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Divorce could leave tycoon £1/2m in the red. That’s a rum do, says judge
Robert Mendick11 Mar 2009
A City investor attempted to make legal history today by getting his wife's £11 million divorce payout reduced because of catastrophic losses suffered in the credit crunch.
If Brian Myerson succeeds in his claim, it will open the floodgates to spouses trying to back out of settlements they can no longer afford.
The Court of Appeal heard today that Mr Myerson paid his wife, Ingrid, £11 million, made up of a cash settlement of £9.5 million and a house in South Africa valued at £1.5 million.
The agreement, reached in February 2008, left him with £14.5 million in assets — or 57 per cent of the couple's total worth.
But since the deal was reached the share price in Mr Myerson's investment company Principle Capital Holding has plummeted from around £2.95 to just 27.5p today.
Mr Myerson's lawyer, Martin Pointer QC, told the court that at today's prices his client was now worth minus £500,000, taking into account debts and mortgages.
Effectively should the settlement be paid in full, Mr Pointer said, then Mrs Myerson would be walking away with 105 per cent of the couple's assets.
Lord Justice Thorpe, in a rare moment of sympathy, remarked: “That's a rum do.”
Mr Pointer said: “The husband's case is that the unforeseeable and unforeseen combination of forces at play within the global economy has undermined the assumptions upon which the order was made.”
He argued that his client's fortune had been hit by “the earthquake of the global financial crisis” and added that the settlement was now both “unfair and impracticable”.
South African-born Mr Myerson has already paid his wife £7 million but wants to opt out of the final instalment of £2.5 million. He also wants to claw back the house in South Africa which he is yet to transfer into her name.
But in arguments submitted to the courts, Mrs Myerson's lawyer, Nicholas Mostyn QC, argued that by February 2008 the economic downturn was “well under way” and “totally foreseeable”. Mr Mostyn added: “The trend was obvious. But he did nothing.” Mrs Myerson's legal team have warned that should the appeal succeed it will open “a Pandora's box”. Mr Mostyn added: “It's too late now for him to try to unpick the deal.”
Mr Mostyn warned that if the appeal succeeds it will cause “an explosion of litigation with which the courts can ill afford to have to deal with”.
The case was adjourned today with judgment deferred for 10 days.
Mrs Myerson, 48, the mother of their three children, married Mr Myerson in 1982. She has, since the divorce, bought a new house in Hampstead and has formed a relationship with a new man. Dressed in a pink wool suit and wearing matching pink spectacles Mrs Myerson, a sculptor, was accompanied in court by solicitor Ray Tooth.
Mrs Myerson, who is also from South Africa, is described a “brilliant”' sculptor who has sat on the Royal Academy's party committee. She is a patron of One Family Fund, a charity which supports victims of terror attacks in Israel.
Mr Myerson's solicitor Philip Way, a partner at the law firm Mills & Reeve, said: “This case has widespread implications for divorcing couples across the country.
“The hope is that the court will give much-needed guidance as to whether recent economic events constitute sufficient reason to enable paying spouses to revisit the terms of financial orders.”
Another divorce lawyer said “People are watching this very carefully. A lot of divorce deals have been constructed on the basis that clients were going to keep making money in the future but that is not the case now.
Reader views (10)
Legally the man is in a pickle, of course. On the other hand, the money was made by him while Ingrid was playing "the artiste" and celebrity wife. Vindictiveness and greed, well, i suppose this is what art world is about these days,
What i find shocking is that two people who shared 20 years together cannot find the minimum of sympathy for each other. She took his money and now gloats watching him sink? Pitiful!
- Koi, Awatowi, AZ, 27/05/2009 01:20
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Seems fair to me
Better they re-negotiate now than he make himself bankrupt and she get nothing. Judge should put in a clause though so that if the assets go up she gets an increased share (maybe more than last time to make up for her having to accept lesser payment now)
- Bob Jones, London, 12/03/2009 10:21
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it's ridiculous that she should, barring exceptional circumstances, get anything more than a basic living allowance. It's HIS money after all.
- James, london, 12/03/2009 10:09
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It is most likely he kept the shares because he had no choice. Directors selling large amounts of shares will have an impact on the company as a whole. So she is a Sculptor? nice.
- Larry, Amsterdam, NL, 12/03/2009 09:19
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If she's a "brilliant sculptor" why does she need millions of pounds ? Moreover why do divorcing husbands always shoulder the bills in a divorce now that the sexes are supposed to be equal ? Provide funds for the kids by all means but why is the man always paying the wife to sit around and do nothing ?
- Madmax, London, 12/03/2009 03:57
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It would be ridiculous to allow this appeal. Nobody would ever know where they stood after a divorce - with the receiving party being able to claim more in a buoyant market and the paying party being able to reduce payments in a falling market. The point of a full and final settlement is that it is a one off payment and future events cannot influence it (which means that unless the financial status quo is maintained there is always one party that benefits over the other after a settlement has been made). If Mr Myerson was so stupid to keep all his money in falling assets then that is no reason for the Court to find in his favour.
- Andy, london, 11/03/2009 16:48
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Surely the settlement is based on asset value at the time. If you know that you are giving up all your cash assets and leaving only volatile assets you would place some of these volatile assets somewhere safer. This is personal fiscal management. If the settlement is based on future earnings then the payment would be made in the future not up front.
Clearly she has no sympathy with his situation - inless the lawyers have told her not to have sympathy in order to get some more hours billed?
- Jon, london,England, 11/03/2009 15:01
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erm....excuse me but does this not mean that if his wealth increases, she would be entitled to more?!
I would love to see how this one works out!!
- Mortgage Broker N3, London, England, 11/03/2009 13:13
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If there was an upturn, presumably she could ask for more !!!!!
- Nigel Howse, Baltimore USA, 11/03/2009 11:58
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Seems reasonable that if a divorce settlement was based on future earnings and those earnings are diminished by these economic circumstances that the settlement should be reduced. What would the legal position be though, if the former husband squandered his wealth to the extent that he couldn't pay the settlement? Any lawyers out there know the answer? (not that I am intending to divorce my wife of course, merely enquiring on behalf of a 'friend'...honest....).
- Dc, London, 11/03/2009 11:41
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