Court of Appeal orders retrial in Faraj v Ahmad financial remedy dispute

The Court of Appeal has ordered a complete retrial of a financial remedy case after allowing appeals brought by both a husband and wife, along with a Bahraini investment bank joined to the proceedings, following findings of procedural unfairness and inadequate reasoning in the original judgement.

In Meerna Ali Ghuloom Faraj v Sohail Sultan Ahmad and another [2026] EWCA Civ 962, Lady Justice King, with whom Lord Justice Baker and Lord Justice Fraser agreed, set aside the findings of Sir Jonathan Cohen in the Family Court, which had ordered the husband to pay the wife a lump sum of just over £6m, including provision for her legal costs and capitalised maintenance, alongside an arrangement for the bank, IIB Group Holdings, to house her and the children pending a resolution over the former matrimonial home.

The case centred on so-called "Disputed Accounts", said to hold around £16m, referenced in letters produced by the husband's bank confirming substantial deposits in his name. The husband had told the Family Court in earlier statements that such an account existed but was effectively blocked and worth nothing to him in practice. At trial, however, he and the bank's chief financial officer both admitted the letters were shams created to inflate the appearance of the bank's liquidity during a takeover bid, and that earlier sworn statements to the contrary had been false.

The trial judge nonetheless found the letters to be broadly true and that the husband held assets of around £16m, a finding that underpinned the entire lump sum award. Lady Justice King held that this conclusion could not stand because the wife's case, that the accounts genuinely existed and were available to the husband, had never been put to him in cross-examination. Applying the Supreme Court's guidance in TUI UK Ltd v Griffiths on the fairness of confronting witnesses with the case against them, she found a fundamental breach of that principle, notwithstanding the husband's own dishonesty. She also rejected an argument, advanced by the husband, that allegations of non-disclosure must always be formally pleaded as conduct under section 25(2)(g) of the Matrimonial Causes Act 1973, holding that straightforward litigation misconduct of this kind does not require such pleading.

On the wife's cross-appeal concerning a separate financing arrangement, known as a Forward Acquisition of Property, under which the bank claimed beneficial ownership of the family home, the court found the judge's six-paragraph reasoning inadequate given the weight of evidence pointing toward the arrangement being used to disguise a benefit to the husband, including an accounting treatment that made the debt disappear from the bank's books. A further document extending the repayment deadline, disclosed for the first time only during the appeal hearing itself, reinforced the court's concerns.

The bank's own appeal succeeded on narrower grounds. Lord Justice Fraser held that the trial judge had improperly attempted to broker a housing arrangement directly with the bank's representative during cross-examination, effectively negotiating from the bench, and that no binding agreement had ever resulted since the parties later failed to agree final terms. An order requiring the bank to continue negotiating housing terms with the wife could not be sustained, since an agreement to agree carries no legal force.

Lord Justice Fraser also cautioned against a wider trend of unsuccessful parties recasting adverse factual findings as procedural irregularities on appeal, though he concluded this was one of the rarer cases where that characterisation was justified. Given the scale of the unfairness affecting the husband's credibility across multiple issues, the court held that only a full retrial before a different judge could remedy the position, notwithstanding costs already incurred across the three parties approaching £6.5m.