Report Model State And Application Errors To Client?

I'm wondering what the best practice is in reporting back to the browser about application or model state errors that would be displayed to the user. Can you throw an exception and handle it in the error handler of the jquery post? For example, consider this method:

[HandlerErrorWithAjaxFilter, HttpPost]
public ActionResult RetrievePassword(string email)
{
User user = _userRepository.GetByEmail(email);
if (user == null)
throw new ClientException("The email you entered does not exist in our system. Please enter the email address you used to sign up.");
string randomString = SecurityHelper.GenerateRandomString();
user.Password = SecurityHelper.GetMD5Bytes(randomString);
_userRepository.Save();
EmailHelper.SendPasswordByEmail(randomString);
if (Request.IsAjaxRequest())
return Json(new JsonAuth { Success = true, Message = "Your password was reset successfully. We've emailed you your new password.", ReturnUrl = "/Home/" });
else
return View();
}

Is it correct to throw an exception in this case when the user is null? Or should I instead do this and handle it in the success handler of the jquery post: return Json(new JsonAuth { Success = false, Message = "The email you entered does not exist in our system. Please enter the email address you used to sign up.", ReturnUrl = "/Home/" });