To the Adulterer the Spoils? The role of Conduct in Divorce and Financial Proceedings in England and Abroad
May 15, 2020, 16:29 PM
Meta Title :To the Adulterer the Spoils? The role of Conduct in Divorce and Financial Proceedings in England and Abroad
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May 15, 2020, 16:28 PM
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Conduct remains an area in which public and client perceptions vary widely from how case law has developed. This article examines the historical background for conduct as a facet of the modern divorce and financial remedy process and how conduct is applied by the courts as a factor within proceedings. It then examines comparable international jurisdictions before making suggestions as to areas in which the doctrine might develop in the future.
Nowhere in my experience as a family lawyer does the view of the client diverge so far from the prevailing view of the court as it does in relation to conduct, specifically how much weight should be given to the conduct of the other party in dealing with the divorce and later in relation to financial proceedings. And no wonder perhaps? Clients continually hear that Parliament is attempting to deal with the issue of no-fault divorce. It naturally follows, therefore, that we currently have a fault-based system. Clients are, understandably, very surprised when we tell them that conduct matters very little difference in the overwhelming majority of cases.
The Historical Context
Divorce as we know it – as a remedy within the gift of civil rather than religious courts – has from its outset in the late 19th century been fault-based. Conduct has played a role from the very beginning. The only basis on which a divorce could be granted in accordance with the Matrimonial Causes Act 1857 was adultery (women required a husband to have been adulterous plus an aggravating factor such as incest to have been present).
Significant reforms in the early 20th century widened the conduct on which a divorce could be based to include cruelty and wilful desertion for three years – both of which live on in slightly modified forms today in the shape of behaviour and desertion petitions. A non-conduct ground was also introduced in the form of incurable insanity.
The very end of the swinging sixties saw a fundamental tipping of the balance away from conduct with the introduction of one ground for divorce – irretrievable breakdown of the marriage – albeit supported by one of five facts. Three facts were conduct based – adultery, behaviour and desertion – and two were not – two years’ separation with consent and five years’ separation.
With small exceptions (an extra form here, answering an additional question there) the process for divorce with a ‘conduct’ fact looked (and still looks) very little different from the process with a ‘no-fault’ fact.
The latter part of the 20th century and the beginning of the 21st have seen more divorce reforms but the fundamentals remain the same: a process arising from the irretrievable breakdown of a marriage, attributable to one of the five facts. As such, the starting point of the process is, in most cases, the conduct of the respondent party.
Within the process which ends the Marriage
So, what impact does this conduct have on the divorce process? ‘Very little’, is the answer most clients are surprised to hear. Surely, they ask us, the court will take into account the difficulties they have faced at the hands of the other party and speed the petition along quicker than those with no conduct element. ‘No’, we in turn must advise them, it won’t; in fact, the process may well be a longer (and potentially more expensive) affair if it relies too heavily on conduct. Amicability between the parties tends to move things along faster.
The only interaction between conduct and the divorce petition in most cases, beyond being a justification to begin that process, is in relation to costs. Where a petition is started on the basis of adultery, behaviour or desertion, the likelihood of the petitioner being able to retrieve some of their costs from the respondent is increased. Those costs tend to amount to a few thousand pounds and track very closely against the costs of the proceedings. There is no element of ‘compensation’ for any suffering or pain resulting from the marriage. This is truly at odds with the understanding clients have about the role of conduct in launching the proceedings and can, understandably lead to a great deal of frustration.
Within the process the divides of Financial Assets
Conduct also looms large in the mind of a client in relation to financial proceedings either following or as part of the divorce process. Again, this is understandable given that the disclosure form they are required to complete (Form E) has a specific question focussing only on conduct. This arises from Section 25(2)(g) of the Matrimonial Causes Act 1973 and Schedule 5 to Part 5 of the Civil Partnership Act 2004, both of which give judges a list of factors to consider when making financial remedy orders and both of which specifically name conduct as one of those factors.
None of the factors is given more weight than the others so conduct has, theoretically, a potentially unlimited role within the proceedings. The reality is not quite so simple.
Limits imposed by the Judiciary
In our legal system, laws come from several sources. Acts of Parliament, EU/international law, common law and precedents set by the judiciary. While Parliament did not set any limits on the role of conduct, the judiciary has done.
As long ago as 1972, Lord Denning made it clear that the role of conduct would be fundamentally circumscribed:
The court should not reduce its order for financial provision merely because of what was formerly regarded as guilt or blame. To do so would be to impose a fine for supposed misbehaviour in the course of an unhappy married life.
This represents a rather stark wake up call for the client wishing to advance a case built on conduct: the court is not there to redress marital unhappiness in pounds and pence within the divorce settlement.
In the same decision Ormrod J mentions conduct having to be ‘obvious and gross’. Other cases mention a ‘gasp’ factor. Conduct will, therefore, only be taken into account when it represents the most serious behaviour and when it would inequitable not to take it into account, i.e., when fundamental fairness demands it.
Development of Categories
Case law shows us that there are two, or arguably three, broad categories of conduct and that they are treated very differently in law.
The first category is litigation conduct within proceedings. This relates to how the parties conduct themselves in terms of court processes. Non-compliance with court rules and practice can be met with costs orders imposed on the errant party. Requests for such orders are advanced frequently - far more frequently than the orders are actually made. The conduct involved generally has to have a material effect on the reaching or imposition of a settlement or run up costs for the other party. A few days late here and there will not, in reality, see a costs order made against a party.
The conduct in this category is dealt with by way of an order rather than an adjustment to the financial settlement (though in reality, payment of the costs order will reduce the amount in the hands of the offending party). Costs orders are limited in scope and it is rare for a party to recover all their costs.
The second type of conduct falls within the period of the marriage rather than within the proceedings – though of course in practice they often overlap. It can be sub-divided into two further categories: financial conduct and more personal conduct.
Courts have been more readily willing to apply ‘add back’ in the cases of financial conduct compared with personal conduct. It is arguably easier for a Judge to quantify what has been ‘lost’ to the matrimonial pot where it can be summed up in pounds and pence then add that notional sum back in to meet the offending party’s claim. A loss does not always equal an add back though. It can mean the making or not making of certain orders, or in some cases nothing happening at all.
The case of K v K saw a wife avoid a maintenance order being made against her in favour of her alcoholic husband who also had a personality disorder. He had gambled away the family savings and his behaviour had allowed the family home to reduce in value, then be repossessed.
K v K is somewhat unusual in that there is quite often a feeling that the flaws of a spouse, particularly resulting from a health condition, ought not be redressed in the divorce finance courts. Contrast K v Kwith the case of MAP v MFP which saw a husband spend £1,500,000 over a two-year period, much of it on drugs, prostitutes and then drug rehabilitation (with only limited success). The court took a rather different approach to K v Kand refused to add the sums back into the pot, making it clear that the expenditure was due to facets of MFP’s personality and that MAP was to take her spouse as she found him. Essentially, the message was that the court was not in the business of undoing a bad bargain a spouse had made for themselves.
The court does take a varying approach where the poor behaviour is aggravated by a ‘wanton’ element (as opposed to it being something an addict or someone suffering medically has limited control over). The ‘wanton’ line of authorities deals with bad behaviour aimed specifically at running down the matrimonial pot (rather than just having a good time?). Vaughan v Vaughan, for example, saw £100,000 added back where the money had been gambled and frittered away. The court made explicit its justification had been the clear evidence of a reckless and wanton aspect to the husband’s behaviour. As any solicitor will tell their client, it can be incredibly hard to produce evidence of deliberate and wanton behaviour. The door is open to wanton conduct claims, but it requires a very firm evidence-based push.
The door seems to swing more easily open in cases where the behaviour amounts to fraud. Mrs LeFoe, in a case involving not only her husband but also the family mortgage-provider, was awarded very slightly under half of what the matrimonial pot would have been were it not for Mr LeFoe’s ‘long record of falsehood and deceit’ – a very significant add back. A fraudulent re-mortgage of the family home later saw both mortgages fall into arrears, all to try and defeat his wife’s claims against him.
On the other end of the scale, personal conduct is much harder to advance a successful argument. The quality of behaviour is inherently subjective in everyday life and just as much in the courtroom. What represents terrible conduct to one person (and to one Judge sitting in a finance case) is part of the ebb and flow of a somewhat unhappy marriage for another.
In light of the poor likelihood of success, conduct arguments are rarely run in relation to personal conduct and even more rarely successful. The court has made it quite plain it exists to divide matrimonial finances, not, in the ordinary run of business, to act as a personal moral arbiter nor to mete out punishment for poor behaviour.
Where the court can act is where that conduct strays outside the ordinary run of business and into something truly exceptional. In the words of Ormrod J, it is willing to deal in conduct which is 'gross and obvious' which has ‘nothing to do with the ordinary run of fighting and quarrelling in an unhappy marriage’. Even then, the court’s role is not punitive – it does not stray into the realm of the Criminal Courts – rather, it aims to redress grossly unfair situations in which a perverse financial result might come about due to the behaviour of one of the parties.
No one case has provided a comprehensive test for conduct being given weight in determining a financial settlement: rather, a patchwork of comments and findings is required to form a guiding approach.
It is apparent that physical violence must be extreme. The types of conduct the court has been willing to address through financial adjustment include a wife inciting another to kill her husband, a husband brutally assaulting and raping his wife resulting in imprisonment for a number of years, and a mother who murdered the two children of the family despite having been found not guilty by reason of insanity.
Balcombe LJ acknowledged in Evans that while the case (referred to above in which the wife incited someone to attempt to murder her husband) would see financial redress for conduct, this would not be the case in every instance where there had been violent conduct or even homicide. Each case would turn on its own facts. This can be seen in Hall v Hall where a maintenance order for just under 1/3 the husband’s income was still made in favour of his wife despite her having stabbed him in the abdomen in the course of an argument. H v H was explicit in saying any financial adjustment should not be punitive: the family court is not standing in the shoes of the criminal court to duplicate, magnify or replace any punishment which has or might have been meted out.
Poor sexual conduct seems in itself not enough to justify any rebalancing of the scales between the parties. Where there is particularly heinous conduct (an aggravating factor akin to differently Victorian divorce treated men and women?) the court may be willing to intervene. There are few cases in this area; the most prominent (in that they have been cited in further judgments) both involve incest with children and grandchildren within the family.
The key difficulty appears being able to confidently say what ‘value’ for the poor conduct needs to be attributed to put matters right. This can be difficult with financial conduct cases, harder still where the conduct is a moral matter. Australia, as discussed below, has found quite a neat way to tackle the issue (though this is limited to serious domestic violence cases only). Where the court can attribute some financial value or impact arising from the moral (mis) conduct, it appears to have been easier for the courts to ‘add back’ a sum to address unfairness arising from personal behaviour. H v H was perhaps an easier decision than most in relation to conduct: the stabbing by the husband had the effect of reducing the wife’s earning capacity to zero.
The English jurisdiction remains significantly far from having a clear and unequivocal approach to personal conduct (other than taking a very light touch) while financial conduct remains a developing area vulnerable to counter-arguments and evidential difficulties around the ‘wanton’ nature of any particular behaviour.
An International Perspective
Just as the position on conduct within the English system of family law varies, so does it vary across and within other jurisdictions. Below is a brief look at how conduct is dealt with in societies very similar to our own, with both common law and civil law systems.
Canada, which has a common law system like England and Wales, is a federal nation and there are some small variations from province to province. However, like England and Wales, conduct generally has little to no impact unless it has a financial aspect and can be described as wanton. Case law has developed three specific categories in which conduct will be applicable in determining how the matrimonial pot (or net family property as it is known there) is divided. They are:
Reckless investing: the key case in this area saw a husband’s share of the pot reduced in light of his wanton and reckless investments having depleted the pot. This depletion was accompanied by fraudulent acts to hide his earlier behaviour, including forging the wife’s signature to obtain more credit.
Spending to feed addiction: a husband took pains to hide the parlous state of family finances from his wife. Years of addiction had led to job losses and debt to feed that addiction. Despite the true scale of the family’s debt having been hidden from the wife, she still made significant contributions to meeting the debt of which she was aware (to the tune of tens of thousands of dollars) and made vastly unequal contributions to what did remain in the family pot. Again, we see an element of fraud or deceit in hiding the true state of affairs from the other spouse.
Spending money on an affair partner: despite the wife’s continuing suspicions, the husband continued an extra-marital relationship with a woman, using family assets to travel far and wide with her. This was held to be reckless depletion of the pot and was redressed in the final financial split.
Australia, also a common law jurisdiction, has a no-fault system of divorce and this filters through to financial matters too. The Family Law Act 1975 is explicit in stating that the matrimonial assets will be divided along contributions lines (though like our system, those contributions may not always be financial in nature). It flows from this that if one party has made a negative contribution or has been impeded from contributing then this can be factored into the final reckoning of matrimonial finances (and, since cohabitees have rights in Australia, cohabitation finances as well). This remains the exception rather than the rule.
For financial conduct, the principles followed by the court are most clearly set out in the case of Kowaliw & Kowaliw:
Notional assets can be ‘added back’ into the matrimonial (or cohabitational) pot.
Financial losses resulting from the actions of one or both are generally to be shared except where there has been ‘waste’. This can be found:
where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, and/or
where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value (which could include excessive gambling, spending excessive sums on drugs, alcohol or the downloading of internet pornography).
So, the position on financial conduct is clear, even if used sparingly in practice. The Australian Courts have rather neatly tied the idea of certain types of moral conduct to contributions so as to justify adjustments in respect of non-financial behaviour. The 1997 decision of Kennon & Kennon allowed for the alteration of a property settlement within the existing contributions-based framework on the basis that the husband’s course of violent conduct had such an impact on the victim it made it significantly more arduous for her to make contributions. A causal link had been established between the level of the wife’s contributions (and what they would otherwise have been) and the husband’s course of violent conduct and how that course of conduct had impacted on future needs.
Just as in our jurisdiction, the courts have been explicit that a light touch should be taken: not every act of violence will see an adjustment.
The French civil law system in so far as it relates to division of assets during the marriage and in divorce operates very differently from our own, and at the same time in a very similar way.
At the time of marriage, couples can opt for one of a selection of marriage contracts/property regimes available (or choose none at all). The contracts allow for community property or separation of property and provide an enduring framework dictating how property acquired during the marriage is to be dealt with. The election of the parties for separate property is subject to a compensatory allowance even where the party seeking an adjustment in their favour is at fault.
In the event an allowance is sought or where a community property regime was selected at the time of marriage, a judge will (in a multi-stage process much like our own Financial Remedy process) make a division using criteria set out in the French Civil Code. The criteria including duration of marriage, age and health, professional qualifications and occupations, non-financial contributions to family life, estimated or foreseeable assets, existing and foreseeable rights and pension rights. A position very similar to our own other than the omission of conduct which we would find in our Section 25(2)(g).
Germany takes a very different approach to France in that conduct plays a clear role at least as far as maintenance is concerned. The Civil Code allows maintenance (paid only where need demands it and very rarely on a lifetime basis) can be restricted or refused by a court in light of the conduct of the receiving party. This conduct can be:
the person entitled frivolously induced his own indigence, and/or
the person entitled frivolously disregarded serious property interests of the person obliged, and/or
the person entitled, before the parties lived apart, for a long period grossly violated his duty to contribute to the family maintenance, and/or
the person entitled has committed a major criminal offence or a serious intentional minor offence against the person obliged or against a close relative of the person obliged, and/or
the person entitled is clearly responsible for manifestly serious misconduct towards the person obliged.
Case law confirms that ‘manifestly serious misconduct’ can include adultery outside the marriage.
Courts in certain areas within England are sometimes perceived to be more ‘wife-friendly’ compared with the rest of the country. By contrast and anecdotally, the courts of Southern Germany are reputed to pay more generous maintenance than those courts in the North of the country. Also, across Germany, courts have very limited powers to deal with division of property (compared with awards of maintenance). Only gains on property acquired during the marriage and pensions can be divided. Any assets belonging to one party to the marriage remain the property of that person upon divorce, so conduct has little impact.
Conduct in the Modern Era
Case law on conduct develops slowly in light of the fact it is rarely brought before the court and even more rarely dealt with in any depth within judgments. There are some areas in which social changes may impact how conduct is dealt with and the author would suggest that they include:
The majority of adjustments appear to be made in favour of female spouses. Historically they tend to be the weaker party financially and this remains the case. Is there a degree of gender stereotyping in addition? Were the gender pay gap to close, we may see more adjustments in favour of male spouses. As same-sex relationships increasingly come within the purview of the court, it will be interesting to observe how they are dealt with.
The family courts see the most serious examples of conduct. Domestic violence continues to remain a problem. Judges are undoubtedly sensitive to ‘floodgates’ arguments in all areas of law. If domestic violence were to increase, or even financial turbulence lead to more wantonly reckless investing, would it increase the number of cases in which conduct can successfully be argued, or would there be a natural brake in the form of judicial reticence to potentially open floodgates?
Will the ‘Me Too’ era see personal conduct having a financial effect? Would poor moral conduct towards a work colleague (certainly the kind of moral conduct the courts have been unwilling to factor into their decisions) now find a nexus with financial conduct in that it could wantonly and recklessly lead to a job loss and thereafter loss of future earning capacity, capital assets e.g. in the form of stock options (or even family savings to fund legal fees to resist or settle claims), or would the effect be a neutral one impacting on both the parties and not justifying redress under Section 25(2)(g).
Conduct, it is acknowledged, is an area of family law with limited application but it remains to be seen whether this could change and how. Other comparable jurisdictions offer interesting perspectives on how conduct might be expanded (such as Germany) or applied within an existing framework with clear judicial guidance (Australia).
It is clear that for the time being, the apprehension of the general public and our clients of what conduct is or should be within the legal system remains very far from the reality.