Alison Fielden & Co: Economic Abuse

Economic Abuse in Financial Remedy Proceedings

Family lawyers often act for clients who can tell their lawyer little to nothing about their finances. Some know nothing other than the allowance they are given by their spouse.

Clients in this position are often embarrassed and self-critical of finding themselves in this situation but rarely is this by choice and lawyers must be watchful for any signs that indicate economic abuse.

What is the legal definition of economic abuse?

Additional provisions came into force as part of the Domestic Abuse Act 2021 and for the first time economic abuse was included in the definition of domestic abuse.

The act states that “economic abuse” means any behaviour that has a substantial adverse effect on another person’s ability to:

Acquire, use or maintain money or other property, or
Obtain goods or services

Economic abuse can take a variety of forms, including restricting access to financial information and controlling how those financial resources are used.

In some cases, alarm bells may ring early, particularly in a case as mentioned above in which a party has no knowledge of financial resources and whose spouse has unilaterally controlled their financial resources for the majority of their marriage. In other cases, concerns may not arise until the financial disclosure becomes available.

How does economic abuse impact divorce?

Where economic abuse is a factor, getting full and frank financial disclosure from the opposing party may prove to be a battle, where, after withholding financial details from their spouse for many years, they may continue to attempt to conceal and control assets.

There are some legal tools to challenge inadequate disclosure, for example by raising a questionnaire, and a schedule of deficiencies and in some cases obtaining a third party disclosure order. There may also be a need to invite the court to draw negative inferences where the disclosure remains incomplete or is questionable.

After the expense and effort of obtaining as clear and complete a picture of the parties’ respective financial positions as possible, to what extent will the abusive behaviour impact on the outcome at a final hearing?

Mostyn J outlines the full scenarios in which conduct may be considered in a financial remedy case in his judgement in OGvAG (Financial Remedies: Conduct) [2020] EWFC 52 as follows:

Gross and obvious personal misconduct but only where there is a financial consequence. This will include economic misconduct provided the high evidential threshold is met:
Add back arguments where one party has ‘wantonly and recklessly dissipated assets’:
Litigation misconduct which should be penalised in costs rather than affecting the substantive disposition:
Joint inferences over the extent of the asset base following a party’s failure to give full and frank disclosure.

For advice in relation to family law matters please contact Heather Weavill, Alison Fielden & Co Solicitors, telephone number: 01285 653261.