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	England and Wales High Court (Family Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Mubarak v Mubarik [2006] EWHC 1260 (Fam) (09 May 2006) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2006/1260.html Cite as: [2007] 1 WLR 271, [2006] EWHC 1260 (Fam), [2007] WLR 271, [2007] Fam Law 13, [2007] 1 FLR 722

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IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Royal Courts of Justice
		9th May 2006

MR. JUSTICE BODEY:

INTRODUCTORY

1 Since 1999 Mrs. Mubarak ("the Wife") has had in her favour a lump sum order against Mr. Mubarik ("the Husband") of some £4.8 million. She also has an entitlement against him to arrears of periodical payments (otherwise interest on the lump sum) of £361,000. She would like to achieve payment of these sums.

2 The husband, an international jeweller, does not seem to want her to enforce the orders. He has been successful '… in going to any lengths to avoid the reality …' that the wife has achieved them (per Thorpe L.J. on 20th October 2004). The wife has only managed to obtain £266,000 of her lump sum. This has not been paid by the husband of his own volition but has been secured by her through successful measures of enforcement. Otherwise the husband has paid nothing.

3 The reasons for the wife's failure to enforce her orders are (a) that as regards undisclosed assets which the husband has been held to possess they have never been traced; and (b) that his disclosed assets are held through a structure which distances them from easy enforcement.

4 That structure loosely called "the Dianoor Group" has, at its head, a Jersey discretionary trust ("the Trust"), which was set up by the husband on professional advice in 1997. He and his wife were its settlors. They wrote a conventional letter of wishes to the professional trustees requesting them to give effect to the husband's wishes in respect of Trust assets and income. All the husband's business assets formerly held by him in his personal capacity were transferred into the Trust, together with a small amount of assets formerly held in the wife's name.

5 Both the husband and the wife were originally beneficiaries of the Trust, together with the four children of the family now aged from 21 down to 8 years of age, and any remoter issue of the husband and wife as yet unborn. However, at the time of the breakdown of the marriage in 1998 the husband exercised a power of exclusion in the trust deed (vested in him alone) to exclude the wife as a beneficiary.

6 The Trustees of the Trust own all the shares of a Bermuda company which in turn owns all the shares of a Jersey holding company. That company in turn holds all the shares of two company (one incorporated in England and one in Hong Kong), which ultimately own valuable jewellery and artefacts in this country. It is against that jewellery and those artefacts that the wife hopes to enforce her orders by way of going against the Trust. Direct enforcement against those valuable items has been impossible by reason of the court's inability to 'lift the corporate veil'; Mubarak v. Mubarik [2001] 1 FLR 673.

7 The wife has now applied (a) to set aside the transfer of assets by the husband and herself into the Trust in 1997; (b) to set aside the document of exclusion in 1998 whereby the husband excluded her as a beneficiary; (c) to vary the Trust as a post-nuptial settlement such that the Trustees would hold for her absolutely that value of the Trust assets as equates to the amount of the husband's liabilities towards her under the 1999 orders; and (d) to be released from an undertaking most recently given by her to Ryder J. not to litigate against the Trust except in this jurisdiction. The hearing of those substantive applications is fixed for December 2006.

8 This is a preliminary application by the wife for an order, often called a "Hadkinson order", preventing the husband from participating in the December 2006 hearing, or else placing him on terms which he would first have to satisfy. During 2005, at the husband's suggestion, the parties agreed that this should be so dealt with as preliminary issue on the basis that preparatory costs would be saved if they knew in advance what part, if any, the husband would be taking at the December 2006 hearing.

9 Very extensive written submissions delivered to me have been supported by oral submissions and I have been taken to many authorities. Through their legal teams the husband and wife have fought the good fight with all their might, at considerable expense. My aim, however, is to keep this judgment as focused as reasonably possible. This will result in over-simplification. I shall not recount most of the numerous hearings which have taken place, nor rule on all the points raised by counsel.

10 The overall costs toll of this litigation is appalling. It could involve litigation (and to some extent already has) in four or five other countries, as well as here. The combined costs total is unclear, but before long it seems set to head off towards the general direction of the amount of the lump sum. During the hearing I therefore urged the parties, even in the face of their profound polarisation, to consider seriously some form of ADR. I record here that, to their credit, both expressed their willingness to give it a try.

SIMPLIFIED BACKGROUND

11 In December 1999, when I heard the substantive ancillary relief hearing (listed for three weeks) the husband's case was that his assets, as disclosed, were subject to two reducing factors:

(a) that he and a relative (Mr. Wani) had a sharing agreement regarding all his business assets whereby he (the husband) held them as to 45 per cent on trust for Mr. Wani; and

(b) that he (the husband) had creditors of some £10 million. Mr. Wani had intervened in the proceedings and was a party.

12 Within the first two days of the hearing, however, the husband and Mr. Wani were caught out in the presentation of false evidence. It involved a conspiracy to mislead the wife and the court about the alleged sharing agreement. They chose to absent themselves for the rest of the hearing. Before they and their respective then leading counsel left, a statement was put in on the husband's behalf expressing his shame at having misled the court and saying that he had chosen to disinstruct his then lawyers and take no further part in the proceedings.

13 During preparation of the substantive ancillary relief hearing, those then acting for the husband had made three representations relevant to this application.

(a) His solicitors had made a concession that, "… for the purposes of these proceedings our client accepts that the assets of the Trust will be treated as being his, subject to 45 per cent of the business interests being held beneficially for Mr. Wani."

(b) His well known and highly respected forensic accountants had stated in a report, "… we are instructed that the husband acknowledges his beneficial entitlement to 55 per cent of all the business assets described above and of any assets derived from them." (The stated 55 per cent was so expressed as to take account of Mr. Wani's alleged 45 per cent interest.)

(c) The husband's then legal team put in a written presentation described as "provisional", which intermingled the Trust's assets with his personal assets. It produced a bottom line that he was worth 'minus £2.3 million'. However, that computation presumed a deduction of 45 per cent for Mr. Wani's alleged share and of £10 million for the alleged creditors.

14 On 10th December 1999 at the end of the ancillary relief hearing (necessarily conducted in the absence of the husband and Mr. Wani) I rejected the husband's case both as to Mr. Wani's alleged beneficial interest and as to the alleged £10 million worth of creditors. (I would perhaps have been fortified in so doing if I could have anticipated evidence later given by the husband in September 2000, when he said that an account of his finances given earlier to his bank manager had been 'not entirely accurate' since in order to 'maximise his financial status', he had omitted to mention Mr. Wani and the £10 million debts). The result of my findings was that the husband's stated net worth of 'minus £2.3 million' on his own presented figures converted into a positive worth of numerous millions of pounds. I also made the above lump sum order and the periodical payments order (otherwise interest on the lump sum) which, as later varied, led to the arrears already mentioned.

15 The husband applied to the Court of Appeal for permission to appeal against the December 1999 order, as to which three extracts from his draft grounds of appeal are relevant.

(a) It was said in para.5:

"… it is accepted that learned judge was entitled to conclude that the husband had some other undisclosed assets. It is also accepted that the judge was entitled to conclude that the husband's overall wealth (including the retail value of the Dianoor Group's stock, itself worth over £30 million as disclosed) ran to tens of millions of pounds." [emphasis added].

(b) It was said in para.8:

"…; … in the light of the learned judge's overall findings, it is not asserted that the husband will be unable to meet the lump sum order [the £4.8 million] provided that he is allowed sufficient time to do so and such time will, of necessity, become considerable."

(c) It was submitted that, given the factual findings, the lump sum should have been £3 million and that, whatever the size of the lump sum, it should have been ordered to be paid by instalments. In effect therefore, the appeal was to be as to quantum only.

16 On 3rd April 2000 the Court of Appeal dismissed the husband's application for permission to appeal. Thorpe L.J. referred to the husband's and Mr. Wani's evidence about the alleged joint venture agreement as being "nothing more nor less than a fraud", and he spoke of the husband's "dishonest" and "disgraceful" litigation strategy.

17 In October 2000, a few days after the introduction of the Human Rights Act I heard (along with arguments about 'lifting the corporate veil') a Judgment Summons against the husband. This had been issued by the wife because he had not paid the lump sum. Applying the criminal standard of proof I concluded that the husband had, or had had, the means to pay the order, whether from his disclosed and/or undisclosed assets, and I imposed a suspended sentence of imprisonment. In so doing, I was strongly influenced by the husband's own case as to his means as they appeared to be from the extracts just referred to in para.15 above. I said:

"… I reiterate that I am referring to his case as to ownership and value. There are plainly a variety of options for raising cash from or by the medium of substantial business assets whether by asset sales, share sales liquidation, borrowings or permutations of these … The fact that the court may not be able or willing, as I have ruled above, directly to seize company assets in the day to day management and control of oppositional directors and where there are genuine creditors [Mubarak v. Mubarik [2001] 1 FLR 673], is not the same as saying that the husband himself cannot in practice use his ultimate ownership of the business structure to raise cash by accessing the underlying resources." [emphasis added].

18 I also made the point in my judgment (October 2000) that the wife had been grievously misled by the concessions made on the husband's behalf prior to the December 1999 hearing (para.13 above) about his effective beneficial ownership of the Trust assets. I noted that, but for those concessions, she would originally have made application to vary the Trust. Particularly hard for the wife was the concession as to his beneficial entitlement being not only in the business assets but also in "any assets derived from them" (para.13(b) above), a concession entirely nullified when the companies later pleaded successfully the 'corporate veil' point regarding the jewellery and artefacts.

19 In December 2000 the Court of Appeal heard the husband's appeal against the suspended sentence of imprisonment (Mubarak v. Mubarik [2001] 1 F.L.R. 698). It was held that the process below had been flawed and the committal order was set aside. Shortly stated, the flaws were that the standard form of Judgment Summons then in use had wrongly put the burden on the husband; that the wife had not put in evidence in support of her Judgment Summons; that the husband who had chosen to give evidence had thereby incriminated himself; and that he had not had sufficient notice of the wife's case as to precisely how he could have raised the money.

20 In the result, the husband continued not to pay the lump sum.

21 Until shortly before April 2003, the husband had fully paid the periodical payments of some £14,000 odd per month; but he then unilaterally reduced the payments down to some £8,000 per month and so arrears under the order began to accrue. He did, however, continue to pay the children's school fees, and has continued to do so throughout.

22 In the same month, the husband wrote to the Hong Kong company seeking employment, saying that he had "… somehow managed to borrow from relatives and close friends, but all my sources have got dried out". At that time, according to him, such loans (from November 1999 to May 2003) were standing at around £1.8 million.

23 The periodical payments order was registered by the wife in the Magistrates' Court, following which in about April 2003 the husband was summonsed to and did attend there. Faced with the possibility of imprisonment, he promptly paid off the then arrears of some £20,000. At the same time he gave notice that he intended to apply for a downwards variation of the periodical payments order pursuant to the guidance given in Corbett v. Corbett [2003] 2 F.L.R. 385. The justification for a reduction was stated to be that up until then he had only been managing to pay the periodical payments by way of loans from friends, which loans were drying up.

24 In August 2003 the husband further unilaterally reduced the wife's periodical payments down from £8,000 per month to £5,800 per month.

25 On 15th September 2003 there was a directions hearing on the husband's reduction application. A preamble to the order then made was to the effect that he would continue to pay the periodical payments at that reduced rate of £5,800 per month, upon which basis the wife's right to enforce the full amount of the periodical payments order was suspended pending the hearing of his outstanding application to reduce. This was to avoid further fruitless attempts by her to enforce (she was then acting in person), whilst the husband's application for a reduction was still pending and when he was saying that he was paying as much as he could.

26 In April 2004 Ryder J. was due to hear that application for a reduction in the order for periodical payments. However, shortly beforehand, leading counsel then instructed by the wife took the preliminary Hadkinson point that the husband should not be heard as he was in contempt of court by not having paid the lump sum.

27 On 18th May 2004 Ryder J. upheld that preliminary point, ruling that the husband's application for a reduction of the periodical payments should only proceed on certain defined terms: Mubarak v. Mubarik [2004] 2 F.L.R. 932. I need not repeat those terms here. Suffice it to say that the husband did not comply with them. Therefore, his application to reduce the periodical payments has ever since remained in suspense, as has the wife's application to enforce them.

28 The husband sought leave to appeal Ryder J.'s order of 18th May 2004. On 20th October 2004 the Court of Appeal dismissed that application.

29 In May 2005 the husband stopped all periodical payments to the wife and has not paid anything since, except educational fees. For about a year now she has therefore been without financial support from him and has been reliant on loans from family and friends, together with some commercial loans.

THE COMPETING ARGUMENTS

30 Miss Harris for the wife argues that the mere fact of the husband's non-payment under the orders concerned constitutes contempt of court and opens the door to the exercise of a judicial discretion to debar him. That discretion is to be exercised so as to achieve overall justice. In exercising it the court looks to all the circumstances and will necessarily consider whether or not the husband's failure to comply has been wilful (i.e. whether or not he could have paid). In exercising the discretion, particularly in deciding whether the husband could have paid, she says the standard of proof is the civil standard.

31 Mr. Howard QC, leading Mr. Harrison, for the husband submits strongly to the contrary, that there can be no question of the exercise of any discretion unless and until a contumelious or contumacious (i.e. culpable) contempt has been established by the wife. This involves proof by the wife of wilful non-payment, i.e. proof by her that the husband could have paid. (In this judgment I shall use "culpable" and "wilful" interchangeably.)

32 Further, Mr. Howard maintains that all ingredients of the alleged contempt, including whether the husband could have paid, must be established to the criminal standard of proof – 'beyond all reasonable doubt'. It is only if contempt is so established that the exercise of discretion arises. Then the court looks at the overall justice of the case and exercises its discretion accordingly. He makes (amongst others) the following further points.

33 He submits that the findings on the 2000 Judgment Summons to the criminal standard cannot stand because the committal was set aside due to the flawed process. I accept that submission in the sense that they cannot stand to the criminal standard.

34 He maintains that the wife does not have "clean hands" and that this ought to weigh in exercise of the discretion, if the court gets to that point. He relies on many examples (some summarised at G110) where the wife has undoubtedly issued misconceived applications and where he says she has sought to mislead the court.

35 He emphasises that the roles have reversed since the hearing before Ryder J. The husband is now in the role of respondent to the wife's pending application; whereas he (the husband) was previously in the role of applicant in his claim for a reduction in the periodical payments. He points out that where a respondent to an application successfully uses Hadkinson "as a shield", then no substantive application is heard at all; whereas if an applicant were ever allowed to use Hadkinson "as a sword", then the substantive hearing in question would proceed in the absence of the respondent (or else terms would be imposed on him or her) either of which would be quite wrong – or in ECHR terminology 'not Article 6 compliant'. He says that no such order against a party in the role of respondent or defendant has been made in any reported case.

36 He submits that the wife's substantive applications will raise jurisdictional issues in that (a) the wife has already had what was described in a preamble to the December 1999 order as a "clean break"; and (b) the court has no jurisdiction to consider a variation of the Trust as the wife has already had a transfer of property order, for example, regarding the matrimonial furniture, and she cannot have another. (In parenthesis I note as regards point (a) that what I actually said at the end of my 1999 judgment was that the wife's claims against (among other entities) the Trust were to be regarded as abandoned or withdrawn "… as and when the husband pays the lump sum". As this has not yet happened, any disjunction between the wording of the judgment and the wording of the preamble to the order is something to which the parties' advisers (particularly the wife's) should perhaps be giving further consideration.)

37 Mr. Howard relies on the fact that the wife's applications are fresh applications, as a result of which there is no issue estoppel in respect of anything decided in 1999 or 2000. This is partly as the issues are now different and partly due to the passage of time.

38 He says that the wife's variation of Trust application engages S.25 and so the court will have a statutory duty to consider the assets which each party currently has. This pre-supposes the husband giving evidence of his means.

39 He says that the S.37 applications (to set aside the transfers into the Trust and her exclusion from the Trust) involve questions of the husband's intention at the material time, which has never been investigated, the burden of proof being on the wife: again evidence from the husband would be necessary.

40 He says that whilst the husband personally still maintains that he has no undisclosed assets (and never did have) and still maintains that Mr. Wani owns 45 per cent of all the business assets, nevertheless it is now accepted on his (the husband's) behalf that he cannot go behind the December 1999 findings or awards.

41 He points out that the wife has had advice from and representation by several counsel in the last couple of years, including leading counsel; so that, although she formerly acted at numerous hearings in person, she must more latterly have been able to raise funds from somewhere and so has not been forensically disadvantaged. She is, he says, even now wasting money on costs (see para.87 below).

42 Lastly, as mentioned already, he says that there cannot be the necessary finding that a party is in contempt without either an admission thereof, or a finding thereof made "beyond all reasonable doubt"; or else the contempt must be "blindingly obvious" and implicit. Here there is no admission of any contempt and the wife has not succeeded in proving any contempt 'beyond all reasonable doubt'.

43 Miss Harris responds that, although the wife has been judicially criticised on occasions and condemned in some costs, this occurred out of her frustration at the husband's failure to comply with the original orders and usually, although not always, while she was acting in person. The wife's faults and failings pale into relative insignificance, she says, compared with those of the husband.

44 She maintains that the findings in the judgments of December 1999 and October 2000 (to which reference should be made) suffice to show clearly that the husband could have paid pursuant to the orders in question and has wilfully failed to do so. She disagrees that it is necessary to have a finding or an admission of wilful non-payment and says that, at least in the sphere of matrimonial money orders, the court can look realistically at the overall circumstances of the case and apply its own common sense.

45 She acknowledges the force of the points that the husband will be in the role of respondent in December 2006 and that jurisdictional issues will be raised. She accepts that there may have to be some consideration of the parties' present financial positions pursuant to S.25. However, this would only need to be very brief and superficial as the application is not fundamentally for any fresh relief at all, but is merely to try to achieve practical enforcement of the order of December 1999.

46 Lastly, in response to the point that the wife is now able to afford her own legal team, she emphasises that the wife is effectively litigating largely through the goodwill of her present solicitors: she (the wife) already owes them some £650,000 as from March 2004 to the present, and she cannot necessarily expect to continue getting credit.

THE GENERAL PRINCIPLES APPLICABLE TO 'HADKINSON APPLICATIONS'

47 The basic principles applicable to Hadkinson applications are now clear. There was once thought to be a rule (with certain defined exceptions) that a person in contempt would not be heard. However, in Hadkinson v. Hadkinson itself [1952] P. 285, 298, Lord Denning said:

"… It is a strong thing for a court to refuse to hear a party to a cause and it is only be justified by grave considerations of public policy. It is a step which a court will only take when the contempt itself impedes the course of justice and there is no other effective means of securing [his] compliance … I am of the opinion that the fact that a party to a cause has disobeyed an order of the court is not, of itself, a bar to his being heard but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed."

This "more flexible" approach was accepted and approved by House of Lords in X Limited v. Morgan-Grampian (Publishers) Limited [1991] 1 AC, 1, as being in accord with "… contemporary judicial attitudes to the importance of ensuring procedural justice" (per Lord Bridge of Harwich).

48 In Arab Monetary Fund v. Hashim (Unreported) 21st March 1997, Lord Bingham C.J. (as he then was) formulated the relevant question as being:

"… whether, in the circumstances of an individual case, the interests of justice are best served by hearing a party in contempt or by refusing to do so, always bearing in mind the paramount importance which the court must attach to the prompt and unquestioning observance of court orders."

That formulation was approved by Lord Nicholls in Polanski v. Conde Nast Publications Limited [2005] UKHL 10, paras.17 and 18.

49 As to how it is that a refusal to hear a party in contempt (or the imposition of terms) need not be seen as unjust, two cases give clear explanation, one before and one after the Human Rights Act 1998. In X Limited v. Morgan-Grampian (Publishers) Limited (above) Lord Oliver of Aylmerton said:

"… It is suggested that to decline to hear an Appellant who is in contempt infringes the maxim 'audi alteram partem' which lies at the route of every civilised system of law … For my part I think this is too facile an analysis. The maxim 'audi alteram partem' means not that a party has an absolute right in all circumstances to be heard in his own defence, but that he must be given a proper opportunity to be heard. So long as that opportunity is given upon terms with which the proposing appellant can reasonably comply, there is not and there should not be any impediment in principle to the imposition by the court of proper conditions which require to be complied with before the appeal is heard …"

Lord Oliver then went on to propose the existence of jurisdictional issues at the substantive hearing as being one example of where the discretion would be likely to be exercised in favour of a party in contempt.

50 In Motorola Credit Corporation v. Uzan (No.2) [2004] 1 WLR 113, Potter L.J. considered the views of Laddie J. in Re Swaptronics Limited 17th August 1998 (that the deprivation of a litigant of his right to litigate could well be in breach of Article 6 of the ECHR) and continued:

"… It is clear that the right of access to the court which is implied in Article 6 is not an absolute right but one that is open to restriction provided that the restriction has a legitimate aim in the public interest and that the means employed to realise that aim are proportionate … The test of proportionality is to be applied on a case by case basis … As it seems to us, this is reflected in the approach of the House of Lords in X Limited v. Morgan-Grampian (Publishers) Limited (above), the width of discretion there recognised being apt to allow issues of proportionality to be properly considered and applied by the court in coming to its decision whether or not to hear a contemnor."

THE FIRST ISSUE: WHETHER CONTEMPT REQUIRES PROOF OF WILFUL NON-PAYMENT

51 Those basic Hadkinson principles all pre-suppose an established contempt. They are the background against which the first of the two main issues of principle arises, namely as to whether on such an application regarding non-compliance with an order to pay money, the applicant has to prove culpability, i.e. that the non-paying party could have paid.

52 In practice, I can scarcely envisage the competing approaches producing differing results. Realistically the outcome will, or will almost certainly, be the same whether one regards the question of the respondent's ability to pay (i.e. whether non-payment wilful) as being an essential ingredient of contempt or whether as a factor informing the exercise of a discretion triggered by the mere fact of such non-payment. If a person is genuinely unable to pay pursuant to an order, then he or she would simply not be debarred from being heard in proceedings (or put on terms) whichever of the competing approaches were applied. So the point is an overwhelmingly theoretical one.

53 However, I am persuaded by a whisker that it does merit determination. This is because, should Mr. Howard's arguments be wholly correct, then he would say (as he does say) not only that the husband has not been shown to the necessary standard to be in contempt, but also that no discretion at all exists therefore to fetter the husband's right to participate in the December 2006 hearing. A party in breach of a money order with no ability to pay then succeeds as of right and is not at the mercy of a discretion, even though its favourable exercise may be virtually certain. Further, there could well be costs implications according to whether the application were resolved 'as of right' or merely as a matter of discretion.

54 I note that very few of the many authorities to which I have been referred address the ingredients of contempt in the context of failure to comply with an order to pay money. In almost all of the reported cases an established contempt is 'a given' and the breach is of a different nature. References to adjectives like "contumelious" or "contumacious" (and so on) used in judgments dealing with completely different factual contexts do not necessarily help therefore on the specific issue joined as between counsel here, namely as to the ability to pay.

55 There is, however, one particular case which is both significant and controversial as between the two competing arguments. It is Baker v. Baker (No.2) [1997] 1 F.L.R. 148, where a husband, in breach of a lump sum order, applied to reduce his periodical payments liability. The Court of Appeal held that he was not entitled to be heard, because he was in contempt by not paying the lump sum. The fact of contempt by non-payment of the lump sum had there been conceded by the husband's counsel at first instance and the Court of Appeal refused him leave to amend his notice of appeal to assert that the criminal standard of proof was the required standard in law by which to establish the alleged contempt.

56 Nevertheless, Sir John Balcombe went to some length to consider whether that concession by counsel at first instance had been properly made. In so doing he considered Leavis v. Leavis [1921] P. 299, where, referring to breaches by a respondent husband of orders for the payment to the wife of costs and maintenance, Hill J. said:

"… Though the contempt constituted by disobedience to these orders cannot be enforced by attachment, it is nonetheless a contempt … The enforcement of such orders is regarded by this court as important to the administration of justice because the wife should have the costs of litigation provided for and not be left destitute. I have come to the conclusion that it is as a matter of discretion for the court to consider, upon all the circumstances of the case, whether the summons of the respondent should be heard and that it is a matter material to the exercise of that discretion to consider whether those circumstances are due to the fault or to the misfortune of the respondent." [emphasis added]

Sir John Balcombe continued in Baker:

"… In other words, what Hill J. was saying was that the non-payment of the sums ordered was in itself contempt and that the question of whether that non-payment was contumelious was relevant to the exercise of the discretion, it was not relevant to the decision whether there was contempt. If the question had been whether it was contempt for the purposes of, for example, a judgment summons under the Debtors Act, then different considerations would apply. For present purposes, namely whether the husband should be allowed to proceed with the current application, the question of whether there was a valid explanation for his non-payment went to the exercise of the discretion." [emphasis again added]

Sir John Balcombe also cited from Gower v. Gower [1938] P. 106, where Henn Collins J. had to decide whether a husband in breach of order for costs should be barred from applying for decree absolute. He (Henn Collins J.) said:

"… With regard to the [respondent] husband's motion to make absolute the decree nisi, it is said that it should not be granted because he has not paid the costs. It is quite true that he is in contempt in that respect; but I am also satisfied by the case of Leavis that this is a matter for my discretion." [emphasis added]

After considering the husband's means, Henn Collins J. concluded:

"… I cannot help thinking that the husband's failure to pay the costs is on account of his inability to do so and is not contumacious. In those circumstances, I exercise my discretion in his favour and the result will be that the decree will be in the list in a week's time."

So contempt was there (Gower) established by the mere fact of non-compliance with an order to pay money.

57 Having considered these cases Sir John Balcombe (with whom Kennedy and Potter L.JJ. agreed) came to the conclusion in Baker that counsel's concession at first instance regarding the husband's being in contempt had been correctly made.

58 Mr. Howard submits that the Court of Appeal's observations in Baker (that the mere non-payment of the lump sum had constituted contempt) were obiter, by reason of counsel's concession at first instance. I accept that submission. Nevertheless, the considered and unanimous views of the Court of Appeal, together with the above two High Court decisions on similar facts, remain persuasive.

59 Sir John Balcombe made one other observation in Baker which is relevant to the instant case. Disagreeing with counsel for the husband's submission that the husband's failure to pay the lump sum ordered did not impede the course of justice, he said:

"… In my judgment it does. There have been innumerable applications. The position is that the costs have risen out of all proportion to the money at stake. The wife has still not had her lump sum and not had all that is due to her under the periodical payments order."

Those observations apply equally here.

60 Mr. Howard argues that Baker (quite apart from being 'obiter') was wrongly decided and/or cannot any longer be regarded as good law. In so submitting and in support of his case generally he relies on Federal Bank of the Middle East Limited v. Hadkinson (presumably no relation) [2001] 1 W.L.R. 1695, a case involving an application for a 'Hadkinson order' against a party allegedly in breach of a Mareva injunction. There Mummery L.J. said:

"… The court normally adjudicates on a charge of civil contempt on an application for an order to commit the person alleged to be in breach of the order … The application is supported by affidavit evidence. The defendant is entitled to answer by affidavit evidence denying the contempt or showing that if there was contempt it was not wilful and setting out the circumstances of the alleged breach and any matters relevant to the exercise of the court's discretion on punishment of any contempt which is established. If a wilful breach of the injunction is established beyond all reasonable doubt, the court has a wide discretion in how to treat the contempt … The powers at the disposal of the court range from making orders as to costs to imprisonment and sequestration." [emphasis added to indicate the wording particularly relied on by Mr. Howard]

It seems to me clear that in that part of his judgment Mummery L.J. was addressing his mind primarily to applications to commit to prison, albeit that he went on to say that those processes just mentioned had not occurred at the first instance hearing of the Hadkinson application in that case. More importantly perhaps, everything there (the Federal Bank case) turned on the proper construction of the injunction in question. It was all a question of whether its wording was apt to restrain the movement of funds by the defendant out of his bank accounts, which funds were assumed (in his favour) to be held by him on trust for others. The conclusion of the Court of Appeal, purely as a matter of construction, was that the injunction concerned was not worded as to catch those funds. Accordingly, the reference to the criminal standard of proof there was in my view obiter, mainly for this reason (the construction point) but also because it was being referred to primarily in the context of applications to commit to prison.

61 The ingredients of contempt in the context of non-compliance with matrimonial money orders were then considered in Mubarak v. Mubarik [2004] 2 F.L.R. 932. Ryder J. ruled in the wife's favour on her Hadkinson application, as already mentioned, by putting the husband on terms as regards his application for a reduction in the periodical payments order. Many of the arguments addressed to him have also been addressed to me, although I recognise that the situation is now different in view of the parties' role reversal and the fact that different applications are involved. Nevertheless, Ryder J. came to a number of conclusions which resonate in this application.

62 At para.42 of his judgment he said:

"… On behalf of the husband Mr. Howard submits that Hadkinson is bad law; it is not European Convention compliant and is inconsistent with the Corbett process. Alternatively he says that if it can survive rigorous examination to modern Article 6 standards, I should take the view that a fair trial of this cause is still possible despite the existence of any contempt (which is not admitted). He [Mr. Howard] submits that the alleged contempt is in any event not wilful as it is predicated on the essential factual fallacy that the husband now seeks to rectify, i.e. there is no fault or blameworthiness in the husband's position. He submits that the wilful element is one which I must be satisfied of before I can exercise any discretion to make a Hadkinson order, whereas Mr. Horowitz [then leading counsel for the wife] submits that wilfulness is an element in discretion."

That encapsulates the arguments re-presented to me.

63 After discussion of Baker v. Baker (No.2) (above), Ryder J. said at para.51:

"… Nothing in the analysis presented to me by Mr. Howard … convinces me that Baker v. Baker (No.2) is … wrongly decided, is not a statement of the modern law or has been authoritatively reconsidered. In particular, it is not correct to say that a Hadkinson order is an infringement of the husband's right of access to a court and accordingly a breach of Article 6 (applying Goulder v. United Kingdom 1979/80 1 EHRR 524). I do not believe that Hadkinson conditions impair the very essence of the right to a fair trial, provided the conditions imposed are proportionate and in pursuit of a legitimate aim (following Ashingdane v. UK 1985/7 EHRR 528 at para.57). The right of access to a court is not unfettered for all purposes. No one suggests in the context of the above that Hadkinson conditions are otherwise than in pursuit of a legitimate aim … Accordingly, I agree with Mr. Horowitz that simple disobedience with an order is sufficient to find the contempt and that, although the existence of wilful contempt is a component that the court must consider, it is relevant to the exercise of discretion not whether the discretion exists …" [emphasis added]

Ryder J. continued:

"I have therefore concluded that Hadkinson remains good law, is European Convention compliant and, in an appropriate case, provides an important discretionary power in the courts albeit for use as a last resort."

He concluded:

"… I am of the firm view, in the absence of hearing oral evidence from the husband [which at para.67 of the judgment Ryder J. says the husband was opposed to giving] that his contempt is wilful, i.e. contumacious and continuing. He is the controlling force behind the Dianoor Group and he refuses to acknowledge the truth or affect of that. In the light of the existing findings I do not accept that the husband is impecunious …"

64 On 20th October 2004, as mentioned above, the Court of Appeal heard and refused an application by the husband for leave to appeal against that decision of Ryder J. At para.12 of his judgment Thorpe L.J. said:

"… Let me first deal with Mr. Howard's 70 page submission. It is a submission that seeks to reappraise the modern application of the rule in Hadkinson in ancillary proceedings in the Family Division. He submits boldly that the decision of this court in Baker is of no surviving effect in the light of the subsequent passage of the Human Rights Act 1998. There are a large number of other sophisticated arguments that he seeks to marshal. In particular he submits that the decision of this court in Corbett is incompatible with any strict application of the rule in Hadkinson. These are not submissions which I find particularly persuasive or attractive. However, if they had validity, this in my judgment is not the vehicle to bring them to the court …"

He then gave two reasons for this last sentence: (a) that, properly analysed, this is not a conventional periodical payments case, in that the periodical payments ordered essentially represent interest on the outstanding lump sum; and (b) that in view of the "insane costs" (already then more than £2.25 million overall) the court was entitled "… to exercise a broad proportionate judgment as to whether to permit [the 'profligate litigation'] to continue". Nevertheless, whilst falling short of giving definitive rulings, Thorpe L.J. was clearly not overwhelmed by Mr. Howard's arguments.

65 From all of the above, I conclude that non-payment in breach of a matrimonial order to pay money is in itself a contempt of court. There is, in my judgment, no requirement that it should be shown to have been culpable, i.e. that the non-paying party had the means to pay. I thus agree with the conclusion of Ryder J. to the same effect, and in so doing I take into account as persuasive the views expressed by the Court of Appeal in Baker. I repeat that in Gower (above) the husband's non-payment of costs was specifically held not to be wilful, yet he was described by the court as being in contempt by the mere fact of such non-payment.

66 In my judgment, therefore, questions of culpability come into play as regards the court's exercising its discretion as to whether and how to act on the contempt so established. At that stage all the circumstances are considered. Crucial, if not decisive, will be whether the non-paying party could have paid if he had wanted to.

THE SECOND ISSUE: THE REQUIRED STANDARD OF PROOF

67 Whether the non-payer's having the ability to pay is regarded as an essential ingredient of contempt (as I have held it is not) or is regarded as a factor in the exercise of discretion (as I have held it is), what is the required standard of proof of that ability to pay?

68 On this particular issue Ryder J. was not required to give a ruling. He said:

"… No party has suggested to me that the standard of proof I should apply in being satisfied as to any element of the Hadkinson test is the criminal standard of proof. I raised the issue in opening and it has not been pursued."

Mr. Howard accepts that he did not advance oral submissions to Ryder J. on the standard of proof but points out that his argument in this respect was set out in his skeleton argument put in for that hearing.

69 I take Mr. Howard's point that, wherever one sees references in the authorities and books to the required standard of proof of contempt, it is invariably expressed as being proof 'beyond all reasonable doubt': e.g. Re Bramblevale Limited [1970] Ch. 128. This is trite law. However, those authoritative statements all appear to me to be in the context of committal proceedings (founded on the particular alleged contempt), the liberty of the subject being at stake. That is why the criminal standard is required. Mr. Howard has not been able to draw to my attention any authority dealing with whether the standard of proof of contempt applicable on a Hadkinson application is the criminal or the civil standard.

70 That distinction may have been marginally touched on by the Court of Appeal, albeit obiter, in Baker v. Baker (No.2) (above), where Sir John Balcombe said, and I repeat for convenience:

"… The question of whether that payment [of the lump sum] was contumelious was relevant to the exercise of the discretion. It was not relevant to the decision of whether there was contempt. If the question had been whether it had been contempt for the purposes of, for example, a judgment summons under the Debtors Act then different considerations would apply." [emphasis added]

Amongst those different considerations might well have been the issue of the standard of proof (to which the court's mind had been specifically addressed by counsel's wish to amend his notice of appeal) although I accept that this is conjectural.

71 In the absence of unequivocal authority on the point, I consider that the standard of proof required to be met regarding non-compliance with a money order depends quite simply on the relief being sought. Where the liberty of the non-payer is at stake, i.e. on a judgment summons, then the standard will obviously be the criminal standard. Where however the issue arises, e.g. on a Hadkinson application, I do not accept Mr. Howard's submission that the criminal standard likewise needs to be met. Why should that be so? The proceedings are essentially civil proceedings and there is (on a Hadkinson application) no question of the liberty of the subject being imperilled. It is a question, as Lord Bridge put it in X Limited v. Morgan-Grampian Limited (above) of "… ensuring procedural justice". So I hold that the standard should be, and is, the civil standard.

72 In parenthesis, if I am wrong in my conclusion at para.65 above that mere non-compliance with a money order in itself constitutes contempt (and if culpability is in law an essential ingredient of such a contempt) then to my mind exactly the same distinction would exist as to the required standard of proof. If the application were for committal to prison then the criminal standard would have to be satisfied, including as to the non-payer's party having the means to pay. Otherwise, e.g. on a Hadkinson application, the standard should be the civil standard.

73 It goes without saying that on consideration of a Hadkinson application, Article 6 of the ECHR is engaged. All the usual considerations about a fair hearing of the later substantive application therefore need to be addressed. That engagement of Article 6 provides protections for the non-paying party, which protections do not in my view need to be bolstered by importing the criminal standard on whether or not the failure to comply with the order was wilful.

74 On the contrary, it would, in my judgment, be quite unreasonable in the context of a Hadkinson application to require the aggrieved party under a money order to prove 'beyond all reasonable doubt' that the non-payer had the means to pay. That would or could mean a near re-run of the original application within which the order was made. It could well put the aggrieved party at a considerable forensic disadvantage including as to funding legal representation and it would be "a recipe for protracted litigation" (per Sir John Balcombe in Baker).

DETERMINATION AS REGARDS THE ALLEGED CULPABILITY OF THE HUSBAND'S NON-PAYMENT

75 Notwithstanding the conclusions stated at paras.71 and 72 above, I propose from an abundance of caution to consider the issue of the husband's culpability (in failing to pay under the 1999 orders) on what I regard as the hypothetical assumption that the criminal standard does have to be met.

76 There is no dispute that the husband has not in fact paid in accordance with the orders, save to the limited extent set out at the beginning of this judgment. So the omission to comply with the court's orders is factually established. Is it proved beyond all reasonable doubt that he could have paid? The answer in my judgment is 'yes'. To quote Mr. Howard's phrase, it is 'blindingly obvious' that he could have paid; not necessarily in full, but greatly more than he has done.

77 In support of this conclusion I rely on three points, each one of which is based on the husband's own case and suffices to make out the wife's case.

(a) Borrowings: the husband says he has been able to borrow considerable sums of money with which to litigate, a case which the wife incidentally says is a sham. His costs (including the Children Act proceedings) are now more than £1.7 million. This borrowing capacity has been and is clearly a resource which, or some of which, could have been used in reduction of his financial obligations to the wife, instead of being used on this titanic and wasteful litigation.

(b) The Draft Grounds of Appeal: I refer to the husband's draft grounds of appeal (para.15 above) deployed in the Court of Appeal in 2000. It will be recalled (a) that £4.8 million was not being described there as an amount which the husband would be unable to meet (given time to pay); and (b) that the sum of £3 million was proposed as the appropriate award for the wife, again with time to pay. Yet, leaving aside the £266,000 obtained by the wife by force of law, nothing has been paid.

78 Those grounds of appeal are admittedly many years old, but I observe that the Debtors Act 1869 itself refers to resources which a debtor "either has or has had since the date of the order" – upon proof of either of which such a debtor is vulnerable to being committed to prison. By analogy, I see no compelling reason why the same should not apply here. The husband's grounds show that given time to pay he has had the means to pay substantial sums (even if not necessarily in full and even if the business has – as he says – been adversely affected by this litigation): yet he has failed to do so.

(c) The Trust: the husband is in all reality the beneficial owner of the Trust. The 1997 letter of wishes and the 1999 concessions (above) combine to confirm this simple observation, which is further supported by the fact that he was able to exclude the wife at will when the marriage broke down. The Trust is, in practical reality, a resource of his. As stated in the extract of my October 2000 judgment quoted at para.17 (and reiterated by Ryder J. in May 2004), the husband could have caused some or all of the Trust assets to be realised and paid to him (time-consuming and complicated although this would probably have been) yet he does not purport to have tried to do so.

79 Those three points are, in my judgment, made out beyond all reasonable doubt. Obviously if I am right in law that only the civil standard of proof needs to be established to prove wilfulness, then the same three factors equally satisfy that civil standard. Further, if only the civil standard needs to be met, then there are also available to the wife the findings made in December 1999 as to the existence of undisclosed assets, bearing in mind especially now the husband's recent concession through counsel that he cannot go behind those findings.

SUMMARY AS TO THE HUSBAND'S NON-COMPLIANCE WITH THE ORDER

80 I am satisfied that the husband has been shown to be in contempt of court by the mere non-payment of the lump sum. If (contrary to my view) culpability/wilful non-payment is an essential ingredient of contempt, then I am satisfied that he is in contempt by virtue of wilful non-payment. As regards Hadkinson applications, I hold that proof of culpability (whether as an ingredient of contempt or as a factor in the exercise of discretion) need be only to the civil standard. Nevertheless, I am in fact satisfied that culpability is proved here to the criminal standard, based on the three factors set out above. Those factors on the husband's own case demonstrate beyond all reasonable doubt that he could have paid the wife at least some significant sums in the time elapsed since the Court of Appeal refused him leave to appeal on 3rd April 2000.

81 So the wife's Hadkinson application succeeds in principle. What response then is proportionate as a matter of discretion?

OUTCOME OF THE WIFE'S HADKINSON APPLICATION

82 I reject the husband's submission that the wife's litigation conduct (including her pending application referred to at para.87 below) should count against her on her Hadkinson application. Whilst she has on occasions been justifiably criticised judicially for being manipulative and misleading (I do not propose to go into all the specific details here), she would in most instances not even have needed to be litigating at all if the husband had complied with his obligations. She is I think, more sinned against than sinning.

83 I reject Mr. Howard's submission, in shorthand 'the floodgates argument', that if the court is not careful Hadkinson will be sought to be deployed by aggrieved parties whenever the other party breaks some order of the court. The sanction is, as Ryder J. said above, "a remedy of last resort". Inappropriate attempts to rely on it would be quickly met with censure and orders for costs.

84 I do not accede to the wife's application that the husband should be simply debarred from defending her substantive applications in December 2006. They are new applications (albeit to try to get enforcement) in respect of which he is in the role of respondent. There are jurisdictional questions to be raised. It would be wrong, in my view, to debar the husband from participating.

85 On the question of terms, Mr. Howard says that there is no reported case of facts remotely like these where conditions have been imposed, and that it would be quite wrong to use Hadkinson to put money in the wife's hands as a condition of the husband's participation at the December 2006 hearing. It would amount to enforcement by the back door. The wife could instead have used the conventional route of an application pursuant to A v. A (Maintenance pending suit) [2001] 1 F.L.R. 377 to obtain a costs fund. However, I consider that such would have been both déjà vu and pointless. She already has more than adequate income provision; but the husband does not comply with it and practical enforcement has not proved possible.

86 An A v. A application would simply have been a re-run of the same expensive hare as previously ended up in stalemate when the wife tried to enforce the existing periodical payments order. The fact that another route theoretically exists is no reason, in my judgment, why Hadkinson terms should not be imposed if they otherwise meet the requirements of their imposition.

87 I record the fact that since the conclusion of the hearing before me, I have received correspondence from both parties' solicitors concerning the extent of the costs of a pending committal application brought by the wife arising out of an alleged contempt of court by the husband and his solicitors in (allegedly) not arranging a bond, as he had undertaken to do, before removing one or more of the children from the jurisdiction on holiday. The correspondence raises highly contentious points and counter-points which I regard as unjusticiable on an application of this sort. It is satellite upon satellite litigation and I have paid no regard to it in reaching my decision.

88 In the overall result and on careful consideration of all Mr. Howard's points, I am satisfied that the husband can and should be placed on certain terms. This is exceptional and unusual, but it is an exceptional and unusual case. To echo the words of Lord Denning in Hadkinson, it merits "a strong thing".

89 The terms will be as follows:

(a) that by 12th June 2006 (or by such other date as the parties may agree or the court may direct) the husband do by recorded delivery letter inform the trustees of the Jersey Trust in terms expressed to be irrevocable:

(i) that he accepts that he is bound by the court's orders, awards and findings of 10th December 1999 and cannot go behind them (including in particular the finding that Mr. Wani has no interest in the Trust assets);

(ii) that he wishes the trustees to assist him in meeting his obligations under the orders of this court and wishes them not to take any steps having the effect of making it more difficult for him to do so; and

(iii) that he accepts that (subject to appeal) he is bound by whatever orders the court may make on the wife's pending applications in December 2006, and that (again) he wishes the trustees to give full effect to those orders; and

(b) that for each £1 he pays to his own lawyers for preparation, representation or advice in respect of the December 2006 hearing from now on, he do pay £1 into a joint account in the names of the parties' respective solicitors. (This is what I called during the hearing "pound for pound"). The money so lodged is to be held to the order of the court, but is to paid out to the wife's solicitors at the conclusion of the December 2006 hearing unless, when dealing with costs at the end of that hearing, the court should positively rule otherwise in its overall discretion.

(c) the husband's solicitors are by 14th June 2006, to confirm to the wife's solicitors whether the husband has complied with paragraph (a) of these terms (enclosing a copy of the husband's letter concerned) and are to keep the wife's solicitors regularly appraised of each payment made to them by the husband from now on, unless any such payment is not in any way connected with the December 2006 hearing.

90 These terms are not intended to punish or penalise the husband, which would be a wrong objective (Arrow Nominees v. Blackledge [2000] 2 BCLC 167). Rather they have what I regard as the legitimate aims of trying to create a fair hearing for both parties and/or facilitating the enforcement of the court's orders (per Lord Denning in Hadkinson (above) and per Sir John Balcombe in Baker (above)).

91 The terms are also, in my judgment, proportionate. The link exists which Mr. Howard submits is required between contempt and sanction. 'Term (a)' requires the husband to do no more than to attempt to comply with the orders of the court. 'Term (b)' seeks to moderate his ability to continue to employ a Rolls-Royce legal team whilst simultaneously failing to pay the wife any of the monies owed to her and leaving her reliant on credit in trying to achieve enforcement.

92 Only 'term (b)' requires the husband to find any money. It does not stop him litigating nor being legally represented. It merely creates an opportunity for the court to ensure that this wife, who is owed substantial sums, is not unduly disadvantaged in funding the litigation by reason of the husband's wilful non-compliance with the court's orders. If, as I doubt, this means that the husband cannot have both leading and junior counsel (as he usually has had throughout) then knowing as I do the quality of his legal team, I am satisfied that he will not be significantly disadvantaged even if, as it turns out, the wife is somehow able to marshal a 'superior' legal team.

93 If the husband complies with the above terms then he may fully participate at the hearing in December 2006. Otherwise he will be debarred from so doing.