Further to my previous blog ("Recession hit Husband tries to Renegotiate Final Order on Divorce") we were all eagerly awaiting the judgement of the Court of appeal following Mr Myerson's appeal of his divorce consent order on the grounds that the fall in value of his shares caused by the financial crisis constituted an event that undermined the basis of the order.
The judgement, released today confirmed that his appeal was dismissed by Thorpe LJ as, following Hale J in Cornick v Cornick, a natural change in the price of shares did not meet the general principles required. He also added four other reasons
"33. First, the order was not imposed but was the product of the will of the parties. The husband, with all knowledge both public and private, agreed to an asset division which left him captain of the ship certain to keep for himself whatever profits or gains his enterprise and experience would achieve in the years ahead.
34. Second, when Mr Pointer was asked what would be the husband's target if the appeal were allowed, he replied that the husband would probably seek the repayment of all or part of the first instalment of the lump sum in exchange for transferring to the wife an unspecified number of his shares in PCH. That response casts a clear light on the merits of this appeal. When a businessman takes a speculative position in compromising his wife's claims, why should the court subsequently relieve him of the consequences of his speculation by re-writing the bargain at his behest?
35. Third, he continues to enjoy control of the opportunities that go with it. The market place may take a pessimistic view of his future prospects. He may not share the market place view. Unusual opportunities are created for the most astute in a bear market.
36. Fourth, because the payment of the lump sum was spread over five instalments there exists, and he has invoked, the statutory power of variation. If the circumstances justify the reopening of the consent order then Mr Justice Bennett has the jurisdiction to rewrite that part of the consent order. Given that the outstanding instalments amount to £2.5 million much more than token relief is there, albeit subject to the exercise of the judicial discretion. On this ground alone I would hold that the appellant fails to satisfy the second limb of Lord Brandon's first condition, namely that the appeal would be certain, or very likely, to succeed. Given the width of the discretion given to the judge deciding the application for variation in the exercise of statutory powers, an appeal directed to the majority of the lump sum already paid and/or the transfer of property order would seem to me to have most uncertain prospects of success."
In layman's terms the additional reasons were namely (1) because the order made was a consent order that Mr Myerson freely and willingly entered into and he agreed to retaining the majority of his business assets to ensure that he would gain from them in the future; (2) because he was seeking repayment of some of the lump sums already made which cast doubt on the merits of his appeal because, as a businessman if he had taken a decision to meet his wife's claims why should he get to change his mind just because his decision may not be a good one? (3) he continues to retain control of his business and therefore can take astute business decisions in this economic climate to try to make the most of opportunities and (4) because the lump sum payable to his wife was over a period of time in instalments, the court has the power to vary lump sums made by instalments, which Mr Myerson had sought. Under those circumstances, there was not a clear certainty that any appeal would be likely to succeed, which there must be if leave to appeal is to be granted. The court has wide discretion when seeking to vary a lump sum instalment and thus the prospect of success on appeal was uncertain.
There was a concern that, should the appeal have been granted, a flood of potential applications would follow by spouses whose downturn in fortunes have meant that the orders made in their divorce proceedings were now perceived to be unfair. The floodgates remain securely sealed.
Rachel Spencer Robb is an Associate at Clarion and an Accredited Specialist in family law. Contact her on 013 336 3349 or email@example.com if you require any advice or assistance on a family law matter.