Conduct Allegations and Domestic Abuse in Financial Remedy Proceedings: A Vanishing Act?

N v J [2024] EWFC 184

Introduction

Those practicing in Financial Remedy proceedings will be all too familiar with explaining to their clients the exceptionally high threshold required to mount a claim as to Conduct pursuant to S.25(2)(g) of the Matrimonial Causes Act (“The Act”). Nonetheless, it is not unusual for a client, or an opposing party, to plead conduct in their Form E, often resulting in no more than an opportunity to espouse the immoral virtues of their ex-spouse. In Tsvetkov v Khayrova [2023] EWFC 130, Peel J deprecated that practice and called for it to be abandoned, noting that it “…muddies the waters and raises the temperature unjustifiably.”[1]

That said, it is not uncommon to read egregious allegations of domestic abuse levied against one party by the other in a Form E, often pursued in a way to garner an increased substantive award. Now, in the recent case of N v J [2024] EWFC 184, Peel J has examined the influence of domestic abuse on conduct in financial remedy proceedings.

Domestic Abuse: Conduct in Financial Remedies

Although there has been an increased and intense focus on the impacts of domestic abuse in private children law proceedings, Peel J makes clear that PD12J, which is not directly applicable in financial remedies proceedings but provides context, and the introduction of the Domestic Abuse Act 2021, have not altered the jurisprudential interpretation of conduct in financial remedies.[2]

Domestic abuse should be considered “personal conduct” as defined by Mostyn J in OG v AG [2020] EWFC 52, in which he said

“34. Conduct rears its head in financial remedy cases in four distinct scenarios. First, there is gross and obvious personal misconduct meted out by one party against the other, normally, but not necessarily, during the marriage. The House of Lords in Miller v Miller [2006] UKHL 24 confirmed that such conduct will only be taken into account in very rare circumstances. The authorities clearly indicate that such conduct would only be reflected where there is a financial consequence to its impact. In one case the husband had stabbed the wife and the wound had impaired her earning capacity. The impact of such conduct was properly reflected in the discretionary disposition made in the wife’s favour. Mrs Miller alleged that Mr Miller had unjustifiably ended the marriage discarding her in favour of another woman. Therefore, she argued that Mr Miller should not be permitted to argue that their marriage was short. This argument was rejected by the House of Lords which held that the conduct in question, although greatly distressing to Mrs Miller, should not find independent reflection in the court’s decision.

35. The conduct under this head, can extend, obviously, to economic misconduct such as is alleged in this case. If one party economically oppresses the other for selfish or malicious reasons then, provided the high standard of “inequitable to disregard” is met, it may be reflected in the substantive award.

It remains that personal conduct must be “both obvious and gross” as stated by Ormrod J in Watchel v Watchel [1973] Fam 72, and as endorsed by Baroness Hale in Miller, McFarlane [2006] UKHL 24 who said:

“This approach is not only just, it is also the only practicable one. 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.”[3]

This remains the law, and an increased understanding of the effects and harm caused “does not lower the conduct hurdle to be surmounted in financial remedy proceedings”[4]

Although S25(2)(g) does not expressly define that conduct is to have caused a direct impact on resources or one or more S.25 criteria, such as needs, of those reported cases a financial impact of the conduct alleged is almost aways clear and obvious for example[5]:

Jones v Jones [1975] 2 AER 12, the husband attacked the wife with a razor, causing permanent disability, and preventing her from being able to work as a nurse
In H v H (Financial Relief: Attempted Murder as Conduct) [2005] EWHC 2911 (Fam) the husband attempted to murder the wife in the presence of the children and was convicted to 12 years’ imprisonment; the wife’s earning capacity was impacted and her housing and income needs increased.
In Clark v Clark [1999] 2 FLR 498 the court found that the wife had emotionally and financially abused the husband; there was a direct financial consequence in that she had coerced him into parting with property, cash and other assets, much of which she had dissipated.
In DP v EP (Conduct: Economic Abuse: Needs) [2023] EWFC 6 HHJ Reardon made findings of economic abuse which had had a direct adverse financial effect on the husband.
In Northern Ireland Seales v Seales (Ancillary Relief: Murder and Coercive Control as Conduct[2023] NI Master 6, the husband’s conduct, which encompassed (i) domestic abuse and (ii) including the parties’ children in committing a murder for which he was convicted, had a clear impact on the wife’s employment prospects and future needs.
In Al Khatib v Masry [2002] EWHC 108, where the husband abducted the children to Saudi Arabia and did not return them, the conduct was reflected in the award principally by reference to provision of a £2.5m litigation fighting find for W to attempt to secure their return, which seems to me to be an example of conduct generated need

Whilst Goddard-Watts v Goddard-Watts [2023] EWCA Civ 115, seems to purport to have strayed from the orthodox understanding there must be a financial consequence to personal conduct, Peel J does not agree that the decision represents a departure from the orthodox. Whilst the reasoning seems to suggest that the Husband’s fraudulent non-disclosure was personal conduct and caused no direct financial consequence, Peel J notes:

I confess to being unclear why the fact of fraudulent non-disclosure seems to have fallen into the category of personal misconduct. It seems to me to sit far more easily in litigation misconduct, one of the other categories listed by Mostyn J in OG v AG (supra). Furthermore, although it was argued that there had been no direct financial consequence on the wife, the original order was set aside because the wife had lost the opportunity of seeking a higher award which does seem to me of itself to have been at the very least a potential financial consequence; otherwise, why would the order have been set aside?[6]

The law remains, that a financial consequence is a necessary ingredient of personal (mis)conduct, which should be identifiable, even if such impact is not easily quantifiable.[7]

Having surveyed the law, Peel J makes several observations at [38] which can be summarised as follows:

The S.25 criteria are considered to the extent they impact the financial distribution under sections 23 and 24. Including a factor without financial consequence would be unusual in an Act focused on financial reordering.
Generally, the impact on the victim of domestic abuse can be considered using conventional criteria, such as diminished earning capacity, without detailed inquiry into the cause.
Personal misconduct rarely impacts the final evaluation significantly. The usual factors suffice in most cases to ensure a balanced financial remedy, making it unnecessary to delve into personal misconduct unless it directly affects the financial situation.
The financial remedies court should not impose fines, penalties, or damages for conduct, nor moralise or assign blame for parties' behaviour during their relationship. Evaluating the entire history of a relationship is complex and generally unnecessary for the court's broad discretionary role.
The absence of a clear financial consequence makes principled quantification difficult, potentially leading to arbitrary or inconsistent awards.
Misconduct must be directly relevant to financial distribution to be considered. Parties often seek to rely on conduct in court for personal vindication, seeking validation of their ill-treatment or condemnation of their partner. While understandable on a personal level, the court's function is not to make findings to assuage grievances but to ensure fair financial distribution.
The court should avoid remorseless scrutiny of past conduct, focusing instead on forward-looking financial independence. This approach minimises unnecessary conflict and promotes a smoother transition post-separation.
The court's task is to set parties on the path to financial independence, looking forward rather than backward. Detailed inquiries into conduct are counterproductive, especially as divorces and dissolutions now proceed on a no-fault basis.
Routinely litigating domestic abuse as a conduct factor would strain court resources. Domestic abuse allegations are often disputed and lead to cross-allegations, requiring more hearings and extended time estimates. The need for Qualified Legal Representatives and additional evidence would increase costs significantly. Given the charged nature of such cases, settlements before final hearings would be rare. The implications for the financial remedies system are profound, highlighting the need to limit litigation to cases with clear financial impacts.

What then for the jurisprudence of Conduct and S.25(2)(g)? It is worth setting out Peel J’s comments in full which neatly summarises the current jurisprudence as to personal conduct:

39. I conclude as follows:

The high bar to conduct claims established in the jurisprudence (cases referred to in this judgment are examples) is undisturbed by the recent focus on domestic abuse in society and the family justice system.
I accept that the statute does not specifically refer to a financial consequence, and it is therefore wise not to rule out completely the theoretical possibility of conduct being taken into account absent such a financial impact. Nevertheless, as the review of authorities above suggests, such cases will be vanishingly rare.
The preponderance of authority clearly militates firmly in favour of financial consequences being a necessary ingredient of a conduct claim. This applies as much to domestic abuse allegations as to other types of personal misconduct.
The alleged conduct (even if it reaches the threshold and has a financial consequence) must be material to the outcome. In the vast majority of cases, a fair outcome is ascertained by reference to the other s25 criteria (including needs and impact on earning capacity) without requiring the court to examine conduct.
To inquire into conduct must be proportionate to the case as a whole.

40. In short, the dicta in both OG v AG (supra) and Tsvetkov v Khayrova (supra) which attempt to distil the learning on both the law and procedure, remain, in my judgment, sound. Courts should continue to case manage conduct allegations robustly at the earliest possible opportunity.

Comment

Peel J’s observations make it clear; rarely will it be appropriate to plead domestic abuse as a conduct issue without an identifiable financial consequence. Even then, it is unlikely that a thorough investigation of the allegations will be necessary when any detriment occasioned by such abuse can be adequately addressed by a proper analysis of the other S.25 criteria. There remains a high bar to conduct claims and a recent and intense focus on domestic abuse in other areas of family law has not displaced the established jurisprudence.

Liam Kelly

Deans Court Chambers

16 July 2024

[1]Tsvetkov v Khayrova [2023] EWFC 130; 45

[2]N v J [2024] EWFC 184; 21

[3] [145]

[4]N v J [2024] EWFC 184; 29

[5] Ibid [29][31][32]

[6] Ibid [36]

[7] Ibid [37]