Behaving badly: approaching conduct arguments in financial proceedings
Every legal practitioner working in FR will know the judicial eyeroll (either metaphorically or, for the more expressive judges, literally) when they see that little box 4.4 ticked on a Form E which indicates that a spouse is wishing to plead conduct. So, how do we approach this topic both with our clients and the court to ensure that we are putting the case properly and being proportionate to the issues which the court must determine? Well, from where I stand, with care and consideration. So, this article will endeavour to do three things – First, explain the framework for pleading conduct. Second, approaching misconduct during proceedings. And finally, provide some top tips. There has been a flurry of case law in the last few years laying out good practice in pleading conduct cases, and we’re mostly tipping out legal hats to Mr Justice Peel for taking on that gauntlet. The big case being Tsvetkov v Khayrova [2023] EWFC 130 and followed up by N v J [2024] EWFC 184 which reiterated the same principles and gave us the framework on which we scaffold conduct cases, namely:
Stage One
Facts – Clearly establish the facts on which you rely.
Link – Demonstrate an identifiable negative financial impact upon the parties directly caused by the alleged wrongdoing.
Stage Two
Once Stage One is complete, the court will consider how the misconduct affects the final award.As ever, the court is not interested in letting parties air all the dirty laundry on which they seek some kind of judicial vindication and judges are well within their rights to, at first appointment, rule out conduct being pleaded if they do not see, either a high likelihood of establishing the facts or there is no causal link. So be ready, at first instance, to make arguments either to fully plead or keep the argument alive to FDR. Good judicial practice is to deal with the issue as soon as possible and determine how best to approach it, which means the classic approach of ‘let’s kick this to FDR’ may not fly as well as it used to.
Addressing Misconduct During Proceedings
There are, as many readers will already be well aware, four types of conduct (as laid out in OG v AG [2020] EWFC 52): gross and obvious personal misconduct; ‘add-back’; litigation misconduct; and non-disclosure. The court recognises that, particularly for the latter three, conduct issues may only arise once proceedings are underway, meaning we may need to raise them after Forms E are exchanged and possibly, even after the first appointment. Good practice on this is clear: as soon as it becomes apparent, the court and other side should know. It is hugely frowned upon to ambush another party at final hearing with these issues; as in all areas of law, you must know the case against you with sufficient time to consider and respond. So, applications should be made swiftly once the decision is made to run the argument.
Alternative Approaches: Costs and Earning Capacity
Costs: Poor litigation conduct should, generally, be dealt with in the awarding of costs at final hearing/FDR. The bar is still high, but these arguments are made far more frequently with positive outcomes and even in needs cases, a party may be liable for costs (eating into the award which is meeting their need). Equally, in cases where the party is legally aided, this is an important factor to consider because, more than likely, they will be repaying some or all of those legal costs under the statutory charge.
Earning Capacity: Where misconduct has negatively impacted a party's earning potential, this issue might be addressed under Section 25 factors rather than through a separate conduct plea. As Mr Justice Peel highlighted in N v J [2024] (para 38ii), focusing on the resulting needs and reduced earning capacity often provides a more pragmatic approach, saving time and reducing conflict. It is hard to see why there would be any need to embark upon a lengthy and conflicted dispute about cause of the diminished earning capacity. What matters is reflecting the limited earning capacity in the overall award. Another example might be behaviour which lead to additional need such as medical costs. Again, it is hard to see how a court will be assisted by detailed inquiry into the cause of the need; what matters is the individual’s requirements and the extent to which they should be met going forward. In other words, I doubt very much that domestic abuse would have a material impact on the vast majority of cases, such that it needs to be litigated.
Top Tips for Pleading Conduct in Financial Proceedings
Think carefully before ticking box 4.4.
Plead early and in detail.
Do not reserve the position.
Consider if you need to plead person misconduct, or you can simply approach the issue of earning capacity in a wholistic way to encompass the issue or seek costs.
Be proportionate to the amount of money in the pot.
Conduct arguments are costly, they are hard to win and, as much as clients may wish to feel like the judge has validated all their feelings about what their ex has put them through, that is not why the financial courts exist. Getting a handle on the argument early, controlling the narrative with your client and being clear with the court will assist hugely in managing these difficult arguments. Written by Bella Tait, Consultant Barrister, Unit Chambers.
Law is correct as of 30th October 2024. Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational purposes. Readers are respectfully reminded that it is not intended to be a substitute for specific legal advice and should not be relied upon for this purpose. No liability is accepted for any error or omission contained herein.
