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THE GREAT DIVIDE: DIVORCE, SHARING AND FAIRNESS
Published on 03 June, 2024 | Emma Whitehead
Regular readers of this ‘blog will recognise that it has remarked upon a number of significant changes in British home life over recent decades.
One of the most notable is arguably the degree to which the collapse of a marriage is no longer necessarily regarded as being in any way unusual.
That is despite the latest data produced by the Office for National Statistics (ONS) showing that the number of divorces in England and Wales two years ago (80,057) was less than half the historic peak recorded in 1993 (165,018)
In my experience and that of my colleagues, the decision to leave a marriage is only reached after considerable thought.
Throughout the process which follows, there should always be an emphasis on trying to unpick a couple’s joint lives and assets with as much sensitivity as possible.
The central element in how that is best achieved is fairness.
It must be said that separating spouses often have different notions of what represents a fair outcome.
Figures from the Ministry of Justice (MoJ), for example, reveal that one-quarter of all proceedings related to financial settlements on divorce during 2023 were contested either initially or all the way to a conclusion (https://www.gov.uk/government/statistics/family-court-statistics-quarterly-october-to-december-2023/family-court-statistics-quarterly-october-to-december-2023#main-points).
Since a landmark ruling in 2000, calculations about how to divide marital assets have begun from the point of equality unless there are reasons why that should not be the case (https://publications.parliament.uk/pa/ld199900/ldjudgmt/jd001026/white-1.htm).
Yet a new Court of Appeal judgement has reinforced that the idea of couples simply splitting their combined wealth in half should only be a starting point towards resolution and not a binding concept.
What happens over the course of a marriage – and even the assets accrued before it – must be taken into account.
As a result, three judges in the case in question reduced the settlement awarded to the wife of a retired banker (https://www.bailii.org/ew/cases/EWCA/Civ/2024/567.html).
The Court was told that Clive Standish had amassed property in the UK and Australia.
During the hearing, his former wife, Anna, maintained that she should be entitled to an even larger proportion of his wealth than she had been awarded by the High Court.
However, three judges agreed that “the magnetic feature” of the case was the value of assets accumulated by Mr Standish before they wed in 2005.
The Court heard that, concerned about a large potential inheritance tax liability and prompted by a desire to provide for the couple’s children, Mr Standish later transferred substantial sums to his wife as part of an estate planning arrangement.
She maintained that the amounts involved were not solely to reduce a likely tax bill but a gift and should be regarded as her separate property by the divorce court.
Her argument seemed to echo a notable ruling in a case from 2007, in which one law lord had outlined how ownership of and any benefit from a property caught up in a dispute between former unmarried partners would be dictated by whoever’s name was on the title deeds (https://publications.parliament.uk/pa/ld200607/ldjudgmt/jd070425/stack.pdf).
The critical difference, however, was that such logic was appropriate to a cohabitation matter and not a divorce.
As Lord Justice Moylan explained in the ruling handed down last week, “the source of an asset is the critical factor and not title“.
In other words, the fact that Mr Standish brought assets into the marriage should be material to the nature of this settlement, regardless of strict legal title.
The judge even discounted the suggestion that the failure by Mr and Mrs Standish to put a pre-nup in place should mean that there was “a presumption of equal sharing”.
Instead, the Court of Appeal determined that Mrs Standish should be entitled to £25 million – half of the couple’s “matrimonial property” – rather than the £45 million which she had initially been awarded in October 2022.
As The Times reported, it is believed to be the biggest reduction of a divorce settlement in British legal history (https://www.thetimes.co.uk/article/bbb250ac-b1ba-48b7-b4a8-02e50d5f8742?shareToken=d2800df3a579355d9f3e3e6b30c60353).
Even so, the case is still not definitively settled. It has been referred back to the High Court to determine whether the amounts are suitable based on Mrs Standish’s financial needs.