The recent ruling in Dmitry Tsvetkov v Elsina Khayrova 2023 has presented a remarkable discourse concerning the application of the Matrimonial Causes Act (MCA) 1973 regarding conduct in financial remedies proceedings.

The landmark ruling brought forth by Mr Justice Peel offers a comprehensive review of how “conduct” should be integrated into the Financial Remedies Framework, aligning with the directions stipulated under Section 25 of the MCA 1973.

In asset division under divorce proceedings, courts rely on the various factors as laid out in Section 25 of the MCA 1973 to ascertain a fair and equitable settlement for all parties involved, one of which has regard to “the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;”

The divorce battle

During the multimillion-pound divorce battle between Dmitry Tsvetkov and Elsina Khayrova, Ms Khayrova was accused by Mr Justice Peel of deceit regarding her assets, particularly her handbag collection valued at around £1 million.

Despite initially declaring she owned about 20 handbags, it emerged she had over 150.

The judge noted her dishonesty pervaded the case, leading to a “merry dance about handbags”.

The couple, separating after over a decade of marriage, grappled over substantial assets, including a £22 million Surrey mansion and other properties across the globe.

Ms Khayrova also undertook measures to restrict her husband’s access to family financial resources and transferred property assets to her mother’s name to withhold them from the settlement.

Consequently, Ms Khayrova was deemed chiefly responsible for the costly litigation and was instructed to cover half of Mr Tsetkov’s £1.76 million legal fees.

Exploring the framework of a “conduct” claim

Mr Justice Peel outlined a two-step process for initiating a conduct claim in financial remedy proceedings.

Firstly, the claimant must provide substantial evidence of the conduct and its financial ramifications.

Furthermore, Mr Justice Peel emphasised the need for detailed allegations to maintain clarity and prevent unnecessary court disputes.

Understanding court discretion and case management powers

Mr Justice Peel reminded that, according to Family Procedure Rules (FPR) 2010, the court’s primary objective is to ensure the fair, quick and cost-effective handling of cases.

The judgement grants the court authority to regulate the assertions early on, possibly preventing the claimant from utilising conduct in cases where it does not meet the strict criteria set by Section 25 of MCA 1973.

This includes evaluating the relevance and potential influence of permitting such a claim to move forward.

Defining the scope of case management powers

Mr Justice Peel’s ruling for the Dmitry Tsvetkov v Elsina Khayrova 2023 case focused on Sections 1.4 and 4.1 of the FPR 2010, defining the limits of the court’s case management powers.

Remarkably, it suggests the possible exclusion of conduct as a Section 25 factor at the final hearing, a notion not extensively explored in earlier authoritative resources.

The challenge of summary judgements

This case introduces the argument regarding the potential view that excluding “conduct” during an interim phase might equate to an unauthorised summary judgment, thereby conflicting with the provisions of Section 25 of MCA 1973.

It reignites the discussion on the range of strike-out applications available in financial remedy proceedings, suggesting a careful strategy is required when dealing with these applications that respects the provisions of the 1973 Act.

Towards a balanced judicial approach

The judgment promotes a more focused and methodical approach to case management while still upholding judicial fairness.

It encourages the option of shorter hearings if appropriate, thus maintaining a balance between rejecting baseless allegations and preserving a platform for valid claims to be presented succinctly.

Our thoughts

David Smith, Associate Director at Ansons Solicitors, said “Clients understandably confuse concepts of conduct on divorce – conduct that principally effects one’s emotional state is very different to conduct that satisfies the high legal test set by the courts in financial proceedings and which, crucially, must have a significant financial implication. Solicitors must listen to their client’s concerns but be ready to advise as to the current position of the law to avoid the wasted costs and (it would seem) adverse criticism from Judges when running conduct arguments within proceedings. Professional advice is key.”

The Dmitry Tsvetkov v Eslina Khayrova judgement stands as a pivotal commentary on the nuanced approach needed in adjudicating “conduct” in financial remedy proceedings.

It moves towards a disciplined yet balanced judicial process, emphasising a streamlined, informed and focused methodology to handle conduct claims.

The ruling hands down a roadmap for sculpting well-substantiated and clearly articulated conduct claims, aligning with the high thresholds defined under the law.

It urges a responsible narrative, cautioning against vague and inflammatory allegations, steering towards a legal landscape that is both judicious and efficient.

If you need advice regarding your divorce proceedings, get in touch with our expert team today. Please contact David Smith, Head of Family Law, on 01543 263456 or at dsmith@ansons.law.

If you would like to be kept up to date with Ansons news please follow us on Facebook, LinkedIn or Twitter.