Thus far, the answer is no. The Court of Appeal has this week rejected an attempt by fund manager, Brian Myerson, to reduce the divorce settlement awarded to his former wife due to significant losses suffered by him in the credit crunch.
Brian and Ingrid Myerson married in December 1982. Mr Myerson founded Principle Capital Investment Trust four years ago and at the time of the parties divorcing last year, his shares in the company were worth £15 million and formed a substantial part of the couple’s total assets of £25.8 million. It was agreed between Mr and Mrs Myerson at the Financial Dispute Resolution appointment in February last year that he would keep his shares and that his wife would be paid £9.5 million over 4 years as well as receiving their beach property in South Africa worth £1.5 million. This represented 43% of the total matrimonial assets at that time.
Unfortunately, Mr Myerson’s company went on to suffer significantly in the economic downturn. At the time of the divorce, his shares were worth £2.99 each but they are now worth significantly less at only 27.5 pence per share. According to Mr Myerson, this now means that his ex-wife will receive 105% of the assets, leaving him £500,000 out of pocket.
It was argued on behalf of Mr Myerson that the assumptions upon which the consent order was made have been undermined due to “the unforeseeable and unforeseen combination of forces at play within the global economy” and that his position could well worsen over the coming months.
The three judges of the Court of Appeal have however unanimously dismissed the case, ruling that they could not justify changing the settlement due to "the natural processes of price fluctuation, whether in houses, shares or any other property, and however dramatic".
Lord Justice Thorpe, who wrote the court's opinion, indicated that Mr Myerson's appeal failed in part because the settlement had not been imposed on the parties by the court, but had in fact been agreed by them.
Lord Justice Thorpe was also clearly unhappy at Mr Myerson’s suggestion that, if the appeal were successful, he would want to seek repayment of all or some of the first lump sum (£7 million) in exchange for transferring to Mrs Myerson an unspecified number of shares in his company. In addition, he felt that by retaining the shares, Mr Myerson had sought to retain control over the asset which it was intended would achieve further profits in the future.
It is believed that Mr Myerson will now take his appeal to Britain’s highest court, the House of Lords, in the hope that they will be more sympathetic to the situation in which he now finds himself. In the interim, he has also applied to the High Court to cancel a further payment of £2.5 million towards the lump sum due to his former wife under the existing agreement.
It appears that the Court of Appeal may well have been attempting to avoid a huge surge in the number of cases before them which would no doubt have happened had Mr Myerson been successful. Will the House of Lords feel the same? Only time will tell but the courts have historically been keen to ensure that there is as much finality as possible with such orders and are certainly busy enough already without having to deal with cases retrospectively. It therefore seems that Mr Myerson has an uphill struggle ahead of him.
In the meantime, however, it is clear that couples should proceed with extreme caution in the current climate when attempting to agree the division of their assets. They should try to spread the risk by sharing assets proportionately, particularly in a clean break case. But does this also mean that for those couples who have negotiated settlements over the last year or two on the basis of a property valuation which has now dropped significantly will also be prevented from applying back to the Court?
It is clearly more important then ever that separating couples each obtain the advice of an experienced matrimonial solicitor before entering into an agreement which could potentially leave them struggling financially in the future with nowhere to turn.
For more information or advice on divorce, please contact
Peter Lowe.
This article was first published in April 2009.
