Kerry Underwood

Archive for July 2021

DAMAGES-BASED AGREEMENTS AND SOLICITORS’ LIENS AND SECTION 73

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THIS SOLICITORS’S LIONS

In

Candey Limited v Tonstate Group Limited & Others [2021] EWHC 1826 (Ch)

the Chancery Division of the High Court rejected the solicitor’s application for recognition of a lien over shares recovered or retained by their client in the litigation.

I reported the earlier decision in the same case

Tonstate Group Limited and Others v Wojakovski and Others  [2021] EWHC 1122 (Ch)

where the court held that there could only be a charge to a client under a Damages-Based Agreement if something was actually recovered, and not just preserved.

Although the solicitors obtained a lien over the shares, their application was defeated as the firm was on notice of a Final Charging Order involving Tonstate, and that took priority over the lien.

The court held that even if, contrary to its earlier decision, the Damages-Based Agreement gave the solicitors an enforceable right to payment, they were not entitled to a Charging Order under section 73 of the Solicitors Act 1974, nor any other security.

Section 73 of the Solicitors Act 1974 provides

“73         Charging orders.

(1) Subject to subsection (2), any court in which a solicitor has been employed to prosecute or defend any suit, matter or proceedings may at any time—

(a)          declare the solicitor entitled to a charge on any property recovered or preserved through his instrumentality for his assessed costs in relation to that suit, matter or proceeding; and

(b)          make such orders for the assessment of those costs and for raising money to pay or for paying them out of the property recovered or preserved as the court thinks fit;

and all conveyances and acts done to defeat, or operating to defeat, that charge shall, except in the case of a conveyance to a bona fide purchaser for value without notice, be void as against the solicitor.

(2) No order shall be made under subsection (1) if the right to recover the costs is barred by any statute of limitations.”

In fact, as the court here observed, a solicitor’s lien is often not a true lien at all, as that can only exist where the person claiming a lien is in possession of the property over which it is claimed.

It is better described as an equitable charge.

The nature of the security was set out in

Welsh v Hole [1779] 1 Doug KB 238

“An attorney has a lien on the money recovered by his client, for his bill of costs; if the money come to his hands, he may retain to the amount of his bill. He may stop it in transit if he can lay hold of it. If he apply to the court, they will prevent its being paid over till his demand is satisfied. I am inclined to go still farther, and to hold that, if the attorney give notice to the defendant not to pay till his bill should be discharged, a payment by the defendant after such notice would be in his own wrong, and like paying a debt which has been assigned, after notice. But I think we cannot go beyond those limits.”

The so-called solicitors’ lien creates a propriety interest in the judgment debt, even before the intervention of the court, and the proposition to the contrary in

James Bibby Ltd v Woods and Howard [1949] 2 KB 449, 453f

cannot survive the decision of the Supreme Court in

Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21

19.         In Haven Insurance, multiple claimants with road traffic claims retained the solicitors on identical conditional fee agreements. Pursuant to the Pre-action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the “RTA Protocol”, which had been agreed by stakeholders under the auspices of the Civil Justice Council), claims were notified by the claimants’ solicitors to the defendants’ insurers via an online portal. Where liability was admitted, a settlement was negotiated or determined by the court at a fraction of the cost if the matter were resolved in ordinary court proceedings. It was an express objective of the RTA Protocol that solicitors were paid their fixed costs and charges direct by the defendant’s insurers. One of the insurers responded to notification of claims on the portal by settling directly with the client, with the intention of avoiding having to add to the settlement amount the fixed costs and disbursements of the solicitors.

20.         The Supreme Court held that the solicitors had a lien on the agreed settlement debts payable by the insurer, as security for their charges, and that the insurers had the requisite notice of the lien such that it could be enforced against them. The insurers were accordingly ordered to pay the charges due under the protocol directly to the solicitors, in addition to the settlement sums already paid to the clients.

21.         The description of the solicitors’ lien in the judgment of Lord Briggs JSC (with whom the other members of the Supreme Court agreed) is indeed inconsistent with the analysis in Bibby. Lord Briggs, at [2], referred first to the ancient common law retaining lien, and to the fact that it afforded no assistance where there was nothing of value in the possession of the solicitor. He continued:

“But equity deals with that deficiency in the common law by first recognising, and then enforcing, an equitable interest of the solicitor in the fruits of litigation, against anyone who, with notice of it, deals with the fruits in a manner which would otherwise defeat that interest.”

The obiter comment by Lewison and LJ in

Bott & Co Solicitors Limited v Ryanair DAC [2019] EWCA Civ 143

to the contrary, is wrong.

That decision is being appealed to the Supreme Court.

Thus, here the solicitors had an equitable interest in the shares, from the moment there was a fund in sight.

The High Court here said that the rationale behind the solicitors’ lien over recoveries in the action applies equally to render that lien effective as against a third party who has obtained its own assignment or charge over those recoveries.

The rationale has sometimes

“… been described by analogy with the principle of salvage. The recoveries in the action exist as a result of the solicitor’s efforts, so the solicitor ought to have a right to those recoveries as security for its fees in priority to the client. Equally, the solicitor should have such right in priority to a third party who acquires a charge over the recoveries, because the value of that charge is similarly dependent on the solicitors’ efforts.”

Here, the court had already decided that the solicitors were not entitled to anything under the Damages-Based Agreement; a party could not be on notice of a non-existent right.

Assessed Costs

The court also considered whether “assessed costs” which can be the subject of the charge in favour of the solicitor as security for costs, included costs due under a Damages-Based Agreement.

The court held that it did.

Comment

This is a well-argued and helpful judgment dealing with liens, but it re-inforces the point that the Solicitors Act 1974, based in part on the Attorneys and Solicitors Act 1728, simply does not deal in any useful way with modern methods of funding and charging.

Kerry Underwood of Underwoods Solicitors is advising Bott & Co Solicitors Limited in relation to their appeal to the Supreme Court against the decision in

Bott & Co Solicitors Limited v Ryanair DAC [2019] EWCA Civ 143

Written by kerryunderwood

July 21, 2021 at 2:51 pm

Posted in Uncategorized

CIVIL PROCEDURE (AMENDMENT No.4) RULES 2021

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I am now offering subscriptions to my newsletter Kerry On Costs… And So Much More… for the remainder of 2021 at half price, that is £250 plus VAT, giving a total of £300.

There will be at least 14 further issues, and if you subscribe, you will get the 18 issues already published in 2021.

If you wish to subscribe, please order here.

The statutory instrument contains amendments to The Civil Procedure Rules dealing with various matters, all of which come into effect from 1 October 2021, with the exception of the amendment to CPR 83.8A (2) concerning Possession Proceedings, which is effective from 7 August 2021.

The statutory instrument is here.

Recording in Court

CPR 2 and CPR 27 are amended concerning the meaning and application of “tape recording” so that any form of recording in court is covered, and not just tape recordings.

CPR 27 is amended to provide that CPR 39.9, which provides for recording and transcription of proceedings, applies in relation to proceedings in the Small Claims Track, as well as fast track and multi-track cases, where the provision has always applied.

Protected Parties and Voluntary and Interim Payments

CPR 21 is amended to clarify that applications for approval of voluntary and interim payments in cases involving children or protected parties should be made under CPR 8. This applies To Pre-Action Interim Payments.

The court is able to order payment of costs to the child’s litigation friend in a case where detailed assessment of costs has been dispensed with under CPR 46.4 (3).

Admiralty Claims

CPR 24 and CPR 61 are amended to bring rules in relation to Admiralty claims up to date and in line with practice, specifically in relation to summary judgment in Admiralty claims, the sale of arrested property before judgment and the determination of priorities and the directions to be given in orders for sale.

Striking Out of Counter Claims

CPR 25 is amended where counter claims are struck out, to clarify the position where a defendant who has brought a counter claim is granted an interim injunction in the counter claim, where the counter claim is struck out for non-payment of fees.

In that case the interim injunction shall cease to have effect 14 days after the date on which the counter claim is struck out.

Appeals

CPR 40 and CPR 50 are amended to resolve doubts about the position regarding when permission to appeal applications and extension of time for permission applications should be made when the hearing at which judgment is given is adjourned – to the effect that the application can be made at the adjourned hearing.

Possession: Further Notice of Eviction

CPR 83.8A(2) is amended to provide to the occupiers a further minimum 7 days’ notice of eviction, if the first eviction does not take place as intended. This is effective from 07 August 2021.

“Tender before Claim” definition

The CPR Glossary is amended to address a gap on the definition of “Tender before claim” and in response to case law (RSM Bentley Jennison (A Firm) & Ors v Ayton [2015] EWCA Civ 1120) to bring it up to date.

It now reads:

“A defence that, before the claimant started proceedings, the defendant unconditionally offered to the claimant the amount due.”.

Tidying up

CPR 70 is amended following the 127th PD Update and the introduction of PD70B. This tidying up exercise (providing for the existing PD70 to be renumbered as PD70A on account of the addition of PD70B, and to amend cross-references in consequence) is in the interests of consistency with other CPR Parts which have more than one PD associated with them.

133RD PRACTICE DIRECTION UPDATE

133rd Practice Direction Update is here.

The Master of the Rolls and the Courts Minister have signed the PD Update. It provides for amendments in respect of:

PD 4 – Forms

This reinstates form N79A (Suspended Committal Order) under the Enforcements Section. This was previously removed in error as part of the contempt reforms.

PD 5B – Communication and Filing of Documents by email

This removes the obligation for parties to include a debit/credit card number when filing an application by email where a fee is payable. Similar changes are also being made to the Family Procedure Rules.

PD 25B – Interim Payments

This corrects errors in references in the rules.

PD 51O – Electronic Working Pilot Scheme

This adds in additional jurisdictions to the e-working (CE-file) pilot scheme.

PD 51U – Disclosure Pilot for the Business and Property Courts

This provides for two updates: extends the pilot for a further 12 months to 31 December 2022, and modifies paragraph 9.2 to clarify that in a case where no order for Extended Disclosure is made in respect of a party on any Issue for Disclosure, that party must still disclose all known adverse documents within 60 days of the first case management conference and provide a Disclosure Certificate certifying that this has been done.

PD 52B – Appeals in the County Court and the High Court

This makes consequential changes related to the above statutory instrument amendments under Part 52.

PD 52D – Statutory Appeals and Appeals Subject to Special Provision

This updates the references (at paragraph 27A.1(2)(c)) to the Welsh Language (Wales) Measure 2011 for Welsh Language Statutory Appeals, which are currently incomplete.

PD 56 – Landlord and Tenant Claims and Miscellaneous Provisions About Land

This updates the Practice Direction to reflect the current state of the legislation because it contained repealed legislation and this was identified in GR Property v Safdar [2020] EWCA Civ 1441 (paragraphs 13 to 21).

PD 61 – Admiralty Claims

This deals with consequential changes related to the above statutory instrument amendments under Part 61 and will update the Practice Directions in relation to the application of PD 57AC (Witness Evidence at Trial), especially to cater for the particular circumstances of contemporaneous witness evidence within the Admiralty jurisdiction.

PD 70 – Enforcement of Judgments and Order

This makes changes consequential to the Part 70 (“tidying up”) amendments referred to in the above statutory instruments.

PD 74A – Merchant Shipping Liner Conferences (Admiralty)

This removes an outdated provision.

PD55C Coronavirus:

Temporary Provision in relation to Possession Proceedings – extends the pilot for a further term (4 months) from end July 2021 to end November 2021

Written by kerryunderwood

July 20, 2021 at 3:21 pm

Posted in Uncategorized

REPLACE LEGAL OMBUDSMAN WITH JUDGES: SLASH THE COSTS AND GET THE JOB DONE

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Legal Ombudsman taking 20 months to deal with non-simple claims

The Legal Ombudsman, who has 241 staff and a budget of £14.47 million a year, is taking 285 days to deal with cases of low complexity, and 616 days to deal with high complexity cases.

This is up from 182 days and 526 days compared with the previous year.

The cost per case has increased from £1,927 to £2,800.

Just 4,704 cases were resolved.

Comment

Is any needed? It would be far, far cheaper and quicker to have all of these cases dealt with by the courts.

A team of 20 judges and appropriate staff would comfortably deal with 4,704 cases a year.

I estimate the turnaround time would be reduced by 75% and costs by 60%. As with all regulators, the incompetent, unaccountable and unqualified system is massively more expensive, slower, and less professional than the judiciary.

Written by kerryunderwood

July 19, 2021 at 12:35 pm

Posted in Uncategorized

SOLICITORS’ CLIENTS HAPPIER THAN EVER: LEGAL SERVICES CONSUMER PANEL MOANS AND DRONES ON

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A survey by the Legal Services Consumer Panel, which has a long history of being highly and irrationally critical of solicitors, has found that 83% of clients were satisfied with the service received from their solicitor and 89% were satisfied with the outcome.

Only 9% thought that the service was poor value for money.

The results, based on a very high sample of 3,500 clients, are the best ever.

80% of clients chose their lawyer by reputation with price, specialism, speed of delivery and locality being the other reasons in the top 5 for choosing a solicitor.

In spite of these stunning results, almost unmatched in any other field, the Legal Services Consumer Panel found it “disappointing” that clients still rely on gut feelings and subjective recommendations as indicators of quality when choosing a lawyer.

It seems to be beyond the comprehension of these people that given the extraordinarily high ratings of solicitors, the clients are very obviously using the right methods to choose their lawyer. It is way beyond time that this harmful body shut up and shut up shop.

Written by kerryunderwood

July 8, 2021 at 11:37 am

Posted in Uncategorized

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