Guidance on needs and prospective inheritance in big money cases

Lady Justice King’s judgment in Alireza v Radwan provides an interesting insight about the treatment of inheritance in financial remedy cases, and the importance of needs in what by ordinary standards are extremely wealthy family circumstances.

King LJ accepted Nourse LJ’s comments in Michael v Michael [1986] 2 FLR 389 that 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 in impossible to hold that an inheritance prospect is property which is “likely to be had in the foreseeable future.”

On the facts of this case, however, the wife’s inheritance prospects did 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. 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. In the absence of live evidence on the point, the court concluded that a portion of the father’s estate would come to the wife in 16 or more years’ time. It was not inevitably appropriate for the court to make an order whereby the meeting of the wife’s needs was dependant on the prospective inheritance, but the life expectancy of the wife’s father was a factor for the court to take into account in this case.

While Mesher Orders have been very popular in the past, they have been the subject of trenchant criticism. When made in conventional terms, it 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. This could render a wife, who had cared for the children, homeless and without the means to rehouse herself at a time when it was hard for her to rebuild capital. Applying a Mesher Order in this case would involve a presumption that, in the event that the wife remarried before her father dies, her new husband would be a man of sufficient means to rehouse her without any capital contribution from her. The Judge must consider the Section 25 factors before making an order tying the parties together for many years to come by way of a Mesher Order, especially where there is money 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 the wife’s past and future contribution to the welfare of the family. This was particularly important here as there was a special needs child who was likely to need care from his mother long after he had achieved his statutory majority.

The wife had no assets of her own. Conventionally, the court would 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, which would mean that the dispute was about quantum rather than principle. Under the forced heirship laws of Saudi Arabia, the wife’s inheritance rights, however, were both unassailable and indefeasible.

Although the father failed to make himself available to give evidence, which was suggested to amount to litigation misconduct on the wife’s part equivalent to the husband’s wilful and non-disclosure of his assets, King LJ did not accept this, despite the judge making adverse findings about the father’s potential evidence as she saw fit. The judge was entitled to find that the wife was likely to be a multi millionaire in her own right upon her father’s death and that she would have unrestricted access to and control over the wealth she stands to inherit.

In evidence, the wife accepted that both as to income and future accommodation, she had a loving father who would not see her go without where she was in a position of real need, and her father had been prepared to step in where necessary. This did not automatically lead to a finding that such support should morph into a Thomas v Thomas type of resource upon which the husband could rely, and on the facts, the judge was not satisfied that that assistance given by the father to the wife amounted to a Thomas resource for the purposes of the legislation.

However, the father’s assistance to his daughter and grandchildren did not mean acceptance of long term financial responsibility for the wife and the children. More specifically, this meant that if asked, the wife’s father would have answered “no” in relation to advancing capital immediately or in the foreseeable future.

The father had no duty under English law to support his daughter. The question was whether the 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 share the husband’s obligation to support his wife and the mother of his children.

This was a needs case, which for the wife meant that she needed housing for life to meet her needs as she had no independent earning capacity of her own.

Lady Justice King adjudged the following matters to be of particular importance:

i)                   Her personal autonomy

The term suggested by the husband would underline the straitjacket the order imposed on the wife’s autonomy and are a recipe for further dispute and conflict. The fact that perhaps even 15 years after the proceedings concluded the wife would have to account to the husband and his family for her reasons for wishing to move house highlighted the unsatisfactory nature of the order. 

ii)                 Her contribution to the welfare of the family

Their youngest child was still only 4 years old at the date of trial, but the wife’s contribution to the care of the family could be lifelong if the special needs child’s difficulties impacted upon his ability to lead a full and independent life in the future.

iii)               The “strained inter-familial relationships” and likely conflict in relation to the implementation of the order

 The husband was found to have a controlling nature in respect of the wife. There was a litigation history including protracted Child Arrangements proceedings and separate proceedings brought by the husband in Saudi Arabia. There was also an issue about the reliability of the husband to be fair and co-operative in his dealings with his wife in relation to the properties.

iv)               The “dual purpose” of the order as proposed by the wife

The order made by the court left the wife with no means of support in 14 years, by which time she would be 53 years old. The wife required a house of her own to fund the next stage of her life one the two younger children had left home.

v)                 The family arrangement

The trial judge had failed to remind herself that there was ￡13m in a family arrangement in readily realisable assets to which the husband had an absolute right to one third. The husband’s ability to have access to funds in the family arrangement as of right meant that this was not a Thomas v Thomas case.

In conclusion, it had only been the fact of the prospective inheritance which had absolved the husband at trial from making a capital payment to the wife in recognition of her contribution to the family over many years and to meet her needs for a permanent home of her own. The wife’s prospective inheritance was undoubtedly a resource, but according to the actuarial tables, not for more than 16 years. It could not be said that the needs of the wife and the children would 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 wished to move, especially taking into account the lack of personal security for the wife in the event that she remarried and the absence of recognition of her contribution to the welfare of the family. It was hard to see how in a situation where a husband had assets of between ￡14 - ￡17m together with an earning capacity of ￡350,000pa, it could be right to conclude that his wife of 14 years, with no earning capacity and three children to care for (one of whom had special needs) should be denied a capital settlement sufficient to allow her to buy a property outright in her own name. On that basis, the appeal was allowed and the matter remitted for reconsideration of the appropriate lump sum to be paid to the wife in addition to the agreed lump sum of ￡2m.

The parties were strongly urged to seek to reach an agreement as to the appropriate lump sum to be paid to the wife for housing, having regard to the extent of the husband’s overall liquidity and achieving a reasonable conclusion in relation to the wife’s “dual purpose” arguments. 

While the immediate application of this case will be in circumstances of "big money", the Judgement expresses the undesirability of Mesher Orders, the importance of capital awards to reflect ongoing contributions to the wife to raising the family, and the limited use of one spouse's family wealth where there is sufficient money available from the paying spouse to cover need. Many cases involve inherited wealth and we can expect to see these arguments run in situations of more modest assets, which of course will be in the vast majority of circumstances.