It can often be a difficult and sensitive topic in financial remedy proceedings: what relevance is domestic abuse when considering a fair distribution of assets after separation?
The approach in this scenario was usefully set out again in the above case heard earlier this year (with reference to in Tsvetkov v Khayrova [2023] EWFC 130 and also OG v AG [2020] EWFC 52, both having been considered by my colleagues Melanie McIntosh, Jane Carter, and Daniel Hooker in other articles).
N v J
The facts of N v J, briefly, are as follows (the parties are male civil partners, a full recount is at paragraphs 6-14 of the judgment):
- N (56) works in the industry, J (60) is a retired businessman.
- They met in 2004 (the parties disputed the date of cohabitation, as either 2006 or 2009), but it was common ground N had negligible assets at the time of or during cohabitation, in contrast to J.
- N had various, significant mental health issues prior to the relationship, his mental health deteriorating from mid-2012-onwards. Importantly, in this case, N alleged that this deterioration was because of J’s conduct (in particular, J having paid sexual encounters with masseurs from 2011 onwards, which was denied by J at the time and not admitted until 2021). N had been hospitalised, spent time in rehabilitation, and attempted suicide at least twice.
- There was a “Partnership Agreement” between the parties in 2021 (though N was not certain they signed it) which provided for N to receive various properties (a value of approximately £2.6 million today).
- The parties entered a civil partnership in 2012 and separated in 2023 (cohabitation as 14-17 years).
- J gave N $1 million upon separation (the majority having been dissipated by N).
Form A was issued by N in October 2023, the position on conduct being “reserved” (this practice not being approved with reference to Tsvetkov).
The matter was allocated to High Court level (given the assets involved of about £32 million, N having £3.25 million via two jointly owned properties) and directions were made to take the matter to FDR (including narrative statements on conduct), followed by a post-FDR directions hearing.
The issues between the parties were: the date of cohabitation; J’s assets at the start of cohabitation; consideration of the Partnership Agreement; and conduct (the focus of this article).
On the final issue, N’s position was summarised at paragraph 16(iv) as:
“N alleges that during their relationship, J lied about his cheating and infidelity. As a result, says N, he increasingly required treatment (hospitalisation, rehabilitation, medication and Electroconvulsive Therapy) based on false assumptions that he was paranoid, delusional and psychotic. He says he felt he had lost his mind and “embraced madness”, believing he was delusional when in fact J was indeed liaising sexually with other men. It was not until August 2021 that J admitted he had had paid sexual encounters with other men from 2011 onwards.”
Conduct: the context and the right approach
It was highlighted in the judgment that domestic abuse (as defined in FPR PD12J and The Domestic Abuse Act 2021) is not directly applicable to financial remedy proceedings (paragraph 21), neither amending or supplementing the statutory definition of conduct in financial remedy proceedings (per paragraph 21(2)(g) of Schedule 5 of the Civil Partnership Act 2004, in this case, as mirrored in paragraph 25(2)(g) of the Matrimonial Causes Act 1973 (as amended), as interpreted by case law. The statutory definition is repeated as below:
- “the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it”.
Four “types” of conduct were identified in OG v AG (paragraphs 34-39), as:
- Personal (the identified type of conduct in this case and article, such conduct to only be considered in rare circumstances and only to be reflected where there is a financial consequence to its impact);
- “add-back” jurisprudence;
- Litigation; and
- Adverse inferences from a failure to give full and frank disclosure.
Personal misconduct was said to need to be of “a high degree of exceptionality to be capable of consideration under the Act” the terms “obvious and gross” being approved by Baroness Hale in Miller, McFarlane [2006] UKHL 24 (at paragraph 145). It is further noted that such conduct would only be reflected where there is a financial consequence to its impact.
Mr Justice Peel affirmed that the above remains the law (and is undisturbed by the recent focus on domestic abuse in the family justice system) and the hurdle that needs to be surmounted in financial remedy proceedings.
The need for “a financial consequent to its impact” was determined as a direct impact on the resources (either a diminution in resources, including earning capacity), such cases where there was an absence of this being extremely rare, or a financial impact on one of the other section 25 criteria (for example, increased needs), the enquiry into conduct needing to be proportionate to the case as a whole.
As to the approach to dealing with conduct arguments, Tsvetkov (paragraphs 43-46) was also affirmed by Mr Justice Peel, where generally speaking:
- It is for the party asserting conduct to prove the alleged facts relied on, that those facts (if established), meet the conduct threshold (as a high or exceptional level in the case of personal misconduct), and that there is an identifiable negative impact on the party from the alleged conduct (a causative link).
- If they can do so, it is then for the Court to consider how the conduct and its financial consequences should impact the financial remedy proceedings, with reference to section 25 and balancing all the relevant factors.
- Procedurally, it is not right for it to be reserved, and must be pled at the earliest opportunity (ideally in detail in Box 4.4 of a party’s Form E, but for example if the issue is dissipation of assets after the FDA then at the earliest opportunity), FPR 1.1 and FPR 1.4 (the overriding objective) is to be in the Court’s approach to the issue, and the Court should usually deal with the matter at the FDA stage (short narrative statements being exchanged as a common approach).
Judgment and reasons
In determining that N’s allegations of conduct should be excluded from the issues for consideration at trial, the following reasons given are highlighted (full reasons are at paragraph 43):
- Even taking N’s allegations at their highest, they are not of such exceptionality to meet the conduct test;
- It is difficult to be satisfied that J’s actions caused N’s mental health to decline and necessitated the treatment for depression;
- The conduct alleged does not, leap off the page as a factor for consideration in the financial remedy proceedings. It may have been wicked and immoral, but that is different from saying that it falls with that very rare band of cases where it will be taken into account in the financial distribution;
- The only direct financial consequence pleaded is increased medical costs. This constitutes an asserted need. Regardless of conduct, the court is required to take health into account to the extent necessary, not least as one of the relevant statutory criteria. Those needs (if established on the evidence) are there irrespective of origin, and will inevitably form part of the court’s evaluative process;
- The court will weigh all the relevant factors…this case will turn largely on the sharing principle and needs (including N’s health generated requirements);
- On N’s case he is entitled to a share of the assets built up during the civil partnership, and his needs should be met. He was not able to persuade the Court that the conduct issue in fact adds anything to his case;
- Conduct in this case is not relevant to the Partnership Agreement (i.e., it being hard to see how any alleged conduct could have impacted the signing of it given the chronology);
- The argument of conduct is disproportionate to the case; and
- The magnetic feature of this case is that the financial distribution can be fairly achieved by reference to all the other s25 criteria (and their equivalent under the Civil Partnership Act) without any need to take account of the conduct allegations, and conduct (even if found) would make no material difference to outcome.
Conclusion
The case provides another useful summary of the approach to be taken when conduct is an issue in financial remedy proceedings, with reference to OG v AG (when considering the type of conduct, and when it is personal, the test to be met) and Tsvetkov v Khayrova (when considering how to approach the issue in financial remedy proceedings and the appropriate procedure).
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