Alireza v Radwan & Ors

This is an appeal against the order of Mrs Justice Roberts dated 4 August 2016 in respect of the Appellant’s (“the wife”) application for financial remedies following the breakdown of her marriage with the First Respondent (“the husband”).

The judge ordered, uncontroversially, payment by the husband to the wife of a lump sum of £2m by way of capitalised maintenance, payments of child maintenance and the children’s on-going educational costs, together with a s um for a replacement motor vehicle.

In addition, and the subject of this appeal, the judge ordered that ongoing provision for housing for the wife (and children during their minority) would be made by giving her a time- limited occupational interest in two flats in South Kensington (the larger of which was the parties’ matrimonial home and principal residence, the smaller of which was used for the housing of domestic staff and guests). The wife’s right to occupy the staff flat was to come to an end in three years’ time and in respect of the principal residence upon either the wife’s remarriage or the death of her father whichever be the sooner.

The issues before the Court of Appeal are:

whether the judge was right in law to regard the wife’s future inheritance from her father as a resource that she was likely to have in the foreseeable future under Section 25(2)(a) Matrimonial Causes Act 1973 (“MCA 1973”); and

Whether the judge had been wrong in making an order granting the wife an occupational interest in the former matrimonial home rather than ordering the husband to pay a lump sum to the wife sufficient to enable her to buy a property of her own.

The parties, both of whom are dual nationals of the United Kingdom and the Kingdom of Saudi Arabia, were married in London on 20 May 1999. The husband was then in his late 20s, working in international banking; the wife was 21 years old. The husband has an earning capacity of in excess of £350,000pa. The wife has not worked outside the home and it is agreed between the parties that she has no separate earning capacity of her own.

Both families are, by any ordinary standards, extremely wealthy. The husband asserted that the scale of wealth of the wife’s family is in a wholly different league from that of the husband.

Following the marriage, the parties moved into a three bedroom flat in South Kensington: [an address], (“10 AHM”). The leasehold interest in the property had been purchased in October 1998 by the Second Respondent, (“Hosamco”). Hosamco is an offshore limited company which was incorporated in St Vincent and the Grenadines by the husband’s father in May 1978 and which is now controlled by the Verité Trust, whose ultimate beneficiaries are the First, Third and Fourth Respondents (the husband, his mother and his sister respectively). Hosamco provided a vehicle through which a number of UK and international property acquisitions were channelled.

The husband’s father died intestate on 24 November 1991, although in 1989 he had set out his testamentary intentions in a formal letter of wishes.

Following the death of his father, under Sharia law the husband was entitled to 58.33% of his father’s estate. The husband however, in accordance with his father’s wishes, agreed to forego his entitleme nt and instead the family arranged its affairs on the basis of the joint or collective ownership of all the family property (“the family arrangement”), continuing to use Hosamco as an acquisition vehicle. The Second, Third and Fourth Respondents were added as parties to the litigation in order to permit the resolution of a dispute between the husband and the wife as to the extent of the husband’s beneficial ownership of, amongst other things, the South Kensington properties and as to whether it was open to the court to make a property adjustment order under s.24(1)(c) MCA 1973 (variation of an ante- nuptial or post- nuptial settlement).

On 15 July 2000, approximately a year after the parties moved into 10AHM, their eldest son, Y, was born. His younger brother, A, was born on 19 December 2002. Y has significant learning disabilities and it is unclear to what extent he will be able to lead an independent life in adulthood. In the summer of 2004 the parties moved to New York in order to secure for Y what they considered to be the best treatment available for him. The family returned to live in London at 10AHM in the summer of 2006 and in January 2008, Hosamco bought an additional, slightly smaller property (“10A”) in the same building as 10AHM, for the use of the husband and wife’s domestic staff (and in particular their nanny) and guests.

Tensions appeared in the parties’ marriage in 2008, and for a number of months, the wife moved out of 10AHM and stayed with the children in her parents’ London home. The family subsequently moved to Jeddah, Saudi Arabia in the summer of 2009, where the husband and wife became reconciled. On 7 August 2011, the youngest child, a son, T, was born. On 29 August 2012 the wife returned to this country with the children and took up residence at 10AHM.

On 29 August 2013 the wife issued a divorce petition and a Form A, seeking financial remedies upon divorce. The marriage was dissolved upon the decree absolute being granted in July 2014.

In November 2013, agreement was reached between the parties in relation to interim maintenance whereby the husband would meet the wife’s household outgoings, the children’s school fees, and other expenses together with maintenance of £8,000 per month. The agreement was subsequently incorporated into an order by DJ Hess on 7 March 2014. Since the making of the order the wife has been obliged to apply, on four separate occasions, for the enforcement of arrears of maintenance by way of judgment summons.

Shortly before the case came before Roberts J for trial, the parties each produced an asset schedule. It was not in dispute that the wife had no assets of her own. She put the husband’s assets, held by him absolutely or beneficially, at slightly under £17.4 million. The husband for his part said that his assets amounted to only a little over £1.75 million, less his own liabilities (in the form of loans to be repaid to his mother and his brother-in- law) and the sum the wife said that she owed to her father in respect of her legal costs (a figure of in excess of £1m).

At the commencement of the final hearing in mid-November 2015, the wife sought a lump sum of £7.5 million (a housing fund of £5.5 million and an income fund of £2 million), or the outright transfer of the title to the Kensington properties in part satisfaction of that sum. Mr Peel QC on behalf of the wife accepted that largely due to her age (37 at the date of trial) the wife would not be entitled to a full Duxbury award on the basis of a lifetime entitlement to maintenance: instead she sought an amount to provide her with 14 years’ income, which would last until T’s majority. In his written opening Mr Peel said:

The wife also sought £1.2 million for her costs, £25,000 for a new car and child maintenance of £15,000 per year per child.

The Husband’s open position at the beginning of the trial was that he would offer £2.5 million as a cash settlement, with the wife and the children to remain in sole occupation of 10AHM until their eldest son, Y, reached the age of 18. (That is to say three years’ time at which time T, the youngest child, would be 6 years of age). The husband offered child maintenance at the rate of £12,000 per year each.

It was not until the fourth day of the hearing that anything like the full picture in relation to the husband’s ‘family arrangement’ emerged following the cross examination of the husband and his mother. By the time Mr Todd QC, on behalf of the husband, made his closing submissions it was accepted by him that his share of assets inherited on the death of his father amounted to £8m and not £1.75m. In fact, as the judge subsequently held, the husband’s beneficially owned assets were substantially more than £8m. The judge held that the husband’s disclosure had been ‘woefully deficient in many respects’. This late discovery of substantial additional assets (most of which were liquid) led to a revised offer of settlement. The husband now proposed to meet the wife’s income needs whilst the children were minors in full (i.e £2m in free capital), but this was on the basis that he would not be required to raise any further capital from his family. In relation to 10AMH, it was now proposed to allow the wife to retain exclusive, rent free, occupation of 10AMH until her remarriage or the death of her father and to have the use of 10A for three years until Y was 18.

The judge made a number of findings in relation to the assets available for (re)distribution:

The judge held that the husband had a one-third entitlement to all the assets held in the family arrangement, from which the husband would only be able to utilise his share, his mother and sister’s share being inviolable in accordance with his father’s wishes ([78]-[79]).

The judge held that, contrary to the wife’s case, Hosamco holds both the beneficial and legal title of 10AHM and 10A ([98]). She found, however, that the properties form a nuptial settlement for the purposes of s.24(1)(c) MCA 1973 on the basis that the parties held a licence to occupy the property following the respective completions of purchase by Hosamco. The court therefore had the power to vary this nuptial settlement, if such a variation were deemed necessary to meet the wife’s needs, when subject to reasonable assessment ([118]).

The judge found that the husband’s one-third interest in the family arrangement was worth between £12.42- £15.7m dependent upon the valuation of a beach villa owned in Jeddah; of that sum, £4,381,630 was in liquid funds. [160].

The judge put a figure of £1.64m on the husband’s personal liquid assets held outside the family arrangement [166] giving the husband a total of £6,021,630 in liquid assets.

The wife’s father did not make himself available to give evidence and the judge concluded that, whilst it would not be permissible to put a clear bracket around his wealth, the wife’s father was clearly extremely wealthy, the wife had an indefeasible entitlement to her inheritance and was likely to be a multi- millionaire in her own right on the death of her father. [126], [168].

Neither party has sought to appeal these findings.

The husband’s revised offer was, in effect, intended to maintain the status quo ante . The offer amounted to:

a lifetime occupational interest in 10AHM, which would be extinguished only following her re- marriage or her inheritance from her father accruing to her;

a three year occupational interest in 10A; and

free capital of £2m in cash.

The court was told that the property element of the open offer was made with the consent and support of the husband’s family, the other beneficiaries to the family arrangement (in which both 10AHM and 10A form a very significant part of the arrangement’s London property portfolio). Notwithstanding the judge’s finding of substantial liquidity within the family arrangement to which the husband was entitled to one third as of right, the judge said that the husband would ‘necessarily have to reach an accommodation with his mother and sister as to how part of this sum ( the lump sum payment of £2m ) can be raised’ [67].

The judge recorded that 10AHM had been remodelled to the wife’s taste and that it was the children’s home. The judge did not regard the property particulars put forward on her behalf as ‘an appropriate reflection of her future need’ for housing [180]. The judge did not refer to the fact that the wife’s dual purpose as put by Mr Peel at trial had been that in due course the “housing fund” given to her would provide both housing and income. The judge referred to the property particulars put forward by Mr Todd as being cheaper than those put forward on behalf of the wife, but she did not find it necessary to make any finding as to what would have been an appropriate figure for a housing fund for the wife in the event that a lump sum order were to be made.

The judge decided that the husband’s proposal was ‘the right answer to the case’. Although the judge was concerned at the lack of autonomy the proposal gave to the wife, nevertheless the offer, in the judge’s judgment, represented a “significant financial detriment” to the husband’s family; by virtue of the fact that in allowing the wife to remain in 10AHM, it was a de facto use of the husband’s family money. In respect of 10A, the judge was of the view that a 3-year term was appropriate, as the children would be three years older and the need for live- in staff would have receded by then. The judge did, however, seek an assurance from the directors of Hosamco that the wife might make an application to them for an extension of her licence to occupy 10A if her circumstances changed.

The judge made further orders that the husband would provide £25,000 for a replacement car; £15,000 per year for child maintenance; school fees for the children; and that £400,000 would be deposited by the husband with his solicitors as security for these sums. The judge subsequently made an order for costs against the husband. Mr Todd did not pursue his appeal in respect of this order.

The wife advances three grounds of appeal, each of which relate to the judge’s order in respect of housing. The grounds are that:

the judge was wrong to take account of the wealth of the wife’s father and the wife’s potential future inheritance from him, thereby:

imposing on the wife’s father a responsibility to provide financially for the wife; and

reducing what would otherwise be the financial obligation on the husband to support the wife and their children;

The judge was wrong not to require the husband to access his resources totalling between £14 million and £17.3 million to pay the wife a lump sum to meet her housing needs; and

The judge was wrong to provide the wife with a time limited occupational interest in a London property rather than a lump sum award to enable the wife to buy a property to meet her housing needs.

The proceedings are brought by the wife under the Matrimonial Causes Act 1973 Part II: Ancillary relief in connection with divorce proceedings, etc, (now called financial remedy proceedings). In deciding whether to make any or all of the orders sought by the parties in such proceedings, the court considers Section 25 which sets out the matters to which the court is to have regard in deciding how to exercise its powers:

It shall be the duty of the court in deciding whether to exercise its powers under section 23, 24,24A, 24B or 24E above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration be ing given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

As regards the exercise of the powers of the court under section 23(1)( a ), ( b ) or ( c ), 24 , 24A, 24B or 24E above in relation to a party to the marriage, the court shall in particular have regard to the following matters—

The law is well established in respect of the application of section 25 and it is unnecessary to do more than to emphasise that there is no hierarchy in respect of any of the factors and that the fact that one matter is of particular significance on the facts of this case, does not mean that it is necessarily determinative so as to exclude consideration of any other factors. In particular, there has developed a practice whereby cases are expressed to be either ‘sharing’ cases or ‘needs’ cases. The fact that such expressions are used as a convenient short hand does not relieve the court from consideration of all other matters found within the section which are, or may be, relevant to the case.

In the present case the parties (and the judge) agreed that this was a case where all the money in the case had been inherited and that therefore the appropriate order would be one which met the financial needs of the wife (section 25(2)(b)). Further, it was conceded on behalf of the wife that in capitalising the wife’s maintenance claims the appropriate multiplier would not be that which would have been used to obtain a whole life Duxbury figure but would be discounted to reflect the fact that the wife was still only 37 years old (section 25(2)(d)).

The husband’s case that the wife should not receive funds sufficient to buy herself a house notwithstanding that funds were available to do so, hinged almost exclusively on his submissions in respect of section 25(2)(a):

Mr Todd’s case is that the wife’s father is a man of extraordinary wealth, and that under Saudi Arabian ‘forced heirship’ laws, his daughter will undoubtedly receive a very substantial sum (measured in tens of millions of pounds) upon his death. This, he says, is a resource under section 25(2)(a) and means that the wife’s financial needs are limited to that which is required to maintain and house her until such time as she remarries or her father dies.

The first question therefore is ‘does the wife’s father’s wealth/ the wife’s inheritance prospects constitute a financial resource which she has or is likely to have in the foreseeable future?’

Mr Peel says not and reminds the court that in the ordinary course of events a party’s inheritance prospects are disregarded by the court. In Michael v Michael [1986] 2 FLR 389 Nourse LJ said (at 395):

Nourse LJ went on to give an example of a case where there was clear evidence that a person had a terminal illness, that property was left to the respondent in his will and that it was highly improbable the testator would revoke the will. Having given such an example he went on (at 396)

Mr Todd for his part relies on the decision of Munby J (as he then was) in C v C (ancillary relief trust fund) ( C v C) [2010] 1 FLR 337.

In C v C the husband had a vested interest in property in that, upon the death of his widowed step mother, he and his three siblings would inherit an estate as tenants in common in equal shares. This was not a discretionary trust. The trustees had no power to appoint ‘even a farthing’ [19] to the husband except with the written consent of the widow who could give it or withhold at her ‘unfettered and uncontrolled’ discretion. As Munby J said:

Given that the husband’s interest was vested and the likelihood was that the reversion would fall in in about 15 years (that being the actuarial life expectancy of the widow), Munby J concluded:

Munby J said that his decision would have been different had the likelihood been of the husband receiving substantially less than the current value of the estate on the death of the widow, or had the widow’s life expectancy been greater than he found it to be. Munby J went on to put his decision that the husband’s vested interest was a resource in context:

In my judgment the words of Nourse LJ in Michael hold good 30 years on and in the ordinary course of events uncertainties both as to the fact of inheritance and as to the times at which it will occur, will make it impossible to hold that an inheritance prospect is property which is “likely to be had in the foreseeable future.”

The present case is different. The wife’s inheritance prospects do not have the inherent uncertainty found where a will is made in a country such as England where there is no concept of forced heirship. In my view, a prospective inheritance which has the certainty brought to it by the laws of forced heirship, is capable of being a “financial resource” which the wife “has or is likely to have in the foreseeable future”.

Mr Peel sought to persuade the court that there remained uncertainties which should mean that, notwithstanding the forced heirship laws, the court should disregard the wife’s inheritance prospects. He suggested by way of example that the father could give all his money away to charity or there could be some sort of cataclysmic political event which would mean he would lose his wealth. There was no evidence before the court to that effect and the wife chose not to call her father to give evidence. In those circumstances a court would be entitled to conclude, as the judge did, that a portion of the father’s estate would indeed come to the wife in 16+years.

Having said that, as Munby J explained in C v C, all that such a finding does is to conclude that the prospective inheritance is a section 25(2)(a) resource; it does not mean that it is inevitably appropriate for the court to make an order whereby the meeting of the needs of the wife is in any way dependant on the prospective inheritance. The fact that the wife’s father has a life expectancy of 16+ years will be factor for the court to take into account on the facts of the case. In the present case, the context is very different from C v C; here the wife is 37 years old with three minor children for which she has so le care, she needs a home now but cannot reasonably expect to inherit until she is in her 50s.

The judge decided that this gap could reasonably be filled by the wife having an occupational interest in respect of 10AHM until such time as she remarried or her father dies. The question is whether the judge fell into error in reaching that conclusion.

Mr Todd naturally relied upon C v C as authority for his submission that the wife’s future inheritance prospects consequent upon Saudi Arabia’s laws of forced he irship is a ‘foreseeable resource’. He goes further however and says that, on the facts of this case, not only are the wife’s testamentary expectations a foreseeable resource but, unlike C v C, the wife’s father’s wealth is a resource which can and should be made available to the wife by way of Thomas v Thomas [1995] 2 FLR 1263 ‘judicious encouragement’.

Thomas v Thomas [1995] 2 FLR 1263 is well known to all who practide in these courts and it is not necessary to rehearse it in this judgment, save to set o ut the basic principle found in Waite LJ’s judgment at p670.

In C v C Munby J quoted Wilson LJ’s formulation of the test set out at [12] to [13] in Charman v Charman No 4 [2007] EWCA Civ 503;[2007] 1 FLR 1246

The form of order made by the judge is commonly known as a Mesher order taken from Mesher v Mesher and Hall [1980] 1 All ER 126. Such orders, whilst very popular for a moment in time, have been the subject of trenchant criticism over the years. A Mesher order, when made in conventional terms, often requires the sale of the property when the youngest child achieves his or her majority, the proceeds of sale then being divided between the husband and wife. Such an order often rendered the wife, who had cared for the children, homeless and without the means to rehouse herself now at a stage in life when it was hard for her to rebuild capital.

Clearly, this consequential objection to the making of Mesher type orders does not apply here, although the order relies upon a presumption that, in the event that the wife remarries before her father dies, her new husband will be a man of sufficient means to rehouse her without any capital contribution from her.

In the recent case of Tattersall v Tattersall [2013] EWCA Civ 77 Black LJ (as she then was), highlighted other dangers which may result from the making of a Mesher order, in particular identifying (i) the likelihood of conflict betwe en the parties endemic in the implementation of such orders, and (ii) the substantial and protracted contribution the primary carer would have made to the welfare of the family together with the impact those responsibilities may have had on her career.

As I have already emphasised, prior to making any order the judge must consider all the section 25 factors in addition, before making an order tying the parties together for many years to come by way of a Mesher order (especially whereas here the money is available to allow for a clean break between the parties). Careful and specific consideration should be given both to the issues of potential conflict between the parties and also to the wife’s past and future contribution to the welfare of the family (per section 25(2)(f)). This is particularly important on the facts of this case in the context of there being a special needs child who is likely to need care from his mother long after he has achieved his statutory majority.

The wife has, to all intents and purposes, no assets of her own. In the ordinary course of events therefore, notwithstanding that the husband’s assets are almost entirely inherited (save for his earning capacity of in excess of £350,000 pa) the court would, on any conventional application of the law, be looking to provide for the wife’s needs by way of an income, either in the form of periodical payments or by way of a capitalised sum, together with a housing fund with which to buy a property outright for herself. In such a case the dispute commonly turns on quantum alone and not upon principle.

Mr Todd’s case on behalf of the husband was, and remains, that the wife’s inheritance prospects are such that, whilst the wife should receive a capitalised sum representing income, fairness does not require her to have funds made available to her to buy a home of her own. Mr Todd puts it this way – “all she needs is a roof over her head until her father dies or she remarries.”

It was agreed between the parties that under the forced heirship laws of Saudi Arabia, the wife’s inheritance rights are both unassailable and indefeasible. Although not substantiated by any evidence, the husband estimated the wife’s father’s wealth at approximately £500 million. He further suggested that under the terms of Saudi law (which it was agreed applies to the wife’s father’s estate) she would receive approximately 20% of the estate upon her father’s death. She could therefore expect, the husband speculated, to come into an inheritance of approximately £100 million.

A central plank of Mr Todd’s submission to this court was in relation to the failure of the father to make himself available to give evidence. He suggested that in some way, this amounted to litigation misconduct on the wife’s part equal to his own client’s wilful and dishonest non-disclosure of his assets. I do not accept that to be the case. No doubt it was frustrating that the father did not give evidence. His failure to do so however allowed the judge to make such adverse findings about the subject matter of the father’s potential evidence as she thought fit. The judge duly made such adverse findings:

The judge, as she was entitled to, found that the wife was likely to be a multi- millionaire in her own right upon the death of her father and that, in contrast to the husband, who is tied into the family arrangement, when her inheritance falls in the wife will have unrestricted access to, and control over, the wealth she stands to inherit.

Mr Todd argued that, contrary to established law and practice, and notwithstanding the contribution of the wife to the welfare of the family, the wife only required a roof over her head until her father’s death (or her remarriage whichever be the sooner). In support of that submission he sought to draw on the wealth of the wife’s father’s in two ways namely:

that the father has, in effect, already chosen to shoulder the burden of supporting the wife and the court should therefore work on the basis that, in Thomas v Thomas terms, she has access to funds which should be regarded as a separate resource of the purposes of a s25 MCA 1973 assessment.

That the wife’s future inheritance prospects themselves are a financial resource and as such relieve the husband from providing the wife with a home of her own.

Mr Todd submitted that such financial help as the wife’s father had given to her since the parties separated represented a separate “resource” for the purposes of the judge’s assessment under s.25 MCA 1973. As this was a needs case in which the husband said he had already had to seek assistance from the other beneficiaries of his family arrangement (his sister and mother), Mr Todd submitted to Roberts J that this was a case of “all hands to the wheel” which included dependence by the wife on her father in order to meet her needs even after the proceedings were concluded.

The judge in her judgment identified three instances of financial assistance that the wife was, at the time of the hearing in November 2015, receiving from her father:

a ‘soft’ loan of an unlimited amount (at the time of trial this amounted to approximately £1.2m) to fund her legal fees [170] [176]);

continuing access to her father’s properties in Saudi Arabia, with accommodation for her and her children, and to his holiday property in the South of France [173]; and

£4,000 per month, to meet a shortfall that the wife says was caused by the husband defaulting on his obligations to her under the agreed rate of interim maintenance [176].

As the judge recorded in her judgment, the wife accepted in evidence that both as to income and future accommodation, she had a loving father who would not see her go without where she in a position of ‘real need’ [170] & [173]. The judge found that the wife’s father had indeed been prepared to step in ‘when necessary’. Such a finding does not in my view automatically lead to a finding that such support should, once the trial comes on and a court considers how the wife’s future needs are to be met, morph into a Thomas v Thomas type of resource upon which the husband can rely. As the judge said [170]:

The judge set out the competing arguments, evidence and law in respect of the Thomas issue at [168] to [176]; she did not, however, set out in terms the conclusions she reached in relation to Mr Todd’s Thomas argument based on assistance given by the wife’s father to her during the course of the proceedings. The passage quoted from [170] above would, however, seem to indicate that the judge, having heard the arguments, was not satisfied that that assistance given by the father to the wife amounted to a Thomas resource for the purposes of section 25(2)(a).

In my judgment that the father has helped his daughter and grandchildren in the way described by the judge cannot, without more, found a successful argument that he has in doing so in some way accepted long term financial responsibility for the wife and the children. Even if there were any merit in such a submission, it could, (given the husband’s acceptance of the wife’s immediate need for housing implicit in his offer of an occupational interest in the former matrimonial home) relate only to income and even then, the husband had accepted his liability to maintain the wife for the duration of the children’s minority by his offer of the payment of £2m by way of capitalised maintenance.

It follows that had the judge answered the question posed by Wilson LJ in Charman , that is to say if asked would the wife’s father have been likely to advance capital immediately or in the foreseeable future, the answer would have been “no”.

That being so, only Mr Todd’s second proposed use of the wife’s father’s wealth as a resource, namely her prospective inheritance, requires consideration. The remaining question is therefore whether it was right for the judge to have made an order which was dependent upon that future inheritance in order to meet the needs of the wife.

Mr Todd’s case has been that it is in part the duty of the wife’s father to support his daughter or, if that is to go too far, that the obligation to support the wife should in some way be shared between husband and father. As the judge said:

Mr Todd maintained this position in his oral submissions before this court saying in terms that: “The case is all about need. The wife needs a roof over her head. She does not have a need of a property of her own, she just needs a roof over her head until her father dies.”

The wife’s father has no duty or obligation under English law. The MCA 1973 governs financial relief upon the breakdown of marriage and the wife is independently entitled to financial provision under the terms of that Act. As the judge rightly went on to observe:

Notwithstanding the judge’s emphasis that English law alone applies, Mr Todd still sought before this court to rely on some sort of moral obligation on the wife’s father to support his daughter post-divorce. Mr Todd submitted that, as the father is subject to Saudi rather than English law, he may feel that he has both a moral and legal obligation to provide for his daughter and that as a consequence he would properly regard divorce as a “problem” for both of the families. Not only was there no evidence before the judge to support such a proposition, but I would reinforce the judge’s clear and correct starting point that English law alone applies and the father has no duty under English law to support his daughter. I emphasise that that does not mean that provision by the wife’s father is not capable of being a resource for the purposes of section 25(2)(a), but the question is whether funds provided by the father are a resource of the wife and not whether the father should be regarded as being under some moral duty either to relieve or to share the husband’s obligation to support his wife and the mother of his children.

This was a needs case. The wife’s needs were, on one level, simple; an income and a house to live in. Given that it was accepted that she had no independent earning capacity of her own, the wife required housing for life adequate to meet her needs. The judge met this need by allowing her to stay in the matrimonial home for a term fixed by reference to a future marriage or her future inheritance from her father.

The judge was, she said, initially troubled by the lack of financial autonomy for the wife if she made an order giving the wife occupation rights in the matrimonial home rather than an outright award in circumstances where ‘inter- familial relationships are strained’. [186] In the end however the basis of the judge’s conclusion was as follows:

In my view the judge was in error in reaching the conclusion she did. With respect to the judge who dealt with this difficult trial with meticulous care, the order does not ‘meet(s) W’s needs and embrace(s) her stipulated requirements in every aspect save for her wish for free capital to purchase an alternative property’.

I fear the judge, for understandable reasons, allowed herself to focus too greatly on her desire to respect the integrity of the family arrangement. In doing so the judge lost sight of her own finding that there were very substantial liquid funds available within the family arrangement (to which the husband had an absolute right) together with his substantial earning capacity and £1.6m in funds outside the family arrangement. Had the judge looked at the husband’s assets in such a way, she would have been reassured that neither the mother nor the sister would have been prejudiced by the making of any reasonable lump sum order the judge might have felt to be appropriate and together, they would not have been deprived of the rental income/sale proceeds of 10AHM and 10A for many years to come [187].

On that basis the judge could have regarded the available ‘pot’ as the approximately £6m of liquid assets available to the husband out of which his need for £1m for accommodation for himself in Dubai, and the wife’s need for capitalised maintenance and a house for herself could be met. The judge in doing so could have taken into account that Mr Peel’s case was that in order to bring the litigation to an end and to have no continuing connection with the husband, the wife would have preferred to have a more modest lump sum rather than the alternative of the use of the flat.

Within her judgment the judge had recognised the issues in relation to the wife’s contribution, her personal autonomy and the strained familial relationships. In my judgment however, coloured by the exorbitant wealth of the wife’s father, and in seeking to respect the family arrangement (and in particular the father’s mother’s position), the judge omitted thereafter to pull all the factors together in such a way as to give her a complete overview of the case with the result that an order was made which left the wife with no capital of her own for many years to come. In my judgment the fact that the property had been the wife’s home for some time and met her immediate needs as to location etc (although two of the children have to share a bedroom) cannot compensate her for the fact that she has no capital with which to buy a home of her own.

In my judgment, the following matters could have been put more firmly into the balance by the judge, and thereafter been considered against her desire to respect the integrity of the family arrangement and give proper weight to the fact that at, some stage in the future, (probably when she is her 50s), the wife will undoubtedly be a very wealthy woman:

The wife’s personal autonomy

The wife’s contribution to the welfare of the family

The ‘strained inter- familial relationships’ and likely conflict in relation to the implementation of the order.

The ‘dual purpose’ of the order as proposed by the wife.

Before turning to each of these matters in turn, I would wish to deal with the fact that one of the events which will bring the occupational interest of the wife in 10AHM to an end is her remarriage.

I have seen nothing in the judgment to help me to understand why, in this unusual set of circumstances, one of the break clauses should be the remarriage of the wife particularly given that the whole basis upon which the order is made is that the wife needs a roof over her head until she inherits. It is only the fact of that prospective inheritance which absolves the husband from making a capital payment to the wife in recognition of her contribution to the family over many years and to meet her need for a permanent home of her own.

In the days when such orders were commonplace, remarriage was inevitably one of the conditions leading to the Mesher order ‘falling in’, the property in question would then be sold and the net proceeds of sale would be divided between the parties in such proportions as the court had decided were fair. The wife at that stage would receive her capital in recognition of her contribution to the welfare of the family. In the present case, upon the Mesher order coming to an end upon remarriage, the wife will receive nothing by way of capital. Whilst the husband (and his family) would no doubt be wholly opposed to a ‘new’ husband moving into ‘his’ flat, on the other hand, if the rationale of the order is that the wife is to have an occupational interest rather than capital on account of her prospective inheritance, why should she forego that occupational interest at any time prior to her father’s death?

As Mr Peel observed, (save for her capitalised maintenance), the outcome in these English proceedings has been that the future of this woman, far from being in her own hands, is in the hands of a series of men – her husband (until one of the terms of the Mesher order bites), and thereafter either, an (as yet unidentified) possible future husband or her father. Such an outcome sits uncomfortably with contemporary mores and significantly impacts upon the wife’s personal autonomy as discussed below.

Personal Autonomy

The judge, having voiced her concern that the order did not give the wife financial autonomy, did not thereafter resolve the issue. The judge did not identify those features which would serve to reassure her that the order would work in such a way as substantially to ameliorate the effect upon the wife of that lack of autonomy, (notwithstanding that the wife would be living for many years ahead in a house owned by her former husband’s family). The judge nevertheless had confidence that all the parties could work together so as to place as few restrictions upon the independence of the wife as could be achieved in all the circumstances.

The husband has complete autonomy and has long since remarried and started a second family; the wife however, living in a property owned by the husband and his family, continues to be tied to her former husband with the inevitable impact on her life including on any new relationship. In particular should she wish to remarry, it is with the inevitable loss of her home and with no capital to fund or contribute towards the purchase of a new matrimonial home (para17 (a)(iii) of the Order). It follows that whilst the death of her father will result in the wife having capital of her own, should she remarry she will have nothing. Further remarriage, given her age, might be thought to be the more likely first event, as opposed to the death of her father who, at the date of the hearing, was only 71.

Mr Todd took the court to the detailed terms of the order emphasising what he described as the efforts made on the part of the husband to ensure the wife had adequate security and the ability to move house s hould she wish to do so. In my judgment, the terms, whilst no doubt reached after some hard bargaining between the parties, only serve to underline the straitjacket the order imposes on the wife’s autonomy and are a recipe for further dispute and conflict. The terms can be summarised as follows (taken from Paragraph 17 (b) of the judge’s order):

The wife may apply in writing to sell the flat and buy another property however: (i) The wife has to ‘set out specific reasons for her desire to move’ and (ii) the property has to be in London, although the company ( i.e. the husband, mother and sister) can agree to a property being purchased outside London.

The company can refuse the request of the wife on the basis that the proposed alternative does not represent a ‘proper investment’, but, if the move is ‘objectively predominantly for the best interests of the children’ and ‘in particular of Y’, then consent is not to be unreasonably withheld.

In default of agreement the wife will have to make an application to the court.

The wife (who has no assets other than the capitalised maintenance) has to pay all associated costs if she wishes to move, including stamp duty. CGT (which would not be a liability which would be incurred if she owned a property of her own) would be met by the company, but the amount paid by way of tax would thereafter be deducted from the funds which would then be available to buy a replacement property.

The wife will not be permitted to ‘top up’ so as to enlarge the funds available to buy another property. If however the company agrees to her doing so, it will be on the basis that the money provided by the wife will be by way of an unsecured, interest free loan and no legal or beneficial interest will be created in her favour.

The fact that, perhaps even 15 years after the proceedings have concluded, the wife, under the terms of the order, has to account to the husband and his family for her reasons for wishing to move house, to my mind highlights the unsatisfactory nature of such an order.

Contribution

The contribution made by the wife, in contrast to the other matters which I have highlighted, is a matter which must by virtue of section 25(2)(f) be specifically considered by the court.

The judge had said at [47] in relation to the husband’s approach:

The judge had therefore emphasised the importance of the wife’s past and future contributions at this early stage of her judgment, but it was not thereafter reflected in her consideration (at Section D of her judgment) of the ‘fair outcome’ where she expressed the view [167] that:

It was agreed that this was not a sharing case. That does not however mean that there should be no reflection in the judge’s order of the contribution of the wife to the welfare of the family now and in the future. Not only was the youngest child still only 4 years old at the time of trial, but the wife’s contribution to the care of the family could be lifelong if, as the judge found, Y’s difficulties may impact upon his ability to lead a full and independent life in future. Whilst the judge acknowledged the wife’s contribution in broad terms, it did not feature in her analysis as to why an order which gave her no capital at all after a 14 year marriage was fair in all the circumstances of the case.

Strained inter-familial relationships

Whilst the judge referred to the strained relationships within the family, she did not consider them in any detail or, when considering the reasonableness of the husband’s proposal, balance them against the consequential necessity of there being a continuing relationship between the wife and the husband’s family, particularly in the event that the wife ever wished to move. The following seem to me to be of significance in this regard :

The judge’s findings of the husband’s controlling nature in respect of the wife [41] and that a ‘desire to control the situation provides the rationale for much of what has occurred in relation to the development of the H’s financial disclosure…’[42]

The bitterness of the litigation in relation not only to the financial remedies application but also the protracted Child Arrangements proceedings and separate proceedings brought by the husband in Saudi Arabia. Such a litigation history could give the judge no confidence as to the ability of the parties to reach an agreement in the event that the wife wished to move, or to extend the period during which she was to have the use of 10A, (an event which should not be regarded as unlikely as even if there would be no need for staff in three years’ time, it may well, by then, be no longer appropriate for any of the children to share a bedroom).

Whether the husband could be relied upon to be fair and to co-operate in his dealings with the wife in relation to the two properties given his serious litigation misconduct to date and the need of the wife historically to have issued four judgment summonses in order to obtain payment of accrued arrears of maintenance for herself and the children.

In making any financial remedy order, as noted by the judge at [167], the ‘first consideration’ is the welfare of any minor children. T is only just 6 years old. The two older boys are of an age to know what is going on between their parents, and have lived through a perfect storm of litigation both in relation to themselves and these proceedings. The child arrangements order, disclosed into these proceedings, show that: the two older children are having therapy, that the court has not only made an order that there be no direct contact between the father and children, but has limited his exercise of parental responsibility in other respects. Finally, the court has made an order under s.91(14) of the Children Act 1989 preventing the husband from making any further applications in relation to the children without the leave of the court for a period of two years. In highlighting the terms of the order I do not comment in any way on the actions or behaviour of either the wife or the husband in relation to the children; I merely refer to the order as its bare text speaks volumes in demonstrating the complete breakdown of relationships between the parties and, importantly, of the impact it has had upon these children.

Conflict between the parties was an issue specifically highlighted by Black LJ in Tattersall and in my judgment was a matter of considerable importance in the present case. The judge made an order which, if it was to work in the medium and long term, would be dependent upon co-operation between the parties. The order was however made against the back drop of a High Court judge having already made one order seeking to give the children of the family respite from litigation between their parents.

Future litigation in relation to this Mesher order would inevitably impact upon the children, not least due to the requirement that consent to a move may well depend on the wife satisfying the husband that such a move is in the interests of the children and in particular Y.

The dual purpose served by the wife’s proposal

The wife’s case was that when the children grow up she would ‘downsize’ and release capital upon which to live, her capitalised maintenance payment having been exhausted. The order made by the court therefore, on the face of it, left the wife with no means of support in 14 years, by which time she will be 53 years old.

The judge did not deal with the ‘dual purpose’ point but said this:[65]

It seems, perhaps unsurprisingly, that amongst the myriad of submissions to be considered, the judge overlooked the wife’s case that, far from the intention being that her father would support her in 14 years’ time, she required a house of her own, in part to fund the next phase of her life once (at least the two younger) children had left home.

In my judgment, the very uncertainty described by the judge as to how the wife was to manage once the children were grown up and that ‘if the worst came to the worst’ her father ‘would not see her in need,’ only serves to underline the unsatisfactory nature of the order and the dangers of the court depending on the death of a man many years ahead as a means of meeting the present and future needs of the wife.

At the conclusion of the trial the judge had held that the husband’s one third interest in the ‘family arrangement’ was between £12.42m and £15.7m (average £14.06m) with a further £1.6m liquid assets outside the family arrangement. O f the assets within the family arrangement there were realisable cash and shares of £13,144,890. It follows that the husband had access to realisable assets of £4,381,630 in the family arrangement (as recorded by the judge in her table at [160]) which sum would be available to him without there being any need for there to be a Thomas v Thomas type ‘judicial encouragement’ of the mother and sister in order to release part of his share of the liquid assets in the family arrangement.

It followed that on a proper analysis, the husband had total assets of £15.06m (£14.06 + £1.6) (average) of which £5.98m was realisable without having either to encroach on the property portfolio or withdraw more than one third of the realisable assets held within the family arrangements. The judge focused [182] on the detriment to the family in tying up 10AMH or 10A, (together worth £6.6m) in order to allow the wife to continue to occupy the properties, and spoke ‘of the need of the husband to ‘reach an accommodation with his family’ in order to pay to the wife the agreed capitalised maintenance of £2m. The judge did not however remind herself that, in reality, no such accommodation was necessary, there being £13m in the family arrangement in readily realisable assets to which the husband had an absolute right to one third.

The family arrangement had liquid assets which would comfortably allow for the purchase of a property for the wife without impacting on the sister and the mother, or by tying up any assets in which they might be said to have an interest. Such a state of affairs sits comfortably with the judge’s finding that the husband’s mother would respect any orders the court might make but would be unwilling to liquidate the property portfolio in order to release cash to the husband. [79].

Mr Todd in his oral submissions, accepted that the husband can get the money out of the family arrangement to which he is entitled. In my judgment the husband’s ability to have access to funds in the family arrangement, as of right, without leaving the sister and/or mother short of realisable assets and without invading the property portfolio, means that this is not a Thomas case vis a vis the husband; but even if, (by the smallest of margins), it could be regarded as such, then the only co-operation required from the mother and sister is to the extent necessary to facilitate the extraction of funds from the family arrangement which form part of the husband’s one third interest. This would therefore be one of those occasions where as anticipated in Thomas itself:

The judge made an order which denied this wife any recognition in the form of a capital settlement to reflect her contribution to the marriage.

The wife’s prospective inheritance is undoubtedly a resource, but according to the actuarial tables, not for 16+ years. One way in which the judge could have taken that substantial prospective resource into account would have been by finding against Mr Peel in relation to his ‘dual purpose’ argument. Mr Peel sought a lump sum of £5.5m to fund his dual purpose. It might be thought that no objection could have been taken to an order for a lump sum order for an amount significantly less than that sought by Mr Peel. Such an order would have been made on the basis that the wife and children could live in a slightly different area of London in a property costing significantly less than 10AHM. Further, it could be argued that thereafter the wife’s father’s life expectancy, and the figure of 14 years used to calculate the capitalised maintenance figure of £2m was sufficiently proximate, and the wife’s likely inheritance so great, that it would be unfair to the husband to build in a ‘top up’ lump sum into the wife’s housing fund of the type sought by Mr Peel as part of his “dual purpose”.

In my judgment, when not only the family arrangement and the wife’s inheritance expectations, but also the additional features highlighted above are put into the equation, the fallacy of the submission that ‘the wife only needs a roof over her head until the father dies’ is exposed. It cannot be said that the needs of the wife and the children will be met by them continuing to live in a three bedroom flat, owned by the husband’s family, and subject to draconian terms in the event that she wishes to move, especially if one takes into account the lack of personal security for the wife in the event that she remarries and the absence of recognition of her contribution to the welfare of the family.

Standing back for a moment, it is hard to see how, in a situation where a husband has assets (albeit inherited) of between £14 - £17m together with an earning capacity of £350,000 pa, it can be right to conclude that his wife of 14 years, with no earning capacity and three children to care for (one of whom has special needs) should be denied a capital settlement sufficient to allow her to buy a property outright in her own name.

It follows that if my Lady and my Lord agree, then for the reasons given, I would allow the appeal and the matter will be remitted for reconsideration of the appropriate lump sum to be paid to the wife in addition to the agreed sum of £2m not challenged by the husband.

There has been some understandable vacillation between the parties as to whether, in the event of the appeal being allowed, this court should substitute its own order. Whilst the court and the parties all regard the prospect of remitting the matter with dismay, all agree that, absent a finding by the judge as to the appropriate housing fund necessary for the wife to rehouse herself and the children (with or without a dual purpose), it would not be appropriate for this court to make an order.

Whilst it would wrong in those circumstances for this court to express a view on quantum, I would strongly urge the parties to seek to reach an agreement as to the proper outcome. To this end, for what it may be worth, I have endeavoured to indicate two features which it seems to me likely to feed into a decision as to the appropriate lump sum to be paid to the wife for housing, namely the extent of the husband’s overall liquidity and my view about a possible reasonable conclusion in relation to the wife’s ‘dual purpose’ arguments.

I agree.

I also agree.