Family Law Insights: How do the Family Courts Treat “Bad Behaviour” in Financial Cases?

John Randle, Head of Family Practice

John is a specialist family solicitor with over 40 years’ experience dealing with complex, high value divorce cases.

The no-fault divorce regime was rightly introduced to avoid the necessity of assigning blame in marital breakdown, allowing the divorcing parties to focus on reaching settlements on the more important issues of children and financial arrangements. 

However, human nature does not follow the law, and many divorcing couples will try to assign blame regardless. In my experience, couples will often use financial proceedings to air these tensions, asking the judge to take account of any bad behaviour and somehow “punish” the other party with a less favourable share of money and assets in the financial settlement.

How do the courts treat allegations of poor conduct? 

In recent family cases, senior family judges have given careful guidance in this area. This guidance can help parties understand how the courts will react when allegations of poor conduct are raised in financial proceedings. 

The courts have gone out of their way in recent months to remind parties that conduct will only be deemed relevant in the overall division of assets if: 

• The conduct meets the very high threshold set by the courts and previous case law or is deemed so exceptional that it would be inequitable to disregard it under the terms of the Matrimonial Causes Act 1973. 
• The conduct has had a demonstrable financial impact on one party and must be fairly reflected in the outcome of the financial remedy proceedings.

I have dealt with many cases where parties have deliberately raised conduct against the other party when completing their Form E. In particular, Box 4.4 of the Form E, which states: “Bad behaviour or conduct by the other party will only be taken into account in very exceptional circumstances when deciding how assets should be shared after divorce/dissolution. If you feel it should be taken into account in your case, identify the nature of the behaviour or conduct below” 

Raising these allegations is often seen as a “declaration of war”, even if the allegations do not come anywhere near to the very high threshold demanded by the courts. It is almost as if, by removing the ability to raise conduct as the reason for marital breakdown, parties want to bring it in “via the back door” in the financial proceedings. As a result, tensions between divorcing parties are raised to a heightened level of bitterness, substantially increasing the legal costs to both parties at a stroke while reducing the prospect of an amicable settlement.

What does poor conduct look like? 

In financial remedies cases, conduct raises its head in four distinct areas: 

• Gross and obvious personal misconduct by one party against the other. The best test in my view of what amounts to relevant conduct by the family courts is “gross and obvious” conduct. This test was first framed in the 1973 case of Wachtel v Wachtel and continues to shape many judgments. It is crucial to understand that simply establishing the high threshold of “gross and obvious” conduct is not enough to allege conduct in a financial remedies case. The party alleging conduct must go one step further and prove that this conduct had a financial consequence that should be reflected in any financial settlement. Whilst the first test is tough enough to meet, the second is even harder to prove. 
• Wanton and reckless dissipation of the assets available for distribution by the court (i.e., where there would have been a larger pot to divide had one party not wasted it). 
• Litigation misconduct, where one party fails to comply with court directions, fails to negotiate reasonably, or is otherwise deemed to have conducted themselves poorly in litigation before the court. Litigation misconduct can lead to an award for costs, meaning the party guilty of misconduct is obliged to pay the other side’s legal fees in part or in whole, or can be taken into account when determining the overall division of assets.
• Failing to give full and frank disclosure of assets in the court proceedings, attempting to hide assets from the court and the other party, or otherwise acting in such a way that the court is liable to drawn adverse inferences against a party. 

When should conduct be raised in financial cases?

There is now clear guidance on this from Mr Justice Peel, National Lead Judge of the Financial Remedies Court. Mr Justice Peel’s guidance states that, if conduct is to be raised, it must be raised very early in the case and no later than the submission of Form E. The court will deal with any such allegation at the preliminary hearing and will give directions for each party to provide narrative statements.

Initially, the party raising conduct must set out their allegations in full in a sworn narrative legal statement. The other party will then be given the opportunity to respond in their narrative statement. The court will examine whether, in the light of these statements, the conduct meets the very high threshold of conduct, and whether the financial consequences of this conduct are sufficiently robust to introduce at the final hearing.

It is my experience, the majority of cases alleging conduct can be dealt with by reference to the other section 25 factors, namely needs, resources, contributions , health , age and the duration of the relationship, without delving into allegations of bad behaviour. The court has a very wide discretion in financial cases in divorce and fairness of the financial outcome to both parties is the overarching aim of the judges when applying the section 25 factors to the individual case. 

Whether you, as a party to a divorce, are going to take the very bold step of raising the conduct of the other party in financial remedy proceedings , or are the one who is having the answer the allegations made against you, then it crucially important to take legal advice from a specialist financial remedy practitioner at the earliest opportunity.