Personal Conduct in Financial Remedy Proceedings: What Cusworth J’s Recent Decisions Tell Us

The role of conduct in financial remedy proceedings is firmly back in the spotlight following two recent decisions of Cusworth J published in 2026. This article looks at the legal framework on personal conduct, reviews Cusworth J’s decisions, and highlights key practical considerations.

The law

Section 25 of the Matrimonial Causes Act 1973 outlines the various factors that the court must consider when making financial remedy orders. One such factor is ‘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’ (s 25(2)(g) of the Matrimonial Causes Act 1973).

In OG v AG (Financial Remedies: Conduct) [2020] EWFC 52 Mostyn J set out four distinct conduct scenarios:

Gross and obvious personal conduct.
‘Add back’ – where one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the matrimonial pot.
Litigation misconduct.
Drawing inferences as to the existence of assets from a party’s conduct where that party has failed to provide full and frank disclosure.

This article focuses on item 1 – gross and obvious personal conduct – looking at recent case law to illustrate the court’s approach.

The court’s approach to ‘gross and obvious personal conduct’

The leading case of Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 set out that conduct should only be raised where it is ‘obvious and gross’ and it would ‘inequitable to disregard’.

In recent years a series of cases have provided further guidance, or provided us with examples of how the guidance has been applied in practice.

Tsvetkov v Khayrova [2023] EWFC 130

The court considered there is a two-stage test for parties who seek to run a conduct argument:

Stage 1: A party asserting conduct has to prove (i) the facts relied upon, (ii) if established, that those facts met the conduct threshold, which had consistently been set at a high or exceptional level, and (iii) an identifiable (even if not always easily measurable) negative financial impact generated by the alleged wrongdoing. A causative link between the act/omission and financial loss is required.
Stage 2: If stage 1 was established, the court will consider how the misconduct and financial impact should impact the outcome of the proceedings, undertaking the s 25 exercise, which requires balancing all the relevant factors, including s 25(2)(g) conduct.

DP v EP [2023] EWHC 6

The wife sought to remove assets from the family ‘pot’ and to place them where the husband would not be able to access them. The husband was functionally illiterate and assumed that the wife was managing their joint assets for their mutual benefit. The court was satisfied that the wife’s actions were economic abuse having considered the definition in the Domestic Abuse Act 2021, therefore finding that her conduct was ‘inequitable to disregard’, which affected the asset division and costs.

N v J [2024] EWFC 184

One party made allegations of domestic abuse, which included allegations that during the relationship the other party lied about cheating and infidelity, which required medical treatment based on false assumptions that he was paranoid, delusional and psychotic. The alleged domestic abuse was excluded from consideration at trial as Peel J considered that it would make no material difference to the outcome. Peel J maintained that there should be an identifiable financial impact.

Judgments of Cusworth J

In recent weeks two reported decisions dealing with conduct have been published – both decisions of Cusworth J.

LP v MP [2025] EWFC 473

The court found that the marriage was founded on deception and fraud, where the wife made false claims of being a High Court Judge.
The court also found that there had been coercive, controlling and abusive behaviour perpetrated by the wife towards the husband.
At the time of the final hearing, the husband had assets of c.£22 million, the wife had a property, and there were two matrimonial homes held in joint names totalling £7.2 million.
Cusworth J reduced the wife’s share, assessed her needs restrictively, and decided that she was not entitled to a replication of the marital standard of living.
Cusworth J explained that whilst the impact of coercive and controlling behaviour may be hard to measure, that does not mean the impact will not be present, considering that there is a real risk of unfairness to victims of such behaviour if it is ignored as a result. His Lordship determined that the wife’s conduct would be the glass through which the court would assess fairness.

Wei-Lyn Loh v Ardal Loh-Gronager [2025] EWFC 483

The parties had signed a pre-nuptial agreement.
The court found that the husband’s behaviour throughout the marriage and during proceedings was deplorable, including taking significant sums from joint accounts and placing the money into his sole name.
Cusworth J concluded that the test for conduct and the approach taken to pre-nuptial agreements should be considered together.
In the context of personal conduct, the court held that ‘inequitable’ means no more and no less than ‘unfair’ or ‘unjust’. Fairness is likewise the central consideration when determining the weight to be given to a pre-nuptial agreement, as established in Radmacher v Granatino [2010] UKSC 42.
Cusworth J acknowledged that the higher courts have sought for policy reasons to limit to only the most serious instances the alteration of a financial remedy outcome by applying s 25(2)(g), whilst also noting that when the implementation of a nuptial agreement has been in issue the application of the principle of fairness has not noticeably been so constrained.

Looking solely at the wording of the statute itself (s 25(2)(g) of the Matrimonial Causes Act 1973), conduct is open to a wide interpretation and judges in financial remedies have discretion. However, the case law has established a norm that a direct financial consequence must be demonstrated. Cusworth J’s recent decisions suggest a more discretionary approach: his Lordship placed less emphasis on a direct financial consequence being made out. He reasoned that although the financial consequences may be difficult to quantify, this does not mean they are absent and to ignore the conduct because its impact cannot be precisely measured risks producing an unfair outcome, therefore he considered conduct as part of the assessment of fairness.

Interestingly, this is not the first time that Cusworth J has considered pre-nuptial agreements and conduct together. In Y v Z [2025] EWFC 221, Cusworth J allowed the wife to amend her case to rely on conduct where she alleged that her husband had taken funds without her consent. Cusworth J highlighted that there were situations where a party’s behaviour might be relevant to the financial outcome of proceedings, without either party pleading s 25(2)(g) and the implementation of a nuptial agreement often involved consideration of behaviour, but rarely under that provision.

In relation to fairness, Cusworth J also remarked:

‘19. … It must be right that in the vast majority of cases, there is no place for ‘fault-based’ financial determinations. Of course, too, there will always be some cases where it will be genuinely inequitable to disregard how one of the parties has behaved, and fair in all of the circumstances for that behaviour to be marked in the financial outcome in some way.’

A change in the court’s attitude towards conduct may well be on the horizon, possibly catalysed by the Law Commission’s Scoping Report on reform of financial remedies, in which some stakeholders suggested that there should be greater recognition of domestic abuse as conduct, highlighting that victims of abuse often suffer poor financial outcomes following divorce. In addition, Resolution’s paper, ‘Domestic abuse in FR settlements’, considered that 80% of family justice professionals thought that domestic abuse was not sufficiently taken into account by the court when deciding the outcome in financial remedies.

Practical considerations for family lawyers

When to raise conduct

If conduct issues are being raised, it should be raised at the earliest opportunity, with the appropriate box completed on the Form E.
Conduct should be clearly set out with specific allegations, stating how the allegations meet the threshold for a conduct claim and identify the financial impact.
The practice of reserving a position on conduct in Form E or providing prejudicial comments which do not meet the conduct threshold is to be strongly deprecated and abandoned (Tsvetkov v Khayrova [2023] EWFC 130, [45]).
Conduct that arises after the exchange of Form Es should be highlighted to the court as soon as possible so the case can be managed properly.

The court’s case management powers

The court within their case management powers can make an order preventing conduct being relied upon if the court is satisfied that the threshold for conduct is not met (Tsvetkov v Khayrova [2023] EWFC 130, [46]).

Issues for the first appointment

The court ought to determine at the first appointment how to case manage conduct allegations. The court may make an order preventing the party who pleaded conduct from relying on it if the court is satisfied that the exceptionality threshold required to bring it within MCA 1973 s 25(2)(g) would not be met.
In some cases, it will be helpful for conduct statements to be ordered at the first appointment to ensure they are available for the FDR, allowing the court to have the relevant information in front of them which can assist with an indication.
It is likely to be beneficial to ‘nail your colours to the mask’ at any early stage and attempt to reach agreement that neither party will plead conduct and ensure this is recited on the order.

Costs implications

There are potential costs implication of pursuing conduct.

Practitioners should be aware of FPR 28.3:

‘(6) The court may make an order requiring one party to pay the costs of another party at any stage of the proceedings where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them).

(7) In deciding what order (if any) to make under paragraph (6), the court must have regard to— …

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party’s conduct in relation to the proceedings which the court considers to be relevant.’