Misconduct in financial remedies: Time for a change?

The Law Commission's recently published scoping report on divorce and dissolution has highlighted the pressing need for various areas of reform in financial remedy proceedings. One of the areas identified in the report is how courts consider the conduct of separating parties when making financial remedy orders, especially when it comes to the issue of domestic abuse.

Right now, this is just a scoping report, it's up to the Government to decide if they want the Law Commission to make any formal recommendations for reform. While we wait for their decision, let's take a look at the current approach and why these changes are so important.

Current Approach

Currently, under section 25(2)(g) of the Matrimonial Causes Act 1973, courts can consider the conduct of each party in financial remedy proceedings if it’s deemed inequitable to disregard it. However, past case law shows that this is usually limited to conduct that is "gross and obvious" and that has direct financial consequences. This high bar often excludes many forms of domestic abuse, which can leave victims and survivors in tough financial situations post-divorce.

Historically, conduct was considered when evidencing the reason for divorce at the outset of the proceedings, but with the introduction of the new no-fault divorce system, these conversations have been pushed back into the financial remedy proceedings where non-exceptional conduct and abuse often go unaddressed.

The scoping report points out several issues with the current approach. One major problem is the inconsistency in how courts interpret and apply the consideration of conduct. There’s no definition of “conduct”, leading to uncertainty and potential unfairness as different judges could hold differing opinions for what constitutes conduct that would be inequitable to disregard.

For example, economic abuse, which includes controlling or coercive behaviour that affects an individual's ability to acquire, use, or maintain financial resources, is often overlooked unless it is blatantly obvious to the court. Even when such abuse is considered by the court, the process of doing so and giving evidence can significantly increase legal fees that victims and survivors can ill afford.

Proposed Changes

To address these issues, the Law Commission suggests considering the following:

1. what forms of behaviour will be considered conduct (whether that be personal misconduct or litigation misconduct);
2. clarification of the wording dealing with conduct in the Form E;
3. the introduction of conduct issues after Form E;
4. the impact that conduct and domestic abuse will have on a claim for financial remedies, for example, the addition of compensation for conduct; and
5. the process to be adopted when making an allegation of conduct, for example, reform to the current fact-finding approach.

Reforms in these areas are necessary for several reasons. Firstly, by ensuring that courts consider domestic abuse more readily, they would ensure fairness and justice and help to shift the financial burden from victims and survivors to perpetrators. Victims and survivors often face poor financial outcomes post-divorce, and clearer guidelines would help courts make more consistent and fair decisions.

Secondly, many of the report’s stakeholders, including those representing victims and survivors of domestic abuse, support the need for clearer recognition of abuse in financial remedy decisions. This would help protect vulnerable parties and ensure their needs are met.

Moreover, clearer rules and definitions would help reduce disputes and litigation. When parties understand how conduct will be considered, they’re more likely to reach settlements and have less contentious divorces. This aligns with the broader societal shift towards recognising the use of Non-Court Dispute Resolution, where appropriate, and addressing domestic abuse in all its forms, ensuring that the legal system supports and protects victims and survivors effectively.

Conclusion

In conclusion, the Law Commission's report aims to persuade the Government that reform is needed to create a more just and predictable framework for considering conduct in financial remedy orders, particularly in cases involving domestic abuse.

This reform is necessary to ensure fairness, reduce financial disputes in divorce proceedings and adequately protect the victims and survivors of domestic abuse.

If you or someone you know are separating from an abusive relationship, there are still steps that can be taken to protect the victim and survivor and to ensure the court recognises the impact of the abuse on them financially.

If you would like to discuss this further, please contact Claudia Gilham who is an expert in this area and can carefully guide you through this challenging area of law.

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