Ahmad v Ouajjou & Anor

Where a party seeks to continue litigation despite non-payment of an interlocutory costs order, the court exercises a discretion and must consider all relevant circumstances. A party relying on inability to pay must provide detailed, cogent and full evidence of its financial position and prospects of raising funds. Where there are no sufficient assets in the jurisdiction and no proper evidence of impecuniosity, payment will generally be required as the price of continuing to contest the proceedings. Any debarring order should ordinarily be framed as an unless order. A damages-based agreement does not prevent a costs order. Costs may be assessed summarily, subject to evidence that recovery will not exceed the amount payable under the agreement.

The claimant applied for an unless order requiring the defendants to pay £113,000 in costs summarily assessed following contempt proceedings. The costs order arose after the defendants admitted breaches of a worldwide freezing order. The defendants relied on late evidence concerning an alleged Spanish administrative decree, expenditure of sale proceeds, assistance from family and friends, and a pending appeal against the costs assessment.

The court considered whether the defendants had shown inability to pay, whether enforcement alternatives or Article 6 of the Convention affected the discretion, and whether the costs of the present application should be summarily or directionally assessed in light of the claimant’s damages-based agreement.

1. Unless order granted. Applying Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm), the court held that sanctions for non-payment of costs involve a discretion. The policy of pay-as-you-go costs orders is to discourage irresponsible interlocutory applications and resistance to successful applications.
2. A party asserting inability to pay must provide detailed, cogent and proper evidence giving full and frank disclosure of its financial position, including prospects of raising funds. The defendants’ late evidence did not meet that standard. It gave inadequate detail about the alleged Spanish embargo, family assistance, or the availability and proposed realisation of other assets.
3. There was no Article 6 issue because impecuniosity was not alleged or established. There were no relevant enforcement assets in England and Wales. The defendants had accepted before the costs order was made that costs were payable on the indemnity basis. The pending appeal and absence of a stay did not justify withholding compliance, since court orders must be obeyed unless reversed or stayed.
4. Because the defendants had insufficient assets in the jurisdiction and had produced no proper evidence of impecuniosity, the strong default position was that payment should be required as the price of continuing the proceedings. The court allowed a period until 28 August 2024, taking account of the apparent expiry of the Spanish decree and the possible time needed to realise assets.
5. The court excluded unspecified statutory interest from the unless condition unless it could be stated with sufficient clarity. In relation to the current application, CPR rule 44.18(1) meant that the damages-based agreement did not affect the making of a costs order. Under rule 44.18(2), assessment was to proceed under rule 44.3, subject to the cap that recoverable costs must not exceed the amount payable under the agreement. A solicitor’s witness statement could certify compliance without exhibiting the agreement, avoiding potential privilege concerns.

The judgment records that an appeal concerning the underlying costs and committal orders was pending. The Court of Appeal, through orders made by Males LJ on 29 May and 5 June 2024, refused a stay. No appellate determination of the underlying appeal is stated.