The recent case of MAP v. MFP  EWHC 627 gives guidance on this very question. In financial remedy proceedings section 25(2)(g) of the Matrimonial Causes Act 1973 allows for conduct to be taken into account when “it would in the opinion of the court be inequitable to disregard”. A line of case-law, most notably Norris v. Norris  1 FLR 1142, has established that where one party “recklessly depletes assets and thus potentially disadvantages the other spouse within the ancillary relief proceedings”, the spent sums can be notionally ‘added back’ into the matrimonial pot. The Court of Appeal in Vaughan v. Vaughan  EWCA Civ 1085 stated that the dissipation must include a “wanton element”. But the question is – how bad does the conduct have to be?
The case of MAP v. MFP is factually an extreme example. Over a 40 year marriage the parties had accumulated assets of £25 million, largely from the husband’s property maintenance business. The judge found him to be a “driving force” in the business and clearly rated his business acumen. Unfortunately the husband’s perhaps obsessive personality, whilst assisting his business, also led him down darker paths. At the end of the marriage the wife claimed that he was spending £6,000 per week on cocaine, large amounts on escorts and £230,000 in total on various (ultimately unsuccessful) periods in rehab. In the 2 years since separation, the wife contended that he had spent £1.5 million in this way. She sought an add-back of that sum to the matrimonial pot.
In reaching his conclusion, Mr Justice Moor noted that in the majority of cases no add-back will take place since “notional monies cannot be used to meet real needs”. Where, however, needs were met, the expenditure will have to be “substantially out of the ordinary”. However, he did not consider that the husband’s spending did meet that test. Despite finding that the husband had accrued £250,000 of illegitimate expenditure, Moor J held that “it would be wrong to allow the Wife to take advantage of the Husband’s great abilities that enabled him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit”.
If this decision is not overturned, it could be seen as effectively preventing the vast majority of add-back arguments. Clearly something exceptional is required. The decision appears to go further than the Norris test by requiring some deliberate aim to deplete the asset pool. It will be interesting to see whether the case is appealed and, if so, what the Court of Appeal makes of Moor J’s approach.