Olivia’s article was originally published in the FTAdviser, 1 November 2022, and can be found here.
In November 2022, some of Britain’s top divorce lawyers gathered on the island of Jersey for Corbette Le Quesne’s annual International Family Law conference. The theme of this year’s conference, unusually, was financial abuse and coercive control in high net worth divorces.
The Domestic Abuse Act 2021, as amended, introduced the concept of economic abuse as an aspect of domestic abuse, into law. Examples of economic abuse include one party to a relationship having sole control of family capital and income, restricting a victim’s access to money, credit facilities, goods or services, and interfering with a victim’s education, training or employment.
Coercive control is a hot topic in family law currently. No longer viewed as a milder type of abuse accompanying more serious physical violence, it is now understood to be at the heart of all domestic abuse relationships. Coercive control describes the power dynamic between perpetrator and survivor, and all the subtle, insidiously harmful ways that a person privately controls their partner behind closed doors.
Sometimes there is also violence, at other times sexual or financial abuse; these behaviours are some of the ways that the constant underlying drive to control is expressed and exerted.
In many abusive marriages, the control continues post separation. For wealthier couples, the battleground is invariably money. This post separation abuse is, very often, unwittingly permitted and even facilitated, by the Family Court.
During the course of a marriage, a couple may appear to outsiders to be simply choosing to inhabit traditional gender roles, with a wife (typically) receiving an allowance from her husband. Many couples do choose freely to live in this way, but there are also a significant number of marriages in which a party’s financial dependency on the other, is coerced. Behind the scenes victims in such relationships may be expected meticulously to account for their spending, pressured into abandoning careers, giving up their own income and assets, or taking on large loans and mortgages. They may be deprived of any information about financial matters. The threat that they’ll ‘get nothing’ if they leave the marriage is a common theme.
Typically, the extent and impact of this control and abuse only becomes apparent upon separation, when a victim finds that they can no longer rely on their spouse for financial support and has little, if any, understanding of their supposedly shared finances. They may be unaware that the law gives equal value to a spouse’s contributions to a marriage in looking after the home and caring for the family. They are also likely to have experienced various other abusive behaviours during the marriage, eroding their self-esteem and isolating them from their support network.
Financial remedy proceedings in the Family Court often become the last remaining channel through which a perpetrator of domestic abuse can continue to control and punish the victim. Thus, in the aftermath of separation, financial abuse is often exacerbated. It typically happens in three ways: first, the abuser cuts off or reduces spousal and child maintenance so that the victim is impoverished. This causes extreme stress and makes it hard for the victim to pay for legal representation. Second, the abuser hides or dissipates assets and suppresses their income to create a false impression of their financial circumstances, and third, they fail to provide disclosure of their finances when requested. When financial disclosure is provided it is delayed, incomplete and often includes reams of meaningless documentation. This smoke and mirrors game with financial disclosure can be infuriating to pin down, creating endless delays, frustration and hardship and forcing the victim to haemorrhage money on legal fees in pursuit of apparently disappearing assets. The perpetrator is motivated by a desire to punish the victim over and above their desire to retain wealth. This attitude renders any attempt at meaningful negotiations, inevitably fruitless.
Financial remedy proceedings in the Family Court may be the only means of securing a fair outcome for the victim of economic abuse. However, currently the court service and procedures are woefully ill-equipped to deal with such cases.
Lawyers and courts are wedded to the concept of a negotiated settlement. They fail to recognise the economic abuse and push parties to engage in a voluntary exchange of disclosure, coupled with mediation, wherever possible. In the majority of cases, negotiation is the most cost effective and dignified route to settling finances on divorce. However, in circumstances where one party is being deliberately opaque about their finances in order to defeat the other’s chances of a fair settlement, this approach is wholly inappropriate. The victim of financial abuse is made to feel they are being aggressive or unreasonable if they refuse to attempt a voluntary settlement, which they know to be impossible.
The delays in the court service are so dire that parties generally have to wait for several months between court hearings. This gives the abuser time and opportunity to hide assets and arrange their finances to defeat or reduce their spouse’s claims.
Following the landmark case of Imerman v Tchenguiz in 2010, a victim can no longer get away with taking the self-help initiative of accessing the other party’s documents. If they do so, they are required to return the documents to their spouse without showing them to the court or keeping a copy. The assets from a marriage are supposedly shared, but any information about them often belongs solely to the financially stronger spouse and sharing that information is effectively in their gift.
The Family Court very rarely takes bad behaviour into account when assessing financial claims on divorce. If a spouse complains to the court about the abuse they have experienced during the marriage and beyond, they are generally advised that the alleged misconduct is irrelevant. The costs of contested court proceedings are prohibitive for most litigants and the general rule in financial remedy proceedings is that each party pays their own costs.
In such cases, the abused party may need to make urgent applications to court at the outset, to freeze assets, obtain disclosure, secure maintenance and a legal services payment order (i.e., a ‘fighting fund’). Perhaps most importantly, the survivor should also have a frank conversation with their lawyers early on as to what they are willing to settle for, how much time and money they feel able to spend and how they will identify when it’s time to walk away. In so many of these cases, where someone is determined to hide their money, and indeed has hidden their money for many years, it simply is not possible to uncover every penny. In circumstances where a party’s financial picture is truly unknown, running up vast legal bills can also be a high risk strategy. How hard to fight for a fair outcome is a personal choice. However, whether someone hopes to secure enough money to meet their needs and walk away, or is determined to pursue their abusive spouse through the courts, being tough, decisive and quick off the mark is imperative.