The adjudication of ‘big money’ divorce cases is characterised by two main arguments – firstly, the desire to achieve equality through the sharing principle (White v White [2000]) and secondly, the argument that non-matrimonial wealth should be separated irrespective of needs, on the basis of morality or basic public policy. Examples generally include inherited assets or assets acquired prior to cohabitation or marriage, that were not intermingled. Where these arguments are both run, judicial discretion will determine the appropriate outcome on a case by case basis.
Standish v Standish involved a long marriage with assets of significant magnitude. The core issue was whether the husband’s premarital wealth, transferred into his wife’s name for inheritance tax planning purposes, had become ‘matrimonialised’ which would lend itself to the argument of sharing and equality. Whilst Standish did not invent the distinction between matrimonial and non-matrimonial property, it delivered a confirmation that the sharing principle should only apply generally to matrimonial property.
White v White famously established the ‘yardstick of equality’ rule, stipulating that there should be no bias toward the breadwinner or the homemaker in assessing contributions where there is need. Crucially, while Lord Nicholls accepted the distinction between matrimonial and non-matrimonial assets, he was hesitant to create a hard-and-fast rule against sharing the latter.
K v L [2011] was the key pre-Standish case that confirmed the necessity of separating non-matrimonial property from the pool. Although the Court of Appeal ultimately ring-fenced the wife’s inherited wealth, the judgement still acknowledged that integration could justify treatment as a shared asset which was the wife’s case in Standish itself. In short, the Family Court could treat non-matrimonial property as shareable if they found sufficient circumstances in the case to warrant it. This left minimal certainty about what the Court may do on an individual basis.
Standish’s marriage was long. The majority of the wealth originated from the husband’s pre-marital business interests. By transferring approximately half the assets into the wife’s name for IHT planning purposes, wife argued this was now matrimonial. Husband argued that this did not, in and of itself, mean it had been matrimonialised if wife was holding this for financial reasons. Justice Moor, at the first instance, found that this transfer amounted to matrimonialisation. This justified a sharing award of 60% to wife. The Court of Appeal reversed this, focusing on the asset’s source. This divergence of judicial opinion led to Standish becoming a case to watch very recently. The Supreme Court on final appeal, delivered five key principles that addressed the issue. The two most critical pronouncements were the ‘Clear Conceptual Distinction’, where the Court firmly reiterated the distinction between matrimonial and non-matrimonial assets, and the sharing principle only applying to the former in some contradiction to the flexibility in K v L.
The Court unequivocally stated that the assets were not being subjected to the sharing principle. The Family Court has one role, which is to meet the reasonable needs of the parties. Otherwise, claims should be ring-fenced where they seek to go beyond this. There was no agreement in Standish that depriving wife of the business interests, was going to cause a deficiency in her basic needs.
The most significant practical clarification related to tax and estate planning transfers of assets. If this is all that has happened, it should not automatically amount to matrimonialisation (even if there is a tangible benefit by way of being married, having this option available to you). Matrimonialisation should not be black and white (is it in their name, or not?) - it requires evidence of shared intention and conduct over time. The money was ultimately not used for the family’s benefit or between the couple, it was
This is the first time the Supreme Court has unequivocally stated that non-matrimonial property is not subject to the Sharing Principle. Of course, some practitioners will argue that this is the default in the lower Courts and this is a unique case compromised by the issues of extreme wealth. Of course, some may also argue that non-matrimonial assets being brought into the pot, is more likely in a low net wealth case where needs cannot be met from the outset.
For HNW couples, the ruling provides far greater certainty on issues of future planning. It confirms that transfers made for general tax or estate planning will not automatically expose pre-marital wealth to sharing claims. Of course, Standish may have had a different outcome had the capital been drawn down and spent in any particular manner. This should not be taken in any way as a blanket rule, in particular of all of the money was not just held.
In summary, Standish had a reasonably minimal impact on the general Financial Remedy disputes that the Court deal with. There is however an argument that there was never intention to impact the law, but about providing an authority where there had been so much conflict previously. Of course, parties should still seek independent legal advice if they wish to review their future planning with the view to only taking actions that won’t compromise the non-matrimonial status of their wealth.
