The Court of Appeal’s recent decision in the case of Standish v Standish can certainly be considered controversial.
The decision effectively states that a gift to a spouse is not in fact a gift, thereby becoming a judgement of universal application in family law.
Another way in which this decision will set precedent is through the way in which it validates a further category of property to be distributed by the court – matrimonialised property. This is a term that has been bouncing around the divorce community for a number of years without ever being fully understood.
The Court of Appeal could have stubbed out the woolly concept of matrimonialised property, providing clarity for all. Instead, it has breathed new life into it, entirely unnecessarily in the writer’s view.
This confusion dates back to Lady Hale saying that the significance of the non-matrimonial nature of an asset may diminish over time in the 2005 House of Lords case of Miller and McFarlane. She said this at a stage in matrimonial evolution when matrimonial property would be shared equally, and non-matrimonial property would not be shared. Troubled by the fouling of the water, Lord Wilson tried to make sense of Lady Hale’s comment in the case of K v L which involved non matrimonial property in a long marriage.
Lord Wilson gave three examples of non-matrimonial property changing its colours over time, and becoming matrimonial, yet he never used the confusing term ‘matrimonialised’.
Ever since, however, the somewhat confected, judge-made word has been sprinkled around like confetti. The apogee of all this is the Court of Appeal decision in Standish, providing a template and springboard for more entirely avoidable conjecture and debate.
This case centres on assets valued at some £130 million, and how much of that money was subject to the application of what since 2005 has been known as the sharing principle. The wife was appealing the financial remedy order made by Moor J in October 2022, while the husband was cross-appealing the same order.
What was agreed by both parties was that the sharing principle does apply to so-called matrimonial property but does not apply to non-matrimonial property. Where they disagreed was in the definition of what makes an asset matrimonial or non-matrimonial property, and also how an asset which was originally not part of the marriage could later become something governed by the sharing principle.
The Court of Appeal decided that where £87m was given by the husband to the wife in 2017, this gift without reservation of benefit by the husband should in effect be treated as owned by him. Upon divorce, the court ruled, he should be attributed a 75% share of it despite having permanently alienated himself from the gift in 2017.
The judges were swayed by the fact that most of that £87m had been earned by the husband before the marriage. It was in effect therefore still his, even though it was part of a tax scheme that permanently excluded him from the benefit.
Quite clearly, he could have obtained a written confirmation of his tax scheme, and of his understanding that he could be a beneficiary of a trust of the money subsequently set up in the Channel Islands. And in retrospect there should have been a post-nuptial agreement at the time of the gift, setting out a common understanding of the gift.
One of the many problems in the case is the wife’s relatively small share of the assets. In the original ruling, the judge decided that some £45m of the £130m assets would be shared with the wife after a long marriage with two children. There was no pre-nuptial agreement protecting the husband’s wealth.
The appeal left her with a sharing claim of £25m and so, therefore, cost her £20m.
With this appeal judgment, she now gets a second bite at the cherry to determine whether her needs are in fact more than £25m by application of the needs principle. If the original judge, Moor J, decides that her needs are, say, £30m, she will get £30m rather than £25m – a sharply focused example of the interplay in big money cases between sharing and needs.
Following Standish, we now have the legal constructs relating to property (not statute-based) consisting of:
- non-matrimonial property, which is normally not shared
- unilateral property, originally described by Lady Hale in Miller and McFarlane, which will not be shared 50/50
- matrimonial property – generally shared 50/50
- matrimonialised property – generally shared, though not necessarily 50/50
Under the new test applied by the judges here, matrimonialised property comprises:
- a matrimonial home, which is generally considered a 50/50 asset (although not necessarily in short marriages)
- non-matrimonial property mixed and mingled with matrimonial property
- property where it is too difficult to work out whether the division should be different to 50/50
One of the most significant aspects of the Standish decision is that the Court of Appeal rejected the original judge’s finding that the assets to be shared had been matrimonialised. Instead, they were held to be the husband’s property – even though actually owned by the wife. Based on that ruling, from now on a spouse can claim more confidently in any family law case that a gift of jewellery, a car, or anything else, is not actually a gift and should go back to him. The principle will apply – perhaps unintentionally – to any kind of case, regardless of its size and the sums involved.
This case was therefore not decided by reference to so-called matrimonialisation. The concept has unnecessarily been elevated by the judgment to another genus of property to be argued over. Family law should be becoming simpler, not more complicated.
The breakdown of ownership of collective financial assets in a marriage can come across as somewhat arbitrary, especially by a Court of Appeal which did not have the benefit of live evidence. What about the wife’s contribution in this case? For example, the fact that she was non-domiciled and the way in which tens of millions of pounds would be saved for the family by the inalienable gift must surely weigh something.
By exposing the uncertainties of the system used to divide assets, and rejecting the wife’s position that so-called marriage partnership property should be divided on a 50/50 basis, the wife’s case in Standish adds to the call for family finance law reform. The decision cries out for Supreme Court clarification.
