Standish v Standish - Dividing Assets in Divorce

Standish v Standish is one of the key cases of recent years which addresses how court’s treat the “matrimonialisation” of assets in divorce.

The case concerned a marriage of 15 years which produced two children. When the parties relationship commenced, the husband had assets valued in the region of £57m. On separation (at trial), it was £132m.  

Key dispute in dividing assets in the divorce

The key dispute between the parties related to the treatment of around £77m which was transferred into the wife’s sole name in 2017 as part of a wider tax planning scheme. The intention at the time was for the wife to then transfer this into an offshore trust, but that never happened.

In the first instance the proceedings were heard by Justice Moor where the case was reported under ARQ v YAQ [2022] EWFC 128. Both parties appealed.

Grounds of appeal in dividing assets in divorce

1. The transfers she received in 2017 converted those assets into her separate property. It is the title, not source, of the property which was determinative.
2. Alternatively, the assets were matrimonial property to which the sharing principle applied. The judge at first instance should have found the “Ardenside property” was a matrimonial asset. Although it had been owned by the husband before the marriage, the parties had holidayed there and had improved it during the marriage, such that it became “matrimonialised”.   

1. The sharing principle should not apply to the husband’s Ardenside property nor to the transfers of wealth made to the wife in 2017. It is the genesis or source of the assets which is important – his position essentially being that these assets formed part of the husband’s pre-marital wealth and such should be ring-fenced from the pot and excluded from the sharing exercise.
2. Alternatively, if these assets were categorised as “matrimonial”, the first instance decision of the court resulted in the wife receiving an excessive share of the family’s overall assets, because that decision failed to recognise the husband’s unmatched contributions and ignored the considerable pre-marital wealth that he brought into the marriage.

On legal title (legal principles in dividing assets in divorce)

At paragraph [149] Moylan LJ made clear that “it is clearly established that, in the application of the sharing principle, the source of an asset is the critical factor and not title."

The driving point is at [152] where Moylan LJ reiterated the clearly established principle in law that “the sharing principle will apply with equal force to an asset in the sole name of one spouse as it does to an asset in joint names.”

On matrimonialisation  

The leading case here remains Hart v Hart [2017] EWCA Civ 1306, which is essential reading on the topic of pre-acquired and inherited property. In Standish, Moylan LJ reiterates though that principle of matrimonialisation should continue to be applied, if narrowly so. Citing Wilson LJ in K v L [2011] EWCA Civ 550 we are reminded that “the importance of the [non-marital] source of [an asset or assets] may diminish over time.”

Moylan LJ proposes "the following slight reformulation of the situations to which Wilson LJ referred in K v L, having regard to the developments that have taken place since that decision as follows:

1. The percentage of the parties’ assets (or of an asset), which were or which might be said to comprise or reflect the product of non-marital endeavour, is not sufficiently significant to justify an evidential investigation and/or an other than equal division of the wealth;
2. The extent… and the manner in which non-matrimonial property has been mixed with matrimonial property mean[s] that, in fairness, it should be included within the sharing principle; and
3. Non-marital property has been used in the purchase of the former matrimonial home, an asset which typically stands in a category of its own."

The devil here is in the detail. In example (a), the sharing principle applies in a straightforward manner. This scenario is likely to apply in cases where non-marital or pre-acquired wealth is proportionately limited when compared to the wider available assets. Following example (c), the former matrimonial home will tend in the vast majority of cases to simply be shared equally. In example (b) the position is less clear and will require a factual consideration of how non-matrimonial property has been used, whether and to what extent it has been mixed with matrimonial assets or treated in such a way as to become matrimonialised and what the underlying motivation was. In view of the judge’s interpretation of the case in Standish v Standish the genesis or source of the assets should still be carefully considered over and above title. Materially, it does not follow that just because an asset has become materimonialised it should automatically be shared equally – the source of the asset and wider factual history remains highly relevant to how such is treated on separation. It is this analysis that led the Court of Appeal to reduce the wife’s award so significantly.