The issue of Conduct reared its head once again recently in the reported case of OG v AG [2020] EWFC 52.

Not to be confused with ‘Unreasonable Behaviour’ which is a fact to prove the irretrievable breakdown of a marriage in divorce and dissolution proceedings; ‘Conduct’ is one of the factors which a Court must have regard to when considering the division of finances between the parties.

Within the checklist of such factors in Section 25 of the Matrimonial Causes Act 1973, subsection (2)(g) provides that the court shall have regard to “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”.

The key phrase is inequitable to disregard”.  It is an extremely high bar to clear in financial proceedings for one party to successfully claim that the other party’s conduct is so bad as to affect the level of financial award.

In OG v AG Mr Justice Mostyn identified four common instances of ‘conduct’; as follows:

  • Gross and obvious personal misconduct – including economic misconduct

The example given being a case in which the husband had stabbed the wife, the wound impairing her earning capacity.

  •  Adding back

Used when one party has disposed of assets to purposely deprive the other person of them. In these instances the court is able to ‘add back’ those assets into the theoretical pot, so that the deprived party will still receive the monies worth from the other non-disposed-of assets.

  • Litigation misconduct

Where one party has conducted the litigation so poorly, most commonly being the non-disclosure of financial information. Such misconduct will often be punished through costs orders – repaying the other party’s wasted costs as a result of the unnecessary litigation.

  • Drawing inferences

The court is able to make assumptions as to the level of available assets following non-disclosure by one of the parties. Mostyn J said of this method however: “Plainly, it will only be in a very rare case that the court would be unable even to hazard a ballpark figure for the scale of undisclosed assets. Normally, the court would be able to make the necessary assessment of the approximate scale of the non-visible assets, which is, of course, an indispensable datum when computing the matrimonial property and applying to it the equal sharing principle.”

In OG v AG both parties’ financial awards were adjusted to reflect the wasted costs as a result of their respective litigation misconduct – though the Husband’s penalty at £328,020 was much higher than the Wife’s of £50,000.

What is clear from the detailed discussion in OG v AG is that, despite findings being made against both the husband and the wife as to conduct and scathing remarks being made by the judge, bad conduct will very rarely result in a stand-alone financial award for the ‘wronged’ party. The more likely sanctions will be costs, inferences and adding back of assets.

Mostyn J summed up his approach to conduct arguments at paragraph 72 of the judgement:

  1. But times have changed. The financial remedy court is no longer a court of morals. Conduct should be taken into account not only where it is 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. 
  1. Therefore I firmly reject the submission that in addition to the competitor discount, which will fall on the husband alone, and the penalty in costs, there should be an additional substantial departure from equality to reflect the court’s indignation at the way the husband has behaved in the course of the litigation.

If you are going through a Divorce or Dissolution and seek advice regarding conduct issues, and/or the division of finances, get in touch with one of our specialist family law solicitors Andrew Smith in York, Richard Buckley in Sheffield, or Chris Burns and Sophie Arrowsmith in Leeds.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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