Standish v Standish – Supreme Court Decision

Today the Supreme Court has given a Judgment which has been described as a ‘key Supreme Court decision in family law’.

The Judgment is in relation to the recent case of Standish v Standish, which was heard earlier this year.

Background

Mr Standish transferred to his wife investments of around £80millon as part of a tax planning strategy. Those investments had belonged to him before the marriage. It was intended that Mrs Standish would place the assets in trusts for their children to negate inheritance tax. Mrs Standish did not set up the trusts and the assets were held in her sole name.

Before the transfer the assets had been ‘non-matrimonial property’, i.e. they had been Mr Standish’s alone Mr and Mrs Standish’s marriage ended in 2020 and as it was found that the assets transferred in 2017 were matrimonial property. The sharing principle was applied  and it was held the assets should be shared. However, because the source of the assets were primarily from Mr Standish the Court ordered a 60/40 share in favour of him.

Both Mr and Mrs Standish appealed the Financial Order. The Court of Appeal found that the transfer of the assets to Mrs Standish did not change their characterisation and transform them into matrimonial property. Mrs Standish’s appeal was therefore dismissed, and Mr Standish’s cross appeal was allowed.

The Court of Appeal then held that 75% of the assets were non-matrimonial. It was awarded that Mr Standish was entitled to 75% of the assets plus half of 25% of the assets, due to the fact that 25% of the assets were matrimonial and subject to the sharing principle.  Mrs Standish then appealed to the Supreme Court on the basis that the transfer of the assets were a gift to her.

Decision

The Supreme Court has today dismissed Mrs Standish’s appeal and upheld the decision of the Court of Appeal, meaning that 75% of the assets were classed as non-marital

The Judgment reasoning highlights that the overall aim of a Court in making a Financial Order is to achieve a fair outcome. The Judgment shows that in this case the “sharing principle” is concerned. Lord Burrows and Lord Stephens set out five principles that are relevant to the application of the sharing principle: –

1. There is a conceptual distinction between non matrimonial property and matrimonial property.
2. The sharing principle applies only to matrimonial property.
3. The starting point is that matrimonial property should be shared on an equal basis.
4. What starts as non-matrimonial property may become matrimonial property through a process of “matrimonialisation”.
5. A transfer of an asset between spouses in a scheme designed to save tax, irrespective of the time period will not normally show that the asset is being treated as shared between spouses. These transfers will therefore not normally constitute matrimonialisation.

These five principles were applied to the facts of the present case, and it was held that the Court of Appeal had made their decision correctly that Mr Standish was entitled to 75% of the assets plus half of the 25% of assets that were found to be matrimonial.

This article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances.