Conduct in Financial Settlements Following Divorce

The Family Law case of OG v AG [2020] EWFC 52 examined the issue of conduct, which is one of the statutory factors the court must consider when deciding how to divide the assets of the marriage.  A judge is at liberty to penalise a party’s conduct: “if that conduct is such that it would in the opinion of the court be inequitable to disregard it”.

Therefore, such behaviour must extreme in nature and far beyond the habitual unpleasantness which characterises marital breakdown. It can be broken down into four categories:

1) Gross and obvious personal misconduct – including economic misconduct

In this example, one party’s abuse of their spouse is so extreme that it would impair the other party’s future financial needs.

2) Adding back

An example would be where one party might transfer ownership of an investment property into the name of a third party, with the intention of depriving their spouse’s entitlement to a share in that property and in order to compensate the loss, the court is empowered to ‘add back’ the value of their loss from other marital assets.

3) Litigation misconduct

A party may willfully refuse to comply with their obligation to give full and frank disclosure of their assets and in doing so deprive the other party of the ability to fully assess the total value of the family assets.

4) Drawing inferences

In this instance, the court may make assumptions regarding a party’s assets if, for example, their lavish lifestyle belies any claims of poverty they present to the court.

Various sanctions are available to the court if a party’s conduct is such as to undermine the other party’s entitlement to a fair and equitable financial settlement.  Such penalties range from orders for the ‘guilty’ party to pay the other party’s costs, adding back the value of lost assets and, ultimately imprisonment, in cases of flagrant and often repeated disregard of the orders of the court.

For Family Law practitioners, two significant factors were highlighted in the judgment of the above matter, however.  Firstly, the importance of negotiating reasonably, even in circumstances where the offending party is found to have conducted their litigation abysmally, including giving late disclosure and an egregious attempt to hide valuable assets.

Albeit belatedly, at the point where disclosure was complete, the parties were under a duty to attempt to resolve the issues between them, rather than to proceed to trial. As seen in this case, the somewhat stubborn failure to negotiate compromised the costs to which one would have been entitled in addition to their financial settlement, due to the other’s late disclosure.

Secondly, while in their determination not to participate fairly in financial proceedings one’s conduct might be described as morally wrong, their behaviour must go as far as to have a financially measurable impact on the other party and thus, be unfair to the other party if the court were to disregard such conduct.

At Goodsells Family Law, we work extremely hard to find and trace hidden assets.  Whilst in order to minimise the financial and emotional costs of divorce we would always endeavour to negotiate on your behalf, if necessary and circumstances dictate, we are swift, firm and precise in our efforts to secure the very best settlement for you.

Talk to a solicitor today who can allay your concerns

To find out more, complete our online contact form, call Donna Goodsell at Goodsells Family Law on 020 7622 2221 or email enquiries@goodsellssolicitors.co.uk.