The husband and wife in R v B and others [2017] began divorce proceedings after a marriage and cohabitation of approximately 15 years. The parties became enthralled in lengthy and costly financial remedy proceedings which cumulated in a recent final hearing. A key issue that arose in the final hearing was one of conduct and how the conduct of both of the parties may affect the financial settlement that they should receive.

Background

To give background to this matter, the wife came from a wealthy property-owning family and the husband began to work for her family business shortly after their relationship began. The wife claimed that the husband’s conduct; namely, transferring assets owned by the family to a complex series of trusts in Jersey, had directly damaged the business and that, as such, his financial award should be reduced to reflect this loss.

The wife also alleged that the husband was guilty of litigation misconduct at huge cost. By way of example, following the issuing of his application, the husband challenged the beneficial ownership of the majority of properties within the family and business. This resulted in a ten day preliminary issue hearing relating to just one particular property. The husband was unsuccessful in his challenges and Moor J described his litigation conduct as “achieving absolutely nothing apart from the waste of over £2million in costs.”

The husband also claimed that the wife’s conduct should be taken into consideration and accused her of recklessly squandering assets whilst in a relationship with a third party. Over the course of the wife’s relationship the third party had secured significant finance from her resulting in her acknowledging that he was a ‘dishonest fraudster’. 

When should conduct be taken into consideration?

A party’s conduct during a marriage will only have an effect on the financial settlement in very limited circumstances. The conduct needs to be gross and must have a direct and obvious effect upon the matrimonial assets.

Litigation misconduct is usually reflected in an order for costs against the guilty party rather than directly effecting the financial settlement.

Outcome

Although the Court found that the husband had made significant contributions to the marriage through his work with the wife’s family business he had nevertheless engaged in ‘clear deception’ which could ‘only be categorised as fraud’ in hiding loans of over £7million. The husband had become obsessed with avoiding tax and siphoning assets to the extreme detriment of the business.

Moor J also held that the husband’s unreasonable litigation misconduct should not only be reflected in an order for costs against him but also by way of a reduction of his financial award.

In relation to the alleged misconduct of the wife the Court held that although the wife had been reckless, her conduct should be set against the very significant financial contribution to the marriage made by her and her family.

The Court therefore ruled in favour of the wife and ordered that the matrimonial assets be divided as per the wife’s previous offer of settlement.

This case acts an important reminder of the effects that conduct may have in financial proceedings.

The Family department at George Green are experts in this area.  Our Family Solicitors consistently offer a high standard of care to all clients by providing expert advice in relation to the financial matters arising from their divorce or separation. In particular, our Family Solicitors can consider and advise on any potential issues of conduct and how this may affect their settlement.

If you require any assistance in relation to the financial aspects arising from your divorce or separation, or any other Family matters, then please contact either our Cradley Heath office on 01384 410410 or our Wolverhampton office on 01902 424927 and ask for a member of the Family department