Prince Fahd Bin Abdul Aziz v Harb

Where a claimant says that an order requiring payment of adverse costs would stifle a bona fide claim, the claimant bears the burden of proving inability to pay on the balance of probabilities. The court must examine the underlying financial realities and decide the application on the evidence presented. A financial condition on access to court must pursue a legitimate aim and remain proportionate. An adverse costs order following an unsuccessful appeal does not, without more, justify staying or striking out a claim. A first-instance trial set aside for deficiencies does not satisfy the fair-hearing requirement where a retrial is ordered. If there is no evidence of foreseeable funds, a stay may have the same practical effect as striking out and may disproportionately impair access to a fair trial.

Mrs Harb brought a claim concerning an alleged oral agreement requiring the Prince to procure the transfer of two Chelsea apartments and pay £12 million. After a trial judgment in her favour, an earlier appeal was allowed because of deficiencies in the judgment and the matter was remitted for retrial. Mrs Harb was ordered to pay £250,000 on account of the Prince’s appeal costs.

She did not pay. The Prince applied for an order that, unless she paid by a specified date, her claim should be stayed or struck out. Arnold J dismissed the application. The Prince appealed, challenging the findings about Mrs Harb’s inability to pay and the conclusion that the proposed order would disproportionately interfere with her rights under Article 6(1) of the Convention. The central issue was whether the claim could be prevented from proceeding because of the unpaid costs order.

1. Disposition. The appeal was dismissed. The first ground was not pursued. Permission to appeal on the ground challenging the assessment of Mrs Harb’s means was refused.
2. Burden and evidence. Following Goldtrail Travel Ltd v Onur Air Tasimacilik AS [2017] UKSC 57; [2017] 1 WLR 3014, the burden lay on Mrs Harb to establish inability to pay, on the balance of probabilities. The court had to examine the underlying realities and should not take evidence at face value. Those principles were generally applicable to any party. The court was nevertheless constrained to decide the application on the evidence presented. Mrs Harb’s evidence was unchallenged and not intrinsically improbable. Earlier loans, the daughter’s ownership of the flat, the absence of bank statements and matters concerning the book did not establish a realistic source of funds.
3. Access to a fair trial. The original trial and judgment were historical facts only. After the earlier appeal had set aside the judgment and ordered a retrial, they had no legal significance for determining the parties’ civil rights and obligations. The parties had therefore not yet received a fair trial for the purposes of Article 6(1) of the Convention for the Protection of Human Rights and Fundamental Freedoms.
4. Proportionality. The proposed order pursued the legitimate aim of securing some recompense for the Prince’s appeal costs. However, the principles in Podbielski v Podbielski [2005] ECHR 39199/98 required a reasonable relationship of proportionality between the financial restriction and that aim, having regard to the amount, the claimant’s ability to pay and the stage of the proceedings. The same balancing exercise arose at common law.
5. There was no general principle that failure to pay an adverse costs order justified staying or striking out an otherwise proper claim. The principle stated by Millett LJ in Metalloy Supplies Ltd v MS (UK) Ltd [1997] 1 WLR 1613 remained important: impecuniosity does not itself make bona fide proceedings abusive, improper or unreasonable. The fact that the costs arose from an unsuccessful appeal, or that the original evidence had attracted criticism, did not outweigh the loss of a fair trial. The Prince could enforce the costs order or seek appropriate relief, but the proposed orders would be disproportionate. In the absence of evidence that Mrs Harb would obtain sufficient funds in the foreseeable future, a stay and striking out had no practical difference.

• Court of Appeal (Civil Division): The appeal against Arnold J’s order was dismissed.
• High Court of Justice, Chancery Division: Arnold J dismissed the Prince’s application for an order that Mrs Harb’s claim be stayed or struck out unless she paid £250,000.
• Court of Appeal (earlier appeal): The Prince’s earlier appeal was allowed on 16 June 2016 because of deficiencies in the trial judgment, and the claim was remitted for retrial. The judgment is cited as [2015] EWCA Civ 481; [2016] Ch 308.