Conduct in Financial Remedy Proceedings

These cases are rare. An individual’s personal misconduct must be extremely serious and is often described as needing to have the requisite “gasp factor”.

Section 25(2)(g) of the Matrimonial Causes Act 1973 does not require there to be a financial consequence to personal misconduct, however it is a feature of virtually all reported cases.

Some examples where personal misconduct has been argued successfully include:

• In H v H [2005] – a husband had been convicted of attempted murder of his wife. The wife’s earning capacity was impacted because of her husband’s violent attack. The Judge assessed the wife’s needs as a higher priority than those of her husband and he was subsequently awarded only a very small portion of the matrimonial assets

• In FRB v DCA (No 2) [2020] – the wife intentionally allowed her husband to believe that he was the biological father of their child, when she knew this was untrue. The Judge accepted that the wife’s conduct was inequitable to disregard but expressed difficulty in quantifying the emotional damage to justify a reduction to the wife’s financial settlement. The husband had also failed to disclose the true extent of his assets in these proceedings. The Judge determined that he would not put a figure on the husband’s undisclosed assets, but equally he would not reduce the wife’s award in view of her misconduct

Examples where personal misconduct has not met the requisite threshold include:

• In N v J [2024] – the husband made serious allegations of psychological abuse stating that his wife had lied about cheating and infidelity, which required him to obtain medical treatment based on false assumptions that he was paranoid, delusional and psychotic. The Judge did not accept that this met the necessary threshold for conduct based on the absence of a clear financial consequence of the alleged misconduct. This case highlighted the need for a causative link the court considered was required between conduct and detrimental financial consequence

An “add back” or “reattribution” may be applied by the court where an individual has disposed of assets in a manner which is “wanton and reckless”. If pleaded successfully in financial remedy cases, the innocent party can seek an amount equivalent to the dissipated assets to be notionally added back to the matrimonial pot as part of a financial settlement to reflect what has been lost.

Examples where an add back has been argued successfully:

• In Vaughan v Vaughan [2007] – the husband gambled away over £80,000 after separation. Although the Judge initially refused to reattribute the dissipated funds, he later decided it was fair to do so

• In DH and RH [2022] - the court added back £800,000 to the matrimonial assets after finding that the wife’s excessive legal spending had unfairly reduced the funds available for division. The court also ordered the wife to pay around £255,000 in costs due to her litigation misconduct

Examples where the add back argument has not been successful:

• In MAP v MFP [2015] – the husband suffered from depression and allegedly spent £6,000 a week on cocaine, alcohol and prostitutes throughout the marriage. The wife sought an add back of £1.5 million. The Judge refused, finding that although the husband had overspent, it was due to his addiction and mental health difficulties - not a deliberate attempt to reduce the marital assets

• In F v F [2012] – the parties had a lot of wealth. The husband made significant lifetime gifts to four of his children from a previous marriage. The Judge held that it was reasonable for the husband to do so, and the gifts did not adversely impact upon the high standard of marital lifestyle and therefore would not be “added back” into the matrimonial pot for the purposes of distribution

Litigation misconduct refers to circumstances where a party behaves so unreasonably during the court process that it increases legal costs.

When argued successfully, the court will generally penalise this behaviour by making an adverse costs order against the offending party, rather than adjusting the distribution of matrimonial assets.

In VTY v GDB [2025] however, the Judge found the husband’s litigation conduct to be so appalling and dishonest, that they adjusted the overall financial award in the wife’s favour, in addition to making a significant costs order against the husband.

An individual who fails to provide their full, frank and transparent financial disclosure during financial remedy proceedings can face serious financial consequences. If the court believes someone is deliberately withholding information, perhaps to try to gain a more favourable outcome, it is entitled to draw adverse inferences about what that person may be attempting to conceal.

The party alleging non-disclosure would need to typically demonstrate clear evidence of the existence of the asset, the other party’s failure to comply with court orders and/or evidence of a lifestyle which is inconsistent with their disclosed financial resources.

In X v Y [2022], the Judge found that the husband had dishonestly falsified his bank statements. As the husband’s true financial position was unclear, the Judge adjourned the wife’s capital claim for 10 years.