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Conduct Cases in Financial Remedy Proceedings: A Plea for Specificity Towards a Streamlined Tomorrow for Our Clients, Our Courts, and Ourselves

Date: 01/12/2023 Type: Articles Topic: Private Client | Investment and HNWI’s |

Part I - Vulnerable and confused: clients or practitioners?

It feels, at least anecdotally to this practitioner, that identification of abusive conduct is becoming more common. Perhaps it’s not just me - the Law Commission is researching the operation of conduct in respect to FRP in their scoping document due September 2024[1]. Even the Government has declared its recent intention to focus on domestic abusers in their proposed sentencing reform legislation[2]. Outside FRP, domestic violence injunctions have increased greatly since the Pandemic, leading to judges recently re-stating the strict thresholds in ex parte injunctions[3]. The President of the Family Division also published updated guidance for Non-Molestation Orders in July 2023. The wider legal sphere continues to enlarge concepts of abuse; for example with the Domestic Abuse Act 2021, we now have a statutory definition of economic abuse, with case law confirming it meets Section 25 factors[4]. The Court of Appeal (albeit within private children proceedings)[5], recently decided whether “definitions of rape, sexual assault and consent used in the criminal justice system should be either a starting or finishing point for judges in the Family Court”. They confirmed the Family Court has a completely different factual approach to determining criminal allegations - ultimately, we must defer to Practice Direction 12J to determine abuse in the family Court[6].

Amidst these developments, it is clearly up to practitioners to be specific in progressing the right conduct claim. Converting marriage breakdowns into rigid terminology of needs, offsetting and sharing requires careful analysis, despite Baroness Hale’s comments in Miller/MacFarlane[7]. But how to stave off the creeping dread of ineffective hearings, wasted costs, arbitrary depletion of asset bases and the very real fear of being on the receiving end of deeply frustrated glances from barristers that irrelevant conduct claims not meeting the “gasp factor”[8] incurs? Determining whether your client is procedurally “vulnerable”[9] is not enough - we must data-mine our client’s experience of their marriage and marriage breakdown to determine any type of conduct of relevance in respect of the final award. 

 

Part II: The exception or the rule? Identifying the exceptional exceptions

A vague refrain often boringly intoned to clients is that section 4.4 of the Form E is dedicated to poor financial behavior so egregious it would be unjust to ignore. We then refer to Section 25 factors, including 25(2)(g) and emphasize the exceptionality of section 4.4. Section 28 (3) of the FRP is referenced when discussing whether costs in FRP can be awarded for conduct “before or during” FRP, not necessarily affecting the award, ending with the sacrosanct principle of no costs awards in FRP. Albeit section 4.4 is clearly conditional, I argue in practice this vague section has given way to confident parties energetically determined to be the exception. Only three years ago in OG v AG [2020] EWFC 52 Mr Justice Mostyn reminded us “conduct should be taken into account not only where it is inequitable to disregard but only where its impact is financially measurable.” However, in TT v CDS [2020][10], the Court of Appeal held it was not unfair for the party guilty of misconduct ultimately to receive a sum less than his or her needs would otherwise demand.

The most obvious form of relevant financial conduct is evidenced, “wanton” dissipation of marital assets intended to defeat the other’s claims (not simply irresponsible or habitual behavior). This could be extravagant living, reckless spending, eg gambling which can result in the Court ‘adding back’ those assets/expenditures to avoid an unfair realization of the depleted assets (where  there are sufficient assets to meet needs). I lay out some exceptional examples of criminal conduct:

  1. Physical abuse to an extent one party rendered virtually unemployable (Jones v Jones);
  2. Attempting to ensure the success of the other’s suicide attempts to gain assets (Kyte v Kyte);
  3. Attempted murder acting to magnify the victim’s needs (H v H (financial relief: attempted murder as conduct) [2005] EWHC 2911, [2006] 1 FLR 990)),
  4. Third party communication aimed at reducing the availability or accessibility of assets (VV v VV [2022] EWFC 41, [2023] 1 FLR 170); and
  5. Coercive and controlling behavior considered “undue pressure” re upholding a postnuptial agreement, Traharne v Limb [2022] EWFC 27 (31 March 2022).

In respect of punishing litigation conduct, where a party fails to engage reasonably and openly in offers and attempts to settle, costs awards can be made (made clear by the President of the Family Division in January 2022 in the amended section of 4D). Needs awards can be invaded to account for costs awards[11]. Excessive spending on legal costs can be treated separately from wanton dissipation and will result in the asset schedule being adjusted pre-distribution. Parties can also be penalised for the dishonest presentation[12] or unreasonably pursuing a case that a prenuptial agreement should be disregarded.[13]

 

Remedies to litigation and non-litigation conduct

Outside of costs penalties and amended financial awards, practitioners have at their disposal the means of many ancillary applications to marry along with FRP, including freezing injunctions (under section 37 of the Matrimonial Causes Act 1973); receiverships (where it is “just and convenient” to do so under S.37(1) of the Superior Courts Act); penal notices and committal proceedings; and confiscation proceedings in the Crown Court pursuant to the Proceeds of Crime Act 2002 (‘POCA’).

 

Part III: Conclusion

I believe many practitioners have experienced net zero gains in running irrelevant conduct cases. At a time of overwhelming pressure on the Family Court (not to mention our colleagues in the criminal legal aid sector) and the economic squeeze on client’s assets, we desperately need practical solutions to streamlining arriving at the “right outcome” and avoiding injecting proceedings with issues that play no relevance, empower grieving clients in a negative way. A wonderful mentor of mine once told me the best negotiations are reached by both parties walking away feeling they’ve lost something, but certainly, extraneous legal costs and dignity don’t have be the collateral when alleged conduct is clearly outside the realm of enforcement and judicial input.

 

[3] “There can be no doubt that far too many such applications are made where there is no reasonable basis to grant the application without notice.. (para 24)... “such an order is only appropriate where there is significant risk of immediate harm (para 25)”. DS v. AC [2023] EWFC 46

[4] DP v EP (Conduct; Economic Abuse; Needs) [2023] EWFC 6 (10 January 2023)

[5] A & Anor v B & Ors [2022] EWHC 3089 (Fam): https://www.bailii.org/ew/cases/EWHC/Fam/2022/3089.html

[7] “It is simply not possible for any outsider to pick over the events of a marriage and decide who was the more to blame for what went wrong, save in the most obvious and gross cases”.

[8] Sir George Baker P in W v W [1976] Fam 107

[10] EWCA Civ 1215, [2021] 1 FLR 996

[11] MB v EB (No 2) [2019] EWHC 3676, [2020] 1 FLR 1086

[12] DP v EP (conduct: economic abuse: needs) [2023] EWFC 6

[13] HD v WB [2023] EWFC 2

 

Author

Amelia Montgomery
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