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Family Law

The leading authority on all aspects of family law

02 JUN 2009

Divorce and Recession Part 2: Creditors, Competitors and Bankruptcy

Simon Calhaem, Barrister, 29 Bedford Row

Part 2 of this article assesses the impact of creditors on the ancillary relief process. To update Part I, published in April [2008] Fam Law 301, in the recent decision of Myerson v Myerson (No 2) [2009] EWCA Civ 282, [2009] 2 FLR (forthcoming), the Court of Appeal refused the husband's application to appeal a consent order on a Barder basis as a result of 'the husband's fortune [having] been hit by the earthquake of the global financial crisis'. The decision is based on the following grounds:

(a) the circumstances were a change in asset values will justify a Barder appeal are 'very few and far between';
(b) the order was made by consent;
(c) the consent order was in part speculative (of the husband's own assessment of asset values);
(d) the value of his shares may still go up;
(e) (and most importantly) because the payment of the lump sum was spread over 5 instalments the husband had power to vary the quantum of the unpaid lump sums (see Part I - Asset protection: drafting).

Thorpe LJ held that '... the natural processes of price fluctuation, whether in houses, shares, or any other property, and however dramatic, do not satisfy the Barder test.' Guidance for practitioners comes from point (e) above. Where there are uncertainties as to liquidity, the capital order should often be phrased as a lump sum by instalments, in order to permit a variation application in the event of economic collapse.

To read the rest of this article, see June [2009] Family Law journal.

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