When a marriage ends, the court’s main goal is to divide assets fairly. Usually, the court does not want to hear about the “he-said, she-said” of why a relationship failed. However, there is a specific legal rule—Section 25(2)(g) of the Matrimonial Causes Act 1973—which states that the court must consider a person’s conduct if it would be “inequitable to disregard it”.

In simpler terms: if one person’s behaviour is so extreme or dishonest that it would be fundamentally unfair to ignore it, the court can reduce their financial award. A recent high-profile case, Loh v Ardal Loh-Gronager, shows exactly how this works in practice.

The Background

In this case, the wife was extremely wealthy. Before marrying in 2019, the couple signed a Pre-nuptial Agreement (PNA). This agreement was designed to protect the wife’s wealth while ensuring the husband received a set amount if they divorced.

Based on the length of their marriage, the husband was initially entitled to a lump sum of approximately £6.45 million. However, the court had to decide if his “deplorable” behaviour during the marriage and the legal process should reduce that amount.

Examples of the husband’s conduct

The judge found that the husband had engaged in a series of dishonest and intimidating acts such as:

• financial deception: he systematically moved £1.405 million from their joint accounts into his own investments without the wife’s permission.
• the “separation day” transfer: On the very day the couple separated, while the wife was in a therapy session, the husband transferred £1 million from her account to his own.
• taking advantage of trust: the husband used a power of attorney to take £2.05 million from the wife’s mortgage account, later claiming it was a “gift”.
• forging evidence: to cover his tracks, the husband created three fake or doctored emails to make it look like the wife had agreed to these transfers. He then deleted the original emails, claiming it was for “therapeutic” reasons to move on from trauma—an excuse the judge found “unbelievable”.
• harassment: shortly before a key court hearing, he set up a private Instagram account to post personal photos of the wife to upset and “destabilise” her. He also hired a private investigator to loiter outside her home on her birthday.

How the court dealt with the husband’s bad behaviour

The judge ruled that the husband’s behaviour was “the most serious level of litigation misconduct”. As a result, the court took the following steps:

The court refused to view the millions the husband took as “gifts.” Instead, it treated the £1 million, £2.05 million, and £655,000 as “advance payments” of his divorce settlement, meaning they were deducted from his final lump sum.

For the £750,000 he took to run his business, the judge ordered a 50% deduction (£375,000) specifically to reflect his lack of honesty and overall bad conduct.

Because of his behaviour, the husband’s final award was slashed from the original £6.45 million down to £2,369,385.

Because he tried to mislead the court with forged documents, the judge warned that the husband would likely be ordered to pay a substantial portion of the wife’s legal fees (which totalled nearly £3 million).

The Loh case sends a clear message: Honesty and transparency are essential in financial remedy proceedings. If you attempt to hide assets, forge evidence, or harass your spouse during a divorce, the court has the power to significantly reduce your settlement to ensure that justice is served.

Where conduct is not taken into consideration

It should be noted however that in financial remedy proceedings, the court generally maintains a high threshold for considering “conduct” under Section 25(2)(g) of the Matrimonial Causes Act 1973.

Examples of behaviour that the court would not take account of are:

• The personal behaviour of the husband or wife, for example, having an affair or even domestic abuse in most cases.
• Spending substantial sums of money on day-to-day living, luxury items, or maintaining the family lifestyle would not be conduct that would meet the high threshold required by the court even if a husband or wife spent the money from their spouse’s sole account.

The higher courts have directed that judges should limit conduct considerations to only “the most serious instances” to avoid turning divorce proceedings into exhaustive investigations into every flaw or disagreement within a marriage.

The court will not use conduct to justify an outcome that is “too extreme”. In this case, the judge rejected the suggestion that the husband should lose his entire entitlement under the pre-nuptial agreement because of his behaviour, as that would be an excessive penalty.

Ultimately, unless the behaviour is exceptional or amounts to serious litigation misconduct, the court will not take account of it.  The court will focus on the financial needs and contributions of the parties rather than their behaviour.

Contact us

If you need any more advice and guidance on any of the above, do get in touch with Saika Alam. Saika is a well-respected family and divorce lawyer based in St James’s, London and co-heads the family law department. Known for her personal and pragmatic approach, Saika represents her clients on all aspects of their family relationships from cohabitation and marriage to separation and divorce and everything in between, whether that relates to financial matters or children’s issues. You can contact Saika on [email protected] or 020 78510110.