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Husband hit with £800k penalty for dishonesty in divorce hearings

Posted: 1st September 2020   In: Family Law

A court has imposed a penalty of more than £800,000 on a husband who behaved unreasonably during divorce proceedings.

The judge said the move should act as a warning to all couples that the law would not tolerate dishonest tactics.

The case involved a couple in their fifties. They had been married for 25 years when decree absolute was pronounced in 2019. They had two children, aged 25 and 10 who lived with the wife at the former matrimonial home.

The couple had run a successful ducting business together. It had been agreed that the wife would take sole control and ownership of it. The wife's case was that the husband had surreptitiously set up a competing business in another country.

The couple also had a domestic and international property portfolio, including eight properties in Dubai.

The wife asserted that the husband had been guilty of misconduct, which included denying ownership of the rival company and concealing transactions involving the Dubai properties.

To reflect such misconduct, she proposed a division of the matrimonial assets of two-thirds to her and one-third to the husband.

In the Family Court, Judge Mostyn said that if not for the question of conduct, this was a model case for the application of the equal-sharing principle. The marriage was long, and all the property was matrimonial property.

However, it had been shown that the husband had set up the rival company. A discount would therefore be applied to the value of the original ducting business to reflect the fact that he had set up a business in direct competition with it.

He should also pay a costs penalty to the wife of £278,020. That represented 45% of the wife's overall costs, which was a fair fraction for the husband to pay considering his conduct.

The husband's litigation misconduct had involved dishonesty and had not only encompassed sustained non-disclosure but extended to altering an email to try to suggest that the wife had agreed to sell the ducting business, when she was saying quite the opposite.

The wife had also been guilty of some non-disclosure, and her negotiation stance had been unreasonable and untenable. Aside from the competitor discount, which would fall on the husband alone, and the penalty in costs, there should not be any additional departure from equality to reflect the court's indignation at the way in which the husband had behaved in the course of the litigation.

The overall value to be retained or received by the husband was £7,316,094. That represented 44.7% of the total assets of £16,371,669. 

The departure from equality was £869,741. That was the price the husband had to pay for his conduct in setting up a competing business and conducting the litigation so abysmally. It was a very substantial sum and should serve as a lesson to any future litigant tempted to behave in the same way.

Please contact Mandip Bhachu or Richard Phillips if you would like more information about the issues raised in this article or any aspect of family law.

Husband hit with £800k penalty for dishonesty in divorce hearings
 [2020] EWFC 52
OG v AG (2020)
Fam Ct (Mostyn J) 29/07/2020
Posted by: Mandip Bhachu
Luton Office