FZ v SZ (Rev 1)

In ancillary relief proceedings, conduct under section 25(2)(g) of the Matrimonial Causes Act 1973 requires conduct sufficiently serious to affect the fairness of the financial award. False allegations and misuse of confidential litigation information may qualify, but reprehensible conduct will not necessarily alter the award where the parties’ conduct is equally serious.

Documents copied from a shared, non-password-protected family computer may ordinarily be used, whereas password breaches and similar intrusions carry risks as to admissibility, conduct and costs. Present market value is the usual basis for valuation. Departure to fair, hope or economic value requires demonstrated serious injustice and is exceptional.

The wife sought ancillary relief and variation of a post-nuptial settlement following the breakdown of the parties’ marriage. The proceedings involved substantial assets, difficult-to-value overseas businesses, pension assets, disputed liabilities and extensive satellite litigation concerning the matrimonial home and children.

The central issues were whether either party’s conduct should affect the financial award, whether documents obtained from the husband’s computer could properly be used, how the overseas businesses and contingent liabilities should be valued, and how the parties’ matrimonial and non-matrimonial property should be divided.

1. The court found that both parties had behaved exceptionally poorly. The wife’s false report to the police concerning the husband’s compliance with the ouster order amounted to conduct under section 25(2)(g) of the Matrimonial Causes Act 1973. The husband’s disclosure of confidential proceedings material to Zendan authorities and his subsequent proceedings against the wife’s parents also amounted to conduct. The parties’ conduct was, however, equally serious, so no financial adjustment was made.

2. The ordinary Hildebrand principles were extended to a family computer used by both parties which was not password-protected. Documents on such a computer could be copied and used in the same way as documents lying openly in the family home. Breaching a password or other security may lead to exclusion or regulation of the material, a conduct adjustment or an adverse costs order. The wife’s copying of the material in this case was not material misconduct.

3. Present market value should ordinarily be used in ancillary relief proceedings. Fair, hope or economic value may be used only exceptionally, where serious injustice would otherwise result. The overseas businesses were too uncertain to value reliably, but the court attributed £1.4 million to the present value of the wife’s interest in the P Business and disregarded the remaining overseas assets and liabilities because their potential upsides and downsides were likely to net off.

4. The court retained a two-stage approach to non-matrimonial property. It first identified and divided the matrimonial property equally, subject to fairness, and then considered the relevance of the husband’s pre-marital property. The wife received £7,982,600, comprising a transfer of the matrimonial home subject to its mortgage and a lump sum, on a clean-break basis. The pension constituted a variable post-nuptial settlement capable of variation.

First instance decision in the High Court (Family Division). The court determined the ancillary relief claim and related issues concerning conduct, valuation and variation of a post-nuptial settlement.