Could the credit crunch get you out of paying that pesky divorce settlement? That's the teaser before London's Court of Appeal after Brian Myerson, a fund manager in the city, asked a panel of judges Wednesday to nix the $15.2 million agreement reached last March with his ex-wife Ingrid. The reason: turmoil in the markets has effectively wiped out his share of the couple's spoils. A ruling in Myerson's favor could see a tide of wealthy divorcees heading back to court in search of sweeter deals.
When the couple's $36 million in assets were divvied up last year after more than a quarter century of marriage, 50-year-old Myerson got 57% of the loot. Ingrid Myerson walked away with the rest. So in return for paying his ex-wife $13.1 million in cash, and handing over a $2.1 million beach house in South Africa, Brian Myerson kept hold of stock in Principle Capital Holdings (PCH), his investment company, worth more than $20.1 million at the time. (See pictures of things money can't buy.)
Problem is, shares in PCH worth 292 pence a year ago are fetching only 20 pence right now. That's left Myerson's stake in the firm worth a measly $2.7 million. Should Myerson be made to pay the $3.5 million in cash he still owes his former wife, she'll have landed 105% of the couple's assets, Myerson's lawyers argued in court Wednesday, and he'll be left hundreds of thousands of dollars in the red. "The freefall in the value of the shares has completely changed the basis on which the case was settled," argued Martin Pointer, Brian Myerson's lawyer.
On the face of it, though, Myerson's chances of re-negotiating the deal look slim. "The whole deal with these clean-break settlements is people know where they stand after they're done," says Julian Lipson, head of the family law team at London law firm Withers. Exceptions might be made if one party lies about their assets, or if "in very short succession after the order has been made, a completely unforeseeable change renders the basis of the agreement wrong," Lipson says. Otherwise, "a final order is a final order. And that's that."
Arguing that today's financial market chaos came out of nowhere will be key to Myerson's case. While Pointer, his lawyer, claimed in court recent events were indeed "unforeseeable and unforeseen", Nicholas Mostyn, representing Myerson's ex-wife, hit back that "the present downturn was totally foreseeable and indeed well under way" at the time of the couple's settlement a year ago. Moreover, Mostyn argued, as a fund manager, Brian Myerson knew as well as anyone that shares can go up as well as well as down. "He agreed in exchange for having a majority of the assets to assume the risk," Mostyn argued. "It is too late now for him to try and unpick that deal."
One thing the judges on this case might want to consider: the potential for a ruling in Brian Myerson's favor to open the floodgates for similar claims. "As much as the court says 'we look at every single case on its own facts', in reality, if this case were decided in [Brian Myerson's] favor it would be a foot in the door for everyone else," says Lipson. That could create a volume of cases courts might struggle to handle. Claims wouldn't just center on the plunging markets; divorcees left with property worth less than they'd been led to believe, for instance, might also seek redress. Until the ruling, divorced London bankers will live in hope.