Al-Rawas & Anor v Hassan Khan & Co & Anor

Smart Summary (Beta)

Factual and Procedural Background

The appellants, a husband and wife residing abroad, were involved in substantial litigation with the respondents, two interrelated firms of solicitors, concerning unpaid legal fees dating from 2006 to 2009. Following non-payment, the respondents initiated proceedings in 2013 to recover sums exceeding £1 million, which subsequently increased to over £3 million due to additional costs and accrued interest. The appellants were found in contempt of court by Morris J for multiple breaches including failure to comply with court orders, making false statements, and obstructive conduct. Morris J sentenced the appellants to imprisonment, which they have not served, and ordered indemnity costs in favor of the respondents. The appellants appealed the findings of contempt and committal orders, claiming an automatic right of appeal without permission. The respondents applied to condition the appeal on payment into court of the full indebtedness plus security for costs. In response, the appellants withdrew their appeal, leaving the sole remaining issue of whether the respondents were entitled to indemnity costs for the appeal.

Legal Issues Presented

Whether the appellants were entitled to an automatic right of appeal against the committal orders for contempt without permission.
Whether the respondents were entitled to have their costs of the appeal assessed on an indemnity basis.
Whether the respondents’ costs related to the security application should be included in the indemnity costs order.

Arguments of the Parties

Respondents' Arguments

The appellants sought to exploit the automatic right of appeal while evading justice as fugitives from court orders.
The appeal was pursued without any fresh evidence despite being predicated on the need for it.
The appellants never intended to participate meaningfully in the appeal process.
The appeal was unreasonable and constituted an abuse and manipulation of the appeal process.
Such conduct warrants indemnity costs to protect the administration of justice.

No written submissions were received from the appellants in response despite court orders requiring them.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Thursfield v Thursfield [2013] EWCA Civ 840	Criticism of automatic right of appeal in contempt cases without permission	Supported the view that permission should be required when appellants evade jurisdiction
Masri v Consolidated Contractors International Co SAL [2011] EWCA Civ 898	Distinction between committal orders (automatic appeal) and ancillary orders (permission required)	Confirmed limitation of automatic appeal right to committal orders
X Limited v Morgan-Grampian (Publishers) Limited [1991] 1 A.C.1	Imposition of conditions on appeals in contempt cases	Recognized that conditions on appeals are rare but permissible
JSC Bank v Ablyazov [2012] EWCA Civ 639	Imposition of conditions on appeals to prevent abuse	Supported the principle that courts may impose conditions on appeals in contempt cases
Excelsior Commercial and Industrial Holdings Limited [2002] EWCA Civ 879	Guidance on awarding indemnity costs when conduct is "out of the norm"	Applied to justify indemnity costs due to appellants’ conduct
Esure Services Limited v Quarcoo [2009] EWCA Civ 595	Clarified scope of indemnity costs beyond moral condemnation to include conduct outside ordinary proceedings	Reinforced that appellants’ conduct justified indemnity costs
Fage UK Limited v Chobani UK Limited [2014] EWCA Civ 5	Findings of fact by lower courts will not generally be reopened on appeal	Supported refusal to reargue factual findings already decided by Morris J

Court's Reasoning and Analysis

The court began by acknowledging the statutory framework granting an unqualified right of appeal in contempt cases but noted judicial criticism of this anomaly, particularly where appellants evade jurisdiction. The court emphasized the need to police this automatic right carefully to prevent abuse. It analyzed the appellants’ conduct in three categories: (a) factual matters already rejected by the lower court, which should not be re-litigated; (b) new factual matters and arguments not previously raised, constituting an abuse of process; and (c) matters requiring fresh evidence, which the appellants failed to provide despite promises. The court found the appeal to be a sham intended to frustrate enforcement and delay payment, conducted while the appellants were in open defiance of court orders. Given this conduct was "out of the norm," the court concluded indemnity costs were justified. The court also considered whether the respondents’ costs for the security application should be included and found that the reprehensible conduct of the appellants warranted inclusion of those costs as well. Finally, the court ordered a payment on account of costs to be made, estimating 70% of the claimed amount as reasonable.

Holding and Implications

The court ORDERED that the appellants pay the respondents’ costs of the appeal on an indemnity basis, including the costs related to the security application. A payment on account of £152,237.77 was directed, with the remainder to be subject to detailed assessment.

The direct effect of this decision is to require the appellants to bear the full costs of their unsuccessful appeal, reinforcing the court’s stance against abuse of the appeal process in contempt cases. No new precedent was established beyond the application of existing principles to the facts of this case.

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