The conduct that the court will and will not take into consideration in financial remedies
Under s.25(2)(g) of the Matrimonial Causes Act 1973, the court may have regard to the conduct of the parties ‘if that conduct is such that it would in the opinion of the court be inequitable to disregard it’. But what does this actually mean? What kind of conduct is actually taken into account? Should any type of conduct be pleaded in the first place?
Section 25(2)(g) does not take priority over the other factors in the rest of the subsection. Even serious misconduct will not necessarily result in a party being deprived of assets. There will be few cases where conduct will be a determining factor and some judges will even refuse to hear evidence or submissions on conduct as it would make little or no difference to the final order (as in McCartney v Mills McCartney  1 FLR 1508).
Types of Conduct
In general, there are three types of ‘conduct’ in financial remedies proceedings: financial conduct, non-financial conduct and litigation conduct.
This type of conduct relates to the financial decisions and actions during the marriage. The court will not conduct a detailed forensic investigation over what mortgage provider should have been chosen or pour over a reasonable business deal that happened to fail. The principle was succinctly stated in Martin v Martin  Fam 335, where Lord Justice Cairns stated that 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 Beach v Beach  2 FLR 160, the husband had selfishly trailed onto financial disaster and bankruptcy by dissipating his own money, his family’s money, his wife’s money, his friends’ money and the money of unsecured creditors. It appears that the correct approach is not to affix a financial penalty as a pseudo-fine for the misconduct but to undergo an evaluation based on all the factors in the s.25(2) MCA (H v H (Financial Relief: Conduct)  1 FLR 971).
A practical matter is the difference between dissipation of assets due to financial conduct and the existence of large debts of one party. In the later, the likely argument to raise is that the debt is non-matrimonial and therefore should not be taken into account in the computation stage as opposed to a separate argument under s.25(2)(g).
It will be incredibly rare for a court to take into account non-financial conduct when assessing the division of matrimonial property. In the helpful case of S v S  EWHC 2793, Stanley Burton J listed most of the reported cases where non-financial conduct had been successfully pleaded. They included:
Wife shot her husband with intent to endanger life;
Husband attacked his wife with a razor and inflicted serious injuries that rendered the wife incapable of working;
Husband committed incest with children of the family;
Wife facilitated the husband's attempted suicide;
Serious assault and attempted rape of wife by the husband. He was then unable to support her financially because of subsequent imprisonment;
Husband assaulted the wife with a knife;
Wife drugged husband to make him sleepy and then suffocated him by placing a bag over his head. The wife did not intend to kill the husband but did intend to make him believe that she was trying to kill him;
Husband abducted the children of the marriage in contempt of court;
Husband committed a very serious knife attack on the wife and was sentenced to 12 years imprisonment for her attempted murder. The wife suffered the financial consequence of her Police career being destroyed.
One of the most significant cases of successfully pleaded non-financial conduct is Clark v Clark  2 FLR 498 (CA). In this case, the marriage was one of 5-years duration and there was a 35-year age gap between the parties. Over the marriage, the wife persuaded the husband to vest most of the properties in her sole name and also coerced him into transferring a large house to her. The husband was then forced to live as a virtual prisoner in a small part of that house, as the wife had removed his telephone and buzzer. The husband had to be rescued by relatives.
What can be seen from these cases is that the non-financial conduct needs to be either egregious, or be significantly serious and also result in financial consequences. As an example, it seems possible that an assault on a ballet dancer that broke their leg and prevented them for furthering their career could be counted as non-financial conduct the court could take into account whereas an assault that caused a broken leg with no other (financial) effects would likely not be significant enough to be taken into consideration.
In B v B (Real Property: Assessments of Interests)  2 FLR 490, it was held that litigation conduct amounting to dishonesty and contempt came under s.25(2)(g). However, while the later case of P v P (Financial Relief: Non-disclosure)  2 FLR 281 agreed that such conduct came under s.25(2)(g), it held that the conduct should be reflected in an order for costs rather than a reduction in the share of assets.
In Tavoulareas v Tavoulareas  2 FLR 418, the Court of Appeal highlighted the difference between conduct during the marriage and conduct that occurred post-separation. It held that the latter would be considered litigation conduct and should not affect the quantification of the substantive award but should be reflected in any costs order.
The recent case of Rothchild v De Souza  EWCA Civ 1215 has made it clear that litigation conduct can come under s.25(2)(g) and can result in not just a costs award but also can affect the distribution of assets. The reasoning was that, if there is litigation misconduct (e.g. contempt of court, destructive litigation etc.), then money spent on legal costs is no longer available to meet the needs of the parties nor can it be split under the sharing principle. The depletion of matrimonial assets is not remedied by an order for costs as that merely reallocates the remaining assets.
Any form of conduct will always be a difficult argument to run, based off the wording of s.25(2)(g) alone. The case law also demonstrates the high level that conduct needs to be. Regardless of the type of conduct, it clearly needs to be either egregious, or significant and have clear detrimental impact of the parties’ finances. Conduct will need to be properly evidence and fully pleaded to increase the chance of the trial judge entertaining the argument at all.
It seems that pleading conduct, especially non-financial conduct, in Forms E that is not of this high standard will not help the case and, if anything, inflame the emotions of the other party and potentially affect the likelihood of a settlement. While financial remedies proceedings are inherently emotional, care needs to be taken to avoid unhelpful lines of argument that are wholly unlikely to be successful at a final hearing. Running a wholly unlikely conduct claim could increase litigation costs and potentially open up the party running it to a costs order themselves.
Tom Gilchrist is a barrister in chambers with a busy practice in family law. Tom specialises in financial remedies, co-habitation, wills, and trusts. To instruct Tom, you can contact our clerks at firstname.lastname@example.org or on 0207 936 2613.