Standish: A clearer horizon for family law?

The Supreme Court has this morning delivered its judgement in the eagerly awaited case of Standish v Standish. This blog will provide some background to this case, what the Supreme Court has decided along with some initial analysis and thoughts as to how this may impact financial remedy proceedings in England and Wales.

Background

In this case Mr Standish transferred £80m of assets in 2017 to Mrs Standish with a view to creating a trust to limit the family’s exposure to inheritance tax. The trust was to benefit their children.

However, the trust was not created and Mrs Standish then sought to divorce Mr Standish.

High Court

At the High Court she wanted to share in the division of the family’s wealth.

Mr Standish argued that the assets he transferred where ‘non matrimonial’ i.e they were acquired by him before the marriage and as such were not a ‘fruit of the marriage’ and open to the ‘sharing principle’ (explained later).

Mr Justice Moor disagreed and divided the assets 60/40 in Mr Standish’s favour.

Both parties appealed the decision to the Court of Appeal

Court of Appeal

When the Court of Appeal looked at the case, the appeal judges decided that the court cannot ignore the source of the where the assets had come from and decided:

• 75% of the 2017 assets were ‘non matrimonial’ and therefore should be retained by Mr Standish;
• Of the remaining 25%, this was ‘matrimonial’ and open to the sharing principle, with the parties receiving 12.5% each.

Mrs Standish appealed to the Supreme Court.

The Supreme Court

The Supreme Court have now heard Mrs Standish’s appeal and have today dismissed her appeal and upheld the decision of the Court of Appeal.

The Supreme Court’s judgment in Standish has brought into the spotlight some other points which are worthy of analysing as to how they may impact our clients.

What does Standish mean for family law?

The twenty page judgment of the Supreme Court has provided much needed clarity on a few aspects of family law. Firstly, the four principles which guide judges to reach a fair outcome in financial remedy proceedings. Secondly, five new principles which relate to the interaction between the ‘sharing principle’ and non-matrimonial/matrimonial assets.

The four guidance principles to achieve a fair outcome in financial remedy proceedings.

The primary aim in financial remedy proceedings is to achieve a fair outcome. A judge will have reference to the statutory factors set out in section 25 of the Matrimonial Causes Act 1973 (“MCA 1973”), which include the needs of any children, the length of the marriage etc.

However, since the MCA 1973 was enacted, over 50 years ago, the discretion afforded by the legislation has allowed case law to incorporate a few ‘principles’ to guide judges to achieve fairness in addition, or to expand, on the section 25 factors due to changing societal behaviours and needs.

1. The first is the ‘sharing principle’, this is that matrimonial assets should be shared, and the starting point is a 50/50 division. The relationship between this principle and non-matrimonial and matrimonial asset is something the Standish judgment has provided much needed clarity on.
2. The second is the ‘needs principle’. This is that where possible, the court should ensure that the parties’ reasonable financial needs are met. This is often separated into ‘income needs’, that parties should be able to meet their outgoings, and capital needs which is often the need to have a roof over their head.
   You can read more into the relationship between non-matrimonial assets and the needs principle is our other blog.
3. The third is the ‘non-discrimination principle’, this is that a spouse who has been a homemaker and/or child carer should be treated equally to a spouse who has been the primary wage-earner during a relationship.
4. The fourth is the ‘compensation principle’. This is where a spouse should be compensated if they have given up valuable opportunities by marrying their spouse. This can be confused with the ‘non-discrimination’ principle but there is a key difference. The compensation principle is reserved for instances where the spouse who has given up work would have almost certainly given up a high earning career.
   Judge Moyston, in the case of AT v BT in 2023, set out this can only be in ‘very rare and exceptional’ cases. In short, some solicitors may now be circling their wagons at the mention of the lesser-spotted ‘compensation’ principle in the Standish judgment. However, it is important to note that Standish judgment does not alter the current position of this principle and it will likely need a case going to the Supreme Court which directly involves this issue before divorce lawyers are provided with further guidance.

The relationship between the Sharing Principle with Matrimonial and Non-Matrimonial Property

A central question that the Supreme Court has to answer in Standish regarding non-matrimonial property. This is something that family lawyers have long been grappling with and the clarity provided by the Supreme Court will hopefully provide more certainty for divorcing couple going forward.

The Supreme Court made 5 legal principles which are relevant to the application of these legal principles.

1. There is a conceptual distinction between non-matrimonial and matrimonial property. As previously earlier in this blog, non-matrimonial assets are usually assets acquired before the marriage (commonly inheritances) and are not ‘fruits of the marriage’. In contrast matrimonial assets are those which are created by the joint actions of a married couple, i.e these are assets which are ‘fruits of the marriage’.
2. The Supreme Court made clear that non-matrimonial property should not be subject to the sharing principle.
3. The sharing of matrimonial property should usually be on an equal footing, although justified departures can be made from an equal split.
4. Non-matrimonial property can become ‘matrimonialised’. This relatively new term has been welcomed by the Supreme Court. What is important in determining whether the process of ‘matrimonialisation’ has occurred is for the court to consider how the parties have treating the asset in question over time. If a spouse can show that an asset that was initially non-matrimonial, but has since been treated as a shared asset, then the court may be able to determine that this asset has now become a matrimonial asset.
5. This principle relates to the facts of Standish directly. The Supreme Court confirmed that in the event that spouses undertake a transfer to save tax, this does not automatically show that the asset has been shared between them (i.e become matrimonialised).

Conclusion

The Standish judgment has provided some much needed clarity to the issues surrounding non-matrimonial and matrimonial property. Whilst family solicitors will need to keep a close eye on future case law to see how these principles are applied, for now there is hope that the horizon will be clearer on these issues.