Court of Appeal Reduces Wife's Award in Big Money Divorce

A recent decision of the Court of Appeal in a big money divorce case clarified how the sharing principle should be applied and when assets are subject to it.

The couple had married in 2005. The husband had had a successful career in financial services before retiring in 2007. The couple then lived in Australia before moving to England in 2010. The marriage came to an end in 2020.

In 2017, the husband had transferred assets now worth about £80 million into the wife's sole name, an arrangement which was part of a tax planning scheme. The Family Court ruled that, of their combined wealth of £132 million, £112 million was matrimonial property. The Court concluded that an unequal division of the matrimonial property was justified, principally because the assets transferred to the wife represented pre-marital wealth built up by the husband and had only become 'matrimonialised' towards the end of the marriage. The wife was awarded £45 million, representing 40 per cent of the marital property and 34 per cent of their overall wealth. In view of the size of the wife's award, the Court concluded that it was not necessary to undertake an assessment of her needs.

The wife appealed to the Court of Appeal, arguing that the transfer of the assets to her in 2017 had made them her separate property, and the Family Court had been wrong to treat them as matrimonial property. In his cross-appeal, the husband also maintained that they were not matrimonial property, claiming that they represented his pre-marital wealth. Alternatively, if they were matrimonial property, the wife's award was excessive given the wealth he had contributed to the marriage.

The Court of Appeal agreed with the husband that the source of assets was the critical factor in applying the sharing principle. The wife's argument that ownership was key ran counter to precedent and would undermine the achievement of a fair outcome. The transfers in 2017 did not mean the assets had become matrimonial property. Rejecting the argument that the concept of 'matrimonialisation' should be done away with, the Court found that assets that pre-dated a marriage could be subject to the sharing principle, although this should be applied narrowly.

The Court ruled that the Family Court's decision to award £29 million of the transferred assets to the wife – effectively treating £58 million or 73 per cent of them as matrimonial property – did not properly reflect its conclusion that they were mostly pre-marital. It would have been correct to conclude that at least 75 per cent of them were non-matrimonial property.

Allowing the husband's appeal, the Court of Appeal found that a fair application of the sharing principle would have resulted in the wife receiving about £25 million. The Court regretfully considered that, as an assessment of the wife's needs had not been undertaken, the case would have to be remitted for determination by application of the needs principle unless the husband and wife could reach an amicable solution.