I suspect you will have read elsewhere about this case.
It clarifies the court’s approach to how the sharing principle applies, particularly in relation to assets transferred between spouses during marriage and when non-matrimonial assets can become matrimonialised.
The husband is now aged 72 and the wife is 57. They were married for 14 years and it was a second marriage for both of them. The husband had accumulated considerable wealth during a successful career in the financial services industry.
In 2017, he transferred £77.8m of assets to the wife as part of an inheritance tax planning scheme, intending for the wife to place them in trusts for the children. She never did. The wife later claimed the transfer was a gift and should be treated as shared (matrimonial) property.
Initially the court judged that the transfer matrimonialised the assets which became subject to the sharing principle. However, as the source of the 2017 assets was primarily the husband it decided that the appropriate share was 60:40 to the husband rather than 50:50.
Both husband and wife appealed. On appeal, the court decided that the husband was entitled to 75% of the 2017 assets and a half share of the remaining 25% which it deemed subject to the sharing principle.
The wife appealed that decision at the Supreme Court, contending that the transfer of the 2017 assets was effectively a gift to her.
The Supreme Court considered the three principles guiding fairness in financial remedies:
– Meeting each party’s reasonable future needs.
– Compensation for relationship-generated disadvantage.
– Equal sharing of matrimonial property unless there’s good reason to depart.
The court also considered the question of matrimonial and non-matrimonial property, highlighting that matrimonial property is that acquired during the marriage through joint effort (e.g. earnings, shared assets) whilst non-matrimonial property is that brought into the marriage, inherited, or gifted externally.
The Supreme Court clarified that:
– The sharing principle only applies to matrimonial property.
– Non-matrimonial assets are not to be shared unless they have been matrimonialised.
– The title of ownership (whose name it is in) is irrelevant; it’s about origin and treatment of the asset over time.
The Supreme Court reasoned that the majority (75%) of the transferred funds were traced to the husband’s pre-marital wealth and was therefore non-matrimonial.
The remaining 25% came from earnings during the marriage and was therefore matrimonial, subject to equal sharing.
There was no evidence that the couple treated the £80 million (the 2017 assets) as shared; the clear intent was tax planning and benefit for children and specifically not the marital partnership.
Given that matrimonialisation must involve consistent shared treatment over time, which was not present here, the wife’s appeal was rejected and the appeal court decision stands.