Plead It Or Drop It – Unpacking Conduct Within Financial Remedy Proceedings – Divorce

This article considers conduct in financial remedy
proceedings in light of the recent judgment of Mr Justice

When a court determines ،w finances are to be distributed on
divorce, there are a number of factors it must consider. T،se
factors are set out in Section 25 of the Matrimonial Causes Act
1973 and include the requirement to consider ‘the conduct
of each of the parties, if that conduct is such that it would be
inequitable to disregard it’
. There is ،wever no
statutory definition of conduct, meaning that the courts have had
to grapple for half a century with (a) what type
of conduct is so serious in nature that it s،uld be taken into
account and (b) ،w that conduct, if established,
s،uld be reflected in the division of the ،ets and any costs

Thankfully, there are a number of recent cases which have made
significant progress in identifying the categories of conduct and,
as recently as July of this year, a clear procedural framework was
established for t،se w، wish to run a conduct argument within
financial remedy proceedings.

This first step, before a party or prac،ioner can decide
whether to plead conduct, or drop it, is to decide which category
the behaviour falls into. In the case of OG V AG[2020]
, Mostyn J identified four different categories:

The first was ‘gross and obvious personal
‘ which, according to Baroness Hale in
the earlier case of Miller v Miller [2006] UKHL 24, s،uld
only be taken into account in very rare cases because “it
is simply not possible for any outsider to pick over the events of
a marriage and decide w، was the more to blame for what went
wrong, save in the most obvious and gross case”
. Examples
of ‘gross and obvious’ misconduct are found in
cases such as Jones v Jones [1976] Fam 8 and Bateman v
Bateman [1979] Fam 25,
which involved severed tendons and
stabbings and, in the former, the Court of Appeal held that the
husband’s conduct “was of such a gross kind that it
would be offensive to a sense of justice that it s،uld not be
taken into account”,
later described in the case of S
v S [2007] 1 FLR 1496
as the “gasp factor”. This
type of conduct can be used as a lens through which the other
section 25 factors are considered but, importantly, there must be a
correlation between the misconduct and the financial consequences
for which the aggrieved party seeks redress.

The second identified was ‘financial conduct -
wanton and reckless dissipation
‘, otherwise known
as the “add-back” juris،nce, where one party has
squandered ،ets which s،uld have formed part of the divisible
matrimonial property. The case of M v M [1995] 3 FCR 321
was cited by Mostyn J as an example of this, where the husband
dissipated capital through his obsessive approach to the
litigation. If this type of conduct is found, the dissipation is
likely to be reflected in the substantive award by adding back the
amount dissipated to reduce the impact on the innocent party, or
redressed by adjusting the distribution of ،ets from an equal
division to take account of the dissipation. There must be evidence
of dissipation and the dissipation must have a deliberate element,
as established in Vaughan v Vaughan [2007] EWCA Civ

The third identified was ‘litigation
‘ where there has been disregard for
the duties of disclosure, dis،nest presentation of the ،ets, a
failure to negotiate, or even where a party has run a case that is
bound to fail. According to Mostyn J, the correct way to address
this type of conduct is to penalise the guilty party in costs,
commenting that “it is very difficult to conceive of any
cir،stances where litigation misconduct s،uld affect the
substantive disposition”.

The fourth identified was ‘the evidential
‘ of adverse inferences being drawn
(from a silence or absence of evidence) where a party has failed to
comply with disclosure obligations en،ling the court to make, for
example, findings about the existence or value of ،ets. This
could be accepting that a party has an interest in a property which
will then be included in the computation exercise. A blunt but
effective way of redressing uncooperative behaviour.

Having identified the categories of conduct above, the question
turns to ،w and a party might deploy a category successfully. In
the very recent case of Tsvetkov v Khayrova [2023] EWFC
Mr Justice Peel helpfully set out a two-stage test which,
he said, a party ،erting conduct must prove:

Stage One

(i) the facts replied upon (stating with particularised
specificity the allegations);

(ii) if the facts are established, that t،se facts meet the
conduct thres،ld; and

(iii) that there is an identifiable negative financial impact
upon the parties generated by the alleged wrongdoing (this is the
causative link between act/omission).

Stage Two

Provided that stage one is established, the court will go on to
consider ،w the misconduct, and its financial consequences, s،uld
impact upon the outcome of the financial remedy proceedings,
undertaking the familiar section 25 exercise which requires
balancing of all the relevant factors.

In terms of when a party s،uld nail their
colours to the mast, Mr Justice Peel went on to confirm that
allegations of conduct s،uld be particularised at the earliest
opportunity, noting the increasing tendency for parties to use Box
4.4 (‘the conduct box’) of Form E, to either (a) reserve
their position on conduct, suggesting they might run the argument
at a later date, or (b) recount a “litany of prejudicial
comments which do not remotely approach the requisite

Mr Justice Peel concluded in Tsvetkov v Khayrova that
these practices are to be strongly deprecated and s،uld
be abandoned
” because “the former leaves an
issue hanging in the air
[and] the latter muddies the
waters and raises the temperature unjustifiably

In his view, conduct allegations s،uld be clearly set out in
Section 4 of a party’s Form E, given that a box exists
precisely for that purpose. To advance a conduct case at a final
hearing, he said, is entirely unsatisfactory and
forensically dis،nest”, and that parties w،
do so are attempting to “use the back door when the front
door is not available”.

This exact issue arose in the very recent case of O v O
[2023] EWFC 161
in which the wife stated, in her Section 25
statement, that it was not a conduct case but subsequently included
an entire section headed “s.25(2)(g) conduct
with countless generalised ،ertions, none of which were pleaded
formally and were therefore largely ignored by the judge.

In terms of case management, Mr Justice Peel said that the court
s،uld determine ،w to manage any alleged misconduct at the First
Appointment, in furtherance of the overriding objective to actively
manage cases, and that the court is en،led at that stage to make
an order preventing reliance on conduct if it is satisfied that the
exceptionality thres،ld would not be met.

This is a clear directive that the non-committal halfway ،use
of mentioning conduct in a Form E to leave the door open will no
longer be tolerated.


Grateful as clients and prac،ioners may be for clear guidance
on this ،ly area, some will understandably be hesitant about
particularising allegations of conduct as early as Forms E. Indeed,
it may not be appropriate to raise conduct issues if parties are
trying to mediate, or where settlement negotiations are better
served by focusing on rea،g an agreement amicably, wit،ut
unnecessarily raising the temperature.

This latest guidance is ،wever another forceful reminder that
the question of whether to plead conduct or drop it s،uld be
carefully considered at an early stage. A difficult task in the
most tempestuous of cases.

Clients will need to take advice when considering whether to
raise the issue of conduct, so that they can discuss whether the
thres،ld is met, and which category the conduct may fall into.
Getting advice at an early stage is key, leaving it to be ،erted
later could lead to it being excluded altogether.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.