The division of financial assets on divorce is a discretionary exercise where the aim of the court is to reach a fair outcome. What constitutes a fair outcome is a question that has busied the Family Division for the last two decades and it was most recently tackled by the Court of Appeal in the case of Standish v Standish [2024] EWCA Civ 567.
The case turned on whether certain assets were matrimonial, non-matrimonial or capable of being 'matrimonialised'. This is important because it impacts (but is not determinative of) the extent to which assets may be shared (or not) on divorce.
This case received a bit of media attention, partly because it involved an enormous sheep farm in Australia but more likely because during the course of the marriage Mr Standish had transferred £80m into Mrs Standish name following tax advice upon their move from Australia to England. Much of Mr Standish's wealth predated the marriage and the key issue was whether, as a result of this transfer, the £80m of which had been matrimonialised such that Mrs Standish was entitled to a 50% share.
The total assets in the case were assessed to be £132 million. The Judge at first instance ruled that the £112m was matrimonial, £80m had been matrimonialised (and was subject to the sharing principle); and that £20m was deemed non-matrimonial. Of the £112m matrimonial property, the Judge awarded 60% to Mr Standish and 40% (ie £45m) to Mrs Standish. Both appealed and the Court of Appeal instead held that the transfer of £80m to Mrs Standish did not automatically 'matrimonialise' the assets; that the reasons for the transfer were relevant (ie a tax scheme which was never fulfilled); that the source of the assets (here deriving from pre-marital endeavour) was relevant; and that the award to Mrs Standish was too high because it did not make 'fair allowance for [the assets] in part comprising or reflecting the product of non-marital endeavour'. Deciding that the marital acquest was in fact £50.48m, Mr Standish's non-matrimonial property was taken at £80m and an award of £25m was substituted for Mrs Standish with and a further hearing ordered as a cross-check to ensure that this sharing claim award met her needs.
So where does that leave the lawyers and their clients?
The 'sharing' principle
The starting point is that each party is entitled to an equal share of the marital acquest (ie the assets built up over the course of the marriage by the parties' endeavour). This is in line with the concept that the parties make differing but equal contributions to the marriage (White v White). The sharing principle does not apply to non-matrimonial assets, which are assets that have been generated or received by a party from a source outside the marriage (eg inherited, gifted from family, purchased or acquired beforehand).
In practice and as a result of the way in which married couples choose to live their lives, the distinction between matrimonial and non-matrimonial assets is not clear cut. Assets are mixed together, spent, sold, purchased, invested in, transferred and funded in a variety of ways. Binary definitions are not always helpful. And so inn Standish, the CoA acknowledged that if the distinction between matrimonial and non-matrimonial property is not clear, the court can undertake a 'broad evidential assessment' (rather than a disproportionate investigation) to determine what's what.
Emphasis on source rather than title
Whether an asset is matrimonial is not determined by how the asset is 'owned'. The fact that marital acquest may be held in a sole name or in joint names is irrelevant. What matters is whether it was generated by the parties' endeavour during the marriage. If an asset is considered to form part of the marital acquest, it may be divided equally between the parties regardless of whether that asset is held in sole or joint names of the parties and it is the source of the asset (ie when and how the asset was generated) that is the key consideration.
'Matrimonialisation'
Following Standish, the concept of 'matrimonialisation' (where non-matrimonial assets become matrimonial, though mingling or such other treatment) has survived but the CoA cautioned that it must be applied narrowly, warning that the concept is not to be used in a way which undermines the clarity of the sharing principle. And if an asset is matrimonialised, it does not always follow that it should be divided equally– the court's objective is to achieve a fair outcome and what is fair depends on the circumstances to the case.
So the court's discretion is broad and there is no clear formula or approach that can be applied to each and every case. So far, so clear?
Family Home – not always matrimonial
The decision in Standish confirms that the family home is typically in a category of its own, be shared equally. However, the CoA reminded us that there is a body of case law which supports a divergence from this approach in the right circumstances and we should take note of that.
Equal sharing?
Even if an asset is deemed matrimonial and subject to sharing, it will not necessarily be divided equally. The aim is a fair outcome, taking into account contributions to the asset base (as well as other contributions).
What next?
As a result this decision I expect to see a move towards more cases being run on the basis that matrimonialised assets should be divided unequally. Unless of course, it is appealed...
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