Businessman hit by recession fails to reduce divorce settlement
A businessman whose assets have been decimated by the recession has failed to get a reduction in his divorce settlement with his former wife.
The Court of Appeal said the law could not be used to protect him from fluctuations in the economy. The ruling may influence the way some divorcing couples negotiate settlements in future.
Brian Myerson reached a settlement with his former wife Ingrid in March last year in which he agreed she should receive 43% of their combined assets and he should retain 57%. This valued her share at £11m and his at £14.5m.
The wife’s share was to be provided in cash and property, paid in instalments over four years, starting with an immediate lump sum of £7m. There are four more instalments to pay over the next four years.
The husband’s share was made up largely of shares in his investment company. At the time of the agreement, those shares were worth £2.99 each which meant his holding was worth just over £15m.
However, a year later the shares slumped to just 27.5p each because of the global recession.
Mr Myerson then applied to have the settlement reduced on the grounds that the collapse in the market meant it was unfair because his assets are now far less than he anticipated. He would end up out of pocket if the settlement were to stand.
However, the Court of Appeal has ruled against him.
Lord Justice Thorpe said that the court could set aside an ancillary relief order in the wake of some dramatic event but only if it was truly exceptional. Such exceptional circumstances did not include market fluctuations in shares or the price of property – no matter how dramatic.
He said the husband’s appeal also failed because the order was not imposed by a court but agreed between both parties.
“The husband, with all the knowledge both public and private, agreed to an asset division which left him captain of the ship, certain to keep for himself whatever profits or gains his enterprise and experience would achieve in the years ahead.”
“When a businessman takes a speculative position in compromising his wife’s claims, why should the court subsequently relieve him of the consequences of his speculation by re-writing the bargain at his behest?”
Lord Justice Thorpe said that had the shares risen in value, Mr Myerson would not have had to pay his wife any more.
A further reason for rejecting his appeal was that it was still open to him to seek to vary the future instalments that he is due to pay to his former wife. These would amount to £2.5m over four years. Mr Myerson has indicated that he plans to return to the High Court in July to have these payments cancelled.
In the light of the Appeal Court’s ruling, many couples now going through divorce proceedings may want to think carefully before committing to settlements involving assets such as shares which can fluctuate so much in value.
Please contact Dawn Harrison on 01622 698000 or at dawnharrison@whitehead-monckton.co.uk if you would like more information about divorce proceedings and settlements.
Published: 29 April 2009