Sohail Sultan Ahmad & Anor v Meerna Ali Ghuloom Faraj [2025] EWCA Civ 468

[2025] EWCA Civ 468Case No CA-2023-002533
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE FAMILY COURT
Venue SITTING AT THE ROYAL COURTS OF JUSTICE
Sir Jonathan Cohen
ZZ20D50345
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 10/04/2025
Before
LADY JUSTICE KINGLORD JUSTICE SNOWDEN
Between
SOHAIL SULTAN AHMADDefendants/AppellantsIIB GROUP HOLDINGS W.L.L.AppellantMEERNA ALI GHULOOM FARAJApplicant/ Respondent
Deborah Bangay KC and James Weale (instructed by Level Law LLP) for First AppellantGiles Richardson KC (instructed by Ashfords LLP) for Second AppellantMichael Glaser KC and Thomas Haggie (instructed by Forsters LLP) for RespondentHearing Hearing date: 12 March 2025
Approved JudgmentThis judgment was handed down remotely at 11.30am on 14 April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]On 28 November 2023, Sir Jonathan Cohen (“the judge”) handed down judgment in financial remedy proceedings between Meerna Ali Ghuloom Faraj (“the wife”) and Sohail Sultan Ahmed (“the husband”). The 2nd Respondent, IIB Group Holdings (“IIB”), is a company incorporated in Bahrain which conducts an international banking business. The husband is the majority shareholder and a director of IIB. The judgment is to be found at [2023] EWFC 209.[2]The judgment, far from marking the end of what the judge had called “a blizzard of litigation” has proved to be simply another step along the seemingly endless trail of destructive litigation conducted between these two people.[3]This judgment relates to an application by the wife for an order that unless the husband pays the sum of £120,000 + VAT ordered by the judge on 13 December 2024 to be paid to the wife by way of a legal services payment order, the husband should not be allowed to pursue his appeal against the substantive order made by the judge at the conclusion of the financial remedy proceedings. Permission to appeal the substantive order was granted by Moylan LJ on 28 June 2024. Background[4]For the purposes of this judgment, it is not necessary to go into the detail of the first instance judgment subject to the pending appeal. It is sufficient for my purposes to understand that the judge found that the husband has three categories of assets: i) A debt owed to the husband by a company, referred to as “GA”, of $25m due for payment by 2031 with interest being paid on part of the debt. The husband has security for payment of the sum over a property in Knightsbridge which has equity of only £1.5m. ii) The husband’s interest in IIB. This is a substantial operation with 150 employees. The husband is a 59.47% shareholder. The judge valued the husband’s interest at £7.55m. iii) The husband’s investments of £16m held in various accounts, details of which were set out in two letters written to the husband by Mr Husain, the Chief Financial Officer of IIB. The husband’s case was, and is, that this money never existed and that the letters were written to give the impression of wealth at a time when IIB, a small bank, was trying to buy a bigger bank. The judge analysed the evidence between paragraphs [88–107] before concluding at [107] of his judgment that “I do not know where the money came from or where it now is, but that there is some at least is probable”. In the light of this finding, the figure of £16m was included in the list of assets found by the judge to be held by the husband at [147]. This money has been referred to as the “disputed accounts”.[5]The judge ordered the husband to pay the wife a lump sum of £6,080,000 on or before 1 March 2024 in addition to orders for spousal and child maintenance.

The Matrimonial Home

[6]The matrimonial home, in which the wife and children continue to live, is owned by IIB as a result of an arrangement described in the judgment as a “Forward Acquisition of Property” (“FAP”). This was a means to allow IIB to provide the husband with approximately £3.5m so he could buy a lease extension on the matrimonial home and clear various debts (judgment [34 – 51]). As he had not repaid the money by February 2024, IIB can now, if it chooses, sell the property. If the husband satisfies the debt, the property will be transferred to him. He can alternatively relinquish the property with no penalties.[7]During the course of his evidence, with what the judge described as “[the judge’s] insistence and with a fair amount of judicial encouragement”, Mr Husain agreed to buy a replacement house in Fulham in the name of IIB for the wife and children to live with a purchase price of up to £2m plus stamp duty, providing that that sum did not exceed the proceeds of sale of the current matrimonial home [130-131]. Perhaps unsurprisingly, the wife’s solicitors and the solicitors for IIB were unable to reach terms which would enable this proposal to be put into effect. At a Consequentials Hearing on 15 December 2023, the judge having heard submissions, ordered at paragraph 10 that the parties “endeavour to agree the terms of the purchase of the replacement property” and that “in the event that the parties are unable to agree such terms, there be liberty to the parties to apply to the Court for adjudication on issues on which they disagree”.

The Appeals

[8]Both the husband and IIB have appealed the orders of the judge. IIB’s ground of appeal is that the court had no jurisdiction pursuant to the Matrimonial Causes Act 1973 or otherwise to include the provisions at paragraph 10 of the order. Permission to appeal was granted by Moylan LJ on 28 June 2024.[9]The husband appeals against the lump sum order on the basis that the judge had been wrong in finding that he had the sum of £16m from which he could satisfy the lump sum of £6m. Moylan LJ granted permission to appeal, ordered a stay on the payment of the lump sum pending appeal and directed that the husband’s application to adduce fresh evidence in relation to the disputed accounts was to be determined at the appeal hearing.[10]On 13 December 2024, permission to appeal having been granted, the judge made a legal services payment order pursuant to section 22ZA of the Matrimonial Causes Act 1973 (“section 22ZA”) requiring the husband to pay the wife a total of £120,000 + VAT in order for her to respond to the appeals with the benefit of legal representation (“the LSPO”). The figure of £120,000 was intended to cover both the appeal of the husband and that of IIB which were listed to be heard sequentially.[11]The LSPO required the money to be paid as to £72,000 by 15 January 2025 and the balance by 15 February 2025. In the course of his judgment, the judge said that he was “clear that the wife in this case does not have funds from which she can fund her costs of the appeal” and that “it would be doing [the wife] a grave injustice if I were to permit the situation where the husband and IIB were represented and she was not, particularly against the findings that I have made”.[12]It this context it should be noted that pursuant to section 22ZA(3):
“The court must not make an order under this section unless it is satisfied that, without the amount, the applicant would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings or any part of the proceedings.”
[13]Section 22ZB(1) sets out the matters which have to be taken into consideration by the court. These include at section 22ZB(1)(a) the resources of the paying party, and at (h) “the effect of the order or variation on the paying party”. This is further elaborated at section 22ZB (3) which provides that: “(3) For the purposes of subsection (1)(h), the court must have regard, in particular, to whether the making or variation of the order is likely to—”(a) cause undue hardship to the paying party, or(b) prevent the paying party from obtaining legal services for the purposes of the proceedings”.[14]The husband appealed the LSPO on three grounds: first, that the judge had been wrong to rely on his findings of the existence of the disputed accounts when the existence of the accounts was challenged and in relation to which permission to appeal had been granted; second, that the judge had been wrong to find that the wife could not make funds available to cover her costs; and third, that the judge did not have jurisdiction to make a LSPO in respect of IIB’s appeal. Moylan LJ granted permission on the first ground and refused permission on the other two.[15]The appeal against the LSPO was heard on 20 February 2025. At its conclusion, Moylan LJ gave an extempore judgment dismissing the appeal. He said: “51. I have been persuaded by the wife's submissions that the judge made no error which would entitle this court to interfere with his decision. I reject the submission the judge was wrong to rely on the challenged finding. The fact that it was subject to an appeal does not mean that the judge should have excluded it from his consideration. The proposition with which I think Miss Bangay agreed during her oral submissions today.52. I do not accept her submission that the judge ignored the fact of the appeal or that he ignored the fresh evidence. The judge was plainly aware of both of these factors and in my view equally plainly took them into account. He expressly referred to them both in the course of his judgment. I acknowledge that he did so briefly but I do not consider that for the purposes of his decision he was required as Ms Bangay submitted to undertake a more detailed assessment of the evidence on which the husband relied or of the merits of his prospective appeal than he did.53. I also do not consider that as submitted by Ms Bangay the judge's decision was circular and wrong because it placed wholesale reliance on his finding as to the £16 million. The judge did not place wholesale or sole reliance on this finding. He referred more than once to his findings which included other matters to which I have referred. As to his challenged finding the judge did no more than, as he said at paragraph 14, take this into account.” (The “other matters” referred to by Moylan LJ were the husband’s interest in IIB and the GA debt).[16]As the substantive appeals were listed to be heard over two days on 11 and 12 March 2025, the husband was ordered to pay the sum of £120,000 + VAT by Monday 24 February 2025. The husband’s application for a stay was refused, as was the wife’s application for an unless order.[17]The husband has not paid all or any part of the sum ordered. The wife accordingly applied for the listed appeal to be adjourned and for the court to make either an unless order or a Hadkinson order in relation to the payments due. I therefore adjourned the appeal and allocated one of the two days for case management. The Case Management Hearing[18]Mr Richardson KC appeared on behalf of IIB. His was in effect a watching brief. IIB was not in breach of any order and accordingly the wife did not seek any sanction against it which could inhibit its ability to prosecute its appeal. The concern of IIB was to ensure that its appeal did not get “lost” and that it would be relisted in an appropriate time scale.[19]Mr Glaser KC together with Mr Haggie appeared on behalf of the wife and Ms Bangay KC with Mr Weale on behalf of the husband.[20]Mr Glaser submitted that if the court did not make a Hadkinson or an unless order against the husband, the LSPO would be rendered meaningless and the husband would be allowed to breach it with impunity notwithstanding that his appeal against the order had been dismissed. The wife, he said, would be left representing herself in circumstances when the court had found that to put her in such a position would amount to a grave injustice. Mr Glaser further submitted that the fact that the appeal against the LSPO was dismissed demonstrated that section 22ZB had been properly considered by the judge who had therefore concluded that the husband had the financial resources with which to satisfy the order without undue hardship, and that the making of such an order would not prevent him from obtaining legal services for the purposes of the proceedings, there being no suggestion that the husband might find himself without legal representation at the hearing of the appeal.[21]Ms Bangay, whilst realistically conceding that she faced an “uphill task” if she was to persuade the court to make no order, sought to rehearse the arguments she made at the LSPO appeal. She said that there was no material before the court from which it could conclude that the husband’s failure to satisfy the order had been deliberate or wilful given that he does not have the means to pay. It follows, she said, that there was no basis for making a Hadkinson order.[22]Ms Bangay also submitted that notwithstanding the dismissal of the husband’s appeal against the LSPO, this court should now give fresh consideration to the husband’s contention that the disputed accounts do not exist and should accept the contents of a further witness statement filed by him asserting that that is the case. The statement in question was produced, without leave, the day before the case management hearing. For the most part, the statement simply seeks to rehearse the arguments made before Moylan LJ and also made by the husband in fresh evidence which he apparently will seek to deploy in the substantive appeal and in respect of which permission has not yet been granted. The statement also described how the husband would be unable to raise money either from IIB or his father, together with bare assertions, unsupported by any detail, that he has tried and failed to raise money from “various friends and business associates” and that he has no security to offer for any loan.[23]One further matter was raised in the statement. The statement indicated that the husband owed very substantial sums to his solicitors who nevertheless continue to act for him on credit. It indicated that the husband’s solicitor had made it clear to him that if he was able to raise the funds to meet the LSPO, his solicitor would not be prepared to continue to act for him and would leave him unrepresented if he were to apply those funds to the wife’s representation.[24]At the hearing, Snowden LJ asked Ms Bangay how the husband was proposing to pay his solicitors and why, if he had no available funds and no ability to raise funds, they were prepared to allow his outstanding debt to them of approximately £800,000 to roll forward and increase. Ms Bangay, having taken instructions directly from the husband’s solicitor who was present in court, told the court that the husband’s solicitor had acted for him for many years and would not “desert” him now. However, Ms Bangay then also confirmed that the solicitor’s largesse was conditional upon any funds raised by the husband being paid first to her in part satisfaction of his debt to her firm, and not in satisfaction of the LSPO. Failure to do so, the court was told, would categorically result in the withdrawal of her services.[25]I was and am troubled by this explanation, but having considered the matter, I do not think that it is necessary to comment further save to reiterate that the husband’s appeal against the LSPO has been dismissed and that he is currently in contempt as a consequence of being in breach of that order. Unless Orders[26]The court has wide case management powers under CPR 3.1(3) to make orders with conditions and to specify the consequences of failure to comply with a condition. These include so called “unless orders” which are conditional orders which result in the automatic dismissal of a claim or debarring of a hearing unless the order is complied with. Such an order must be proportionate and if one were made in this case, once it had bitten, the appeal could only be reinstated following a successful application for relief from sanctions under CPR 3.9 with the undoubted challenges that satisfaction of the three stage test in Denton v TH White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3296 would present to the husband in a case of this nature.[27]Mr Glaser took the court through a number of authorities concerning the law relating to, and the proper use of, unless orders. With respect to those skilful submissions, I do not propose specifically to consider those cases.[28]The fact that permission to appeal has been granted to a party is a relevant consideration to the exercise of discretion to make an unless order, but it is not determinative. An unless order can plainly be appropriate even though failure to comply with it would result in the dismissal of an appeal for which permission has been granted. That might be so, for example, where an appellant has been ordered to provide security for the costs of the appeal but has not done so.[29]However, in my judgment the making of an immediate unless order would be disproportionate in this case. As Ms Bangay has emphasised, permission to appeal has been granted in relation to the disputed accounts, the existence of which is central to the making of the LSPO. I consider that the husband should have a short further opportunity to satisfy the LSPO, so that if he makes the required payment, his appeal can be re-listed to be heard without him having to surmount the additional hurdle of obtaining relief from sanctions. Provided that the husband satisfies the LSPO, it is better that he be able to pursue his appeal so that the lump sum and other orders made by the judge, which are essential to provide for the parties in the future, can be scrutinised on appeal.

Hadkinson orders

[30]The wife seeks in the alternative a Hadkinson order (Hadkinson v Hadkinson [1952] FLR Rep 287) which would bar the husband from being heard on his appeal until such time as he has purged his contempt of court by satisfying the LSPO. Unlike an unless order, no application for relief from sanctions would have to be made upon satisfaction of the LSPO.[31]The law in relation to Hadkinson orders is well established and there is no need for me to rehearse it in this short judgment. I have in mind that Hadkinson orders have been said to be a “case management order of last resort” for use against litigants in wilful contempt (Assoun v Assoun (No 1) [2017] 2 FLR 1137). But as I have indicated, in a case such as the present, such an order would be less onerous for the defaulting party than an unless order.[32]In De Gaffori v De Gaffori [2018] EWCA Civ 2070 at [111] (De Gaffori), Peter Jackson LJ said that a Hadkinson order will normally only be made if all the following conditions are satisfied:(i) the party against whom the order is sought is in contempt;(ii) the contempt is deliberate and continuing (rather than a species of penalty or remedy in committal proceedings for contempt);(iii) as a result, there is an impediment to the course of justice;(iv) there is no other realistic and effective remedy; and(v) the order is proportionate to the problem and goes no further than necessary to remedy it.[33]In my view it is unarguable that the essential criteria are other than met.[34]In Laing v Laing [2005] EWHC 3152 (Fam), Sir Mark Potter P said that the contempt should be wilful in the sense of voluntary, deliberate, and knowing. The husband knew he had to pay and failed to do so.[35]Ms Bangay submits that the husband cannot pay the LSPO. His failure to pay cannot therefore be regarded as deliberate or wilful. There is in my judgment, no merit in this submission.[36]In De Gafforj, Peter Jackson LJ at [12] approved the view of Bodey J in Mubarakv Mubarik (No.2) [2006] EWHC 1260 (Fam) that there is no express requirement for the person in contempt to be able to pay. Bodey J said that questions of culpability only become relevant when the court is considering what order to make. Bodey J went on to say that at [66] “culpability come into play as regards the court's exercising its discretion as to whether and how to act on the contempt”. It follows that the husband’s ability to comply with the LSPO becomes an important factor only in determining the proportionality of an order, contempt having been established. It is undoubtedly the case that the husband’s failure to pay £120,000 + VAT to the wife is deliberate and wilful in the sense described above.[37]The judge made a finding that the husband had significant funds in the disputed accounts, a finding which although challenged on appeal, the judge was entitled to have regard to. Further, in dismissing the appeal from the LSPO, Moylan LJ observed that the judge did not rely exclusively on the disputed accounts but referred also to other significant assets. Having found the husband to be in contempt, it follows that in considering what order to make, I have in mind that the husband has the means to pay.[38]Condition (iii) is that the contempt must impede the course of justice. Failure to pay a legal services payment order is an obvious impediment to justice. As Peter Jackson LJ observed in De Gaffori at [16], failure to pay a legal services payment order is an impediment to justice as compliance is “essential to enable the wife to participate fairly in the husband’s appeal”. It impacts, he said at [17], “in the most direct way possible upon the course of justice”.[39]So far as Conditions (iv) and (v) are concerned it is clear that there is no other effective remedy. I have no doubt that the form of Hadkinson order I intend to make is proportionate and necessary. I have already indicated at [29] above why in my judgment the more draconian course of an immediate unless order would be disproportionate.[40]In my judgment requiring the payment of the LSPO as a condition of the hearing of the husband’s appeal is a proportionate means to enforce the order.[41]I will therefore direct that the husband’s appeal shall not be heard unless and until the sum of £120,000 + VAT due under the LSPO is made. The appeal brought by IIB will be listed on the first available date after 2 July 2025. If the husband satisfies the legal services payment order by 2 May 2025 his appeal will be listed, as before, to be heard with the appeal of IIB. If he satisfies the order after 2 May 2025 but before the hearing of IIB’s appeal, the parties shall be at liberty to apply to this court for an adjournment of IIB’s appeal and further directions with a view to the two appeals being heard together at a date that ensures that the wife’s legal team have sufficient time to prepare for both appeals.

Postscript

[42]Upon this judgment being sent out in draft, Mr Haggie made further consequential submissions which whilst they had not been canvassed in argument at the case management hearing or sought by the court, have a direct impact on the future management of the proceedings.[43]Mr Haggie first sought directions from the court as to the status of the stay on the enforcement of the lump sum order by Sir Jonathan Cohen which is the subject of the husband’s appeal. Second, Mr Haggie highlighted that there should be a long-stop date for the listing of the husband’s appeal, as it would be contrary to the interests of justice for the appeal to be adjourned indefinitely leaving the status of the judgment below unresolved. Third, Mr Haggie requested that payment of the order for costs made by Moylan LJ should form part of the Hadkinson order requirements.[44]In response Ms Bangay said that the husband would consent to there being a long-stop date for his appeal to be heard after which, in the event that there was no compliance with the LSPO, the appeal would stand dismissed. Her submission was that the long-stop date should be six months because the husband “is currently exploring means of raising funds to cover the LSPO. This is likely to involve a complex set of arrangements, which is unlikely to be completed significantly before 6 months”.[45]This submission is in marked contrast to the husband’s position as stated only a matter of weeks ago at the case management hearing when, as set out at para. [22] above, his case in writing and orally was that he was wholly unable to raise any funds with which to satisfy the LSPO. In the light of this change of position I intend to vary the future management of the case from that which I originally indicated.[46]I regard a further six months for a long-stop date for payment of the LSPO as far too long. The husband was made subject to the LSPO four months ago on 13 December 2024, so that he ought to have been assiduously “exploring means to raise the funds” since then. That said, every reasonable opportunity should be given for both appeals to be heard together in the event that the husband now purges his contempt and satisfies the LSPO.[47]I do not consider that the Hadkinson requirement that non-payment of a court order should be an impediment to justice is met in relation to the husband’s failure to pay the costs order made by the Court of Appeal on 20 February 2025. But neither should there be any restriction on the wife’s freedom to seek to enforce that order.[48]I will therefore order that: i) The husband shall pay to the wife the sum of £120,000 + VAT in satisfaction of the LSPO on or before 2 May 2025. ii) The husband’s appeal shall not be listed to be heard unless and until the LSPO is paid in full. iii) In the event that the husband fails to satisfy the LSPO by Friday 11 July at 4.00 p.m., his appeal against the lump sum order made by Sir Jonathan Cohen on 28 November 2023 shall stand dismissed without further order and the stay on the enforcement of the lump sum order will be discharged. iv) The appeal of IIB shall be listed (for the convenience of counsel) on the first available date after 1 October 2025 with provision for a second day to be made available to enable the husband’s appeal to be heard together with that of IIB in the event that his appeal has not been dismissed pursuant to (iii) above. v) The order for costs made by the Court of Appeal on 20 February 2025 shall not form part of the Hadkinson order. There is no bar on the wife from seeking to enforce the same forthwith.[49]I agree.

Cited in 4 later judgments