The Court of Appeal (CoA) heard a case involving ongoing financial remedy proceedings between a wife and husband and delivered a stark reminder of its power to ensure that financial orders are upheld, even when one party attempts to obstruct the process.
Background:
Ms. Meerna Ali Ghuloom Faraj and Mr. Sohail Sultan Ahmed were married. The husband is the majority shareholder and director of IIB Group Holdings (IIB), a company incorporated in Bahrain which conducts an international banking business.
In November 2023, the husband was ordered to pay the wife a lump sum of £6,080,000 by 1 March 2024, along with spousal and child maintenance. IIB owns the matrimonial home under an arrangement to provide funds to the husband. He was also ordered to pay the wife £120,000 + VAT to cover her legal costs (LSPO) in December 2024, with £72,000 due by 15 January 2025 and the balance by 15 February 2025.
Both the husband and IIB appealed the Judge's orders. The husband's appeal concerns the Judge's finding that he possessed the disputed £16m. IIB's appeal relates to a provision in the order regarding the purchase of a replacement property for the wife and children.
Decision:
The CoA granted a "Hadkinson order” and declined to make an immediate "unless order" – CPR 3.1(3) – as it was regarded as disproportionate in this case. The Court agreed with Moylan LJ that the husband’s failure to pay the Legal Services Payment Order (LSPO) was deliberate and therefore justified the imposition of conditions on the appeal under Section 22ZA(3) of the Matrimonial Causes Act (MCA) 1973. Lady Justice King reiterated the conditions for a Hadkinson order to be made and noted that “Failure to pay a legal services payment order is an obvious impediment to justice”. She said that “there is no express requirement for the person in contempt to be able to pay”, which is the case here.
The husband's appeal will not be heard unless he pays the outstanding LSPO by 2 May 2025. If he fails to pay by 11 July 2025, his appeal against the original lump sum order will be dismissed, and the stay on enforcement of that order will be lifted. IIB's appeal will be heard separately.
Implications:
Divorces are never easy, but when significant assets are involved, the process can become even more complex, particularly if one party, who has the financial ascendancy, attempts to avoid their financial obligations. This case offers a good reminder that courts have the power to enforce financial remedy orders, including legal costs and ensure a level playing field between the parties, especially when the economic power is not balanced. While they will only do so if Hadkinson’s conditions are met, courts will ensure that the parties comply with those orders. In this case, the non-payment of the LSPO was considered an impediment to the course of justice.
This case highlights the potential serious repercussions of non-compliance. In this case, it meant the husband's own appeal was effectively put on hold and could ultimately jeopardise his position in future proceedings.
