Factual and Procedural Background
The judgment concerns financial remedy proceedings between the Plaintiff and the Defendant, with the 2nd Respondent being Company A, an international banking company incorporated abroad, where the Defendant is the majority shareholder and director. The original judgment was handed down on 28 November 2023 by Judge [Last Name]. The case involves complex and ongoing litigation between the parties.
The Plaintiff applied for an order that unless the Defendant pays £120,000 plus VAT, as ordered by the judge on 13 December 2024 under a legal services payment order (LSPO), the Defendant should not be permitted to pursue his appeal against the substantive financial remedy order. Permission to appeal was granted on 28 June 2024.
The judge found the Defendant to have three categories of assets: (i) a $25 million debt owed to him by a company (GA), secured by a property with limited equity; (ii) a 59.47% interest in Company A, valued at £7.55 million; and (iii) investments totaling £16 million held in disputed accounts, which the Defendant denies existed but which the judge found probable to exist.
The judge ordered the Defendant to pay the Plaintiff a lump sum of £6,080,000 by 1 March 2024, alongside maintenance orders. The matrimonial home is owned by Company A under a "Forward Acquisition of Property" arrangement, with provisions for its sale or transfer depending on repayment of a debt.
Both the Defendant and Company A have appealed aspects of the judgment. The Defendant's appeal challenges the lump sum order based on the disputed accounts, with permission granted and a stay on payment pending appeal. Company A's appeal contests the court's jurisdiction to include certain provisions related to the matrimonial home.
On 13 December 2024, the judge made the LSPO requiring the Defendant to pay £120,000 plus VAT to the Plaintiff to fund her legal representation on the appeals. The Defendant appealed the LSPO on limited grounds, but the appeal was dismissed on 20 February 2025.
The Defendant has not paid the LSPO amount, prompting the Plaintiff to apply for an adjournment of the appeal and for enforcement orders. A case management hearing was held to address these issues.
Legal Issues Presented
- Whether the Defendant should be required to pay the LSPO before being allowed to pursue his appeal.
- Whether the court has jurisdiction to make a legal services payment order in respect of Company A's appeal.
- The appropriate enforcement mechanism for non-payment of the LSPO, including the suitability of an unless order or a Hadkinson order.
- Whether the Defendant's failure to pay the LSPO constitutes wilful contempt of court.
- The proportionality and fairness of barring the Defendant's appeal pending payment of the LSPO.
Arguments of the Parties
Plaintiff's Arguments
- The LSPO is necessary because the Plaintiff lacks funds to fund her legal representation on the appeals, and it would be a grave injustice to allow the Defendant and Company A to be represented while she is not.
- The dismissal of the Defendant's appeal against the LSPO confirms that the court properly considered the Defendant's resources and concluded he can pay without undue hardship.
- Without enforcement orders such as a Hadkinson or unless order, the LSPO would be rendered meaningless, allowing the Defendant to breach it without consequence.
- The Defendant's failure to pay is deliberate and wilful, constituting contempt that impedes the course of justice.
Defendant's Arguments
- The Defendant challenges the existence of the disputed accounts, which are central to the LSPO, and contends the judge erred in relying on findings subject to appeal.
- The Defendant asserts he lacks the means to pay the LSPO and that his failure to pay is not deliberate or wilful.
- The Defendant argues the court lacks jurisdiction to make an LSPO in respect of Company A's appeal.
- The Defendant submitted a late witness statement reiterating his inability to raise funds and stating his solicitors continue to act on credit but would withdraw if funds are diverted to the Plaintiff's costs.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Denton v TH White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3296 |
Test for relief from sanctions in relation to unless orders. |
The court noted that an unless order would require the Defendant to satisfy the three-stage Denton test to reinstate the appeal once dismissed, highlighting the onerous nature of such an order. |
| Hadkinson v Hadkinson [1952] FLR Rep 287 |
Use of Hadkinson orders to bar a party from proceeding until contempt is purged. |
The court considered a Hadkinson order appropriate to enforce the LSPO, barring the Defendant's appeal until payment is made, as a proportionate remedy. |
| Assoun v Assoun (No 1) [2017] 2 FLR 1137 |
Hadkinson orders as a last resort for wilful contempt in case management. |
The court acknowledged Hadkinson orders as a measure of last resort, suitable in cases of wilful contempt such as the present. |
| De Gaffori v De Gaffori [208] EWCA Civ 2070 |
Conditions for making a Hadkinson order, including wilful contempt and impediment to justice. |
The court applied the De Gaffori criteria, finding all conditions met for a Hadkinson order against the Defendant. |
| Laing v Laing [2005] EWHC 3152 (Fam) |
Definition of wilful contempt as voluntary, deliberate, and knowing failure to comply. |
The court found the Defendant's non-payment wilful under this standard. |
| Mubarak v Mubarik (No.2) [2006] EWHC 1260 (Fam) |
Ability to pay is relevant only at the stage of deciding what order to make, not for establishing contempt. |
The court held that the Defendant's inability to pay is not a defence to contempt but a factor in proportionality of sanction. |
Court's Reasoning and Analysis
The court analysed the Defendant's failure to pay the LSPO as deliberate and wilful contempt of court, referencing established principles that wilful non-compliance impedes the course of justice. The court rejected the Defendant's contention that inability to pay negates wilfulness, clarifying that ability to pay informs the proportionality of the sanction rather than the finding of contempt itself.
The court considered enforcement options and concluded that an immediate unless order would be disproportionate given the ongoing appeal concerning the disputed accounts. Instead, the court found a Hadkinson order appropriate as a proportionate case management tool to enforce compliance without necessitating relief from sanctions if the Defendant purges contempt.
The court acknowledged that permission to appeal remains granted but balanced this against the need to ensure fairness and justice by requiring the Defendant to fund the Plaintiff's legal representation. The court also addressed the Defendant's inconsistent position on funding efforts and the conditional support of his solicitors, finding no merit in the claim of inability to pay.
The court set a firm timetable for payment and appeal listing with dismissal consequences for non-compliance, ensuring procedural clarity and finality.
Holding and Implications
The court ORDERED that:
- The Defendant must pay £120,000 plus VAT under the LSPO by 2 May 2025.
- The Defendant's appeal shall not be listed or heard unless and until this payment is made in full.
- If the Defendant fails to pay by 11 July 2025 at 4:00 p.m., his appeal against the lump sum order will stand dismissed without further order, and the stay on enforcement of the lump sum will be lifted.
- The appeal of Company A will be listed after 1 October 2025, with provision for the Defendant's appeal to be heard together if it has not been dismissed.
- The costs order made by the Court of Appeal on 20 February 2025 is not included in the Hadkinson order and remains enforceable by the Plaintiff.
The decision enforces compliance with the LSPO as a condition precedent to pursuing the appeal, balancing the Defendant's right to appeal with the Plaintiff's right to fair representation. It does not establish new precedent but applies established case management and contempt principles to ensure the orderly progression of complex financial remedy appeals.