High Net Worth Divorce Case Studies

Myserson v. Myerson

Mr. and Mrs. Myerson reached an agreement to divide £25,800,000.00 worth of family assets.  Mrs. M receiving £11,000,000.00 (this represented 43% of the total).  Mr. M. retaining £14,500,000.00 (57%).

Mr. M. had made his fortune as a fund manager operating Principal Capital Holdings Limited (PCH).  Of her £11,000,000.00 Mrs. M. received £9,500,000.00 in cash and the balance was represented by the transfer of a holiday home in South Africa.

Mr. M. retained his substantial shareholding in P.C.H. and other properties.  The share value of P.C.H. at the time of the hearing was £2.99p per share making his shareholding worth approximately £15,000,000.00.  The agreement was reached on 19th March 2008 when the shares were valued at £2.75p per share.  A year later the value was £0.275p per share.

In December 2008 Mr. M. sought to appeal the order on the basis that the downturn in the economy had rendered the order unfair.

It was argued on behalf of Mr. M. that the drop in the share price and house values made the order unworkable.  It was argued that the “basis or fundamental assumption upon which the original order had been made” was no longer practicable.

The reduction in the share value reduced Mr. M’s share of the assets to a negative position of minus  £539,000.00 whereas the wife retained £11,000,000.00 worth of cash and assets.

The Court of Appeal had to consider whether or not it could review the consent order.

The Court of Appeal did not allow the appeal stating that the order had been reached by consensual agreement and that Mr. M. must have known the risk, or potential risk, he was likely to face.  In reaching the agreement he had taken a speculative course by seeking to retain the risk laden shareholding.  Given that he had agreed to take this risk the court felt that it had no obligation to relieve him of the consequences of the risk he took.

The Court of Appeal repeated the court’s stated position that it must do its upmost to uphold parties to the terms of an order particularly one made by consent.

It stated that to vary a consent order the circumstances had to be extreme and the court would expect the payer to find whatever legitimate means may exist to fulfil payment of the order, for example, the borrowing of more monies or the selling of all assets.

It is believed that Mr. M. will now take his appeal to the House of Lords.  Family lawyers should be particularly careful in the current climate when entering into agreements and should bear in mind the potential problems which could be caused by the downturn in the value of the assets which form the substance of any agreement.