This case concerned a husband and wife who began cohabiting in 2004, married in 2005, and separated in 2020. They had 2 children together and each had children from previous relationships.
The husband brought around £57 million to the marriage, whereas the wife entered the marriage with significantly less. By the time they separated, their combined assets were worth around £132 million. The wife was a homemaker for the duration of the marriage, and the husband retired in 2007 after a successful career in financial services – he argued that the majority of their wealth was accumulated by him prior to the marriage and was therefore not available for sharing. In particular, the case centred around a sum of approximately £77 million that he had transferred to his wife in 2017 which was intended to be put in a trust for their children. This had not been achieved by the time Mrs Standish applied for divorce, and consequently she argued that the money was a gift and therefore her separate property.
The starting point for all financial remedy cases is the sharing principle, which was established in the cases of White v White and Miller v Miller / McFarlane v McFarlane. This means that spouses to a marriage are equal and therefore entitled to share the ‘fruits of the matrimonial partnership’ equally. Importantly, this means that contributions to a marriage, such as bringing up children and taking care of the family home, are given equal weight to financial contributions. The equal sharing principle can be departed from in cases where the available assets do not meet the separating couple’s needs (known as ‘needs-based cases’) and in short, childless marriages. In such cases, the Court determines a financial settlement based purely on meeting needs. The Court can also have regard to ‘non-matrimonial’ assets in needs cases, and can deviate from the 50/50 starting point in favour of a spouse whose needs are deemed to be greater by the Court.
The Judge who first heard this case determined that £112 million of their wealth was matrimonial, including the £77 million transferred to Mrs Standish in 2017. There was a further property worth £20 million (a farm in Australia) which the Judge decided was non-matrimonial property. The Judge ordered that the matrimonial assets should be split on a 60/40 basis, with Mrs Standish receiving £45 million and Mr Standish receiving £67 million. Both parties appealed and argued that the sharing principle had not been applied correctly.
Mrs Standish claimed on appeal that she should have been given £66 million, being half their total wealth. She argued that the Judge was wrong to decide that the assets transferred to her in 2017 had been matrimonialised, and that title was the crucial factor – the assets were in her name and were therefore separate and not subject to the sharing principle. She did concede however that they should be shared because she ‘accepted that the overall nature of their partnership meant that the total of the assets should be divided equally’.
Mr Standish cross-appealed on the basis that the first Judge had overlooked the source of the wealth and that, as it had primarily been accrued by him prior to their marriage, it was not subject to the sharing principle. The Court of Appeal dismissed the wife’s appeal and reduced her award by £25 million – the biggest reduction in the history of UK divorce law.
It is common knowledge that the sharing principle is applied to matrimonial assets (savings, pension, the family home and any other property), and not non-matrimonial property (for example, assets brought into the marriage by one spouse or owned prior to the relationship). However, assets can be ‘matrimonialised’ – for example, if an inheritance is used to purchase a property for the family to live in together.
The decision in Standish v Standish further made clear what ‘matrimonialises’ an asset, i.e. what makes it subject to the sharing principle. The appeal decided that the first Judge was flawed in his decision-making as he had decided that the £77 million transferred to Mrs Standish’s name in 2017 had been matrimonialised, without considering the source of the money. It was put in the wife’s name, but that did not mean it should be retained by her, as it was made up of wealth generated solely by the husband before they married. This case clarified that the source of an asset is more important than the name it is in, and that simply transferring assets into one spouse’s sole name does not automatically transform the asset into matrimonial property.
To learn more about what this means for you if you are divorcing, or to speak to one of our lawyers about drawing up a pre-nuptial agreement before you marry to protect your assets in the event of divorce, please contact our family department on 01622 698000.
