A millionaire businessman and his son are in court to fight over a £5million divorce pay-out – awarded to their ex-wife and mother two months before she died.

Eric Richardson, 71, faced his son, Fraser, across London’s Appeal Court as the hotel tycoon’s lawyers sketched out a case encompassing the carve-up of a £40 million business empire, a severely injured child, and the death of Mr Richardson’s wife, Harriet, last year.

Mr Richardson and his wife were married for 40 years and jointly established the Richardson Group hotel and property empire - with real estate in the North West, Devon and Cornwall, and Manchester. In September last year, after their marriage hit the rocks, a judge split their £10,906,734 net assets – awarding £5,726,035 to Mr Richardson and £5,180,690 to his ex-wife.

The order laid down that Mrs Richardson would retire from the Richardson Group, while her ex-husband would “indemnify” her against any liabilities she may have accrued while in business.

Mrs Richardson, 70, was also handed the former family home, the luxury Beech Hill Hotel, in Windermere.

The judge’s ruling might have drawn a line under the dispute, but for the death of Mrs Richardson from a heart attack just two months later – and the shock news that the company’s insurers were denying cover for an accident at one of its Manchester flats in July 2004.

Nigel Dyer QC, for Eric Richardson, said two-year-old Paris Hunston sustained grave brain damage in a fall from a flat window in Grosvenor Court, Manchester, and has since lodged a £3 million damages claim.

He argued that Mr Richardson senior should have the right to reduce the lump sum payment he is now obliged to make to his dead wife’s estate, to reflect the “unforeseen” developments since the September 2009 divorce case.

When he promised to indemnify his ex-wife “for all liabilities” he had no inkling that his company’s insurers might withhold cover on Paris’s compensation claim, the QC argued.

In the “exceptional” circumstances it was not “fair or reasonable” that Mr Richardson alone should be liable for compensating Paris, said Mr Dyer, who added: “Any damages award should still be a liability to be be met by the husband and the wife’s estate”.

Eric Richardson is now bidding to unscramble the divorce settlement at the Appeal Court, but his case is hotly opposed by his 42-year-old son, Fraser, who was formerly involved in the family business and is his mother’s sole beneficiary.

The son’s lawyers argue that Eric Richardson is bound by his promise to give his ex-wife “full indemnity” against any liabilities arising during her involvement in the business – including Paris’s accident.

After a day of legal argument Lord Justices Thorpe, Rimer and Munby, reserved their decision on the case and will give their ruling at an unspecified later date.