In what the Daily Telegraph on the 24 March 2009 described as “the newly broke in search of cut-price divorce” (see link below) many people are looking to renegotiate their divorce settlements as a result of a fall in their assets due to the credit crunch.
In the United States John Cleese successfully made an application to halve the £1.3 million per year payments he has to make to his ex-wife.
That application probably gave hope to fund manager Brian Myerson. He recently made an application to the Court of Appeal to ask that they review his divorce settlement to saying that he could no longer afford to pay a total lump sum of £9.5 million to his wife.
Mr Myerson had agreed that his wife would receive an overall deal worth £11 million. This was made up of a £1.5 million house and a £9.5 million lump sum. My Myerson had already paid £7 million to his wife in April 2008. The deal provided for him to pay a further £2.5 million over the next four years at a rate of £625,000 per year until 3 April 2012.
My Myerson’s 57% share of the matrimonial assets had been made up almost entirely of his shares in his investment company. At the time of the order Mr Myerson’s shares were worth £15 million (£2.99 each). By the time of the appeal the shares in his company were worth 27.5pence each.
Mr Myerson argued that the fall in value of his shares had “destroyed the basis or fundamental assumption upon which the order was made”. He argued that the order was no longer fair and that due to the decline in the value of his company it would no longer be practical for him to comply with it.
His legal team further argued the effect of Mr Myerson making future payments would be to leave him with a deficit of £539,000.
Mrs Myerson’s legal team raised with the Court, amongst other issues, that allowing the appeal would open the floodgates for further appeals since there would be many people in a similar position having seen the value of either their shares or properties falling after a divorce settlement was agreed.
The Court of Appeal dismissed Mr Myerson’s appeal saying that “the natural processes of price fluctuation whether in houses, shares, or any other property, and however dramatic” should not be reason to overturn an agreed settlement.
The Court said that Mr Myerson had known the risk when agreeing a settlement in which the majority of his share of the assets was the shares in his company. The Court stated that share prices could very well rise in the future. Mr Myerson, as a businessman, might well be able to make a good situation from a bad one.
It seems a large part of the Court’s reasoning was to prevent a future rush of applications of this sort.
A judgment underlines the importance of carefully choosing which assets to retain in a divorce settlement. It is also a further reminder that a capital order is a final one which in the large majority of circumstances cannot be revisited.
For further advice in relation to all aspects of divorce and separation please contact
Melanie Pilmer
in our family team:
mpilmer@steeleslaw.co.uk
To read The Guardian's article in full click here.