A recent family law case, DP v EP  EWFC 6, has found that economic abuse can amount to “conduct” within the meaning of section 25(2)(g) of the Matrimonial Causes Act 1973, a factor to be taken into account when the court is deciding upon a financial settlement.
The Domestic Abuse Act 2021 (“DAA”) came into force on 1 October 2021 and defined economic abuse as “any behaviour that has a substantial adverse effect” on the other party’s ability to “acquire, use or maintain money or other property” or “obtain goods or services”.
The wife’s position was that this was a straightforward “needs” case, which pointed towards an equal division of capital and a clean break. However, the husband’s position was that the wife had been leading a “double life”, claiming she had knowingly entered into a bigamous marriage with him, conceived a plan to defraud him and ultimately to leave him, having enriched herself at his expense. The husband was illiterate and he said that the wife had been siphoning off joint funds throughout the marriage and using them to accrue assets that he knew nothing about. He claimed that she had exploited his vulnerability in this regard, so that he was significantly worse off than he would otherwise have been.
Once the DAA came into effect, there was debate as to whether economic abuse and other forms of controlling and coercive behaviour are potentially relevant “conduct” that would be “inequitable to disregard” pursuant to the section 25 factors. In terms of what is “conduct”, whether a party’s behaviour had the necessary “gasp factor” was coined as a test.
Here, the judge made findings in respect of the wife’s financial conduct, stating that it fell within the definition of economic abuse under the DAA. The judge acknowledged that not all cases involving economic abuse will have the “gasp factor” required for “conduct” under the Matrimonial Causes Act but concluded that this case did, with the case being out of the ordinary because of the husband’s illiteracy and the wife’s exploitation of his consequent vulnerability, the deliberate nature of the wife’s deception and the fact that the wife’s behaviour was over a considerable period of time.
This led to the decision by the judge to divide the assets 53:47 in the husband’s favour, rather than 50:50. The judge acknowledged that it was a “modest departure” from equality and one that did not depress the wife’s award below the bottom of her “needs” bracket. Perhaps in a “bigger” money case, there may have been a larger departure from equality than 53:47.
It is certainly useful to see how judges are approaching “economic abuse” in the context of financial settlements upon divorce. Following the DAA, it is likely that there will be more findings of economic abuse in the family courts to come and it is hoped that it will become clearer how the courts will deal with the question of how that conduct should be reflected, given the lack of real guidance on this issue to date.
"In my view, W’s conduct falls within the definition of economic abuse contained in DAA 2021...W’s conduct in this case involved the exploitation of a dominant position, which is the essence of all forms of abusive behaviour; and the fact that H was unaware of W’s behaviour at the time, and that it did not directly impact on his daily life during the marriage, has only made his subsequent discovery of it more shocking. I am in no doubt that H feels a profound sense of betrayal, and that the harm caused by W’s actions has extended well beyond the financial detriment they have caused."