Prince Fahd Bin Abdul Aziz v Harb, Court of Appeal - Civil Division, December 21, 2017, [2017] EWCA Civ 2215

Resolution Date:December 21, 2017
Issuing Organization:Civil Division
Actores:Prince Fahd Bin Abdul Aziz v Harb
 
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Neutral Citation Number: [2017] EWCA Civ 2215

Case No: A3/2017/0657

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

MR JUSTICE ARNOLD

HC09C01992

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21 December 2017

Before:

LORD JUSTICE DAVID RICHARDS

and

LORD JUSTICE NEWEY

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Between:

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Ian Mill QC and Shaheed Fatima QC (instructed by Howard Kennedy) for the Appellant

Romie Tager QC and Ian Clarke QC (instructed by Hughmans Solicitors) for the Respondent

Hearing date: 13 December 2017

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Lord Justice David Richards:

  1. The defendant in these proceedings (the Prince) appeals against the dismissal of his application for an order that, unless the claimant (Mrs Harb) paid an outstanding costs order of £250,000 by a specified date, her claim be struck out or stayed. Arnold J gave permission to appeal on two grounds but refused permission on a further ground. The Prince's application to this court for permission to appeal on the further ground, together with the appeal if permission were granted, was ordered to be heard together with the substantive appeal on the other grounds.

  2. For the purposes of this appeal, the background facts can be shortly stated. Mrs Harb issued these proceedings in 2009, claiming that the Prince was obliged under the terms of an oral contract to procure the transfer to her of two apartments in Chelsea, London SW3 (the properties) and to pay her the sum of £12 million.

  3. After some substantial interlocutory applications, including an unsuccessful application by the Prince to strike out the claim on grounds of state immunity (see [2015] EWCA Civ 481; [2016] Ch 308), the trial of the action took place before Peter Smith J in July 2015. He gave judgment on 3 November 2015, ordering the Prince to pay £15.45 million (including interest) to Mrs Harb and granting specific performance of the agreement to procure the transfer of the properties.

  4. The Prince appealed to this court and by an order dated 16 June 2016 (the CA order) the appeal was allowed, on the grounds of deficiencies in the judgment. The case was remitted to the High Court for a re-trial.

  5. The CA order also provided for Mrs Harb to pay 75% of the costs of the appeal, to be assessed on the standard basis if not agreed, and to pay £250,000 on account of those costs within 28 days. This order was stayed pending any application to the Supreme Court for permission to appeal. Mrs Harb's application to the Supreme Court was dismissed on 21 December 2016. The sum of £250,000 therefore became payable either immediately or after 28 days. Mrs Harb has not paid any part of it.

  6. The CA order also required Mrs Harb to apply within 28 days to the Chancery Division for directions for the re-trial. This, too, was stayed pending any application to the Supreme Court. On 11 January 2017, Mrs Harb issued an application for directions, which was listed for a one hour hearing before a Master on 6 February 2017.

  7. On 30 January 2017, the Prince issued the application which is the subject of this appeal. It was listed to be heard with the application for directions. The Master adjourned it to be heard by a Judge. Arnold J heard it on 6 February and gave judgment on 21 February 2017.

  8. The Prince's application was supported by a witness statement made by his solicitor, Steven Morris, on 30 January 2017. Mr Morris noted that Mrs Harb had not applied for an extension of time to pay the interim costs and that there was no evidence before the court regarding her means or explaining her non-compliance. (This was not surprising, given that the Prince had only on that day issued his application.) Mr Morris continued: ``...she has provided no evidence as to her financial position, e.g. whether and what she can afford to pay; how she has funded or intends to fund this litigation; how she intends to meet any future adverse costs orders.'' Mrs Harb's solicitors had, however, emailed the Prince's solicitors on 20 January 2017 to say that she had no assets, other than her claim against the Prince, and was unable to pay the interim costs of £250,000. As I will explain in more detail later, the Prince had known that this was the position taken by Mrs Harb since June 2016, from a skeleton argument submitted to this court on her behalf.

  9. Mrs Harb made a witness statement on 1 February 2017. She said, as is the case, that she had been made bankrupt on 1 May 2008. She said that she had no assets other than her claim against the Prince and ``a right to receive 30% of the net profits of a film based on my book Royal Flush: The Saudi King and I, or my life story, pursuant to an agreement dated 19 February 2015 that has been disclosed to the Defendant''. Under that agreement, she went on, she had received an up-front payment of £170,000 ``which has all been spent on legal costs, dentist fees and general living expenses''. The film had not yet been made and there was no immediate expectation of further payments under the agreement. The flat in which she lived belonged to her daughter. Her only income was her state pension. No family members were able or willing to lend funds to her. Her solicitors and counsel acted at the trial ``on a basis that there was no immediate obligation to make payment and are continuing to act on that basis now''. Her solicitors and counsel extended credit to her for their fees in respect of the appeal to this court and the application to the Supreme Court. She was unable to pay the costs ordered by this court and, if the order sought by the Prince were made, it would stifle her claim.

  10. By a letter dated 2 February 2017, the Prince's solicitors acknowledged receipt of Mrs Harb's witness statement and sought certain information. They said that the information about the funding of her legal costs was unclear and they requested disclosure of all relevant agreements. They also sought clarification as to the use and availability of the sum of £170,000 received under the agreement dated 19 February 2015.

  11. Mrs Harb made a further witness statement on 6 February 2017. She said that she had spent the sum of £170,000 as follows: £50,000 paid to her lawyers for their costs of the state immunity appeal; £39,000 for dental work; £24,000 paid to her daughter in respect of arrears of rent; £24,000 paid to her daughter for rent at £1,000 per month since 2015; £20,000 for renovation of the flat where she lives; £10,000 for her daughter's dental work; £4,000 in payment of a debt due to her son-in-law; £3,500 for work on the boiler and other specified plumbing and electricity work; and £1,200 for replacing asbestos with wood panels in the heating room. As to her legal costs, her lawyers acted at the trial under a conditional fee agreement. They acted on an ordinary fee-paying basis in this court and the Supreme Court but they had not rendered fee notes and to that extent they had extended credit to her and continued to do so.

  12. Further statements as to Mrs Harb's financial position were made at the hearing by her counsel, on instructions. Her book had sold only a few copies, and Mrs Harb had therefore received no income from that source. She was unable to...

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