Excluding s 25(2)(g) ‘Conduct’ from Consideration at an Interim Stage – Strike-Out or Summary Judgment by Another Name?

Published: 11/08/2023 09:00

Dmitry Tsvetkov v Elsina Khayrova [2023] EWFC 130 (4 August 2023) per Peel J has much of interest to say in relation to MCA 1973 s 25(2)(g) ‘conduct’.

At [43] Peel J stated that at ‘stage one’ a party asserting conduct must prove:

‘i) the facts relied upon;
ii) if established, that those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and
iii) that there is an identifiable (even if not always easily measurable) negative financial impact upon the parties which has been generated by the alleged wrongdoing. A causative link between act/omission and financial loss is required …’

As he later stated at [46] ii) the reason for this is that:

‘[a] party who seeks to rely upon the other’s iniquitous behaviour must say so at the earliest opportunity, and in so doing should; (a) state with particularised specificity the allegations, (b) state how the allegations meet the threshold criteria for a conduct claim, and (c) identify the financial impact caused by the alleged conduct. The author of the alleged misconduct is entitled to know with precision what case he/she must meet.’

Further at [46] viii) Peel J stated that:

‘[u]sually, an exchange of short, focussed narrative statements will suffice (page limits are an indispensable tool in the judicial armoury and should be deployed) but such statements must set out in particularised detail (a) the facts asserted, (b) how such facts meet the conduct threshold, and (c) what consequential financial loss or detriment has occurred.’

At [44] Peel J stated that if ‘stage one’ is established, at ‘stage two’ the court:

‘will go on to consider how the misconduct, and its financial consequences, should impact upon the outcome of the financial remedies proceedings, undertaking the familiar s25 exercise which requires balancing all the relevant factors.’

The above analysis is conventional. Paragraphs [43], [46] ii) and [46] viii) broadly reflect the wording in Order 1.1 of Financial Directions Order (Longer Version) – part of the Standard Family Orders – where paragraph 36 requires a party who seeks to run a conduct case to file and serve a concise statement addressing (i) what conduct exactly [he] / [she] is seeking to rely upon; (ii) the basis for [his] / [her] conduct allegations; and (iii) what effect this alleged conduct should have on the current [financial remedy] application.

At [45] Peel J recorded that he had noted the ‘increasing tendency’ for parties to complete paragraph 4.4 of their Form E by either (i) reserving their position on conduct; or (ii) recounting a litany of prejudicial comments which do not remotely approach the requisite threshold. He states that these practices ‘are to be strongly deprecated and should be abandoned’ given that ‘[t]he former leaves an issue hanging in the air. The latter muddies the waters and raises the temperature unjustifiably.’ These comments need to be noted by the profession.

Peel J then moves on at [46] to set out the ‘procedure [which] should normally be followed when there are, or may be, conduct issues’.

Of particular interest is [46] iv) where Peel J states that the court is ‘duty bound by FPR 2010 1.1 to have regard to the overriding objective’ – which he thereafter sets out in full – and v) where he states that ‘[i]n furtherance of the overriding objective, [the court] is required to identify the issues and empowered to determine which issues should be investigated’ and thereafter sets out FPR 1.4 which states that the court ‘must’ further the overriding objective by actively managing cases and gives examples of what is such case management including at (2)(c)(i) ‘deciding promptly … which issues need full investigation and hearing and which do not’.

This leads Peel J to state at [46] vi) that the court should determine at the First Appointment how to case manage the alleged misconduct. Of note he states that:

‘In my judgment, in furtherance of the overriding objective and FPR 2010 1.4, the court is entitled at that stage to make an order preventing the party who pleads conduct from relying upon it, if the court is satisfied that the exceptionality threshold required to bring it within s25(2)(g) would not be met. The court should also take into account whether it is proportionate to permit the allegation to proceed, for a pleaded conduct claim usually has the effect of increasing costs and diminishing the prospects of settlement. Finally, the court should take into account whether the allegation, even if proved, would be material to the outcome.’

There is also, of course, the court’s general powers of case management at FPR 4.1 which include at FPR 4.1(3)(l) that ‘[e]xcept where these rules provide otherwise, the court may … exclude an issue from consideration’.

Until Dmitry Tsvetkov v Elsina Khayrova there has been little (if any) reported family authorities on the scope of (in particular) FPR 1.4(2)(c)(i) and FPR 4.1(3)(l) – both of which were imported from the Civil Procedure Rules (the former is at CPR 1.4(2)(c) – ‘deciding promptly which issues need full investigation and trial and accordingly disposing summarily of the others’ – and the latter with identical wording is at CPR 3.1(2)(k)).

It has often been thought (and argued) that these rules assist in general case management (as part of the court’s duty to further the overriding objective) but do not extend to allowing a court at an interim stage to exclude a statutory factor (such as an explicit s 25 factor) from consideration at a final hearing. This is because (i) that which is promulgated as secondary legislation (e.g. the FPR by way of a statutory instrument) cannot take precedence over primary legislation;1 and (ii) if it was not ‘reasonable for a party to raise, pursue or contest a particular allegation or issue’ or ‘the manner in which a party has pursued or responded to the application or a particular allegation or issue’ was of relevance then this should be dealt with by way of a costs sanction as being ‘litigation conduct’ within FPR 28.3(6) and (7) making it appropriate to require one party to pay (towards) the costs of the other party. However, this argument would now seem unsustainable in light of Peel J’s comments.

It is arguable that Peel J’s analysis is tantamount to a strike out order made pursuant to FPR 4.4(1). This rule provides inter alia:

‘the court may strike out a statement of case if it appears to the court—
(a) that the statement of case discloses no reasonable grounds for bringing or defending the application;
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings …’

PD 4A as amended provides, inter alia, at para 2.1 that:

‘[t]he following are examples of cases where the court may conclude that an application falls within rule 4.4(1)(a) – (a) those which set out no facts indicating what the application is about; (b) those which are incoherent and make no sense; (c) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable application against the respondent.’

And at para 2.2 that:

‘[a]n application may fall within rule 4.4(1)(b) where it cannot be justified, for example because it is frivolous, scurrilous or obviously ill-founded.’

Paragraph 2.5 provides that the examples set out above are intended only as illustrations.

In Wyatt v Vince [2015] 1 FLR 972 Lord Wilson of Culworth (with whom all the other judges agreed) considered the scope of applications to strike out in financial remedy proceedings. At [24] he identified the divergence in the powers provided under the FPR and CPR namely that CPR 24.2 expressly confers upon the court a power to give summary judgment in appropriate cases whereas there was no analogous power under the FPR. Lord Wilson regarded such an omission at [27] as having been ‘deliberate’ given the nature of (in particular) financial remedy proceedings. He went on (emphasis added):

‘The objection to a grant of summary judgment upon an application by an ex-spouse for a financial order in favour of herself is not just that its determination is discretionary but that, by virtue of section 25(1) of the 1973 Act, it is the duty of the court in determining it to have regard to all the circumstances and, in particular, to the eight matters set out in subsection (2). The determination of an application by a court which has failed to have regard to them is unlawful: Livesey (formerly Jenkins) v Livesey [1985] AC 424 at p 437, Lord Brandon of Oakbrook. The meticulous duty cast upon family courts by section 25(2) is inconsistent with any summary power to determine either that an ex-wife has no real prospect of successfully prosecuting her claim or that an ex-husband has no real prospect of successfully defending it …’

Could it not therefore be argued that excluding ‘conduct’ at an interim stage – whether under FPR 1.4(2)(c)(i) and/or FPR 4.1(3)(l) – amounts to (impermissible) summary judgment in that it prevents the court at final hearing from carrying out its duty under MCA 1973 s 25(1) to have regard to all the circumstances and to all of the matters set out in subsection (2)?

This reasoning led Lord Wilson to conclude at [27] that FPR 4.4(1) ‘has to be construed without reference to real prospects of success’ and that the three sets of facts set out in PD 4A para. 2.1 ‘exemplify the limited reach’ of FPR 4.4(1)(a) and does not extend to applications which are ‘legally recognisable’.

Further and importantly Lord Wilson in recognising the ‘limited reach’ of FPR 4.4(1) did not rule out the possibility, in appropriate circumstances, for there to be a form of abbreviated hearing. At [27] he referred to:

‘[p]rocedures for the court’s determination of applications for financial orders, which both respect its duty under s 25(2) of the 1973 Act and yet cater for such applications as may be fit for an abbreviated hearing, are now well in place: see para [29] below.’

He then stated at [29] (emphasis added):

‘Although, however, the wife's appeal against the strike-out should succeed and her application should proceed, it is essential at this stage to conduct a provisional evaluation of the issues. For, by FPR 2010, r 1.4(1), the court must further the overriding objective by actively managing cases, which, by r 1.4(2)(b)(i) and (c), includes promptly identifying the issues, isolating those which need full investigation and tailoring future procedure accordingly. This exercise will dictate the nature, and in particular the length, of the substantive hearing …’

In MG v FG (Schedule 1: Application to strike out; Estoppel; Legal Costs Funding) [2016] EWHC 1964 (Fam) Cobb J stated at [21] that in deciding whether to order a strike out based on ‘abuse of process’ ‘[t]he guidance from the Supreme Court … is clear … I must not be distracted by a detailed consideration of the merits of the claim itself’.

In the later case of Roocroft v Ball [2017] 2 FLR 810 King LJ at [45] set out a number of matters that could be drawn from Wyatt v Vince including:

‘(ii) The court's power to strike out an application pursuant to r 4.4(1) of the FPR 2010 is of 'limited reach' and has to be construed without reference to 'real prospects of success', it follows that an application is not an abuse of process for the purposes of the FPR 2010, r 4.4(1)(b), simply by reason of the fact that it has no real prospect of success.
(iii) An application has 'no reasonable grounds' for the purpose of the FPR 2010, r 4.4(1)(a), if it is not legally recognisable in the sense that it is incoherent or the applicant has remarried.
(iv) There is no summary judgment procedure under the FPR 2010. That does not however mean that the court is constrained from exercising its case management powers to direct there to be some form of abbreviated hearing following a provisional evaluation of the issues.’

Peel J stated at [46] vi) that the court should determine at the First Appointment how to case manage the alleged misconduct. In this context, and given the suggestion in Wyatt v Vince that an abbreviated hearing may be appropriate, it is of note that in Roocroft v Ball at [48] King LJ stated that:

‘[i]f an abbreviated hearing is to be appropriate and fair … proper notice [must] be given to the parties allowing them the opportunity to make submissions as to the issues to be considered and the form such a hearing should take.’

If a court at First Appointment (or otherwise the first time a court has case managed the case if the First Appointment order was made on paper as part of the Accelerated Procedure or otherwise) is entitled at that stage to make an order preventing the party who pleads conduct from relying upon it then it could be said that no ‘proper notice’ of this will have been given to the parties.

It is therefore arguable that conduct allegations which are ‘legally recognisable’ and not an abuse of process are not capable of being excluded from consideration at an interim stage whether under FPR 1.4(2)(c)(i) and/or FPR 4.1(3)(l) or otherwise. Is not a court preventing a party who pleads conduct from relying upon it if satisfied that the exceptionality threshold required to bring it within s 25(2)(g) would not be met equivalent to summary judgment on the merits? There is no doubt that a court can use its case management powers to dictate the ‘nature’ and ‘length’ of a final hearing following a provisional evaluation of the issues but can the court at an interim hearing make an order preventing the party who pleads conduct from even arguing it? In appropriate circumstances there may be a form of abbreviated hearing but is not an abbreviated hearing different to no hearing at all? And even if there is to be an abbreviated hearing proper notice of this must be given to the parties.

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