In divorce proceedings, ‘conduct’ refers to the behaviour of either party during or before the marriage that a court may take into account when deciding how to divide assets. As such, conduct in divorce financial settlement proceedings is extremely important. This is the case because under section 25(2)(g) of the Matrimonial Causes Act 1973, the court must consider the conduct of each party if, and only if, that conduct is such that it would be inequitable to disregard it. This sets a deliberately high threshold.
Since the introduction of no-fault divorce in April 2022, the reasons a couple divorces are no longer relevant to the divorce process itself. However, this has not changed the rules on conduct in financial remedy proceedings. Conduct remains a separate consideration, covered by section 25(2)(g), and the threshold for it to affect a financial outcome has not been lowered.
In financial remedy proceedings, the court will only take conduct into account in limited circumstances. The court may consider different types of behaviour, including:
- Serious financial misconduct
- Violence or extreme personal conduct
Litigation misconduct is a separate category of conduct. It refers to behaviour during the legal proceedings themselves, rather than during the marriage. Examples include deliberately withholding financial information, making false statements to the court, or failing to comply with court orders. Litigation misconduct does not usually change how assets are divided. Instead, it is primarily reflected in costs orders, meaning the party who has behaved improperly may be ordered to pay a greater share of the other side’s legal costs. While costs orders are the standard remedy, the court has the discretion to depart from equality in the asset division if the litigation misconduct is sufficiently grave.
What is serious financial misconduct
Financial misconduct is often the most relevant type of conduct in financial remedy proceedings. It occurs when one party has behaved in a way that has diminished the matrimonial asset pool at the expense of the other. Examples include:
- Deliberately or recklessly dissipating matrimonial assets
- Transferring or hiding money to reduce the asset pool
- Gambling away substantial sums
- Concealing assets from financial disclosure
- Providing false financial information to the court
If a party has deliberately or recklessly dissipated assets, the court may apply what is known as an “add-back”. This involves treating the dissipated sums as though they still form part of the matrimonial assets when calculating a fair division. The leading authority is Vaughan v Vaughan [2007] EWCA Civ 1085. In this case, the husband had gambled away significant sums. The Court of Appeal upheld the addition of £100,000 back into the asset schedule, but the judge emphasised that ‘add-back’ should be applied with caution. There must be clear evidence of dissipation with a “wanton element” – the dissipation must not simply reflect poor character or unfortunate spending, but rather behaviour that was deliberately designed to reduce the asset pool or was so reckless that it is akin to deliberate.
Another example is in Loh v Loh-Gronager [2025] EWFC 483, the judge reduced the husband’s entitlement under a prenuptial agreement on the basis of his conduct. The husband, a former investment banker, had taken funds from joint accounts without consent, invested them without authority, and obtained other sums under false pretences. Most seriously, he attempted to fabricate email evidence during proceedings, which the judge described as amounting to the most serious level of litigation misconduct that may be seen in these courts. His conduct throughout the marriage and the proceedings was found to be “deplorable”. As a result, his entitlement under the prenuptial agreement was reduced from approximately £6.45 million to £2.37 million, with a further deduction of £375,000 directly attributable to his conduct. The case illustrates that, in sufficiently extreme cases, conduct can result in a significant reduction of an otherwise valid contractual entitlement.
What is violence or extreme personal conduct
In financial remedy proceedings, “violence or extreme personal conduct” refers to serious behaviour by one spouse that is so grave it would be unfair, or “inequitable”, for the court to ignore it when deciding financial outcomes. Such conduct must clear a very high threshold. Not all bad behaviour, even serious abuse, will automatically affect the financial outcome.
The types of behaviour that may qualify include:
- Serious physical violence causing lasting harm
- Coercive or controlling behaviour with a direct financial impact, and
- Conduct that has fundamentally affected the other party’s ability to earn or accumulate assets
In the recent case of LP v MP [2025] EWFC 473, the judge penalised the wife financially for her coercive and controlling behaviour towards the husband. The conduct included frequent financial demands, physical abuse, threats to kill, and the making of serious but false allegations in Children Act proceedings. The court found that the wife’s behaviour met the conduct threshold and reduced her sharing entitlement by 40% of her award. The judge noted a real risk of unfairness to victims of violent or coercive controlling behaviour if the lack of readily quantifiable financial loss prevents the courts from even considering such behaviour. The case marks a significant development in how courts treat coercive control in the financial remedy context.
How does the court evaluate conduct arguments and what are the outcomes?
The leading authority on how courts approach conduct arguments in financial remedy proceedings is Tsvetkov v Khayrova [2023] EWFC 130, where the judge set out a clear two-stage test.
Stage one: the party alleging conduct must prove three things:
- The facts relied upon;
- That those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and
- 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.
Stage two: If stage one is satisfied, the court will then consider how the misconduct and its financial consequences should impact the overall outcome. The court carries out the familiar section 25 exercise, weighing all relevant factors to reach a result that is fair in all the circumstances.
If the threshold is met at stage one, the court may:
- Adjust the financial award to reflect the harm caused
- Apply an “add-back” where assets have been dissipated (in financial misconduct cases), or
- Reflect the conduct within the overall fairness assessment under section 25
It is important to understand that the court’s approach is not punitive. The purpose is not to punish the wrongdoer but to achieve a fair outcome for both parties.
References:
Section 25 of the Matrimonial Causes Act 1973
Vaughan v Vaughan [2007] EWCA Civ 1085
