Gardner Leader

Couples who were divorcing six to twelve months ago, may have reached a settlement based on a vastly different set of financial circumstances than they have before them now. Seona Myerscough, family lawyer at Gardner Leader solicitiors, offers some advice to those who have found themselves in this position.

This very point has recently been considered in a case in the Court of Appeal reported as Myerson and Myerson (2009) The husband, whose assets were valued at £25.8million (the majority of which were from shares), was ordered to pay his wife a lump sum of £11million in instalments. The following month, the recession hit and the value of his shares plummeted by approximately 60%. The Court of Appeal concluded however that, despite this dramatic change, a compromise as to the level of payment he made to his wife was not justified.  

There were a number of factors that came into play in this case, most notably the fact that the original settlement was agreed by the husband, with all his knowledge and experience and there was still a reasonable chance that over time the shares would recover. However, these points aside, it still seems a surprising outcome.

Where does this leave the ordinary person who has divorced, is in the process of divorcing or even just thinking about it?

1. I was ordered to pay maintenance to my former spouse and I have lost my job or my income has been reduced. What should I do? 

Maintenance, unlike capital payments (as in the Myerson scenario), is always open to variation should your circumstances change. If you cannot afford to make payments then you should not delay and apply to the Court to vary your spousal maintenance order. If a variation is granted, it will date from the date of the application and, whilst your application is being considered, the recipient of the spousal maintenance cannot apply to the Court to enforce the original order.

2. I pay Child Maintenance, which has been assessed by the Child Support Agency (CSA), but I have now lost my job or my income has been reduced. What should I do?

Maintenance to your children is no longer governed by the Court, so if your circumstances change, you need to ask the CSA to re-assess you. In cases where the CSA has not been involved and instead you have made a voluntary agreement with the other parent, I suggest you explain openly and fairly to the other parent that you can no longer afford the payments, and agree a new figure until your circumstances improve. If this is not possible, the only action that can be taken is for the receiving parent to apply to the CSA to make an assessment and enforce an appropriate level of Child Maintenance. Please note, the CSA back-dates payments to the date of the application, so it does not pay to delay.

3. I was ordered in the divorce to pay my former spouse a lump sum of money, but I can no longer afford to pay this? 

If you have this problem, you have no choice but to see a family solicitor urgently. The case of Myerson certainly does not mean that you will be unsuccessful in your application to amend the order, (each case is decided on its own merits), but it won’t make it any easier either.

4. I am going to be made bankrupt, how will this affect my family in the divorce? 

Bankruptcy can have a devastating effect on a divorcing couple and their family. As assets are recovered, it may become difficult to make maintenance payments. The trustee in bankruptcy can seek to sell a property after a year if there are children living in the property. You need to get specialist advice on this problem from an insolvency practitioner and a family lawyer. It is not in any way straightforward.