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Thursday, November 11, 2010

Father and son fight over £5.1m divorce settlement

By Stephen Howard, PA

A father is fighting his son in court over a £5.1 million divorce settlement he made with his former wife two months before she died.

Fraser Richardson inherited his mother Harriet's estate and is resisting his father Eric's application to cut the settlement.

The father ran a hotel chain and flats business with his wife and faces a massive damages claim after a child was injured falling from one of the apartments.

His insurers have warned him they may not indemnify him and he wants the divorce settlement figure varied so that any damages award is shared with the estate of his late wife.

Sally Harrison QC, representing the son, told three judges at the Court of Appeal: "The relationship between Fraser Richardson and his father has broken down entirely and they could not work together in any way in the future."

The son says that when the divorce settlement was agreed, his father retained 52.5% of the couple's joint assets, close to £11 million, and in return agreed to take on all the risks of the business from which his mother had retired.

Nigel Dyer QC, representing the 71-year-old father, said any damages award should be a joint liability because the accident happened when his former wife was his business partner.

He said it was not foreseeable during the divorce proceedings that the insurers might repudiate liability under the insurance policy and refuse to indemnify the business.

"In these circumstances it is not fair or reasonable that the husband alone should be liable for the damages award; any damages award should still be a liability to be met by the husband and wife's estate."

He said the husband had been advised by solicitors that if the claim succeeded on liability, the damages could be in the region of £3 million with costs of £300,000.

"If the husband has to pay £3.3 million he will lose nearly 60% of the assets he retained under the order."

Mr Dyer said it would not affect the wife's estate by staying the settlement order until after the accident damages hearing.

"The wife is dead so she does not need the money," he said.

At the time of the divorce settlement hearing, both husband and wife were 70 and had been married for more than 40 years.

During their marriage they carried on a business as hoteliers, property investors and landlords.

Their assets comprised two hotels in the North West, five in Devon and Cornwall and nine blocks of flats in Manchester, worth a total of £40 million.

After deducting investment loans mainly taken out by Mr Richardson, the net assets were £10,906,734.

The accident in 2004 involved a two-year-old girl who fell from a window in one of the couple's blocks of flats.

Mr Dyer said that three and a half years after the accident, a personal injury claim was issued against Mr Richardson and the Richardson Group which he ran with his wife.

He said: "If the husband has to meet the damages claim with no contribution from the wife's estate, then Fraser will end up with a much greater share of his parents' wealth than his father will retain."

He said the settlement order should be set aside and a new lump sum order made to reflect the true value of the assets after any damages award had been taken into account.

Ms Harrison said Mr Richardson failed to act promptly in appealing against the order.

When the settlement was made, the judge had balanced the fact that the husband was retaining assets with far greater potential for growth against a lump sum paid to Mrs Richardson with the husband's acceptance of all the risk laden assets and any losses, she said.

Judgment was reserved in the case.


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