Financial remedy: Do we still share and share alike after Standish?

When my twins were young, we had a rule that one cut the treat in two and the other got first dibs. Our instinct is that sharing means equal sharing. However, the recent judgment by the Court of Appeal in the case of Standish v Standish [2024] EWCA Civ 567 has refocused our views of sharing and the application of that judgment is now beginning to play out.

Prior rulings

Before Standish would have usually started with the judgment of Mrs Justice Roberts in WX v HX [2021] EWHC 241. After 33 years of marriage, the parties’ assets totalled £54.65m. The Judge found that £38.88m was matrimonial. H’s £1.7m post-separation inheritance and W’s £14m inheritance were found to be non-matrimonial, despite H trading and growing W’s £9m portfolio for years. H’s inherited assets (circa $10m) had been fully mingled, so were treated as marital.

At paragraph 113 the Judge listed six relevant principles from the case law: “113…(iv) Assets or property which are matrimonial in character will be captured by the ‘sharing principle’ and divided equally between the parties.”

What about assets which originated outside of the marriage? At paragraph 116 Roberts J said where “non-matrimonial property has been ‘mixed’, ‘merged’ or ‘mingled’ with matrimonial property, the court will need to consider whether the ‘contributor’ has accepted that his or her property should be treated as matrimonial property.” I always read this as meaning the key factor in matrimonialisation was an intention to share.

Paragraph 113 (vi) clarified that: “(vi) The application of the sharing principle will not always lead to an arithmetically equal division of the marital wealth.” The Judge quoted in support the judgment by Moylan LJ in XW v XH [2019] EWCA Civ 2262 at paragraph 136, “… that the application of the sharing principle does not necessarily lead to an arithmetically equal division of the wealth. Factors such as risk and liquidity can impact on the manner in which the division is affected.” The source of funds was not the focus.

Roberts J shared equally all of the marital assets in that case.

The decision in Standish

So, to Mr and Mrs Standish, who had an ‘entirely conventional second marriage’ of nearly 16 years. Mr Standish contributed all of the assets. By 2002, the year before cohabitation, he was sitting on the executive board of UBS earning AUS 11,000,000 (£5,648,478) a year and his net worth was approximately £57m.

In 2017, H transferred £77m worth of his assets and shares to W for tax reasons.

At trial before Mr Justice Moor the arguments centred upon the parties’ intentions towards the assets transferred to the wife. Moor J concluded the transfer must have caused these assets to become matrimonial. The total matrimonial pot was £112.6m, which he shared not equally but 60:40 in H’s favour, to reflect the source of wealth and the Section 25 factors, rather than title.

Both parties appealed. Moylan LJ gave the lead judgment and ran with Moor J’s analysis that title is not a determining factor for matrimonialisation: “it is clearly established that, in the application of the sharing principle, the source of an asset is the critical factor and not title” [149] “it would place undue weight on legal and beneficial title when this is unlikely, or at least may well not reflect whether the wealth has been generated during the marriage because experience shows that such wealth will often be largely or significantly in the name of the ‘money-maker’ who remains much more likely to be the husband than the wife” [152].

Further, “the concept of matrmonialisation should be applied narrowly” [163].

How should the court reflect the source of funds if matrimonialisaiton was applied narrowly? Moylan LJ proposed “with some diffidence” a reformulation of Wilson LJ’s consideration in K V L [2012] EWCA Civ 550 paragraph 18 of how the relevance of the source of assets diminishes over time. At paragraph [163] he set out that:

‘(a) 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;

(b) the extent to which and the manner in which non-matrimonial property has been mixed with matrimonial property mean that, in fairness, it should be included within the sharing principle;

(c) 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’ [163].

He stated that in (a) the sharing principle applies, in (c) the family home will likely be shared but “this is not inevitable” and (b) requires “a more nuanced approach.”

Moylan LJ frequently referenced fairness and his judgment in the case of Hart v Hart [2017] EWCA Civ 1306, where after a 23-year cohabiting relationship, W was awarded 37% of the assets to meet her needs, where the £9m pot had come entirely from H. Even if an asset has become matrimonialised he stated that “The submission by Mr Todd that, once an asset is matrimonialised and treated as matrimonial property, it must be shared equally is unsupported by any authority and would be contrary to the objective of a fair outcome” [166].

Where Moylan LJ “parted company” from Moor J was that the transfer of assets caused them to become matrimonial: “source is a reflection of when and how an asset was generated, not title” [168]. He noted the transfer was for tax reasons, rather than an intention to share and shot down the argument that W would have been better off unmarried as ignoring the Section 25 criteria.

Moylan LJ therefore decided that the family home, some joint name assets, 20% of the business in which W had been transferred shares and 25% of the other assets transferred to W were marital. This reflected the source of the funds and fairness. The total marital pot was £50.48m. Moreover, 50% of that was £25m, leaving H with £107m. W’s award from Moor J had been £45m. Moylan LJ remitted the case for a consideration of whether the £25m would meet W’s reasonable needs.

The application of Standish

The case of RM v WP [2024] EWFC 191 is a recent example of how Standish is being applied in practice. HHJ Hess found all capital assets had been contributed by H. Three properties had been consecutively the family home over 15 years, although the £1m+ London apartment had only housed them for a year. The total value of the three properties was £1.4m. The Judge awarded W £657,000 to meet her needs and £17,500 to meet her interim needs (if H asked her to moveout of her current apartment, which he owned). Half of the three family homes would have given her £730,844. He drew support for his award from the Section 25 criteria, H’s unmatched contribution and the short time the parties had lived in the expensive family home. To do otherwise would be to apply an “unbending formulaic approach” to sharing the family home and he quoted from paragraphs 164-166 of Standish that “it would be perverse if the court could not decide that the non-matrimonial source, in whole or in part, of an asset treated as matrimonial property could not justify an other than equal division.”

Conclusions

Matrimonialisation of originally non-marital assets remains but applied narrowly and considered though Moylan LJ’s three scenarios. The source of funds is a significant factor, title is not. The overarching consideration must be fairness. This feels like a firm steer away from any formulaic approach of sharing all assets equally after a medium or long marriage. I do wonder whether HHJ Hess might have given the wife 50% of the value of all of the family homes before Standish was decided and whether WX v HX still feels quite as fair as it did initially. Since Standish, the arguments about source of funds and overarching fairness are clearly shouting more loudly to be heard over the ongoing rumble of sharing. Perhaps we will have less certainty but more fairness, which would not be a bad thing.