Lump sum and maintenance payments after divorce take account of a variety of factors, many of them, obviously, related to the means and the needs of the respective parties. The best valuations and predictions made at the time may prove wrong, and the credit-crunch and ensuing recession have increased the number of settlements whose premises have been subverted by events.
The most obvious examples – obvious in the sense that they were predictable once the downturn got under way – arise either through the loss of the employment which supported the payments or through changes in the valuations of property or shares which underlay the division of assets on the divorce. The landmark case of this kind was that of Myerson v Myerson where the husband, wealthy city trader Brian Myerson, failed to persuade the Court of Appeal to reopen his former wife’s divorce settlement after the value of his company’s shares collapsed.
A more recent case, Walkden v Walkden, sees the reverse. Mr and Mrs Walkden made an agreement in January 2007 by which future maintenance payment were converted into a capital sum which reflected, amongst other things, the best estimates of the value of Mr Walkden’s shareholding in a timber company called Triesse. Triesse was valued at the time of the divorce at £800,000. In August 2007, however, Triesse was sold for more than £3.7 million. Mr Walkden was the majority shareholder, and the result of the sale was that 82 per cent of the couple’s assets, as they then appeared, stayed with him.
Mrs Walkden applied to vary the settlement. Mr Walkden argued that his position was the same as that of Brian Myerson. If Myerson had been made to stick to his bargain, Mr Walkden argued, then so should he. The Court of Appeal agreed, Lord Justice Thorpe referring to the “highly speculative value of the shareholding” which, he said “was duly reflected in the compromise agreement”.
These two decisions do not mean that the court will never reopen divorce settlements. They are a product of the times in the sense that such volatility in valuations is a feature both of recession and its hoped-for aftermath of rising values. They are founded on an assumption that a former husband and wife must share the risks in divorce which they shared when married. One of those risks is that the market will utterly subvert what appeared as a certainty. That can affect the timing as well as the substance of any settlement in these uncertain times.
At Ambrose Appelbe we are well used to weighing the commercial and practical as well as the human aspects of divorce, whether it is a so-called “big-money” divorce or the more usual division of assets between people of more typical means. Contact Lisa Bolgar Smith or Felix Appelbe on 020 7242 7000 if you are contemplating divorce or wondering if your existing divorce settlement might be re-opened.
