MAP v MFP [2015] EWHC 627 (Fam), [2016] 1 FLR 70 Moor J considered that although the husband had overspent, he had not done so to deliberately reduce the wife’s claim, and declined an add-back on the basis that:

  • the court could not add-back items of expenditure that were simply extravagant or part of the husband’s obsession with perfection;
  • a spouse had to take their partner as they found them; many very successful people are flawed, that was true of the husband and it would be wrong to allow the wife to take advantage of the husband’s great abilities that enabled him to make such as success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit, and
  • the husband’s behaviour might have been morally culpable overall, and it was irresponsible, but it was not deliberate or wanton dissipation and therefore would be wrong to add the assets back.

Non-disclosure and litigation misconduct

Relevant conduct may include making false statements or wilful non-disclosure during proceedings. Litigation conduct if proved, will usually be penalised in costs rather than in the distribution of the assets. In P v P (Financial Relief: Non-disclosure) [1994] 2 FLR 381, Thorpe J found conduct that in his opinion it would be inequitable to disregard, but considered that it should be reflected in an order for costs rather than in the distribution of assets.

There are however cases where litigation conduct has been considered, rather than being reflected in a costs order. In Morgan v Morgan [2006] EWHC 2250 (Fam) the husband had gambled away a significant sum, as well as repeatedly failing to make proper disclosure, and the judge considered this conduct relevant to the award, rather than merely confining it to a costs penalty.

In OG v AG Mostyn J said that ‘…it is very difficult to conceive of any circumstances where litigation conduct should effect the substantive disposition’.  In TT v CDS [2020] EWCA Civ 1215, [2021] 1 FLR 996 litigation conduct was considered by the Court of Appeal and Moylan LJ said that ‘what is important is that, whether by taking the effect of the conduct into account when determining the distribution of the parties’ financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the relevant circumstances and gives first consideration to the welfare of any minor children’.

Conduct in financial remedy proceedings- conclusion

Although conduct in financial remedy proceedings is a specific factor the court can consider it will only be in exceptional cases that conduct is relevant. Add-back will be applied very cautiously and only if the dissipation is demonstrably reckless or wanton.  In litigation misconduct cases the court will consider all the circumstances of the case when deciding whether it would be fair to make a cost order or redistribute the assets between the parties. The team at Watson Morris Family Law can help you navigate the law on conduct in financial remedy proceedings. For an initial free no obligation discussion to see how we can help please contact us.

Written by Caroline Watson

August 24, 2023

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