Peel J’s view is that it is unlikely that domestic abuse would have a material impact on the vast majority of financial remedy cases, such that it would need to be litigated. Peel J uses the case of N v J to address the interplay between domestic abuse and conduct in the context of financial remedy proceedings.

Background

N 56. J 60. Cohabitation started in either 2006 (N) or 2009 (J). Civil Partnership 2012. Separation 2023. Cohabitation and civil partnership was either 17 or 15 years. N had mental health issues, including bipolar affective disorder. There was a marked deterioration in N’s mental health from 2012 onwards. 2016 was a particularly severe decline. N’s case was that it was because of J’s conduct. In particular, J’s denial of paid sexual encounters with masseurs from at least 2011 onwards. N was hospitalised, spent time in rehabilitation and attempted suicide on two occasions.

Asserting conduct post Tsvetkov v Khayrova

Peel J reiterated the two-stage test in Tsvetkov v Khayrova [2023] EWFC 130, at [43]–[46].

In Tsvetkov v Khayrova, Peel J made it clear that:

1. Form E Box 4.4 should be used to set out any allegations of conduct clearly and in line with the two-stage test. Reserving your position on conduct or recounting a litany of prejudicial comments are practices that should be abandoned.
2. Courts should, at the First Appointment, case manage any alleged misconduct. The court is entitled to make an order preventing a party who pleads conduct from relying upon it, if the court is satisfied that the threshold required to bring it within s 25(2)(g) would not be met. The court should consider proportionality and whether, if proved, it would be material to the outcome.
3. Conduct that arises after the exchange of Form Es should be brought before the court as soon as possible so the case can be managed properly.

Conduct: financial remedy proceedings

At [28] regarding personal misconduct, the judge noted that the observations by Ormrod J in Wachtel v Wachtel [1973] Fam 72, which were endorsed by Baroness Hale in the Court of Appeal in Miller, McFarlane [2006] UKHL 24 at [145]: that the conduct must be ‘both obvious and gross’ remained the law. The increasing awareness of the incidence of domestic abuse and its harmful and pernicious effects does not lower the conduct hurdle to be surmounted in financial remedy proceedings; [29].

At [33] Peel J considers Goddard-Watts v Goddard-Watts [2023] EWCA Civ 115 to be a case strictly about financial non-disclosure and not personal misconduct. In his conclusion in [37] Peel J maintains that there should be an identifiable financial impact even if it is not always easily measurable. The words at [74] of Goddard-Watts did not represent a new departure from the traditional view. Peel J repeats that, as per Tsvetkov v Khayrova, there must be a causative link between the conduct and the financial consequence.

Comments by Peel J at [38] that all practitioners should be aware of

1. Section 25 criteria are listed as signposts for the court to consider what orders to make. It would be highly unusual to include a factor which has no financial consequence under the terms of an Act which is directed to reordering the finances of the parties.
2. In the great majority of cases, the impact on the alleged victim can and ordinarily will be taken into account by reference to the conventional criteria regardless of whether domestic abuse has, in fact, taken place. It is doubtful that domestic abuse would have a material impact on the vast majority of cases, such that it needs to be litigated.
3. The s 25 factors will enable the court to arrive at a fair and balanced decision by reference to the usual factors such as needs, resources, contributions, health, age, and duration of relationship without any reference to conduct. It is unlikely that personal misconduct will have a material impact on the ultimate evaluation.
4. It is not the job of the financial remedies court to impose a fine, a penalty, or damages upon a party for conduct. Nor is it for the financial remedies court to moralise or apportion blame for how the parties behaved towards each other during their time together.
5. Personal vindication is not the function of the financial remedies court. Misconduct must be directly relevant to the distribution of finances to be entertained.
6. Courts should not expose an alleged victim of domestic abuse to a remorseless investigation into that very domestic abuse.
7. Courts need to look forward and not back, and where possible set the parties on the road to financial independence. A detailed inquiry into conduct is a retrograde step, even more so in the era of no-fault divorce.
8. If courts were to determine allegations of domestic abuse in financial remedy cases – the implications on the system of financial remedies would be profound.

Held

1. There is a two-stage test for conduct in financial remedies proceedings – Tsvetkov v Khayrova, [3].
2. Courts should continue to case manage conduct allegations robustly at the earliest possible opportunity; [40].
3. Paragraph [39]:

i) The high bar to conduct claims is undisturbed by the recent focus on domestic abuse in society and the family justice system.

ii) The statute does not specifically refer to a financial consequence; nevertheless, such cases will be vanishingly rare.

iii) Financial consequences are a necessary ingredient of a conduct claim. This applies as much to domestic abuse allegations as to other types of personal misconduct. (See also para [37], where Peel J states there must be a causative link between the conduct and the financial consequence.)

iv) The alleged conduct (even if it reaches the threshold and has a financial consequence) must be material to the outcome. In the vast majority of cases, a fair outcome is ascertained by reference to the other s 25 criteria (including needs and impact on earning capacity) without requiring the court to examine conduct.

v) To inquire into conduct must be proportionate to the case as a whole.

Outcome

N’s alleged misconduct was excluded from consideration at trial. The financial distribution could be fairly achieved by referencing the s 25 criteria (and their equivalent under the Civil Partnership Act) without needing to account for the conduct allegations, and conduct (even if found) would make no material difference to the outcome.