John Hooper & Co

Solicitors

Newsletter 19 – The effect of the credit crunch upon financial settlements

MORE? YOU WANT MORE?

A number of national newspapers have recently reported upon the case of Mr & Mrs Myerson. Mr Myerson tried to get the Court to look again at a Financial Order, made by agreement, where the value of Mr Myerson’s shares had fallen dramatically as a result of the “credit crunch”. He failed.

The decision followed a line of cases where one spouse has tried to change the terms of an agreed Order because of a subsequent change of circumstances. Invariably they have been unsuccessful – due in part, to the somewhat speculative nature of some of the cases but also in consequence of a reluctance on the part of the higher Courts to permit extended litigation.

In 2008 a wife who was receiving maintenance stated clearly and categorically on more than one occasion that (a) she was not cohabiting and (b) she did not intend to cohabit or remarry. The husband applied to capitalise the maintenance and the wife received a lump sum payment. Shortly after, the wife remarried. Even here, the Court declined to overturn the lump sum provision.

More recently, at a Financial Dispute Resolution hearing it was assumed by the parties and by the Court, that the husband had a potential debt of £14 million. By agreement, after some guidance from the Judge, an Order was made by consent. Subsequently it was found that the debt amounted to a mere £600,000! The wife’s application to overturn the Order was rejected.

In both cases the Court said that the problem could probably have been remedied by an appropriately worded recital in the Order setting out the understandings between the parties and the Court in relation to the consequential provisions of the Order. For instance, in the 2008 case, the Order should have contained a recital to the effect that the wife had indicated that it was not her intention to remarry or cohabit. This might have given the husband a fighting chance of getting the Order overturned.

June 2009

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