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11: Money and blame – financial disputes during divorce

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11: Money and blame – financial disputes during divorce
Leave your thoughts John Darnton

By John Darnton

When a relationship ends it is perfectly natural for allegations of blame or fault to raise their ugly heads. However, rarely is the reason for the breakdown of the marriage (or civil partnership) relevant to the outcome of any financial dispute between the couple.

Potentially, conduct can be taken into account where “it would in the opinion of the court be inequitable to disregard it” but the difficulty is often in determining when this is likely to be the case especially when emotions are raw and strong feelings rife. In many instances there will be allegations and counter allegations with denials on both sides.

As long ago as 1973 Lord Denning famously said that, short of cases where the conduct was “both obvious and gross” (whatever that meant) it would be wrong to reduce the order for financial provision in favour of one spouse because of what had formerly been regarded as guilt or blame as to do so would be to impose a fine for supposed misbehaviour in the course of an unhappy, married life. Of course, things have moved on in the last 40 years but there is still a reticence on the part of many judges to a countenance allegations of behaviour martialled in support of, or against, financial claims.

Recent disputes

The case of Paul McCartney and Heather Mills-McCartney was played out in vivid colour in the media. Both parties sought to rely on allegations of marital conduct. The judge who dealt with the case at trial did not allow either of them to introduce any of those allegations but he did add back into the wife’s assets a figure of £500,000 to represent what he found to be “completely unreasonable expenditure”. It is therefore possible for the court to take into account reckless expenditure but even that is not straightforward.

The question of ‘add back’ was considered by Moor J in MAP v MAP. That was a case of a 40 year marriage where the accumulated assets totalled some £25m. The wife contended that the money for division would have been even greater had the husband not been spending in the order of what she claimed was £6,000 per week on cocaine, and other large amounts on escorts, as well as further sums totalling £230,000 on therapy and a number of unsuccessful periods in “rehab” as he sought to overcome his addiction.

The judge concluded that the husband had significantly overspent but he was not prepared to “add back” in the manner sought by the wife. He found:

“I do not find, however, that the Husband overspent to reduce the Wife’s claim. In part he did it because he could not prevent himself from doing it. It was down to his flawed character. This court could not possibly add-back the expenditure on drug therapy. This was him trying to put matters right…………….Equally, I cannot add-back items of expenditure that were simply extravagant or part of his obsession with perfection. I have had the most difficulty with the expenditure on cocaine and prostitution. I have, however, come to the clear conclusion that I should not add-back even these items. As I have already noted, a spouse must take his or her partner as he or she finds them. Many successful people are flawed. This is true of the Husband. I have decided that it would be wrong to allow the Wife to take advantage of the Husband’s great abilities that enable him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his in ability to rid himself of the habit.”

So you ‘take the rough with the smooth’ or do you?

The Court of Appeal may now have the opportunity to give some guidance on the subject.

In December 2014 the judge in the dispute between Mr and Mrs Rapp estimated that Mr Rapp had spent some £600,000 on drink, drugs and escorts in just 3 years after the marriage broke down. As a result the judge awarded Mrs Rapp £7.43 million and Mr Rapp £6.2 million so she ended up with a bigger share of the £13.6 million available assets.

Mr Rapp is now seeking to appeal that decision on the basis that his addiction was an “illness” and he should not be penalised for this. It is understood that part of Mr Rapp’s argument is that when the parties got married they did so “for better or worse” and that if this means anything then, on the end of the marriage a party should not be penalised for something which was not a lifestyle choice. Part of the responsibility of the judge hearing cases like this is to strive for a result that is “fair”. It is said on behalf of Mr Rapp that it cannot be fair to leave Mrs Rapp with £1.2 million more than Mr Rapp when his spending arose from his addiction and he was not “morally culpable”. Perhaps understandably Mrs Rapp’s response is to assert that Mr Rapp’s behaviour was wanton and reckless and as a result, family money was frittered away. She therefore says that the judge’s decision was fair.

It is understood that the Court of Appeal has decided to reserve its decision and it will be interesting to see how it deals with the thorny issue.

23 December 2015

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