Credit Crunch Divorce

Divorce settlements have been brought into the spotlight in recent months, as people are demanding that negotiated settlements be re-opened and the reason for this torrent of claims the global economic downturn.

As incomes plummet and value is wiped off savings, investments and property prices, divorce settlements agreed in better times are no longer looking favourable, particularly where one party has retained riskier investments as part of the settlement.

In the publicised case of Mr & Mrs Myerson, the divorcing couple agreed on a division of their assets just before the recession hit. Brian Myerson, a successful entrepreneur, was to keep £14.6 million of their combined £25.8 million fortune, and his wife Ingrid, a sculptor, was to keep the remaining £11.2 million. Her portion consisted of cash and real estate, and his portion was to be comprised mainly of shares in his fund management company. Shortly after the settlement was agreed, a significant amount was wiped off the value of Mr Myerson’s shares, with the result that after paying for his wife’s settlement, his lawyers argued Mr Myerson would be £500,000 in deficit.

Claiming that the settlement was unfair, Mr Myerson returned to Court to ask if the terms could be changed. The Court of Appeal rejected his claims because:-

• Mr Myerson had freely agreed to the deal with his wife, and had chosen to keep his shares as his part of the bargain so he had accepted the risk associated with them. The Court could not relieve him of the consequences of his speculation by re-writing the deal.
• The Court had the power to vary ancillary relief orders in exceptional circumstances but natural price fluctuation of property and investments however dramatic was insufficient reason for the Court to intervene.

It has been reported that Mr Myerson intends to appeal to the House of Lords, although at the present date this is yet to be confirmed.

In a case with a rather different slant, Caroline Bokor-Ingram discovered (after agreeing the terms of her divorce settlement) that her banker ex-husband had been negotiating a better-paid job when they divorced. His income was consequently set to increase considerably from £500,000 per annum to a package worth £1.1 million per annum. Mrs Bokor-Ingram decided to apply to the court to vary the terms of her settlement to take into account her ex-husband’s new increased salary. In the meantime the recession hit, and Mr Bokor-Ingram’s bonus was significantly reduced. At the 11th hour, Mrs Bokor-Ingram backed down, agreeing to keep her maintenance payments at the level agreed in the original settlement.

Few people have been left unscathed by the rollercoaster effect of the economy over the last 12 months. It is vital to weigh up the risks inherent in any financial deal and recent events have shown that it has never been more important to take specialist legal advice. For further advice or information please contact Kim Aucott.