Financier's son ordered to pay £1.3m debts on ex-wife's house

Jonathan Lyons, 58, had been allowed by a High Court judge to keep more of the total assets of his marriage in a divorce settlement on the understanding he would be liable if the bank called in the debt.

But Miriam Lyons, 59, who split from her husband in 2007 following a 32-year marriage, went to the Court of Appeal to alter what she said was an "unfair" settlement with her husband, who was once said to be worth 22m.

The three appeal judges allowed her challenge and gave Mr Lyons the option of either paying off the debt within two years of the date of the High Court hearing in April last year, or to pay the 1.3m to his former wife.

At the High Court hearing, Mrs Justice Macur said if Mr Lyons was forced to raise the money by selling property, "there is little doubt of the potential domino effect and his potential ruin".

Philip Moor QC, representing Mr Lyons, said: "To a large extent, the problem in this case is the current economic climate."

He said Mr and Mrs Lyons, who have three adult children, had lived beyond their means, regularly borrowing money against their joint property portfolio to pay off debts.

"This was not particularly sensible in a rising property market but it became disastrous when property prices began to fall drastically."

The divorce increased the financial pressure, with the legal bill estimated at 1.4m before the start of the appeal, he said. Mr Moor added that Mr Lyons' wealth was at one time estimated at 22m, but after the collapse in property values combined with family expenditure, his assets were now said to be worth less than 7m.

He said Mr Lyons also faced a tax bill of 624,000, with penalties which could double this, if he lost his battle with HM Revenue and Customs over whether his permanent home was in London or Switzerland.

There were also capital gains tax considerations if he was forced to sell a property and this could reduce his wealth to 2.5m, said Mr Moor.

James Turner QC, representing Mrs Lyons, said both parties had brought substantial family wealth to the marriage and acquired at an early stage a multimillion pound property in St John's Wood, north London, where Mrs Lyons still lives.

He said Mr Lyons has a permanent home in Switzerland but returns to the UK, where he has accommodation in Notting Hill, west London.

The High Court ruling allowed Mr Lyons to keep assets valued at 4,199,906 while his wife retained 3,334,660. The figures assumed Mr Lyons would be responsible for the bank debt and would bear the risk of any tax liability.

Mr Lyons is one of the two sons of Jack Lyons, one of Leeds' most prominent businessmen of the latter half of the 20th century.

He owned the John Collier and Alexandre chains and was a patron of the arts.

Knighted in 1973, he was stripped of his knighthood and CBE in 1991 after being convicted of six charges of share trading fraud surrounding the Distillers takeover.