It remains the case that difficult and malicious behaviour exhibited by one party during financial remedy proceedings can be punished with adverse costs orders, an adjustment of the asset division, or both.
This type of behaviour, referred to as “conduct” is not just limited to litigation conduct, but any conduct which the court considers it would be inequitable to disregard.
With that in mind, what type of conduct might a court consider relevant, or “inequitable to disregard”? In the Rothschild case, Ms De Souza alleged the following conduct perpetrated by Mr Rothschild had impacted adversely on the “financial circumstances of the family”:
- Deliberate and wanton overspending and dissipation of assets, for the husband’s sole benefit, and at a level wholly unsustainable as against the assets that were available and the family’s needs moving forwards;
- Destructive behaviour which has impacted negatively on the value of the assets;
- The husband’s refusal to allow the rental (or rental at a commercial rate) of the property portfolio since the separation, resulting in repossession proceedings and other enforcement proceedings, together with increased costs, as well as depletion of other capital and income to save them;
- The husband’s refusal to obtain any form of paid work in the three years since separation to assist in meeting the increased costs of a separated household and litigation;
- The husband’s behaviour which had impacted on the children, increasing the expenses associated with meeting their needs;
- The husband’s refusal to participate appropriately within the proceedings, bringing unmeritorious applications and consistently failing to comply with orders and deadlines, needlessly increasing costs by a vast amount; and
- The husband’s refusal to agree to the release of assets on an interim basis to allow each party to meet legal fees, forcing the wife resort to expensive specialist litigation funding at significant costs that could have been avoided.
Each of the above examples may well give good grounds for an argument that there should be a re-attribution of the assets in favour of the reasonable party. Of course, each case turns on its own facts.
A culmination of one or more will strengthen any such argument. The broadest, and most frequently argued, is the penultimate submission – namely that in respect of litigation conduct. Court orders are to be complied with and, understandably, judges are becoming increasingly less sympathetic to those who flagrantly disregard them.
Judicial system under pressure
With the Covid-19 pandemic, the judicial system has found itself under unprecedented pressure to keep cases moving towards a just resolution. There is simply no compassion for those who place obstacles in the court’s way by failing to comply with clear directions.
As a practitioner, one party's failure to comply with their ongoing duty of full and frank disclosure of the assets within their financial proceedings is an all too familiar issue.
Not only does this hinder any early settlement (and accordingly, increases legal costs on all fronts) because the other party is not likely to agree to a settlement which has no regard to assets which they suspect are in existence but which have not been disclosed, but it also enables the court to make such assumptions as to the available assets as it deems appropriate.
If a court draws an adverse inference in respect of one party’s means and their ability to meet their needs, whether in relation to their income, assets or liabilities, because that party has failed to provide adequate disclosure, then that party can hardly complain that the inference has led to an unfavourable award.
It is highly frustrating for an innocent party to find themselves at the receiving end of such behaviour. It is essential to ensure that any failings by the vexatious party are bought to the court’s attention, without delay.