Cecilia Barrett – ‘Add Backs’, what are they and what do you need to know
14th Apr 2025 | Blog
What is an ‘add back’?
An ‘add back’ is a species of a conduct argument under section 25(2)(g) Matrimonial Causes Act 1973. An ‘add back’ argument is made when one party seeks to persuade a court to notionally reattribute funds to the other party because that party has wantonly or recklessly spent matrimonial assets on themselves. An ‘add back’ does not therefore recreate money, it simply attributes it to one side, if the argument is successful. Generally speaking, it is a high hurdle to pass.
What do I need to know?
The origins of the concept of the ‘add back’ are found in the case of Martin v Martin [1976] Fam 335. Cairns LJ at 342H said this
‘a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.’
The decision of Mr Justice Bennett in Norris v Norris [2003] 1 FLR 1142 developed the concept. Mr Justice Bennett reattributed £250,000 to Mr Norris, as a consequence of what the court found was the husband’s reckless overspend saying
‘Why should the wife be disadvantaged by in the split of the assets by the husband’s reckless expenditure? A spouse can, of course, spend his or her money has he or she chooses but it is only fair to add back in to that spouse’s assets the amount by which he or she recklessly depletes the assets and thus potentially disadvantages the other spouse within ancillary relief proceedings.’
In Vaughan v Vaughan [2008] 1 FLR 1108, CA Lord Justice Wilson made clear that a notional reattribution has to be conducted very cautiously and by reference only to clear evidence of dissipation (in which there is a ‘wanton element’). The judgement reminds us that the reattribution does not extend to a reattribution which treats the sums reattributed as cash, capable of meeting need.
In MAP v MFP [2015] EWHC 927 Mr Justice Moor put the brakes on a ‘sex drugs and rock and roll’ conduct argument, finding that a spouse must take his or her partner as he or she finds them. The husband was a very successful businessman, who developed a serious cocaine addiction, spending, at times, about £6,000 a week on the drug. He had also spent significantly on prostitutes and had used about £230,000 of matrimonial funds to pay for expensive residential rehabilitation. The wife sought to add back £750,000 which represented one half of the £1.5 million she said the husband had wantonly dissipated since separation. Dismissing that argument, Mr Justice Moor found as follows
‘[90] I do not find, however, that the Husband overspent to reduce the Wife’s claim. In part he did it because he could not prevent himself from doing it. It was down to his flawed character. This court could not possibly add-back the expenditure on drug therapy. This was him trying to put matters right. Whilst I accept that he did not always take advice, I reject Mr Pocock’s description of him going to this therapy as a “holiday” to get away from the pressures of life or the litigation. He was ill and he needed treatment. The same illness, however, prevented him at times from accepting the treatment.
[91] Equally, I cannot add-back items of expenditure that were simply extravagant or part of his obsession with perfection. I have had the most difficulty with the expenditure on cocaine and prostitution. I have, however, come to the clear conclusion that I should not add-back even these items. As I have already noted, a spouse must take his or her partner as he or she finds them. Many very successful people are flawed. This is true of this Husband. I have decided that it would be wrong to allow the Wife to take advantage of the Husband’s great abilities that enabled him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit. It may have been morally culpable. Overall, it was irresponsible. But I find that this was not deliberate or wanton dissipation. It would be wrong to add it back.’
Mr Justice Moor also decided the financial remedy application between AP v ALP [2018] EWHC 2758 (Fam). ALP, was a risk-taking entrepreneurial husband, who in a the course of that risk taking endeavour had lost the family an enormous sum of money. The wife, AP, argued that these business losses should be ‘added back’ on the husband’s side. Mr Justice Moor made clear that an allegation of reckless dissipation of assets, is a section 25(2)(g) conduct argument, and for the court to ‘add back’ assets that have been spent the court must be satisfied as it made clear in Vaughan, that there was a wanton element. Mr Justice Moor did not find that the husband, ALP, had wilfully dissipated assets. He accepted that the husband was an entrepreneur who had made enormous sums through risk taking and found
‘if that had not been his approach he would not have made the money in the first place. I am satisfied that he did not set out to lose this money.’
More recently, in DH v RH (No 3) (Final Hearing) [2024] EWFC 79, Mr Justice MacDonald considered an ‘add back’ argument in relation to legal costs. In this case, the wife had spent £1.9 million in costs, funded by a litigation loan, and the husband had spent £987,000. In addition, the wife had also failed to comply with a series of orders made in relation to expert evidence. Mr Justice MacDonald accepted the husband’s argument and found that wanton and reckless dissipation can include excessive spending on legal costs. He found that a costs order against the wife would not remedy the effect of there being less in the ‘pot’ to be distributed between the parties. He added back £800,000 on the wife’s side.
Finally, for a summary of the law, the judgment of Mr Justice Baker (as he was then) in R v K (Financial Remedies: Conduct) [2018] EWFC 59 is a helpful starting point.
How should I approach an ‘add back’ argument?
Careful instructions on potential ‘add back’ arguments should be taken in advance of negotiations, and issue of proceedings.
Practitioners should be aware that add back arguments are universally complex and the outcome is often uncertain. The forensic process required to establish the ‘wanton dissipation’ may be disproportionate to the sums in dispute and the case law makes clear that there is a high hurdle to establish that ‘wanton dissipation’.
In addition, practitioners must remember that an ‘add back’ is a hypothetical reattribution of funds, it does not recreate actual money capable of being deployed to meet need.
For solicitors advising clients on this issue, careful preparation and realistic advice are essential to achieving the best outcomes. Our Financial Remedies Team is here to help navigate these complexities with precision and expertise.
Cecilia Barrett
2025
