The Standish Judgment: Supreme Court clarifies non-matrimonial assets on divorce

The case involved parties, with a substantial asset base who were married for 15 years with two children. The central issue of the case was whether a portfolio created in 2017, with assets worth £80 million, transferred by the husband to the wife during the marriage for tax planning purposes, should be treated as MP- and therefore subject to the sharing principle.

The Supreme Court’s ruling

The wife argued that the transfer was a gift and that all the assets should be shared. The husband maintained that most of the assets were NMP that was not intended to be shared, and therefore had not been transformed into matrimonial property.

The Supreme Court has today dismissed the wife’s appeal, finding that only 25% of the 2017 portfolio were MP, and that the remaining 75% of the 2017 assets were not matrimonial, therefore reducing the wife’s total award by 40% to £25 million.

The five key principles of the Sharing Principle

In dismissing the wife’s application, the Supreme Court outlined five principles relevant to the application of the sharing principle:

1. A clear conceptual distinction was made between MP and NMP. MP reflects the fruits of the marriage and the product of the parties' joint efforts. NMP typically includes property brought into the marriage by one party or acquired through external sources like gifts or inheritance. Legal title alone does not equate to 'matrimonial property'.
2. Although courts have been reluctant previously to say so, the Supreme Court has now decided to take a definitive stance on the application of the sharing principle - determining that the time has come to recognise that the sharing principle applies only to MP and not to NMP (although the sharing principle will still be relevant for needs or compensation-based cases).
3. The Starting Point for MP is that it should be shared on an equal basis.
4. A turning point - The Court endorsed the concept of “matrimonialisation” and determined that NMP can become MP over time if the parties consistently treat it as shared during the marriage.
5. Transfer of assets between spouses for tax efficiency will not automatically convert NMP into MP, and such transfer will not normally constitute matrimonialisation. The Court was clear that the 2017 transfer in this case, which was purely for tax planning and intended for the children’s benefit, did not create a sharing entitlement.

What this means for financial remedies going forward

For practitioners and divorcing parties, this judgment provides long-awaited clarity on the sharing principle. It strengthens the protection of NMP, such as pre-marital wealth, inheritance, and gifts, and provides clearer guidance on when and how NMP can become open to sharing.

Going forward, when assessing financial remedies, we can expect a greater focus on how assets were treated during the marriage to determine potential 'matrimonialisation'. The starting point will be stricter ring-fencing of NMP, unless there is clear and sustained evidence that the parties intended to share them.

This post is for general awareness and should not be considered legal advice. For tailored advice on your situation, please contact a family law specialist.

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For more information or advice, please contact our Family team.