Whist we Wait…Standish V Standish

This week we bring you a Blog written by Family Barrister, Eleanor Irons.

“When does non-matrimonial property become matrimonial property in the context of financial remedy proceedings, and how should the sharing principle be applied to such property?”

The Supreme Court heard the appeal of Standish v Standish on 30^th April and 1^st May, with family law professionals now eagerly awaiting this much anticipated Judgment. It seems unequivocal that this will provide a precedence for the treatment of matrimonial and non-matrimonial property in England and Wales.

Standish v Standish is the first case heard by the Supreme Court where the questions of whether and how the sharing principle should be applied have been considered. The sharing principle, as identified in White v White [2000], holds that “the fruits of the matrimonial partnership” should be shared equally unless there is a good reason to depart from equality.

As recognised by the Justices during the hearing, the effect of their decision will not only affect divorce cases with substantial assets (‘big money’), but its principles will  be far reaching and apply to all divorce cases across England and Wales.

To date there has been somewhat of a grey area around what happens when pre-marital wealth is transferred between spouses during the marriage whether as “gifts” or for financial planning reasons. Greater clarity regarding the sharing principle could lead to a more rigorous investigative approach when deciding whether an asset has become ‘matrimonialised’ and if it has, how the court should fairly and justly divide that asset.

Background

Mr and Mrs Standish married in 2005 (the husband and wife), their marriage spanned 15 years and they had two children. In 2020 the wife filed for divorce.

Prior to the marriage the husband had accrued substantial wealth through his career in investment banking; when the parties relationship commenced the husband had assets valued in the region of £57m and on separation the assets valued at £132m.

The wife had remained at home throughout the marriage to take care of the children. However, in 2017, the Husband had transferred c.£80m to his wife (for tax planning purposes) to be held in a trust to be transferred “offshore”. When the wife filed for divorce, the assets were still held in her name; the key dispute between the parties related to the treatment of this substantial sum.

At first instance, the wife received £45m and the husband £87m; the trial Judge deciding that the assets transferred to the wife had been matrimonialised and therefore subject to the sharing principle.

On appeal, the Court of Appeal reduced the wife’s award by £20m leaving her with £25m and the husband with £107m. This was the largest reduction in a divorce award in the Court of England and Wales.

The appeal court emphasised that a critical factor when applying the sharing principle is the source of an asset, not legal ownership.

Lord Justice Moylan said: “The sharing principle is founded or based on each party, in accordance with… fairness, equality and non-discrimination, being entitled to an equal share of their matrimonial property, namely the ‘fruits of the partnership’ or the wealth built up by the parties’ ‘endeavours during the marriage.”

 The wife then sought and successfully obtained permission to appeal this later judgment, which was granted by the Supreme Court on 16 October 2024 and heard last month.

Possible Decisions?

The Justices may uphold the decision of the Court of Appeal, which would ringfence the husbands assets acquired pre marriage, with the wife being awarded c.£25m and the husband receiving the remaining assets of c.£107m.

Or if Justices do not align themselves with  the decision of the Court of Appeal, this could have significant implications on how we treat pre-marital wealth on divorce. Those entering marriage, who wish to ring fence pre-marital assets may more readily seek pre and postnuptial agreements to protect their assets.

Regardless of the decision of the Justices, with the media attention garnered to date and the far reaching consequences the decision may have, Standish v Standish could hugely impact on how couples structure their finances, protect inherited wealth and consider their approaches to the documentation of the intentions  behind wealth transfers during marriage.

Eleanor specialises in all areas of family law, with a particular emphasis on Private Children and Financial Remedies. If you would like to book Eleanor please contact the clerks here.