Landmark judgement has major implications for divorcing couples

An eagerly anticipated landmark judgement from the Supreme Court will have major implications for divorcing couples, according to Rayma Collins, head of Family Law at Furley Page.

The judgement on Standish v Standish was handed down by the Supreme Court on 2 July, following earlier decisions in the High Court and the Court of Appeal.

Mr Standish (72) and Mrs Standish (57) married in 2005 and subsequently had two children. Mr Standish was a successful investment banker who had accrued substantial wealth prior to the marriage. He retired in 2007. From the time of their marriage until he retired, Mr Standish earned around $US40 million, and there had been no material increase in his wealth since retirement.

The couple moved to England in 2009, where Mr Standish was deemed domiciled but Mrs Standish was of non-domiciled status. During 2017 and 2018, Mr Standish took tax advice and pursuant to that, he transferred £77 million to his wife (the 2017 assets) with an intention to place the monies into trust. However, before the trust was established, Mrs Standish applied for divorce.

The case went before the High Court, where Mrs Standish submitted the marriage was a ‘partnership of equals’, so fairness dictated a 50:50 sharing of the marital assets and that upon transfer of the 2017 assets, they became hers. Mr Standish argued he never intended to share ownership of the 2017 assets, and that the court should not deem the assets to have been ‘matrimonialised’, because they were the product of his pre-marital career the division should remain non-matrimonial and not be subject to equalisation.

The judge, Justice Moor, found that by transferring the asset to his wife, Mr Standish had matrimonialised the property, but because the vast majority of the money had been earned before they were married, the 2017 assets should be shared unequally in favour of Mr Standish (34%/66%).

Both parties appealed the decision to the Court of Appeal; the wife sought the 2017 assets as her sperate non-matrimonial property and the husband asserting that his actions in generating the wealth should be the deciding factor in attributing him with a greater share.

The Court of Appeal rejected the wife’s separate property claim, describing it as ‘nonsense’. The Court also determined that the division was unjust. They determined that the 2017 assets should be attributed as 75% non-marital and 25% marital property, the latter to then be added to the overall pot of assets to be shared equally.

Mrs Standish subsequently appealed the Court of Appeal decision to the Supreme Court, which has now handed down its judgement. The Supreme Court unanimously dismissed her appeal, upholding the decision of the Court of Appeal that 25% of the 2017 Assets had been matrimonialised whilst 75% remained non-matrimonial and not therefore subject to the equal sharing principle.

Rayma Collins said: “This decision will not just affect divorce cases of the ultra-wealthy as its principles will apply to all divorce cases in England and Wales. It clarifies that a transfer of assets between spouses with an intention to, for instance, save tax and irrespective of the time period involved, will not normally constitute matrimonialisation of that asset”.

“The Supreme Court has reviewed the sharing principle in this case and ruled that (a) there is a conceptual difference between non-matrimonial property and matrimonial property (b) that Courts will recognise that the sharing principle only applies to matrimonial property (c) the starting point in sharing matrimonial property is equality and (d) non-matrimonial property may become matrimonialised in certain circumstances depending on the reason for any transfer and/or how the asset has been treated by the parties over time”.

“This judgement provides clarity about the relatively new concept of matrimonialisation which the Supreme Court accepted whilst new to the English language, was useful shorthand to describe the process by which non-matrimonial property becomes matrimonial property for the purpose of sharing on divorce. For these reasons, it is even more important to take legal advice before making any substantive changes to how assets are held by spouses, to be certain you understand the potential implications of any such change beforehand”.

If you would like to know more about the implications of this landmark judgement, please do not hesitate to contact Rayma Collins or a member of the Family law team on 01227 763939.