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Nigel Cholerton reported in CC v LC [2023] EWFC 52

Facts:

This case concerned financial remedy proceedings involving modest financial resources. This was a nuanced case and the difficulty was that the husband refused to engage. The issues turned on non-compliance and how that relations to conduct under section 25(g) of the Matrimonial Causes Act 1973.

The applicant wife, a part-time teacher, was represented by Nigel Cholerton of No18 Chambers. The respondent husband, a journalist, did not appear and was not represented. The asset of significance and which the judge needed to decide upon was a three-bedroom former matrimonial home, valued at £420,000, which provided adequate accommodation for the wife and three children aged five, eight and ten. This was a ten-year marriage and the parties were in their 40’s.

Conduct of the husband:

The important feature of this case concerned conduct and the drawing of inferences.

The husband’s failures include a failure to file any evidence of his housing and other capital needs, his mortgage raising ability, his earning capacity or his intentions. Further, he made no proposals to resolve the proceedings. Not only did he then not attend the hearing, but he also ignored orders to disclose documents and did not even attend an eventual committal hearing. When bailiffs were sent to arrest him and bring him to court (under rule 37.7(2) FPR 2010) the husband still did not attend court and the bailiffs, faced with difficulties, did not arrest him.

It was stated that the wife was well advised to give up on enforcement of the orders of disclosure and list a final hearing instead, due to the developing and disproportionate burden of the costs trying to get the husband to engage.

When applying the statutory provisions of section 25 of the Matrimonial Causes Act 1973, HHJ Wildblood KC gave the issues arising in relation to conduct very careful thought. He considered the passage in OG v AG [2020] EWFC 52 in which Mostyn J considered four scenarios in which conduct could arise within financial remedy proceedings:

  1. Personal misconduct during the marriage or after which will only be taken into account in rare circumstances (Miller v Miller [2006] 2 AC 618) and where there is a financial impact of such conduct;
  2. “Add-back” jurisprudence where in the rare case dissipation is clear and obvious;
  3. Litigation misconduct which may result in a litigant being severely penalised in costs but will only very rarely affect the substantive disposition; and
  4. Failure to provide full and frank disclosure where the court is able to draw inferences with respect to the process of computation rather than distribution.

 

The court then considered the broader approach put forward by Mr Cholerton from the case of RR v CDS [2020] EWCA Civ 1212, in which the husband appealed the district judge's order which had awarded the wife the whole of the equity in the former matrimonial home, the parties' only remaining asset. Connell J dismissed the appeal on the basis that the wife was entitled to rely on various aspects of the husband's conduct. Connell J concluded, “whether by taking the effect of the conduct into account when determining the distribution of the parties' financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the relevant circumstances and gives first consideration to the welfare of any minor children”.

Held:

HHJ Wildblood KC concluded that the more compartmentalised approach suggested by Mostyn J, and the broader approach from RR v CDS result in the same conclusion. When considering the husband’s conduct, the court found the husband’s failure to give full and frank disclosure led to two inferences: i) that he has more financial resources than he has chosen to reveal and ii) he is not troubled by how much he has after these proceedings and is satisfied that he can meet his needs and the needs of the children when they are with him. However, when drawing inferences, it was impossible for the court to give any specific figure for what this husband may have underdeclared in relation to his capital.

HHJ Wildblood KC took together the effect of adopting the broader approach, the husband’s conduct, with the other section 25(2) factors. This led to an order that the former matrimonial home to be transferred to the wife, the husband had a lump sum which met his needs (as the court took them to be) and the husband was to pay the existing level of maintenance. The husband was also to pay the wife’s costs of the failed FDR and committal proceedings, which reduced his lump sum.

Analysis:

This decision carefully considered how litigation conduct can fall into conduct under s.25 MCA 1973. Litigation misconduct and the failure to provide full and frank disclosure can lead to the drawing of inferences by the court, which can affect the overall outcome for the parties. Although it will be impossible for the court to provide for specific figures.

This case further highlights that costs are not the only risk for an uncooperative party in financial remedy proceedings. Here, penalising the husband in costs for his non-disclosure did not reflect the extent of his misconduct and choice to cause misery, expense and uncertainty, together with his lack of engagement.

A link to the judgment can be found here: https://www.bailii.org/ew/cases/EWFC/HCJ/2023/52.html