The judgement in Myerson –v- Myerson on 1st April provided welcome guidance for ex-spouses considering revisiting a divorce financial settlement reached before the current economic downturn.

Mr & Mrs Myerson reached a financial agreement in February 2008, confirmed in a Consent Order the following month.  They both received specialist legal advice before entering into the agreement, whereby Mr Myerson kept his shares in an AIM listed fund management company and Mrs Myerson received a property and a lump sum, payable in instalments over a four-year period.  At the time of entering into the agreement, shares in the fund management company were trading at £2.99.  Mr Myerson’s share of the matrimonial wealth was 57% (£14.5 million) and Mrs Myerson’s was 43% (£11 million).

Much to Mr Myerson’s dismay, the company’s share price fell at a steady pace to a mere 27.5 pence by March 2009.  Mr Myerson argued that this was such a dramatic change in circumstances that the original financial agreement should be revisited.  Although he had already transferred a property to Mrs Myerson in accordance with the original agreement and had paid part of the cash lump sum, he was encountering difficulties raising funds to pay the remaining instalments.   

After hearing skilful argument for both parties the Court of Appeal concluded that the original financial order would not be set aside.  Mr Myerson’s application failed because:

1. The Order was entered into with the consent of both parties after legal advice.  Both parties knew what they were entering into;
   
   
2. The husband had taken a speculative position when entering into the Consent Order.  If the share price had increased, he would not have wanted the original agreement to be revisited in favour of the wife;
   
   
3. He continued to enjoy control of the opportunities in the financial market place;
   
   
4. He could invoke the statutory power of the Court to vary the timing of the lump sum instalments; and
   
   
5. To revisit the Consent Order would be to open the floodgates for all those whose financial settlements were determined leading up to the economic downturn.

It was concluded that “the natural processes of share price fluctuation, whether in houses, shares, or any other property, and however dramatic” do not satisfy the test to re-open the settlement.

Maintenance payments can always be varied to reflect a change in circumstances of the payer or payee, but the decision in Myerson sends a very clear message to all those considering varying the capital element of their divorce settlements to take into account the current economic climate.

Mr Myerson is now considering an appeal to the House of Lords.

Deborah Jeff
Partner & Head of Family Department
Seddons solicitors
17.04.2009