Conduct in Financial Remedy Cases
In financial remedy proceedings, courts decide how the matrimonial assets should be divided upon divorce/dissolution. In making this decision, they must have regard to a variety of factors, one of which includes the party’s conduct throughout the court process.
The recent case of Tsvetkov v Khayrova [2023] EWFC 130 explained that there is an exceptionally high threshold that conduct must reach to diminish one party’s asset upon distribution by the court.
‘Misconduct’ usually arises in one of four situations:
Situation one: Gross and obvious personal misconduct. This is conduct that is done between the parties which has a financial impact. For example, in one case the husband severely wounded the wife which impacted her future earning capacity.
Situation two: One party has moved, hidden, or given away family assets to prevent the other party from obtaining them through the divorce proceedings. These assets can be added back into the pot for financial distribution as if they were never dissipated.
Situation three: Litigation misconduct. This concerns the party’s behaviour throughout the court process, such as lying to the court or disobeying court orders.
Situation four: Failing to give full and frank disclosure of the assets in existence to be distributed.
There is a two-stage test that must be passed before the court will penalise a party for their misconduct. At stage one, a party asserting misconduct must prove to the court three things: Firstly, the facts they are relying on. Secondly, that those facts meet the high conduct threshold and finally that an identifiable negative impact has been caused by the misconduct. At stage two, the court will consider how the misconduct and its financial consequences should impact the financial proceedings, taking all factors into account.
The case of Tsvetkov v Khayrova considered the issue of litigation misconduct. The wife removed joint assets from the jurisdiction, lied to the court twice, colluded with the husband’s enemies to try and cause the husband damage and diminished the matrimonial financial pot. Despite the Judge being appalled by the wife’s behaviour, in this instance found against penalising the wife for her litigation misconduct when considering the division of assets. However, the court penalised the wife via a costs order (a way to order one of the parties to pay part or all of the other party’s legal costs).
Therefore, whilst Tsvetkov v Khayrova demonstrates that the bar for misconduct is high, it also highlights other remedies available. Given the complexities, specialist legal advice should always be sought.
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These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.
