TT v CDS (Rev 1)

Litigation misconduct may be taken into account under section 25(2)(g) of the Matrimonial Causes Act 1973. This applies to misconduct within financial remedy proceedings and related litigation. A costs order may merely redistribute the remaining assets and may not remedy their depletion.

The court may reflect the financial consequences of misconduct in its substantive award. Where necessary to achieve fairness, it may prioritise the needs of the innocent party and minor children. The responsible party may receive less than would otherwise meet that party’s needs.

A judgment must explain how the award was calculated. It need not invariably quantify the misconduct or calculate a hypothetical award before deducting its financial effect. The required analysis depends on the circumstances.

The husband appealed from Cohen J’s final financial remedy order following TT v CDS [2019] EWHC 3572 (Fam). The order transferred the family business to the wife and required the husband to pay a secured lump sum of £225,000. The parties’ two children lived with the wife and had particular needs.

The litigation had substantially depleted the matrimonial assets. The judge found the husband largely responsible and concluded that the wife required the business to support herself and the children. The husband argued that the judge had failed properly to assess his needs and had implicitly imposed a penal award without identifying or quantifying the misconduct relied upon.

The central issues were whether litigation misconduct could affect a needs-based award, whether the judge had adequately explained its effect, and whether the resulting distribution fell within the range of fair awards.

1. Appeal dismissed. The judge had taken the husband’s litigation misconduct into account and was entitled to do so. His references to the resources being unavailable because of the husband’s conduct, the unnecessary haemorrhage of money, and the destructive litigation made that conclusion clear.

2. Litigation misconduct may fall within section 25(2)(g) of the Matrimonial Causes Act 1973. It may include misconduct in the financial remedy proceedings and in other litigation. Money dissipated through litigation is no longer available to meet needs or for sharing. A costs order may only reallocate the assets that remain and therefore may not repair the depletion.

3. The court may reflect misconduct through the distribution of income and capital, a costs order, or both. The controlling objective is a fair outcome which reflects all relevant circumstances and gives first consideration to the welfare of minor children. A party cannot fritter away matrimonial assets through conduct within section 25(2)(g) and then claim the share that would have been available had the party acted reasonably.

4. Misconduct can justify an award which does not meet the responsible party’s needs. Where resources are insufficient, the court may prioritise the needs of the innocent party and the children. In an appropriate case, the financial consequences of misconduct, together with other relevant factors, may justify awarding all the matrimonial assets to the innocent party. The result must remain justified by the section 25 factors.

5. A financial remedy judgment must clearly explain how the award was calculated. No universal structured method requires the court first to calculate an award without misconduct, quantify the misconduct in money, and then deduct that amount. The appropriate degree of quantification and structure depends on the case, although a clearer analysis is desirable.

6. The award was sufficiently explained and justified. The litigation had consumed at least £800,000, and the excess caused by the husband’s conduct would otherwise have been available for distribution. The wife required the business to meet her needs and those of the children because the judge could not rely on the husband to contribute. The husband retained substantial assets, a further receivable, and realistic entrepreneurial prospects. The judge had adequately considered his needs and reached an award within the permissible range.

1. Court of Appeal (Civil Division): The husband’s appeal was dismissed. The financial remedy order made by Cohen J remained effective: TT v CDS (Rev 1) [2020] EWCA Civ 1215.
2. High Court, Family Division: Cohen J determined the financial remedy proceedings in TT v CDS [2019] EWHC 3572 (Fam). A final order was made on 5 February 2020 following minor adjustments to the disposition stated in the December 2019 judgment.