Conduct in relation to financial proceedings
Thursday, January 12, 2017
Conduct as relates to financial settlement can be taken into account, but rarely, only if the conduct is so serious that it would be unfair for the court to disregard it.
There are two types of conduct which are important to financial settlement orders. The first is what can be described as personal misconduct and the second is financial misconduct.
As regards personal misconduct, the usual elements of that behaviour in a marriage will have no effect, although they may have a bearing upon who pays the costs of the divorce. That is not the financial proceedings, just the divorce itself.
To impact upon a financial settlement, personal misconduct has to be very serious and even then there is absolutely no guarantee that the court will penalise the misbehaving party by reducing the amount of their settlement.
In FS v JS, a 2006 case, examples of personal misconduct were set out. So where a wife shot her husband with a shotgun, a wife stabbed her husband and where a husband committed incest with the children of the family.
In most divorce cases, it is financial misconduct which is more often seen. That is where one party recklessly or purposely dissipates assets prior to the financial remedy proceedings, reducing the amount available for the court to divide.
Good examples of these are Norris v Norris, where gambling and spending money on unnecessary things were taken into account.
In financial misconduct cases, the court will usually add back the money or assets that have been dissipated and proceed as if the parties still had them, but really it is up to the court.
Where a party’s proceedings have failed to comply with the orders of the court, or behaved badly, this is known as litigation conduct. Usually, this is penalised by a costs order only.
Parties who divorce need to be careful as pursuing an unreasonable claim for conduct may result in them being penalised for costs themselves.
But Section 25 of the Matrimonial Causes Act 1973 does state that: “The conduct of each party, whatever the nature of the conduct and whether it occurred during the marriage or after separation … if that conduct is such that it would in the opinion of the court be inequitable to disregard it” is good law today.
It is still unusual for such conduct to be taken into account unless it is gross and obvious, as per Wachtel.
In H v H, a 2005 case, the Husband attacked the Wife with knives, causing her serious injury and was jailed for 12 years.
In the financial remedy proceedings, it was held that the Wife’s earning capacity had been diminished as a direct result of the attack and due to his incarceration the Husband would not be in a position to provide maintenance for the Wife or children for many years, and during his imprisonment the Wife would be solely responsible for caring for and maintaining the children.
The judge also noted there was real concern that the children had been emotionally affected by witnessing the attack and that the priority of the court was to ensure the children were housed securely and out of the former matrimonial home. The Wife was awarded the equity of the matrimonial home and the joint savings of over £100,000, leaving the Husband with only £30,000.
In MAP v MFP, a 2015 case, in a marriage of over 43 years they accrued wealth in excess of £25 million. The Husband was the driving force behind the business, but the Wife contributed to family life and allowed the Husband to continue to be successful.
In 2007, the Husband began abusing drugs, spending £6,000 a week and large sums of money on prostitution.
The Wife’s legal team argued that £1.5 million should be added back to the matrimonial pot, being that spent by the misbehaving Husband and Cairns, LJ said that “A spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim a greater share of what is left as he would have been entitled to if he had behaved reasonably”.
In Norris v Norris, a 2003 case, Bennet, J held that where the assets had been recklessly depleted by a spouse, the other party should not be disadvantaged in the split of the assets.
Lord Justice Lawson has, however, added the caution that there must be clear evidence of dissipation.
In MAP v MFP, the judge refused to add back the funds as he wasn’t satisfied that the Husband had wantonly depleted the assets as he was a flawed character who had a cocaine addiction. But there, there were more than enough assets to make sure both sides were financially resourced after the split.
It is easily arguable that the judge would have reached a different conclusion if the assets had been of a lower value yet sufficient to meet the parties’ needs.