The Court of Appeal has heard arguments by a divorced couple over whether the Court should order Hossam Radwan to pay his ex-wife , Hayat Alireza, an extra 5.5 million so that she can buy a house for herself and her three children. That sum is on top of 2 million that Mr Radwan has already handed over to provide his ex with an income fund.
These are large sums but to put them in context Mr Radwan is reported to be worth about 14 million. During the marriage the couple lived in an apartment next to the Albert Hall in London. The original judge, Mrs Justice Roberts, decided that on top of the 2 million income fund Mrs Alizera should be able to continue to live in the flat until her father died. As Mr Radwan wasn’t ordered to provide cash so that Mrs Alireza could buy a home for herself and the children the wife thought the decision unfair and asked the Court of Appeal for an extra 5.5 million, her plan being that she would buy a house and later downsize, and use the surplus cash to provide an extra income fund.
On the face of things, after a14 year marriage, with three children, and with Mr Radwan being worth a reported 14 million the wife’s request doesn’t seem that unreasonable, as in the absence of a prenup agreement or pre marriage contributions the divorce Court would normally start from the premise that assets should be divided equally between a husband and wife, unless there are good reasons to depart from equality.
Mr Radwan says that there is good reason for an unequal split and argues that he should not have to pay his former wife 5.5 million to buy a new house, on top of the 2 million income package, because her father is a member of one of Saudi’s oldest business dynasties and is remarkably wealthy. The wife argues that her father has no legal obligation to maintain her and that the current flat is too small for her and the children.
Normally when a Court hears arguments about the relevance of future inheritances the sums are not vast and, more importantly, the point is normally made that a parent may choose to disinherit their child, with the familiar line being that a parent may elect to give their money to the local cats home or donkey sanctuary. However, Mrs Alizera’s father is a Saudi citizen and under Saudi law Mrs Alireza will inherit a fifth of her father’s estate of 500 million, so about 100 million. The first judge referred to this as a vast fortune when making the decision not to give the ex-wife anything other than a right to stay at the family home until her father died.
Appealing the decision, Mrs Alizera says that her father, who is in his 70s, may live for decades and in the meantime the flat is too small and furthermore that she will run out of money from the 2 million income fund if she doesn’t inherit within the next 14 years. The Court looks at the standard of living enjoyed by a family when considering the wife’s assertion that the income fund may well be used up prior to her father’s death leaving Mrs Alizera with no means to provide for herself and no money to pay the bills on the flat. Mrs Alireza contends that the decision to not give her a share of the family wealth is placing her father under an obligation to support her if the money runs out before his death or to enable her to move house.
What is agreed is that there is no principle of law that a husband or wife should become the financial responsibility of their birth family on divorce. The wife therefore says the judge was wrong to take into account the wealth of her father when making the order. Contesting the appeal the husband says that he may be rich but he is much poorer than his ex-wife’s rich family and that the wife’s father has financially supported her in the past by paying over a million in lawyer’s fees and will continue to do so. Mr Radwan, therefore, contends that the inheritance is both an existing resource and a future resource. The appeal judges have reserved their decision on the case until a later date.
The sums are eye watering and many would question how relevant this type of decision will be to them in their own divorce proceedings. However, as a matrimonial finance solicitor and member of the International Academy of Family lawyers, it is not unusual to come across scenarios where a husband or wife know that they will automatically inherit international property as a result of succession laws in the relevant country. The Court of Appeal decision may give guidance that will help in a number of similar scenarios, such as where a family have put money into trust for the benefit of a son or daughter and distributions of income or capital or both have been made to the child. The relevance of trust assets is a surprisingly common issue in divorce proceedings and I am often asked to represent either a husband, wife, trustees who are joined to the financial proceedings or an intervening family member. Many families try to ring fence assets to protect family wealth from future generations by using an agreement but it is equally important that ongoing advice is taken on the impact of the trustees making capital or income contributions or, in Mrs Alizera’s case her father paying legal fees and making a 20 million pound house available to his daughter during her estrangement from her husband.
Whether it is a Saudi inheritance or a potential trust distribution, a lot of the concerns about how the money should be split could be avoided by a couple doing a prenup or postnup agreement, setting out who should get what in the event of a marriage breakdown. In my view whenever there is a sizeable inheritance or trust a prenup agreement is just sensible planning to limit financial claims and lawyers’ fees if there is a future separation.
Frustratingly it may be the case that both sets of lawyers’ fees for husband and wife may get to almost the amount that Mrs Alizera says she needs as a housing fund and I always, therefore, recommend that families look at compromise solutions, such as the husband buying a larger property for wife and children but with the property reverting to him on the death of Mrs Alizera’s father. This is just one of a number of routes that the Court of Appeal could go down.
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