The relevance of conduct in divorce
An initial question commonly asked by clients when seeking advice is the extent to which their spouse's behaviour may be taken into account when dividing matrimonial finances. Where a spouse has committed adultery, or behaved unreasonably, causing the marriage to break down, the petitioning spouse can be surprised to learn that such behaviour is unlikely to affect the financial settlement.
Section 25 of the Matrimonial Causes Act 1973 lists the factors that the court must take into account when considering a claim for a financial remedy. The long list of factors includes "the conduct of each of the parties, whatever the nature of the conduct and whether it occurred during the marriage or after the separation … if that conduct is such that it would in the opinion of the court be inequitable to disregard it". However, in reality it is unusual for a party's conduct to be taken into account. The House of Lords considered this issue in a leading case in 2006 and concluded that conduct should only be taken into account in the "most obvious and gross cases."
This of itself is not particularly helpful. A closer look at an earlier case provides a clearer example. In H v H (2005), a husband had attacked his wife with a number of knives causing her significant and life-threatening injuries to her neck and face, in front of their children. It is recorded that it was a miracle that she was not killed. The husband was subsequently jailed for twelve years. The wife was subsequently diagnosed with moderately severe PTSD and was unable to return to the family home or to her job as a police officer. When the court considered the matter in financial remedy proceedings, it was held that the proper way to consider his conduct was as a potentially magnifying factor when considering the wife's position under the other s25 factors. The wife's earning capacity had been significantly diminished as a direct result of the attack. Due to his incarceration, the husband would not be in a position to provide maintenance for either the wife or the children for many years. In addition, during the husband's imprisonment the wife would be solely responsible for caring for and maintaining the children. The judge also noted that there was a very real concern that the children had been emotionally affected by witnessing the attack and that the priority of the court was to ensure that they were re-housed in a secure property well removed from the former matrimonial home. Accordingly, the wife was awarded the equity from the matrimonial home and the joint savings of £100,700 and the husband was left with only £30,000.
In March 2015, the Family Court was asked to consider the issue of conduct afresh in the case of MAP v MFP. The parties were married in 1972 and over the course of their forty-three year marriage accrued joint wealth in excess of £25,000,000. The husband left school at fifteen with no qualifications, but went on to become the Managing Director of his property maintenance company, owning 95% of the shares (worth £20,625,200). The wife owned the remaining 5% of the shares.
At trial, the judge found that the husband was undoubtedly the "driving force" behind the success of the company, although it was the wife's contribution to family life and the company which allowed the husband to be so successful was be considered as having equal weight in the acquisition of the family fortune. However, in 2007, the wife became aware that the husband was abusing alcohol and cocaine. The wife alleged that the husband had been spending £6000 a week on his habits and she also claimed that large sums of money had been spent on prostitution. At the trial, the wife's legal team argued that £1,500,000 should be added back into the matrimonial pot as this represented the husband's spending on alcohol and cocaine. It was their case that the figure to be divided between the parties should be increased to what it would have been, but for the husband's spending.
Two distinct legal principles were therefore brought into question. Firstly, whether it was appropriate to 'add back' the funds that had already been spent by the husband and secondly, whether the husband's conduct in spending the funds should be taken into account when dividing the assets.
Previous cases have indicated that funds can be 'added back' where there has been "wanton dissipation of assets." In 1976, Cairns LJ ruled 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 the seminal case of Norris v Norris in 2003, Bennett J held that where assets have been depleted recklessly by a spouse, the other party should not be disadvantaged in the split of the assets.
This principle was challenged in 2008, when Wilson LJ indicated that the practice of adding assets back in to the matrimonial pot must be treated very cautiously and there must be "clear evidence of dissipation."
In the case of MAP v MFP, the judge refused to add back the funds that the husband had spent. He was not satisfied that the husband had wantonly depleted the assets. The judge found that the husband could not help himself and his spending was due to his 'flawed character.' The judge ruled that "it would be wrong to allow the wife to take advantage of the husband's great abilities that enabled him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction." Whilst acknowledging that the husband's behaviour was morally culpable and irresponsible, the judge held that he had not deliberately or wantonly dissipated the assets.
A mortal blow, then, it seems, for making a case that a party's conduct should be taken into account, or that funds inappropriately spent should be added back in to the pot for the purposes of financial division.
Clearly, the case of MAP v MFP involves assets on an unusually large scale. The needs of both parties were met more than adequately by division of the remaining financial resources. It is interesting for practitioners to speculate whether the judge would have reached a different conclusion if the assets had been of lesser value, yet still sufficient to meet the parties' needs. In the meantime, it remains only in the "most obvious and gross" cases that a party's conduct will be sufficient to merit consideration in a claim for a financial remedy.