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General Disclaimer: Nothing presented constitutes legal advice and the McKenzie Friend UK Network is not a legal entity or in anyway claims to be a 'legal resource'. The resource guide is supported by McKenzie Friends and Litigants in person for Litigants in Person in Family Court. McKenzie Friends provide layperson support as an informed friend under the Family Court Practice Guidance of 2010. All information is published under the spirit of that guidance. For any corrections of the information, please contact the McKenzie Friend UK Network

Conduct Cases in Financial Remedy

In Section 25 of the Matrimonial Causes Act 1973, one of the factors for the court to consider is the conduct of each party, particularly if such conduct would make it inequitable to disregard it. Notably, conduct lacks a statutory definition, leaving the courts to determine the nature of serious conduct and how it should influence the division of assets and any associated cost ordered.

Recent cases have given some clarity in categorising conduct. A procedural framework for conducting a conduct based case within financial remedy proceedings was established in the case of OG v AG [2020] EWFC 52, where four categories of conduct were identified:

1.		Gross and Obvious Personal Misconduct: This involves serious misconduct that is rare and must have a direct correlation with the financial consequences for which redress is sought. Examples include cases like Jones v Jones [1976] Fam 8 and Bateman v Bateman [1979] Fam 25.

2.		Financial Conduct - Wanton and Reckless Dissipation: Known as the "add-back" jurisprudence, this category addresses the squandering of assets that should have been part of the divisible matrimonial property. Dissipation is reflected in the substantive award by adding back the amount dissipated to mitigate the impact on the innocent party.

3.		Litigation Misconduct: This pertains to actions such as disregard for duties of disclosure, dishonest presentation of assets, or running a case bound to fail. Mostyn J suggests that the appropriate response is to penalize the guilty party in costs rather than affecting the substantive disposition.

4.		Evidential Technique: Inferences can be drawn from silence or absence of evidence when a party fails to comply with disclosure obligations, enabling the court to make findings about the existence or value of assets.

In the recent case of Tsvetkov v Khayrova [2023] EWFC 130 established a two-stage test for asserting conduct:

Stage One: (i) Particularised facts supporting the allegations; (ii) Establishment of facts meeting the conduct threshold; (iii) Identification of a negative financial impact generated by the alleged wrongdoing.

Stage Two: Upon establishing stage one, the court considers how misconduct and its financial consequences should impact the financial remedy proceedings, following the familiar section 25 exercise of balancing relevant factors.

Mr. Justice Peel emphasized that conduct allegations should be clearly outlined in Section 4 of a party's Form E, discouraging the use of the "conduct box" for vague or reserved statements. He decried the practice of advancing conduct cases at final hearings, emphasizing the importance of early clarity to avoid forensic dishonesty.

In the further case of O v O [2023] EWFC 161, a similar issue arose, highlighting the need for parties to explicitly state conduct cases in Section 4 of Form E and discouraging vague assertions.

Mr. Justice Peel suggested that case management should address alleged misconduct at the First Appointment, allowing the court to make orders preventing reliance on conduct if the exceptionality threshold is not met. This directive signifies a departure from the previous practice of leaving conduct allegations vaguely mentioned in Form E.