The Court of Appeal has ordered a retrial of a high-profile divorce dispute involving allegations of hidden wealth, non-disclosure, false evidence and contested ownership of a multi-million-pound former matrimonial home.
The original decision, handed down by Sir Jonathan Cohen in 2023, awarded Ms Faraj £6 million following her divorce from businessman Sohail Sultan Ahmad, CEO and majority shareholder of IIB Group Holdings (IIB). Central to the litigation was whether a €4.25 million agreement between Mr Ahmad and IIB to secure an extension of the lease over the former matrimonial home, which also purported to transfer the beneficial ownership of the home to the company, was genuine or a sham.
Although the trial judge found the agreement to be genuine, he concluded Mr Ahmad had access to undisclosed cash assets of £16 million held on his behalf by IIB and relied on that finding when making the financial award. Mr Ahmad maintained that the funds never existed and that documents referring to them had been created to enhance the group’s apparent financial strength while IIB sought to acquire a larger bank.
In a judgment likely to attract significant interest across the family law profession, the Court of Appeal unanimously allowed appeals brought by the wife, the husband and IIB, concluding that the cumulative effect of a number of errors meant that none of the key findings could safely stand.
Rosie Schumm, partner at Forsters, acting for Ms Faraj, said: “This is a significant Court of Appeal decision on procedural fairness and the proper treatment of non-disclosure in financial remedy proceedings. The case involved exceptionally complex issues concerning corporate structures, asset ownership and credibility. We are delighted to have secured this outcome for our client and look forward to supporting her as the matter returns to the High Court.”
The Court of Appeal granted Ms Faraj’s appeal against the finding that the property agreement was not a sham, concluding that significant aspects of the evidence had not been adequately addressed. There was a risk the judge was influenced by IIB agreeing in principle to fund alternative accommodation for the wife and children if the €4.25 million agreement was found to be valid, the court found.
Mr Ahmad’s litigation misconduct and non-disclosure were heavily criticised throughout the proceedings. Both Mr Ahmad and the CFO of IIB admitted they had perjured themselves in written evidence, which, in the trial judge’s words, were “lies”.
However, the Court of Appeal held that the trial had been procedurally unfair because the husband was not adequately confronted during cross-examination, with the case ultimately advanced against him in closing submissions regarding the alleged £16 million assets.
The court also found that the trial judge had erred in exploring the possibility of IIB providing alternative housing for the wife and children, emphasising that judges must determine cases on the evidence before them rather than seek to broker solutions between parties. It expressed concern that the proposed housing arrangement, which was linked to the validity of the disputed property agreement, may have influenced the proceedings.
The Court of Appeal confirmed that litigation misconduct by non-disclosure should be penalised in costs rather than by adjusting the substantive division of assets and that adverse inferences go to the computational exercise (rather than distribution), save in exceptional cases.
Describing its decision as one reached “with great regret”, the Court of Appeal ordered the entire case to be reheard before a different High Court judge.
Forsters’ partner Rosie Schumm and senior associate Timothy Evans acted for Ms Faraj throughout the proceedings, including the appeal.
