Court reduces Wife’s award by £20 million

The biggest “Divorce Cut” in legal history

Court of Appeal judges have just made history by reducing the divorce award to the former wife of a multimillionaire by £20 million.

Clive Standish, a 71-year-old former banker, persuaded three appeal judges that the original award of £45 million should be reduced to £25 million, a downward revision of 45%.

The reduction is the largest ever made for a high-net-worth divorce in England and Wales. The case confirmed important family law concepts around the sharing principle, fairness and the treatment of pre-marital wealth.

Standish v Standish: The Background

The case involved the marriage of Clive and Anna Standish, who were married for 15 years before divorce proceedings began in 2020. The couple had two children together. They had both been married before and each had 3 children from their previous marriages.

Before his retirement in 2007, Mr. Standish had an extremely successful career in business, initially in the financial sector and later as a cattle and sheep-farming tycoon. He had amassed significant wealth before his marriage with Mrs Standish began. Mrs Standish did not bring any significant wealth to the marriage.

In 2017, Mr Standish transferred around £77 million to his wife as part of an estate planning strategy. This had grown in value to just over £80 million by the time of the divorce. The expectation was that Mrs Standish would place these assets into an offshore trust for the benefit of their children. In 2020, the wife commenced divorce proceedings and the trust was never executed.

The total marital assets at the time of the split were £132 million, the vast majority of which had grown from the fortune that Mr Standish brought into the marriage.

High Court awards wife £45 Million

The High Court judge who heard the case in 2022 decided that the assets transferred in 2017 had become ‘matrimonial property’ and therefore subject to a fair division between the parties.

The overall split of the total assets, which included a substantial 18 bedroom family home and a farming business and land in Australia, was 34% to the wife (£45 million) and 66% to the husband (£87 million). The judge did not conduct a “needs assessment” for Mrs Standish given the level of the award.

Mrs Standish appealed the decision on various grounds, primarily that the £80 million transferred into her name in 2017 was a gift by Mr Standish to reduce an inheritance tax liability, not intended to be returned. She argued that it should therefore be treated as her property and not a marital asset. Despite this money being legally hers, she said she was willing to share it equally when the couple divorced in 2020.

Mr Standish counter-appealed. He also argued that the 2017 assets should not be considered to be a marital asset. However, he argued that because the wealth was his long before the marriage, these assets should be ring-fenced for himself and not subject to the usual sharing exercise. Mrs Standish should instead receive an amount that met her reasonable financial needs.

Court of Appeal Cuts the Settlement

The Court of Appeal rejected the Wife’s appeal and accepted the husband’s. It agreed that the £80 million was generated entirely by the husband prior to the marriage, and should not go into the pot for division.

In England and Wales, the sharing principle assumes that each party is entitled to an equal share of the “fruits of the marriage,” that is, the assets shared and the wealth built up by the couple together during the marriage. On this basis, only the portion of the assets that could be attributed to the marriage should be subject to the sharing principle. The rest belonged to Mr Standish.

In view of this, Lord Justice Moylan stated that “a fair application of the sharing principle would have resulted in the wife receiving approximately £25 million” — effectively giving £20 million back to Mr Standish.

It is a point of legal principle that if someone’s reasonable needs cannot be met from their sharing entitlement, the court can increase the award. This is to ensure that each party can maintain their lifestyle, as far as is possible, in similar circumstances to that enjoyed during the marriage.

The case will now go back to the High Court to assess whether the £25 million award would be enough to meet the wife’s reasonable needs. It could potentially give Mrs Standish a second bite of the cherry to increase the award.

Greater Clarity on Pre-marital Wealth

This decision is significant, particularly to those who bring wealth into the marriage. The Court of Appeal made it clear that, as well as how the assets are treated during the marriage, it is the source of the wealth that matters, not whose name the assets are held in.

In cases where considerable wealth is built up before a marriage, it is important to document the sources of wealth and structure assets carefully to avoid unintentionally changing the nature of the assets from non-marital to marital. Standish should give some relief to couples who entered into a marriage without a Prenuptial agreement, however they remain important and are highly recommended to record this distinction. For couples who agree that it would be fair for some assets to remain separate from marital property, it is also sensible to consider whether a post-nuptial agreement should be entered into. The existence of a nuptial agreement (whether entered into before or after the marriage) can make a significant difference to the level of dispute and the legal costs incurred as a result, in the unfortunate event of a future divorce.

Expert HNW Divorce Lawyers

Are you dealing with a complex divorce involving significant assets or pre-marital wealth? Understanding how recent landmark cases like Standish v Standish can impact your settlement is crucial. Our expert family law solicitors can provide the guidance and support you need to navigate these challenges and protect your interests. Contact us today for a confidential consultation.

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