DIVORCE SETTLEMENTS – COURT OF APPEAL SAYS “NO” TO DEAL BEING REOPENED

The recent decision of the Court of Appeal in Myerson v. Myerson is a stark reminder that the courts will not allow a divorce settlement to be reopened simply because of a subsequent rise or fall in asset prices, whether it be the price of houses, shares or other property.

The facts of Myerson arose from the credit crunch. Brian Myerson was a wealthy fund manager. In March 2008, following his divorce from his wife Ingrid, a compromise was reached and reflected in a Consent Order. The joint assets, then valued at £25.8m, were to be split 57% / 43% in favour of Mr. Myerson. The assets retained by Mr. Myerson included a substantial shareholding in a company quoted on the AIM Exchange. At the date of the Consent Order, the shares were quoted at £2.77½ per share. By December 2008, the price had fallen to just £0.72. In terms of value, the asset split made by the Consent Order was now 86% / 14% in favour of Mrs. Myerson. Mr. Myerson appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal. The Court ruled that Mr. Myerson had freely agreed to the Consent Order on the basis of full knowledge of the relevant information, both public and private. So far as the shares were concerned, he had agreed to a deal which, in the Court’s words, left him “captain of the ship”. Secondly, he had deliberately taken a speculative approach to Mrs. Myerson’s claims and had secured important benefits as a result. It was not for the Court to rewrite the bargain between Mr. and Mrs. Myerson simply because things had not turned out as Mr. Myerson anticipated.

Fortunately, Mr. Myerson had something of a lifeline although it was somewhat second best. The Consent Order provided that of the £11m payable to Mrs. Myerson, £2.5m was to be paid to her in instalments. The Court has no power to vary the size of a lump-sum order, only the timing, but it can vary an order for maintenance. Indeed, by the time the Myerson case was heard in the Court of Appeal, Mr. Myerson had already applied for the variation of maintenance. This was another factor which weighed with the Court of Appeal in dismissing the appeal, given that £2.5m was a sizable chunk of the £11m payable to Mrs. Myerson.

It is hard not to feel some sympathy for Mr. Myerson. Few people foresaw the global downturn at the end of last year. However, this case does illustrate the importance of divorce settlements being properly thought through and perhaps a more balanced attitude is taken to risk and ensuring that all likely contingencies are covered.

If you would like to know more about the implications of this case, please contact Mary Banham-Hall or Dawn Millar.

Filed: 17/06/2009 13:21:44