Shining a light on domestic abuse in financial remedy proceedings

Resolution’s groundbreaking report into the interplay between domestic abuse and the treatment of finances on separation and divorce published on 8 October 2024 makes for stark reading. Domestic abuse is defined by s1(4) of the Domestic Abuse Act 2021 and includes, but is not limited to, economic abuse.

Of those family justice professionals surveyed for the report, almost three quarters of professionals considered domestic abuse was an issue between the parties in more than 21% of their cases. Almost 80% of respondents considered that domestic abuse economic abuse is not sufficiently taken into account in financial remedy proceedings and financial awards for children.

This is not unexpected given the personal accounts of victim-survivors who have experienced ongoing financial abuse whilst trying to divide the family finances; withholding of funds, so that spouses cannot meet day-to-day expenses for themselves and their children, hiding assets, creating unnecessary and expensive delays to proceedings and successive breaching of court orders are all too common examples of financial abuse which are employed in divorce and separation.

This report calls for acknowledgment that such conduct is ‘post separation domestic abuse’.

The report focuses on the pressing need to better protect victims during court proceedings and beyond. It contains necessary proposals for legal and procedural reform and for a cultural shift, some of which can immediately be implemented, whilst others will require law reform, such as proposed changes to the family procedure rules, to amend the overriding objective, so that dealing with a case ’justly’ includes ’ensuring the parties are safeguarded from domestic abuse’; and using case management powers better where economic abuse is present.

Where there is ongoing economic abuse by failure to disclose finances, or a lack of interim provision or allegations of ongoing domestic abuse, the report, perhaps controversially, but sensibly, suggests that the balance be shifted away from any form of NCDR continuing until the situation is addressed.

Of critical importance is the proposal for a review of interim financial remedies available to ensure victim-survivors are financially supported between separation and a final outcome. These recommendations and others are designed to safeguard vulnerable litigants in the family justice system, and to ensure that either court-imposed or negotiated financial outcomes on separation and divorce are just and fair.

The survey also revealed that the limited availability of legal aid for victim-survivors and/or the accessibility of funds to pay legal fees as a chief concern which has a major role to play in the propagation of abuse.

The current Legal Services Payments Orders (LSPOs) legislation is of specific concern. Where there is enough money to go round, why should one party be required to try to fund (without access to money) an expensive and often long drawn-out process to gain access to funds whilst the other party spends freely and without limit on their legal fees?

Another issue raised by the report is the current approach of the courts to s25(2)(g) of the Matrimonial Causes Act 1973 - ‘conduct’ - which creates a very high hurdle to raising conduct as an issue in financial remedy proceedings. We have guidance in OG v AG [2021] 1FLR 1105, and more recently in Tsvetkov v Khayrova [2024] 1 FLR 937 and N v J [2024] EWFC 184, about how to approach a case involving domestic abuse. The latter two decisions both state that in order to be relevant, the conduct must be (i) exceptional and (ii) have a negative (even if not easily measurable) financial impact caused by the act/omission.

There is also a procedural requirement to present a fully particularised arguable case at the outset failing which the court should make an order preventing that party from raising conduct at any further stage in the proceedings (absent new evidence coming to light). No such bar applies to raising any of the other statutory factors (embodied in s25 MCA) which the Court is compelled to consider.

Aside from the difficulties sometimes faced in identifying the existence of such domestic abuse at the early stages of a case and what sort of domestic abuse is serious enough to be exceptional, the requirement to evidence a causative link to an adverse financial consequence is not contained within s25(2)(g) MCA 1973 and, indeed, there are cases where conduct has been taken into account, despite the absence of financial consequence.

Adverse financial consequence may not be easily measurable, but that does not eliminate its existence. And we know from research that domestic abuse in a relationship is correlated with poorer short-term and long-term financial outcomes, especially for women.

So, what is the solution? The Report suggests financial remedy cases would benefit from an explanatory Practice Direction and sets out, in detail, what the PD could cover.

This includes clarification that all forms of domestic abuse can cross the statutory test, guidance as to what sort conduct would do so, how its impact should be quantified, and provision for the automatic disclosure of findings of domestic abuse in other proceedings into financial remedy proceedings.

The proposals form the building blocks for important policy developments in this area. The argument against such changes is that the Court is not the court of morals and there are concerns about opening the floodgates to litigation. I do not consider that these are acceptable objections, if they leave vulnerable people without protection.

Given our greater awareness and understanding about the detrimental impact of domestic violence, and in the light of wider societal changes, would not the reasonable person on the omnibus think that victims of domestic abuse should be protected in financial proceedings and for such conduct to be taken into account when arriving at a fair financial solution? I think so. Australia is way ahead of us in this respect with its Federal Government consulting on a proposed amendment to legislation that would see domestic abuse brought into the mix when determining how separating couples’ property is divided. It is time we caught up.

Claire Blakemore is a partner at Withers LLP