Bad behaviour: what amounts to ‘conduct it would be inequitable to disregard’? By Debbie Heald

Divorce|Family Law|February 26th 2018

It’s a question asked by so many clients, both at the outset of their case and during court proceedings. The conduct, or behaviour, of one party in a divorce often falls short of that which many would consider reasonable but in practice, when is bad behaviour taken into consideration, if at all?

The law

Key legislation the Matrimonial Causes Act 1973 specifically invites the Court to consider the conduct of the parties as one of the factors to be considered when making a financial order. Section 25(2)(g) cites:

“the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it

But as case law has developed it has become clear that conduct related arguments only have a narrow role to play in influencing the Court and indeed will only be considered in exceptional circumstances.

The key case is the House of Lords decision in Miller v Miller; McFarlane v McFarlane (sic) in 2006. In this case the Court made it clear that arguments about conduct should be reserved for truly exceptional cases where the disputed conduct is “gross and obvious”. This builds upon the case law predating the Matrimonial Causes Act, when the Court indicated that the behaviour needed to be such that a right-minded member of society would say it justified a reduction in or extinction of any claims arising from the marriage. In Miller v Miller; McFarlane v McFarlane Baroness Hale commented:

“The add-back authorities essentially say the same. For the court to “add-back” assets that have been spent, the court has to be satisfied that there has been “wanton dissipation of assets“. In Martin v Martin [1976] Fam 335, Cairns LJ said:

‘A spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.’ ”

In such cases the Court can artificially “add back” assets to the matrimonial pot that have been dissipated by one party. The effect is to artificially increase the assets available for distribution with a view to penalising the party at fault.

When are arguments based on conduct successful?

The answer is very rarely and only in extreme circumstances. For example, the grounds for divorce, including any adultery committed, will not usually be enough to be classified as conduct which it would be inequitable to disregard. The Court has in previous cases taken into consideration physical violence and financial misconduct. In terms of physical violence/abuse, examples include a brutal attack that rendered the other party virtually unemployable and a sexual assault on the parties’ grandchildren, including the communication of explicit images over the internet. These were considered conduct that amounted to ‘the grossest breach of trust’.

In terms of financial misconduct, the Court will generally require any expenditure/dissipation to have been deliberately ‘wanton’ or ‘reckless’ – for example excessive spending or gambling.

In one case of interest, a wife attempted to raise arguments about conduct after a 40-year marriage in which there were assets of approximately £25 million. She argued that the husband was spending £6,000 per week on cocaine, in addition to substantial sums on therapy and prostitutes. The wife calculated his expenditure over a two year period to be approximately £1.5 million, arguing that this sum should be ‘added back’ to the assets available for distribution and allocated to the husband when dividing those.  The Court accepted that the parties had suffered financial losses due to the husband’s addictive character. However, it was found that the wife must take her husband as she found him. He was a successful businessman, regardless of his other flaws, and she must take him as a whole package. She was not permitted to cherry pick, rejecting the addictive side of the husband’s character but embracing the elements of his character which had generated the family wealth.  The Court made no adjustment to the financial award based on the husband’s conduct.

What is the Court likely to do if inequitable conduct is found?

The general approach is to consider ‘adding back’ the assets, as in the case above. It should however be noted that if a Court does make a conduct finding it doesn’t necessarily follow that there will be a reduction in, or total extinction of any financial claims. The Court has wide discretion and will weigh all factors when making a decision. A finding of poor conduct may, however, provide the other spouse with a basis upon which to argue that there should a departure from equality, which is the starting point in all cases.

Ultimately the Court must still ensure that the needs of both parties are met. A Judge in one case stated that whilst the Court may alter its approach from reasonable needs generously assessed to something lower, it cannot reduce a party to a “predicament of real need”.  Notional funds cannot he utilised to meet basic needs, meaning that in the vast majority of cases arguments about conduct will not be taken into consideration in dividing assets.

In cases where there are more assets than are needed to meet reasonable needs, then the Court may consider arguments for adding back or reattributing funds.

Conclusion

In determining financial claims arising from a marriage, the Court has a number of factors to take into consideration in the pursuit of a fair and reasonable outcome. The Court is reluctant to punish parties for their behaviour. Case law has demonstrated that the Court will only take arguments about conduct into consideration in exceptional circumstances, where the assets are in excess of needs and the conduct complained of is not a consequence of character flaws which manifested themselves during the course of the marriage.

 

Deborah Heald graduated from the University of Northumbria at Newcastle and later attended the BPP Law School in Leeds. She joined Stowe Family Law in 2014 and now works out of the Leeds office.

Deborah has worked across all aspects of family law, including divorce, finances and disputes concerning children. She has previously worked closely with Court of Protection clients and is a member of both Resolution and Young Resolution. She is also a member of the Family Law Panel.

Debbie is a Partner at the Leeds office. She is a specialist in all aspects of family law including divorce, finances and children disputes. She has worked closely with Court of Protection clients and is a member of both Resolution and Young Resolution.

Share This Post...

Leave a Reply

Close

Newsletter Sign Up

For all the latest news from Stowe Family law
please sign up for instant access today.



Privacy Policy