Standish Primer in Advance of Court of Appeal Judgment

Published: 22/05/2024 14:05

How should a substantial sum of money (in this case £80m) which was partly generated before marriage but transferred to the other spouse during marriage be treated on divorce? Do those funds remain the non-marital property of the person who brought them into the marriage? Have those funds become the separate property of the recipient requiring an equal division or, even more radical, retention by the recipient? Is there a middle ground where the funds are treated as having become matrimonial but shared unequally to recognise the non-marital source?

Although the sums involved may often be smaller and the facts different, these are important issues which arise in many cases on divorce. They can involve different issues – both as to fact and law – which can be hard to resolve. Should there be a broad brush approach which gives the court flexibility to arrive at an outcome it considers as fair as possible in all the circumstances but lacks predictability? Or should there be a more formulaic approach which might give greater certainty but afford the court less flexibility? These are some of the issues due to be covered in a judgment expected to be reported by the Court of Appeal tomorrow.

In brief summary, H (aged 69) and W (aged 54) commenced a relationship in 2003, became engaged in late 2003 (per W) or late 2005 (per H) and married in December 2005. They had two children aged 15 and 16 at trial. H retired in 2007. In 2017 H transferred approximately £77m worth of shares to W which by the time of trial were worth approximately £80m. The marriage broke down in early 2020. At trial in May 2022 Moor J found the total assets to be in the region of £133m. The main issue at trial and on appeal was the categorisation and treatment of the shares which were transferred by H to W in 2017.

H’s position was that W should retain £25m to meet her needs with the balance to H. In support of H’s case it was argued that the magnetic feature was the non-marital wealth brought into the marriage by H which it was claimed exceeded the current value of the assets if updated for inflation. It was also argued that the transferred shares transferred had not become matrimonial and, even if they had, should not be shared equally. H put W’s housing need at £8m and her income needs at £557,000 per annum which would require a Duxbury sum of £10.5m. H’s offer (£25m) therefore exceeded his assessment of W’s needs (£18.5m).

W’s position was that the total assets should be shared 50/50. W argued that the marriage was a ‘partnership marriage’ and that the transfer to her in 2017 made those shares her separate property. W argued it was significant that the parties chose not to have a marital agreement and that but for her concession that they had a ‘partnership marriage’ which justified a 50/50 split she would have been entitled to retain the shares transferred to her in 2017. It was also argued it would be wrong to treat W less favourably than she would have been treated as a cohabitant.

Moor J rejected W’s argument of a ‘partnership marriage’ as having no basis in fact or law. He also rejected the significance of the parties not having entered a marital agreement. Moor J held that the shares which were transferred by H to W in 2017 had become matrimonial, but that it would be unfair to share them equally as that would ignore the pre-marital wealth brought into the marriage by H. After excluding some assets as non-matrimonial, Moor J divided the matrimonial assets (including the £80m) 60/40 in H’s favour which gave an overall division of 66/34 in H’s favour.

W appealed to the Court of Appeal. H cross appealed. The appeal hearing took place in November 2023 with judgment expected tomorrow. Watch this space for a case summary and blog once the judgment has been handed down…

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