Unreasonable parties will pay the price for litigation misconduct

Litigation should be a tool for resolving disputes, not a weapon to facilitate or continue economic abuse over an ex-partner. Unfortunately, given the highly emotional context of the proceedings, family courts all too often bear witness to a range of deplorable behaviour, or ‘litigation misconduct’, by parties to the proceedings. There is now more light at the end of this tunnel however, as explained below.

In financial proceedings brought by divorcing or separating couples, litigation misconduct covers a multitude of sins. Examples are many, and include refusing to negotiate with the other party (so as to increase costs and emotional pressure on the other party), unilaterally transferring ownership of matrimonial assets out of the reach of the other party, failing to disclose assets, deliberately taking steps to reduce the value of an asset, fraudulently manipulating information before the court and refusing to comply with procedural rules.

Fortunately for those who want a fair and just outcome, the courts are becoming ever more willing to punish spouses who commit such acts. The recent decision in OG v AG 2020 EWFC 52 saw Lord Justice Mostyn stating that litigation misconduct should be ‘severely penalised in costs’.

In this case, the litigation costs ran to £1 million and proceedings were underway for two years which Lord Justice Mostyn put down to the ‘abysmal, and let there be no doubt, dishonest, presentation’ of the husband. His financial position was not fully disclosed until two weeks before the financial hearing, so the opportunity to meaningfully negotiate a settlement could not arise until this time.

The husband’s dishonesty led Lord Justice Mostyn to determine that 90% of the wife’s legal costs should be paid by the husband. He stated that this would have been an order for 100% of the wife’s costs had the wife at this point engaged in reasonable negotiations, which she unfortunately did not.

But, in certain cases, a punishing costs order won’t suffice. The decision in Rothschild v DeSouza 2020 went even further, punishing the misconduct of the husband by drastically reducing his overall entitlement at the end of financial proceedings. In this case, the husband had brought excessive and unnecessary court proceedings against the wife, not just in relation to the matrimonial finances but in relation to the children and third-party property ownership claims. He refused to comply with numerous orders made in previous hearings and was at one point handed a suspended prison sentence for 28 days for failing to comply with court orders against him.

The effect of the husband’s litigation misconduct meant that there were now insufficient funds left to meet the needs of the whole family. The judge held that the children’s needs must be met first. Secondly, the wife should not be penalised for the misconduct, so her needs were met next. This left the husband without enough money to meet his own needs; but that did not sway LJ Cohen, who determined that the husband had to pay the price of his ‘vindicate and irrational’ behaviour. He stated that this was an inevitable result of his behaviour.

So the courts have now made clear that litigation misconduct will not be tolerated, and parties who indulge will be held to account. It is hoped that lawyers will advise their clients accordingly so leading to a more consistently responsible and constructive approach in court proceedings

SMB’s market leading family practice advises on all aspects of relationship breakdown. we believe that we combine sensitivity and tenacity with an understanding of how to protect our clients’ interests and ensure the best outcome for all those involved in a family break up.

By Claire Hindle and Jane McDonagh