High Court refuses to strike-out claim against Saudi prince over unpaid interim costs order

High Court: breach involuntary

A High Court judge has refused to strike-out a claim by a woman who failed to comply with a Court of Appeal order to pay £250,000 in interim costs, on the grounds that it would breach her rights to a fair trial.

Janan Harb’s claim arises out of an alleged oral agreement between herself and Saudi Prince Abdul Aziz in 2003, in which the prince agreed to pay her £12m and to procure the transfer to her of two properties in Cheyne Walk in Chelsea.

The prince denies that he made any such agreement. In the alternative, he contends that any agreement was made on behalf of his father, the late King Fahd, and was not binding upon the prince.

In May 2008 Mrs Harb was declared bankrupt with creditors exceeding £3m. In 2015, Mr Justice Peter Smith awarded her over £15m, along with the two flats.

The Court of Appeal overturned the judgment on the grounds of serious “deficiencies” and ordered a retrial. Ms Harb was ordered to pay 75% of the prince’s costs and make an interim payment of £250,000.

The prince applied for an order that, unless Ms Harb paid the money, her claim should be struck out, while Ms Harb applied for directions for the retrial of her claim. She claims she cannot pay the money.

In Harb v Prince Abdul Aziz [2017] EWHC 258 (Ch), Mr Justice Arnold said her breach of the Court of Appeal’s order was “involuntary”.

“Even if that technically amounts to a contempt of court, it is not one which impedes the course of justice in these proceedings.

“In those circumstances I regard the suggestion that the court should decline to hear Mrs Harb’s application as a remarkable one. Non-payment of interim costs orders by litigants is, regrettably, a very common occurrence.

“If it amounted to a contempt of court which justified courts in not hearing the defaulting parties, many litigants would be shut out from pursuing or defending claims even in the absence of any substantive order to that effect. In my view that cannot be right.”

The judge said the Court of Appeal made the order without giving Ms Harb further time to file evidence of lack of means and “did not give any reasons” for this.

He agreed with counsel for the prince that it could be inferred that the appeal judges did not consider lack of means was a reason not to make the order. He also said that it was not relevant that the prince was a very wealthy man.

However, he said the Court of Appeal did not consider what should happen if Ms Harb failed to comply, and the consequences for her rights to a fair trial.

In her evidence, Ms Harb stated that as well as being made bankrupt, her only income was her state pension; she lived in a flat belonging to her daughter, and none of her family were willing to lend her any money.

Her solicitors and counsel at trial acted under an agreement which only requires her to pay them if she wins the action. In the Court of Appeal and Supreme Court (in an unsuccessful attempt to appeal) she retained them on an ordinary fee-paying basis, “but they recognise that she cannot pay them at present and therefore have extended her credit”, the judge noted.

Arnold J said the effect of the Court of Appeal’s decision to order a retrial was “as if there had been no trial before Peter Smith J” and she had not yet had a determination of her claim at first instance.

He concluded that granting the strike-out sought by the prince would amount to a “disproportionate interference” with Ms Harb’s rights under article 6(1) of the European Convention on Human Rights.

He dismissed the prince’s application and listed the matter for trial as requested by Ms Harb.

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