This case involved assets assessed by Peel J at £48 million. There had been 11 court hearings and a variety of interlinked proceedings in other courts. Although the parties' wealth had been generated by the husband, he had placed almost all of it the wife's name. The wife was found to have repeatedly lied to the husband and the court during the proceedings. She had prevented the husband's access to the family bank accounts and had transferred properties into her mother's name in an attempt to place them beyond the husband's reach. She limited his involvement with other assets, effectively shutting him out of the family assets.
Peel J noted the four categories of conduct identified by Mostyn J in OG v AG [2020] EWFC 52, namely:
- Gross and obvious personal misconduct meted out by one party against the other – such conduct will only be taken into account in very rare circumstances and where there is a financial consequence to its impact;
- "Add-back" cases, in which one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the divisible matrimonial property;
- Litigation misconduct (usually penalised in costs rather than affecting the substantive disposition);
- The exercise of drawing inferences as to the existence of assets from a party's conduct in failing to provide full and frank disclosure.
He considered that, where a party relies on conduct, there is a two-stage process. At stage 1, the party asserting conduct must prove:
- the facts relied upon;
- if established, that those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and
- that there is an identifiable (even if not always easily measurable) negative financial impact upon the parties which has been generated by the alleged wrongdoing.
If stage 1 is established, the court will then consider how the misconduct (and its financial consequences) should impact on the outcome of the application, bearing in mind the s.25 factors.
Where there are conduct issues, conduct should always be pleaded at the earliest possible opportunity and the court may, at the first appointment make an order preventing the party pleading conduct from relying on it, if the exceptionality threshold required to bring it within s.25(2)(g) would not be met and/or if it would be disproportionate or immaterial to the outcome of the case.
Sheena Cassidy Hope says: While arguments of non-financial conduct are usually difficult to succeed on, many litigants still seek to rely on them, often as one of the overall circumstances of the case. The decision by Peel J not only clarifies the way the court should deal with allegations of conduct, but also gives clear guidance on how those allegations should be case managed. Conduct arguments can lead to significantly increased costs, court time and acrimony and frequently do not result in a different ultimate outcome. A disciplined approach to any such allegations is key.