Owing more than one has to give
I'm sympathetic to the plight of Brian Myerson (to the extent that I'm capable of being sympathetic to an individual whose wealth was once so great). He and his soon to be ex-wife agreed that he would transfer to her by installments a sufficient amount of his property and the value of his shares that she would end up with 43% of their combined assets (as valued at the time of the agreement). The agreement was rubber-stamped by the judge and therefore binding for almost all intents and purposes.
Given the economic climate that subsequently prevailed, it is unsurprising that the value of the shares plummeted. Under the terms of the agreement, Mrs Myerson became entitled to 105% of their combined assets, such that Mr Myerson will probably have to borrow money in order to meet his obligations. Yesterday, he lost his appeal against the order rubber-stamping the agreement (although he can still try to have it varied to a limited extent).
I understand how the court reached its conclusion on the basis of existing legal principles. Of course, there was an inherent risk in Mr Myerson choosing to transfer a fixed amount and yet retain his shares. But I'm not convinced that a fall in the value of the shares from £2.77 1/2 each on the date of the order (19th March last year) to 27.5p can be described as part of the "natural processes of price fluctuation".
In the commercial context, of course, Mr Myerson would receive no sympathy: these things happen. But it is somewhat ironic that such inflexibility has been shown in an area characterised by judicial discretion and the aim of a fair distribution of the parties' assets, where courts have refused to make pre-nuptial agreements binding. If such a catastrophic change in fortune had occurred before this couple had divorced, both of them would have had to tighten their belts. It is difficult to see why the same should not apply now that their marriage has been dissolved.
Given the economic climate that subsequently prevailed, it is unsurprising that the value of the shares plummeted. Under the terms of the agreement, Mrs Myerson became entitled to 105% of their combined assets, such that Mr Myerson will probably have to borrow money in order to meet his obligations. Yesterday, he lost his appeal against the order rubber-stamping the agreement (although he can still try to have it varied to a limited extent).
I understand how the court reached its conclusion on the basis of existing legal principles. Of course, there was an inherent risk in Mr Myerson choosing to transfer a fixed amount and yet retain his shares. But I'm not convinced that a fall in the value of the shares from £2.77 1/2 each on the date of the order (19th March last year) to 27.5p can be described as part of the "natural processes of price fluctuation".
In the commercial context, of course, Mr Myerson would receive no sympathy: these things happen. But it is somewhat ironic that such inflexibility has been shown in an area characterised by judicial discretion and the aim of a fair distribution of the parties' assets, where courts have refused to make pre-nuptial agreements binding. If such a catastrophic change in fortune had occurred before this couple had divorced, both of them would have had to tighten their belts. It is difficult to see why the same should not apply now that their marriage has been dissolved.