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6th May 2024

Olivia Piercy and Anita Mehta discuss economic abuse in family law proceedings in Solicitors Journal

Olivia Piercy and Anita Mehta discuss economic abuse in family law proceedings in Solicitors Journal

Olivia and Anita’s (4PB) article was published in Solicitors Journal, 6 May 2024, and can be found here.

Domestic abuse in financial remedy proceedings

Olivia Piercy and Anita Mehta ask whether it is the time to discuss some of the outstanding issues concerning economic abuse in family law proceedings

In 1922, whilst discussing the Separation and Maintenance Orders Bill, Mrs Wintringham said in the House of Commons: “The man does not mean to be extravagant, but he is perhaps good-natured, and possibly rather more generous than he ought to be, and at the end of the week, or the beginning of it, when his wife should have her housekeeping allowance, he gives her only a very small proportion of his earnings. Well, now the wife must apply both for a separation and a maintenance order together…”

Economic abuse

These days we may consider the payer’s extravagance, or decision to spend generously outside of the family, a form of economic abuse, if those who are reliant on that income are not having their needs met as a result.

The law has taken huge strides forward since then. The harm caused by economic abuse has been acknowledged by the introduction of a clear definition in the Domestic Abuse Act 2021: (4) ‘Economic abuse’ means any behaviour that has a substantial adverse effect on B’s ability to—

  • acquire, use or maintain money or other property, or
  • obtain goods or services.

The complexity that faces courts and lawyers now is understanding how that legislation, and our greater understanding of domestic abuse should impact on financial awards following a breakdown in family relationships – both for married and unmarried couples.

We all know as professionals working with separating families that there are frequently complaints about how the other party has managed, or mismanaged, the family money. When it comes to married couples, the courts have developed mechanisms to:

  1. add back – sums that have been wantonly or reckless spent by one spouse;
  2. draw inferences – if it appears that a party has hidden assets; and
  3. penalise litigation misconduct – by adjusting awards if a party has over spent on their costs bill.

However, the same mechanisms cannot be used for cohabiting couples, or non-married parents, who have no rights at all unless this is a civil claim. We question whether that is right in a society where we know that opposite-sex cohabiting couples are the fastest growing type of family in the last 10 years, and they made up 18% of families in 2022 according to the Office for National Statistics.

Earning capacity

Whilst these mechanisms do deal with a circumstance where funds have been removed from the matrimonial pot, but what of a party’s earning capacity? There is now Australian research evidencing that victims/survivors of domestic abuse experience poorer financial outcomes – something that most lawyers know from working on these cases. However, the bar for the impact on the award made by the court has been set incredibly high for cases of personal misconduct, for example attempted murder with obvious financial consequences (H v H [2005] EWHC 2911 (Fam)). This does not fit with our greater understanding of domestic abuse and that the harm caused to the victim/survivor is caused as much by the coercion and control, as it is by specific incidents.

At present, there is no obvious remedy for the impact these experiences have had on a victim/survivor’s earning capacity. This is in part because the parameters for compensation-related relationship-generated disadvantage have been drawn so narrowly. In Miller v McFarlane [2006] UKHL 24, when describing the rationale for distributing assets, Baroness Hale said: “A second rationale, which is closely related to need, is compensation for relationship-generated disadvantage. Indeed, some consider that provision for need is compensation for relationship-generated disadvantage. But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted.”

She goes on to give the example of a high-earning wife sacrificing her career. Whilst it is clear the Judge was only giving that as an example of relationship-generated disadvantage, it is easy to see why the examples of compensation are based on that set of facts – because the party is able to prove the disadvantage. The Judge can examine the career trajectory the wife was on to provide a measure of the disadvantage. It is not so simple for most victims/survivors who may not have had a high-earning career in the first place and, therefore, have no easy route for proving the disadvantage they have experienced.

Despite these difficulties we ask whether it is the time for us to discuss these issues and the law in this area.