[0] Solicitors and clients can negotiate for a security for the solicitors unpaid fees. The waiver cases, referred to at the end of the main body of the article, are examples of solicitors/clients negotiating security for fees.

One form of security, arises from a solicitor and client agreeing that a specific fund coming to the client/client directing that a such funds, held by another, shall be used to pay the solicitors fees: In Withers LLP v Rybak (also known as: Withers LLP v Langbar International Ltd) [2011] EWCA Civ 1419 ('Rybak'), Sir Robin Jacobs (with whom Kitchin LJ and Lloyd LJ agreed) in Rybak said, under the heading 'Equitable Charge?', at paragraphs 42 to 43:

'The law was undisputed, being clearly set out by Lord Wrenbury in Palmer v Carey [1926] AC 703, 706–707:

“The law as to equitable assignment, as stated by Lord Truro in Rodick v Gandell (1852) 1 DM & G 763, 777, 778, is this: ‘The extent of the principle to be deduced is that an agreement between a debtor and a creditor that the debt owing shall be paid out of a specific fund coming to the debtor, or an order given by a debtor to his creditor upon a person owing money or holding funds belonging to the giver of the order, directing such person to pay such funds to the creditor, will create a valid equitable charge upon such fund, in other words, will operate as an equitable assignment of the debts or fund to which the order refers.’ An agreement for valuable consideration that a fund shall be applied in a particular way may found an injunction to restrain its application in another way. But if there be nothing more, such a stipulation will not amount to an equitable assignment. It is necessary to find, further, that an obligation has been imposed in favour of the creditor to pay the debt out of the fund. This is but an instance of a familiar doctrine of equity that a contract for valuable consideration to transfer or charge a subject matter passes a beneficial interest by way of property in that subject matter if the contract is one of which a court of equity will decree specific performance.”

So what we have to look for is an agreement for valuable consideration - a contract - that the money shall be applied in a particular way, namely for payment of [solicitors'] fees. Unless there is such an agreement there is no equitable charge.'

The same issue arose in Clifford Harris & Co v Solland International Ltd (No.2) [2005] 3 Costs LR 414 ('Clifford'), dealt with from paragraphs 55 onwards. In a concise formulation of the test, the deputy Judge in Clifford said, at paragraph 55:

'All that is needed to create an equitable charge is an agreement between debtor and creditor that the debt will be paid out of a specific fund coming to the debtor: see Palmer v Carey [1926] AC 703, 706 per Lord Wrenbury.'

Should a equitable charge be found this way, it can be appropriate to give effect to this charge, by making an order under s.73 of the Solicitors Act 1974 (see paragraph 63 of Clifford)

[1] The relevant liens here are not contractual rights, though they may arise as a consequence of a contract (the retainer). It is a a remedy for breach of contract which the common law confers. In Tappenden (t/a English & American Autos) v Artus [1964] 2 QB 185 [1963] 3 WLR 685 ('Tappenden'), Diplock LJ giving the judgment of the Court of Appeal (Willmer LJ; Danckwerts LJ; Diplock LJ) said, at paragraphs 3 to 6: 

'The common law lien of an artificer is of very ancient origin, dating from a time when remedies by action upon contracts not under seal were still at an early and imperfect stage of development: see the old authorities cited by Lord Ellenborough C.J. in Chase v. Westmore [(1816) 5 M. & S. 180] Because it arises in consequence of a contract, it is tempting to a twentieth-century lawyer to think of a common law lien as possessing the characteristics of a contractual right, express or implied, created by mutual agreement between the parties to the contract. But this would be to mistake its legal nature. Like a right of action for damages, it is a remedy for breach of contract which the common law confers upon an artificer to whom the possession of goods is lawfully given for the purpose of his doing work upon them in consideration of a money payment.'

[1a] In Bott and Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8 [2023] AC 635; [2022] 2 WLR 634:

(a) Lord Briggs said, at paragraph 154:

'payment for transactional work is wholly excluded from protection'

(b) Lady Arden gave the reason behind this, at paragraph 126:

'The animating principle of effective access to justice does not extend to the transactional services provided by a solicitor.'

(c) Lord Burrows, at paragraph 85, used '"litigation or dispute resolution" work' in contradistinction to transactional work.

[1b] In Tappenden (t/a English & American Autos) v Artus [1964] 2 QB 185 [1963] 3 WLR 685, Diplock LJ giving the judgment of the Court of Appeal (Willmer LJ; Danckwerts LJ; Diplock LJ) said, at paragraph 3 (the remedy being the common law remedy of a common law General Lien - known as the retaining lien):

'The remedy can be excluded by the terms of the contract made with the artificer either expressly or by necessary implication from other terms which are inconsistent with the exercise of a possessory lien; cf. Forth v. Simpson [(1849) 13 Q.B. 680].'

In the author's view, there seems no reason why this would not apply to a solicitors' Equitable Lien. The solicitors' Equitable Lien waiver cases support this (referred to at the end of the main body of the article).

[2] In James Bibby Ltd v Woods (Howard, Garnishee) [1949] 2 KB 449 [1949] 2 All ER 1, High Court (Lord Goddard, Birkett J, Lynskey J) said, at paragraph 4:

'A solicitor has a lien on papers of his clients which are in his possession; he can refuse to give up those papers so long as his costs are not paid.'

 In Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052, Lord Briggs said, at paragraph 2:

'Solicitors have, since time immemorial, been entitled to a common law retaining lien for payment of their costs and disbursements. That is an essentially defensive remedy, which merely enables them to hold on to their clients’ papers and other property in their actual possession, pending payment. It affords no assistance where there is nothing of value in the solicitor's possession, and is powerless where, in a litigation context, the defendant to the claim pays the judgment debt or agreed settlement amount direct to the solicitor's client, the claimant.'

[2a] In Richards v Platel (1841) Cr & Ph 79; 41 ER 419, the Lord Chancellor said, at 421:

'Liens, existing by the custom of trade or the practice of a profession, are equivalent to contracts; and I know of no distinction, in the law of lien, between that of a solicitor and that of any other party.'

Where the service provider is an artificer, it is known as an artificer's lien. See Tappenden (t/a English & American Autos) v Artus [1964] 2 QB 185 [1963] 3 WLR 685, Diplock LJ, paragraph 1.

[3] In Tappenden (t/a English & American Autos) v Artus [1964] 2 QB 185 [1963] 3 WLR 685 ('Tappenden'), Diplock LJ giving the judgment of the Court of Appeal (Willmer LJ; Danckwerts LJ; Diplock LJ) said, at paragraphs 3 to 6:

'The common law lien of an artificer is of very ancient origin, dating from a time when remedies by action upon contracts not under seal were still at an early and imperfect stage of development: see the old authorities cited by Lord Ellenborough C.J. in Chase v. Westmore [(1816) 5 M. & S. 180] Because it arises in consequence of a contract, it is tempting to a twentieth-century lawyer to think of a common law lien as possessing the characteristics of a contractual right, express or implied, created by mutual agreement between the parties to the contract. But this would be to mistake its legal nature. Like a right of action for damages, it is a remedy for breach of contract which the common law confers upon an artificer to whom the possession of goods is lawfully given for the purpose of his doing work upon them in consideration of a money payment. If, pursuant to the contract, the artificer does his work, he is entitled to retain possession of the goods so long as his charges, whether agreed in advance or (if not so agreed) payable upon a quantum meruit, are satisfied. The remedy can be excluded by the terms of the contract made with the artificer either expressly or by necessary implication from other terms which are inconsistent with the exercise of a possessory lien; cf. Forth v. Simpson [(1849) 13 Q.B. 680]. in the same way as the common law remedy in damages for breach of contract may be excluded or modified by the terms of the contract itself. But this does not mean that the remedy of lien, any more than the remedy in damages, is the result of an implied term in the contract to which what we may conveniently call the Moorcock [(1889) 14 P.D. 64; 5 T.L.R. 316, C.A.] criteria relevant to implying terms in a contract apply. The test whether or not the remedy exists is not whether or not its existence is necessary to give business efficacy to the contract. Judged by this test there would in modern times never be an artificer's lien.

The common law remedy of a possessory lien, like other primitive remedies such as abatement of nuisance, self-defence or ejection of trespassers to land, is one of self-help. It is a remedy in rem exercisable upon the goods, and its exercise requires no intervention by the courts, for it is exercisable only by an artificer who has actual possession of the goods subject to the lien. Since, however, the remedy is the exercise of a right to continue an existing actual possession of the goods, it necessarily involves a right of possession adverse to the right of the person who, but for the lien, would be entitled to immediate possession of the goods. A common law lien, although not enforceable by action, thus affords a defence to an action for recovery of the goods by a person who, but for the lien, would be entitled to immediate possession.

Since a common law lien is a right to continue an existing actual possession of goods (that is to say, to refuse to put an end to a bailment) it can only be exercised by an artificer if his possession was lawful at the time at which the lien first attached. To entitle him to exercise a right of possession under his common law lien adverse to the owner of the goods, he must thus show that his possession under the original delivery of the goods to him was lawful - Bowmaker Ltd. v. Wycombe Motors Ltd [[1946] K.B. 505; 62 T.L.R. 437; [1946] 2 All E.R. 113, D.C.] - and continued to be lawful until some work was done by him upon the goods.'  [bold added]

Diplock LJ then goes on to consider the specific scenario in the Tappenden case, namely where: (a) the owner, gave possession of the goods to a bailee; (b) the bailee contracted with the artificer to undertake works on the goods, but then the bailee failed to pay the artificer; (c) the owner then demands possession of the goods from the artificer, but the artificer refuses to transfer possession of the goods to the owner, relying on the defence of his (the artificer/artificer's) common law (general) lien. Diplock LJ said, at paragraph 6:

'Where, therefore, as in the present case, possession of the goods was originally given to the artificer not by the owner himself, but by a bailee of the owner, the test whether the artificer can rely upon his common law lien as a defence in an action for detinue brought against him by the owner is whether the owner authorised (or is estopped as against the artificer from denying that he authorised) the bailee to give possession of the goods to the artificer. This, it seems to us, is the test which, after some vacillation, is laid down by the modern authorities. It is as a result of applying this test that the cases which have been cited to us fall upon one side or other of the line.'

[note: the action for detinue was abolished by Torts (Interference with Goods) Act 1977]

Diplock LJ continues in Tappenden to investigate the law for that scenario (paragraphs 6 onwards) and prohibitions and what was reasonable incidental to the initial bailee's reasonable use of the goods.

[4] The position on the common law General Lien (common law possessory lien, or retaining lien) and Withers LLP v Rybak (also known as: Withers LLP v Langbar International Ltd) [2011] EWCA Civ 1419 ('Rybak') will be set out as follows: (a) the law on General Lien, as set out in Rybak; (b) facts in Rybak.

(a) the law on General Lien

Under the heading 'The lien point', Sir Robin Jacobs (with whom Kitchin LJ and Lloyd LJ agreed) in Rybak said, at paragraph 19:

'Halsbury's Laws of England, 5th ed, vol 66 (2009), para 997 says, omitting footnotes:

“The general rule is that the retaining lien extends to any deed, paper or personal chattel which has come into the solicitor's possession in the course of his employment and in his capacity as solicitor with the client's sanction and which is the client's property … The lien does not extend to … (d) documents which did not come into the solicitor's hands in his capacity as solicitor for the person against whom the lien is claimed … but as … trustee. Moreover, where … money is paid to the solicitor for a particular purpose so that he becomes a trustee of the money, no lien arises over … that money unless subsequently left in the solicitor's possession for general purposes.”

The passage was cited by Evans-Lombe J in Euro Commercial Leasing Ltd v Cartwright & Lewis [1995] 2 BCLC 618, 621–622.

(b) facts in Rybak

[to fully understand the facts in Rybak, which are too complex to shorten completely, readers will want to read: (a) Withers LLP v Rybak [2011] EWHC 1151 (Ch), [2011] 3 All E.R. 842, Morgan J, paragraphs 4 to 32 ('Extract 1'): and (b) Rybak in the Court of Appeal, Sir Robin Jacob paragraphs 2 to 16 ('Extract 2')]. Both are set out at the end of this footnote.

In Rybak, the Court of Appeal considered whether a firm of solicitors (W) held a common law lien over money held in the solicitors firm's client account. 

W's clients (R) contended no common law lien arose, as a common law lien's existence would be inconsistent with the circumstances surrounding the payment of the money into the solicitors firm's client account.

W accepted that on payment into the account no lien arose, because control of the money had passed to the court, but argued that a subsequent order had given sufficient control of the money to R to enable a lien to arise.

So, the issue in Rybak, was whether a lien arising against that money in respect of the solicitor's costs, was incompatible/inconsistent with the circumstances surrounding the money being paid in/control of the money thereafter. As Lloyd LJ (with whom Kitchin LJ agreed) stated, at paragraph 52, the question in Rybak was:

'...whether the terms on which the money was paid into and held in [solicitors'] account were compatible with the money being subject to a lien in favour of [the solicitors]...' 

(c) law on a General Lien on money in a solicitors client account

Sir Robin Jacobs (with whom Kitchin LJ and Lloyd LJ agreed) said in Rybak, at paragraph 20 to 39:

'20. The key question seems to me to be whether money in a client account is there “for general purposes”.

21. It is not so where it is the subject of a purpose trust, for instance where money is provided to a solicitor for a particular purpose which then fails. Then the solicitor holds it in trust for the provider, as in Stumore v Campbell & Co [1892] 1 QB 314.

22. But a purpose trust is not the only way in which a lien over money in a client account will not arise. The question must always be, why is it there? And if the reason is inconsistent with a lien, then there will be no lien. A purpose trust is merely an example of inconsistency with a lien. In deciding whether there is inconsistency a key question will therefore be whether the money is there “for general purposes” or for a particular purpose?

23. The judge reasoned thus: when the money came into the account it was effectively money held and frozen subject to a freezing order. Such frozen money does not give the claimant any security over it: it remains the property of the defendant. All that the freezing order does is to restrain dissipation so that the money will be available to meet any ultimate judgment: see Flightline Ltd v Edwards [2003] 1 WLR 1200 and Tradegro (UK) Ltd v Wigmore Street Investments Ltd [2011] 2 BCLC 616.

24. So, the reasoning went on, when the money came into the account pursuant to the Morgan order it was not, albeit frozen, subject to a security interest or trust. There was no charge over it, even though at the hearing it had been described as going into an “escrow account”. So it belonged to Rybak. He considered the position to be even clearer following the variation made by the Waksman order.

25. Given that it was Rybak's money placed into a client account pursuant to client instructions, the judge then concluded that it followed that there was a lien over it.

26. Now, by the conclusion of the argument before Morgan J, Langbar (to whom Rybak had assigned all of its interest in the money) was not contending that it had a security interest in the money. Mr Andrew Fletcher QC (with Ms Charlotte Eborall, neither of whom had appeared below) for Langbar does not so contend before us. He submits that does not matter. The money went into the account so that it would remain available and subject to the court's directions as to its disposition. Thereby, if the court thought fit, it could be used towards the satisfaction of any claim of Langbar. That is inconsistent with Withers having any lien. For otherwise to the extent of the lien the money would not be available to satisfy the claim.

27. Ms Joanna Smith QC (with Mr Sebastian Allen) for Withers accepted that no actual lien arose when the money went into the account following the Morgan order. But not for the reason advanced by Mr Fletcher. She said there was no lien because control over the money had passed to the court: the money “will be held in and not withdrawn from the account until further order by the court”. However, she submitted, the Morgan order was not inconsistent with a lien arising later if and when Rybak in some way became entitled to the money in the account or the purpose for which it was in the account expanded to include payment of Withers' fees.

28. And that happened, she submitted, on the making of the Waksman order (or, more accurately when the overriding Gordon order was later discharged). For under the Waksman order Rybak did have sufficient control over the money in the account. It could direct that sufficient money be released from it to pay legal expenses.

29. True it is that there was a prior procedure to be gone through (notification to Jones Day followed by consent as to reasonableness) but that was essentially only procedural: if Jones Day did not consent as to reasonableness the matter could be ruled upon by the court pursuant to the permission to apply given by paragraph 5. Mere lack of “automaticity” (by which she meant an immediate right to exercise it) was not an essential requirement of a lien - there could be prior procedural hoops to be gone through. Thus, for instance, a retaining lien is not inconsistent with section 11(3)(c) of the Insolvency Act 1986, which prevents the taking of any steps to enforce a security over a company's assets save with the consent of the administrator or the leave of the court: see Euro Commercial Leasing Ltd v Cartwright & Lewis [1995] 2 BCLC 618. Similarly, the fact that the Solicitors' Accounts Rules requires a bill to be submitted to the client before money can be transferred from a client account to an office account does not prevent money in the client account from being subject to a lien: Irwin Mitchell v Director of Revenue and Customs Prosecutions Office [2009] 1 WLR 1079.

30. Nor, she submitted, did the fact that the order provided for living expenses of €25,000 per month make it inconsistent with a lien. There was enough money in the account to provide for that for so many years that in reality there was no inconsistency.

31. I am unable to accept Miss Smith's submissions. Firstly I think that Mr Fletcher was right in contending that the Morgan order was inconsistent with a lien coming into existence at the time the money was paid in. The whole purpose of the order was to ensure that the money was held in this jurisdiction so as to be available, if the court thought fit, to satisfy, or go towards satisfying, Langbar's claim. The payment had no other purpose. The money could easily have been paid into court or into a joint solicitors' account instead. No one could realistically have supposed, when Langbar (for it was Langbar) proposed that the money be paid into a Withers client account, that Withers would have any claim ahead of Langbar over the money.

32. It is true that the Morgan order did not create a purpose trust in favour of Langbar. But it is equally true that the order did not create any proprietary right, actual or potential, in favour of Withers. Suppose the Waksman order had never been made and Langbar applied at that stage for the money to be paid to it. Surely Withers could not have asserted a lien over it.

33. Nor do I accept the implicit assumption in Miss Smith's argument that if the money was not subject to a purpose trust it was Rybak's and that it followed that a lien arose automatically. There is room for an undistributed middle, namely that the deposit of the money was inconsistent with a lien arising, actually or potentially.

34. I think there is a good analogy here with Halvanon Insurance Co Ltd v Central Reinsurance Corpn [1988] 1 WLR 1122. There, a defendant had paid into a joint account of his and the plaintiff's solicitors a sum as a condition of leave to defend. The sum was “to abide the event of the action”. The plaintiff's solicitors later contended that they had a lien over the money in the joint account. Hobhouse J held that they did not. He worked by analogy with a payment into court and held that the money was held by the solicitors as bare trustees who had no interest of their own in it. I do not see why the fact it was in a joint account makes any difference (Hobhouse J did not rely on that point.) Nor do I see any real difference between the purpose of the payment in that case and the present.

35. I turn to Miss Smith's contention that following the Waksman order Rybak were essentially entitled to the money in the account for the purpose of paying Withers subject to merely procedural steps. The suggestion was that the Waksman order expanded the purpose of retention of the money in the account so as to encompass Withers' fees.

36. But the steps which would or could be involved were more than merely procedural. First of all Rybak had to direct. Then Jones Day had to be asked to consent to reasonableness. Unless Jones Day consented, there was no entitlement. In the absence of consent an application would have to be made to the court. It is not certain that such an application would succeed - for instance, suppose it appeared on such an application that the Rybaks had sufficient funds to meet the bills? Surely the court would not then have reduced Langbar's protection against dissipation which was the fundamental purpose of the Morgan order. Moreover the whole order remained subject to potential variation and in those circumstances the Waksman order itself would very likely have been varied.

37. The procedural steps which might be involved were not merely administrative, as for instance sending a bill, as in Irwin Mitchell v Director of Revenue and Customs Prosecutions Office [2009] 1 WLR 1079, or a prior check by the court (in the absence of administrators' consent) that there is an existing lien or other proprietary right, as is provided for by section 11(3)(c) of the Insolvency Act 1986. Note that in both these cases there is nothing contingent about the existence of the lien merely hoops which have to be gone through before it could be enforced.

38. Morgan J said [2011] 3 All ER 842, para 61: “the real question in this case is whether [the orders] produced the result that Withers held the moneys in their client account for a particular purpose which was incompatible with [a retaining lien].”

39. He thought the point was “more arguable” in the case of the Morgan order of 19 December 2008 but that the Waksman order was not incompatible with a lien. I do not agree. Rybak did not have control over the money in the account. Even if it wanted to pay the fees there were obstacles in the way which were not purely administrative. And the real purpose of the money being in the account, to protect Langbar's interest in non-dissipation, remained.'

Lloyd LJ said, in Rybak, at paragraph 51:

'The distinction drawn in the older cases, between money held in a solicitor's account for general purposes on the one hand or, on the other, for a particular purpose, may seem a little odd nowadays. [counsel for appellant/creditor] pointed out that, whatever may have been the practice in the past, today, since the imposition of regulatory controls aimed at preventing money-laundering, generally speaking solicitors can only hold client's money if it is either: (a) for use in relation to a particular transaction (or is received from a third party as a result of a transaction, as on the completion of a sale of property of a client); or (b) paid on account of costs. A solicitor cannot now be his client's banker. Therefore, in practice, money paid to the solicitor on account of costs is within the “general purpose” category laid down in the old cases, and, in the ordinary way at least, is likely to be subject to a lien. Other money will fall into the “special purpose” category and will not be subject to a lien.'

(d) decision on the facts in Rybak

The Court of Appeal determined whether the reason for the money in the solicitors account, was (or was not) compatible/consistent with the solicitor having a common law General Lien on it. To do this, the key question was: whether money in a client account was there "for general purposes" or for a 'special purpose'/'particular purpose'.

The answer, on the facts, was that the money had, throughout, been in the solicitors client account, for a special/particular purpose. Consequently, the existence of a common law General Lien would have been inconsistent/incompatible with that reason, so there was no common law General Lien held by the solicitors.

Extract 1: Withers LLP v Rybak [2011] EWHC 1151 (Ch), [2011] 3 All E.R. 842, Morgan J, paragraphs 4 to 32:

'4. The litigation between Langbar and the Rybak parties has a long history. From 2006 to 2008, Langbar and the Rybak parties were involved in proceedings in the Chancery Division in which Langbar claimed substantial damages against the Rybak parties. Those proceedings came on for trial in November 2007 before Blackburne J. and the trial continued until the proceedings were settled on April 21, 2008.

5. By a settlement agreement of April 21, 2008, the Rybak parties agreed to pay approximately £30 million to Langbar. That sum was warranted by them to equate to nearly the entirety of their worldwide assets. These assets included an apartment in Monaco. Title to the apartment was vested in SCI.

6. The settlement agreement of April 21, 2008 contained detailed terms providing for a payment or payments to be made by the Rybak parties to Langbar. The settlement agreement made different provision for the different circumstances in which the apartment might in the future be sold by the Rybak parties.

7. The settlement agreement of April 21, 2008 was varied by a supplemental agreement of September 24, 2008. The supplemental agreement varied the earlier agreement as to payments to be made by the Rybak parties to Langbar and the earlier terms as to the consequences of the apartment being sold in various circumstances. Under the supplemental agreement, in the event of the apartment being sold prior to December 31, 2008, the sums payable by the Rybak parties to Langbar were less than the sums which would have been payable if the terms of settlement had remained as recorded in the settlement agreement of April 21, 2008.

8. By December 2008, the Rybak parties had found a purchaser for the apartment, or the shares in SCI, and wished to proceed with a transaction of that kind. Langbar for various reasons wished to prevent a transaction of that kind taking place at that time. Langbar took certain steps in Monaco to prevent completion of such a transaction. On December 19, 2008, the Rybak parties made an application in the original proceedings for interlocutory relief which prevented Langbar interfering with the Rybak parties’ ability to conclude a transaction of the kind proposed. The Rybak parties gave short notice to Langbar of this application and the application was heard by me late in the afternoon of December 19, 2008. The application was attended by counsel and solicitors for both the Rybak parties and Langbar. On that day I made an order, in effect, preventing Langbar from interfering with the transaction proposed by the Rybaks.

9. At the hearing on December 19, 2008, there was discussion as to the obligations of the Rybak parties to make payments to Langbar as a result of the sale of the apartment. The Rybak parties put forward their case as to their liabilities on completion of the sale and Langbar put forward a very different case as to its entitlement to be paid by the Rybak parties. The Rybak parties contended that the sums payable by them extended to only part of the proceeds of sale of the apartment whereas Langbar contended that, in the events which had happened, Langbar was entitled to be paid by the Rybak parties a sum which would consume all of the proceeds of sale and, indeed, Langbar would be entitled to further damages because the apartment was being sold at an undervalue.

10. Faced with these rival contentions as to the rights and obligations of the parties, the question arose as to what should happen to the proceeds of sale of the apartment. At the hearing on December 19, 2008, the Rybak parties put forward a draft order which included an undertaking by the Rybak parties to pay a part of the proceeds of sale: “to the client account of their Monegasque lawyer Richard Mullot, such monies to be held in and not withdrawn from that account until further Order by the Court”. When I indicated that I would make an order which allowed the sale to proceed, Langbar put forward two principal objections to the form of undertaking which had been proffered. It submitted that the full amount of the proceeds of sale should be dealt with by the undertaking and, further, the money should not be paid into a client account in Monaco but should be paid into the client account of Withers, who were the solicitors acting for the Rybak parties. At that hearing, Withers did not have instructions from the Rybak parties to give an undertaking on their behalf, as requested by Langbar.

11. In the event, the order which I made contained the following provisions:

“1. The injunction granted in paragraph 2 below shall be conditional upon the Applicants agreeing and undertaking forthwith to transfer or to procure the transfer of the net proceeds of any sale on or before 31 December 2008 of the apartment in Monaco owned by the Seventh Defendant/ Applicant (“the apartment”) to a client account of their solicitors Withers LLP (“the account”) on terms that:

1.1 subject to paragraph 1.2 below, the monies will be held in and not withdrawn from the account until further Order by the Court;

1.2 the Applicants may direct payments to be made from the account to the Respondent in discharge of or on account of sums due from the Applicants to the Respondent under the settlement agreements scheduled to the Tomlin Orders in these proceedings dated 21st April 2008 and 23rd October 2008.

2. [The injunction ordered by the court]

3. The Applicants and the Respondent shall each have permission to apply, and in particular (but without limitation) the Applicants shall have permission to apply for an Order permitting payments for their living and legal expenses to be made from the account pending the resolution of any dispute that may exist as to who is entitled to the monies in the account.”

12. By way of explanation of the terms of the order of December 19, 2008, I should say that the applicants were the Rybak parties and the respondent was Langbar. The seventh defendant/applicant was SCI, the owner of the apartment. The references to the Tomlin orders of April 21, 2008 and October 23, 2008 were references to two orders which gave effect to the settlement agreement of April 21, 2008 and the supplemental deed of September 24, 2008.

13. I have been shown a transcript of the hearing which took place on December 19, 2008. The proposal to place part or all of the proceeds of sale into an account was described in various ways. Counsel for the Rybak parties referred to it as a “blocked account”. Counsel for Langbar referred to a proposal that the money be put into “an escrow account”. In the course of the argument I also referred to an escrow account, adopting the description used by Counsel. Indeed, at one point, Counsel for the Rybak parties also adopted this description of the relevant account.

14. Before making my order on December 19, 2008, I gave a short judgment setting out my reasons for the order I intended to make. In [2] of that judgment I stated what was to happen in relation to the proceeds of sale. I stated that the proceeds were to be paid into “the relevant escrow account”.

15. Following the order of December 19, 2008, the transaction was completed on or before December 31, 2008. Although at one time it was envisaged that the transaction would be effected by way of a sale of the shares in SCI, in the event title to the apartment was conveyed by SCI to the purchaser. Accordingly, the proceeds of sale prima facie belonged to SCI, subject to the condition contained in the order of December 19, 2008, which bound the Rybak parties including SCI.

16. In December 2008 and January 2009, the net proceeds of sale were paid over in accordance with the condition set out in the order of December 19, 2008. I understand that the net proceeds of sale were in excess of €13 million and that the Rybak parties paid to Langbar a sum of €7.588 million, pursuant to para.1.2 of the order of December 19, 2008. I understand that, accordingly, a sum in excess of €5 million was paid into a client account operated by Withers.

17. Thereafter, the Rybak parties brought a new action against Langbar and Langbar served a defence and counterclaim. These new proceedings raised issues as to whether the Rybak parties had complied with the terms of settlement of April 21, 2008 and as to the circumstances in which the parties had entered into the supplemental deed of September 24, 2008. Langbar asserted that the Rybak parties were in breach of contract and were liable in damages for misrepresentation. Langbar claimed a sum of money which exceeded the remaining net proceeds of sale by a very substantial amount.

18. On August 5, 2009, the Rybak parties applied for the release of the monies held by Withers pursuant to the order of December 19, 2008. That application was fixed to be heard on September 11, 2009 by H.H. Judge Waksman QC, sitting as a Judge of the Chancery Division. In fact, early in the day on September 11, 2009, the Serious Fraud Office applied to H.H. Judge Gordon in the Central Criminal Court for a restraint order preventing Mr Rybak from disposing of or dealing with his assets and Judge Gordon made such an order. In summary, the order made was a general worldwide freezing order in relation to Mr Rybak’s assets. The order stated that the freezing prohibition included the funds in the Withers’ client account, held pursuant to the order of December 19, 2008. In relation to that specified fund, it was provided that in addition to the restraint imposed on Mr Rybak himself, Withers were not to remove the fund or in any way diminish, dispose or deal with the monies in the fund.

19. Later on September 11, 2009, Judge Waksman heard the application by the Rybak parties for the release of the monies held by Withers pursuant to the order of December 19, 2008. Judge Waksman dismissed that application. I was shown a transcript of the judgment given by Judge Waksman on that application. It is clear from his reasoning that he regarded the order of December 19, 2008, in relation to the net proceeds of sale in the Withers’ client account, as a “freezing order”. He then considered whether it was appropriate to continue or to vary that order. He referred to a number of matters which are normally relevant when considering the making of a freezing order, such as whether a party claiming a freezing order has established a good arguable case and whether there was a risk of dissipation. I was also shown a transcript of submissions made by Counsel for both sides to Judge Waksman, following his judgment, as to the terms which were appropriate to reflect the desire of the Rybak parties to access the money in the fund for the purposes of paying living expenses and legal expenses. That argument is again consistent with the monies in the fund being treated as frozen pursuant to a freezing order.

20. The order as made by Judge Waksman on September 11, 2009 contained these provisions:

“1. The Claimants’ application dated 5th August 2009 for release of funds held in the Withers Account (“the Account”) pursuant to the order of Morgan J dated 19 December 2008 is dismissed.

2. Subject to paragraph 3 below, the monies in the Account shall be held in and not withdrawn from the Account until further Order by the Court.

3. Subject to the terms of a Restraint Order made by His Honour Judge Gordon in the Central Criminal Court on 11th September 2009, the order of Morgan J dated 19th December 2008 is varied so as to permit the Claimants to direct payments to be made from the Account, as follows:

i) all legal expenses incurred by the Claimants in relation to these proceedings shall be notified by Withers LLP to Jones Day and, upon confirmation from Jones Day that the Defendant consents to the reasonableness of those expenses (such consent being presumed in default of a response within seven days), the Claimants may direct that sufficient monies shall be released from the Account to fund those legal expenses; ii) the Claimants shall be entitled to monthly living expenses payable from the Account on the first day of each month in the sum of €25,000. Payment of these expenses is to commence immediately with the first payment for September 2009 to be made as soon as reasonably practicable.

iii) [t]he Claimants shall be entitled to an immediate payment from the Account of €90,180 to cover outstanding expenses.

4. The Claimants may agree with the Defendant’s legal representatives that the above spending limits shall be increased or that this order shall be varied in any other respect, but any agreement must be in writing.

5. The Claimants and the Defendant shall have permission to apply, and in particular (but without limitation) the Claimants shall have permission to apply for an Order permitting additional payments for their living expenses and/or for any legal expenses not consented to under paragraph 3 above and/or for any other payments arising in the ordinary and proper course of business to be made from the Account pending resolution of the proceedings. Applications for living expenses other than those identified herein at paragraph 3(ii) may be made in writing to HHJ Waksman QC where appropriate.”

21. In this order, the claimants are the Rybak parties and the defendant is Langbar. It is also relevant to refer to another part of the order made by Judge Waksman on September 11, 2009. That order recorded an undertaking by Langbar in damages. The order required Langbar to fortify this undertaking by placing a sum of £200,000 in a client account of Langbar’s solicitors, Jones Day. Paragraph (iii) of schedule 1 to the order stated that the sum of £200,000 was to be held “as security” to meet any liability under the undertaking in damages.

22. On October 22, 2009, Judge Gordon in the Central Criminal Court varied his earlier order of September 11, 2009. The order of October 21, 2009 referred to the sum in the Withers’ client account pursuant to the order of December 19, 2008, as being €5,589,390.25. Of this sum, €3,589,390.25 was excluded from the restraint order, although for the avoidance of doubt it was stated that this sum remained the subject of the order of December 19, 2008 and Judge Waksman’s order of September 11, 2009. The restraint order continued to apply to a sum of €2 million being part of the sum in the Withers’ client account. The order of October 22, 2009 ordered Withers not to remove or in any way dispose of, deal with or diminish the value of that sum of €2 million together with any accrued interest thereon from that date. On April 23, 2010, the restraint order made on September 11, 2009 was wholly discharged.

23. In around May 2010, as a result of a disagreement between the Rybak parties and Withers there arose a conflict of interest between Withers and the Rybak parties. In May 2010, the Rybak parties wished to instruct alternative solicitors, Devonshires and, in due course, the Rybak parties did instruct Devonshires.

24. On May 20, 2010, Norris J. heard an application on behalf of Mr Rybak for an order releasing £150,000 from the money in the Withers’ client account. The application was put on alternative bases, either that the release should be made pursuant to para.3(i) of the order of Judge Waksman of September 11, 2009 or that Judge Waksman’s order of September 11, 2009 should be varied to allow for the release of £150,000. Mr Rybak wished this sum to be released so that he could use it for the purpose of instructing Devonshires. Norris J. refused to order the release of this sum. I have been shown a transcript of the reasons he gave for his decision. The learned Judge took the view that para.3(i) of Judge Waksman’s order of September 11, 2009 only applied to legal expenses which had been incurred and not to prospective legal expenses. He then considered whether he should vary the order of September 11, 2009 to permit the release of the funds requested. He held that because Mr Rybak had access to other monies which would enable him to obtain legal representation in the litigation, it was not appropriate to release monies from the fund in the Withers’ client account. In his judgment, Norris J. plainly regarded the monies as frozen pursuant to what was effectively a freezing order. The order drawn up to give effect to Norris J.’s decision expressly referred to Judge Waksman’s order of September 11, 2009 as the “Freezing Order”.

25. On May 24, 2010, Withers (acting on behalf of the Rybak parties) applied to the court for an order that the sum of £456,166.12 should be released from the fund in the Withers’ client account pursuant to the orders of December 19, 2008 and September 11, 2009, in order to discharge the legal costs of the Rybak parties up to that date. The application was supported by the sixth witness statement of Mr Wass, a solicitor at Withers, and Langbar served a witness statement of Mr Brown of Jones Day, its solicitors. Mr Wass, in his witness statement, referred to the money in the account as the “Frozen Funds”. Mr Brown in his witness statement referred to the application being for a release of frozen money and made comments as to the attitude of a court to monies, the subject of a freezing order, being released to pay legal expenses.

26. The application of May 24, 2010 came before Mann J. on May 27, 2010. He adjourned the application to the trial of the action, when it would be heard together with an application intended to be issued by Langbar to vary the order of September 11, 2009.

27. In July 2010, the proceedings brought by the Rybak parties against Langbar came on for trial before me. In the event, the action was not tried on its merits. This was because there were a number of preliminary matters which needed attention. I heard the matter for four days and, on July 9, 2010 I gave judgment on the matters which had been argued. I held that the Rybak parties were in breach of an unless order made on May 20, 2010, that the result of their breach was that their claim and their defence to counterclaim stood struck out and I declined to grant relief against that sanction of the claim and defence to counterclaim having been struck out. This produced the result that the proceedings before the court were restricted to a counterclaim to which there was no extant defence.

28. On July 12, 2010, I gave judgment for Langbar on its counterclaim against the Rybak parties. I entered judgment in the sum of €3,852,000 plus interest of €152,127. In addition, I ordered that damages, as claimed in a part of the counterclaim, should be assessed at a future hearing. I ordered the Rybak parties to pay to Langbar an interim payment of €1million in relation to the claim where damages were to be assessed. I further ordered the Rybak parties to pay Langbar’s costs of the action on an indemnity basis and I ordered a payment on account of those costs of €900,000. I ordered that the order of Judge Waksman of September 11, 2009 should be varied so as to permit payment to Langbar of the sums of €3,852,000 plus interest of €152,127 plus the interim payment of €1 million plus the costs of €900,000 from the fund which was the subject of the order. On such payment being made, I discharged the order of September 11, 2009. Paragraph 9 of the order made on July 12, 2010 provided as follows:

“All of the money in the Account shall be paid forthwith by Withers LLP to Langbar’s solicitors in partial discharge of the Rybaks’ liabilities under this order. Provided however that if Withers LLP give to Langbar a cross-undertaking in damages in the usual form then they may retain the amount of £410,000 in the Account until close of business on 14th July 2010. Withers LLP shall have liberty to apply on 24 hours notice to Langbar for an order extending the time for payment of the £410,000.”

29. On July 14, 2010, I extended the time for Withers to make the application referred to in para.9 of the order of July 12, 2010 and I ordered that the time for the transfer to Langbar of the remaining money in the account should be extended until further order of the court.

30. On July 21, 2010, in accordance with the earlier orders, Withers applied to vary para.9 of the order of July 12, 2010 so that the £410,000 currently held by Withers in their client account for the Rybak parties could be retained by Withers on the following terms:

(1) Withers’ reasonable legal costs, charges and expenses incurred acting on behalf of the Rybak parties (“the Reasonable Legal Expenses”) were to be assessed by the Supreme Court Costs Office;

(2) the Reasonable Legal Expenses once assessed were to be paid to Withers out of the £410,000 currently held by Withers in the account together with interest on that sum; and

(3) any of the £410,000 currently held by Withers and remaining in the account after payment to Withers of the Reasonable Legal Expenses and interest was to be paid to Langbar.

31. On August 23, 2010, the Rybak parties assigned to Langbar all of their rights, title and interest, present and future in, under and to the relevant account and the balance of the account standing to their credit from time to time. Langbar agreed to apply such sums as it might receive from the account in reduction of the debt due to Langbar from the Rybak parties. Langbar has duly given notice to Withers of this assignment.

32. The hearing of Withers’ application of July 21, 2010 was deferred pending the determination of a separate application made by Langbar against Withers for a wasted costs order. I dismissed that application on February 17, 2011. The application of July 21, 2010 was argued before me on March 9, 2011. Ms Joanna Smith QC and Mr Sebastian Allen appeared on behalf of Withers and Mr David Quest appeared on behalf of Langbar.'

Extract 2: Rybak in the Court of Appeal, Jacob J paragraphs 2 to 16

'2. I must explain briefly how and why the money came into the account. Morgan J gives a fuller account at paras 4–32. Withers' clients (collectively, “Rybak” - for details, see the judgment of Morgan J at para 2) had been sued for a substantial sum by the respondent to the appeal, Langbar International Ltd (“Langbar”). In April 2008 the proceedings were settled by an agreement by which Rybak agreed to pay about £30m to Langbar. The £30m was warranted by Rybak to equate to nearly all their worldwide assets. These included a Monaco apartment owned by SCI Atol, the fourth defendant and a member of “Rybak” as defined.

3. The agreement contained a provision about the payment to Langbar of a sum of money which would be raised by a sale or mortgage of the apartment. The agreement was varied by an agreement of September 2008. This provided that in the event of a sale before the end of the year, Rybak would pay €7,588,000 from the net proceeds of the sale, regardless of the actual price achieved.

4. In December 2008 Rybak found a potential purchaser and wished to proceed. Langbar wished to prevent the transaction going through and to that end had lodged letters of opposition with a notary in Monaco which would have prevented the sale.

5. Rybak applied in the original proceedings for an order preventing Langbar from interfering with the sale. Morgan J heard the application on notice on 19 December 2008. He granted the order sought, subject to conditions about what was to happen to the proceeds of sale. Langbar objected to these being paid into the account of Rybak's Monegasque lawyer. It suggested that the money should be paid into a client account of Rybak's solicitors who were then Withers. The money would thereby be safeguarded within the jurisdiction. Morgan J acceded to that proposal, saying in his judgment that the proceeds were to be paid into “the relevant escrow account”. He made an order (“the Morgan order”) to which I shall have to return in detail.

6. The sale went through for a sum exceeding €13m. In accordance with the Morgan order the money was paid into the account. Pursuant to a provision of the Morgan order €7,588,000 was paid over to Langbar, leaving a sum in excess of €5m in the account.

7. Rybak then started a new action against Langbar and Langbar counterclaimed. The dispute was about whether Rybak had complied with the settlement agreement and whether Rybak were liable for misrepresentation. By the counterclaim Langbar were claiming a lot more than was in the account.

8. In August 2009 Rybak applied for release of the money held in the account, doing so pursuant to a provision of the Morgan order. Shortly thereafter, in early September, Judge Gordon in the Central Criminal Court on the application of the Serious Fraud Office made a general freezing order over Mr Rybak's assets (“the Gordon order”). The order expressly included the funds held in the account.

9. Rybak's application for release of those funds came before Judge Waksman QC, sitting as a judge of the High Court. Following a disputed hearing (which he treated as an application to vary a freezing order) he made an order dated 11 September 2009, varying the Morgan order (“the Waksman order”).

10. Later, in October, Judge Gordon varied his earlier order so as to prevent the sum in the Withers account being diminished below €2m. In April 2010 the Gordon order was wholly discharged.

11. In May 2010 Withers, acting for Rybak, applied for an order that £456,166 should be released from the account to pay the legal costs of Rybak up to that date. The application was adjourned to the trial of the new action and counterclaim. That came on before Morgan J in July. In the event there was no trial on the merits because he held that Rybak were in breach of an unless order, that the consequence of that was that the defence and counterclaim were struck out, and that relief against that consequence should not be granted.

12. The result was a judgment for Langbar against Rybak in the sum of €3,852,000 plus interest, and an order for an assessment of damages for a claim included in the counterclaim. Rybak were ordered to pay €1m interim damages in respect of that, the costs of the proceedings on an indemnity basis, and to pay €900,000 on account of those costs.

13. Morgan J made specific provision as what was to happen to the money in the account. Langbar wanted all of it transferred to it but by now Withers was claiming a retaining lien or equitable charge over the money. To hold the ring until the validity of that claim could be decided, Morgan J's order contained the following provision, at paragraph 9:

“All of the money in the account shall be paid forthwith by Withers to Langbar's solicitors in partial discharge of the Rybak liabilities under this order: provided however that if Withers give to Langbar a cross-undertaking in damages in the usual form then they may retain the amount of £410,000 in the account until close of business on 14 July 2010. Withers shall have liberty to apply on 24 hours' notice to Langbar for an order extending the time for payment of the £410,000.”

14. Time under the order was extended and on 21 July 2010 Withers applied for an order that the £410,000 in the account (the balance having been paid to Langbar) could be retained whilst their reasonable legal expenses were assessed, and that when they had been assessed Withers could be paid the assessed sum out of that money, any balance to go to Langbar.

15. In August Rybak assigned to Langbar all its rights in the money in the account on the basis that any money recovered would be applied to reduce its debt to Langbar.

16. Thus the upshot as it came before Morgan J to decide the lien/equitable charge point is that there was €410,000 in Withers' client account. It had got there pursuant to the Morgan order which had been varied by the Waksman order.'

[5] See: (a) Prekookeanska Plovidba v LNT Lines Srl [1989] 1 WLR 753 at 757; (b) Re Toleman and England, ex p Bramble (1880) 13 ChD 885; (c) Insolvency Act 1986, section 349; (d) Re Aveling Barford Ltd [1989] 1 WLR 360.

[6] In Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] 1 WLR 2052, Lord Briggs (with whom Lady Hale, Lord Kerr, Lord Wilson and Lord Sumption agreed), said, at paragraph 3:

'It was called a lien because the chose in action represented the fruits of the solicitor's work. But it is better analysed as a form of equitable charge.'

Later, Lord Briggs said, at paragraph 35:

'Barker v St Quintin (1844) 12 M & W 441 shows, better than any other, that the equitable lien operates by way of security or charge. Parke B said, at p 451:

“The lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the court to have that judgment held as a security for his debt.”

Lady Arden in Bott and Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8 [2023] AC 635; [2022] 2 WLR 634 said, at paragraph 103:

'The equitable lien constitutes an equitable charge...'

Lord Ktichen (with whom Lord Reed, Lord Briggs, Lord Hamblen and Lord Stephens agreed) in Candey Ltd v Crumpler [2023] 1 WLR 342, [2023] 2 All ER 527, in the Supreme Court, said, at paragraph 40:

'Instead, it operates by law as a first ranking right of the solicitor to be paid his or her fees out of the proceeds of the litigation, and as a form of equitable charge which binds third parties with notice of it. It is in this sense akin to a right of salvage.'

[7] Cockburn C.J. in Mercer v. Graves (1872) L. R. 7 QB 499, at 503 said

'There is no such thing as a lien except upon something of which you have possession...although we talk of an attorney having a lien upon a judgment, it is in fact only a claim or right to ask for the intervention of the court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs.'

Note, this characterisation of the solicitors' Equitable Lien is no longer good law - see: (a) Zacaroli J in Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs LR 907; (b) Lord Briggs, extra-judicially, agreed Zacaroli J in Tonstate - while giving a lecture on this area. In a lecture entitled 'Solicitors’ Equitable Liens' (Lecture to the Chancery Bar Association Annual Conference 14 January 2023), Lord Briggs said, at paragraph 50:

'Although Edmondson did not expressly overrule the Bibby line of authority, I would respectfully agree with Mr Justice Zacaroli that it did so by necessary implication, so that any case which suggests that the solicitor has no security right over a specific fund prior to a charge actually being granted by the court can no longer be regarded as good law.'

[8] In Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 ('Edmondson'), Lord Briggs said, at paragraph 3:

'Originally the fruits of the litigation were first identified in the judgment debt. Later this was extended to the debt due under an arbitration award and, later still, to the debt due to the claimant under an agreement to settle the claim. Each of those types of debt was identified as a form of property, a chose in action, in which equity could recognise and enforce an equitable interest in favour of the solicitor. It was called a lien because the chose in action represented the fruits of the solicitor's work.'

For completeness, there does not need even to be any formally issued proceedings either. Lord Briggs in Edmondson, at paragraph 35, said:

'Provided that the debt has arisen in part from the activities of the solicitor there is no reason in principle (and none has been suggested) why formal proceedings must first have been issued, all the more so in modern times when parties and their solicitors are encouraged as a matter of policy to attempt to resolve disputes by suitable forms of ADR, and when pre-action protocols of widely differing kinds have been developed precisely for that purpose.'

This was re-affirmed in Bott and Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8 [2023] AC 635; [2022] 2 WLR 634 ('Bott'):

(a) Lord Burrows, at paragraph 86, said:

'Assuming that the solicitor is acting for a potential claimant rather than a potential defendant, the best interpretation of Gavin Edmondson is that, for there to be an equitable lien, the solicitor must provide services (within the scope of the retainer with its client) in relation to the making of a client's claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client. The equitable lien secures, by a charge over that fund, the solicitor's costs. The making of a claim by a client, with or without legal proceedings, is the essence of the services provided by "litigation and dispute resolution" solicitors (acting for claimants). In this case, the solicitors have provided such services in relation to the making of claims for compensation for flight cancellations and delays payable under Regulation (EC) No 261/2004 ("Regulation 261"). Provided their services have significantly contributed to the successful recovery of compensation, they are, in my view, entitled to an equitable lien over that compensation.'

(b) Lord Briggs said in Bott, at paragraph 180, of Lord Burrow's test - that it was '...propounded by Lord Burrows JSC and supported by Lady Arden and me as sufficient to attract the solicitors' equitable lien, regardless whether there was any actual or reasonably anticipated dispute at the time of the retainer.' He continued:

'The pursuit by solicitors of a client's claim by the provision of professional services on credit will generally provide the client with access to justice, even though it may be less closely focused upon the achievement of that animating principle than a test based on the existence of an actual or reasonably anticipated dispute. But the claim-based test has the commanding advantage of simplicity and predictability. It is not in dispute that the other conditions for the existence of the lien, laid down in the Edmondson case, are all satisfied.' (paragraph 180)

[9] In Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 ('Edmondson'), Lord Briggs, speaking of a different point about the reach of equitable principles, said something about the nature of Equity itself, at paragraph 57:

'I acknowledge that equity operates with a flexibility not shared by the common law, and that it can and does adapt its remedies to changing times. But equity none the less operates in accordance with principles. While most equitable remedies are discretionary, those principles provide a framework which makes equity part of a system of English law which is renowned for its predictability.'

Equity will not 'stretch' to meet all solicitors' expectations. Lord Briggs in Edmondson said, at paragraph 58:

'It is simply wrong in my view to seek to distil from those cases a general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges.'

This was stated, as part of Lord Briggs rejection, at paragraph 56 to 58, of the solicitors' submissions:

'to the effect that the flexibility of the equitable remedy for the protection of solicitors was apt to respond to any instance of unconscionable conduct by the insurer, including breach of the RTA Protocol, all the more so because of the strong public policy in enforcing the scheme, designed as it was to balance the competing interests of its stakeholders while ensuring access to justice for the victims of road accidents at proportionate cost.'

[10] In Cook on Costs, 25th Ed, the learned authors summarise the 'Particular Lien' as follows, at paragraph 3.32:

'A solicitor also has at common law a particular lien on property recovered or preserved by him in litigation which extends to all costs incurred, both billed and unbilled. Unlike the general lien, a particular lien covers property not in the solicitor's possession and gives him an equitable right to have the property transferred into his possession. The costs are incurred when work is done under the retainer entitling the solicitor to exercise a general or a particular lien until the costs are paid. Recent cases involving defendants seeking to avoid the costs of solicitors incurred by claimants have involved the higher courts considering the boundaries of an equitable lien: see [3.33].

If some of the costs are unbilled the client's remedy is to request a bill for any outstanding costs. If the solicitor does not comply with the request the client may apply to the court under section 68 of the Solicitors Act 1974 for an order that he does so (see [3.13]).'

[11] The final sentence here, introduces an interesting question. Whether the persons who the law provides a Equitable Lien to, will be expanded, to assist other types of lawyers/legal advisers. Particular, barristers, and that would be both those that: (a) 'conduct litigation' akin to a solicitors (though there are a few differences); and (b) barristers, doing direct access work/licenced access work (presumably, barristers doing referral work from solicitors in the traditional referral model, don't need their own Equitable Lien).

In Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634 ('Bott'), none of the members of the Supreme Court made observations on this issue. Lady Arden, at paragraph 129 noted;

'Like other members of the court, I would express no view on the questions whether the lien should also protect the work of other advisers apart from solicitors...'

Lord Briggs in Bott, at paragraph 174, when dealing with a difficult issue of whether recognising the Equitable Lien at a very early stage of a claim, gives solicitors, as against other claims handlers, an unfair advantage, said:

'An obvious alternative might be to extend the lien to them as well. But that is not a matter capable of being addressed in this case. It would in all probability best be left to legislation.'

Lord Burrows in Bott, at paragraph 85, said:

'It would not be appropriate in this case - and neither counsel is suggesting that it is - to try to rationalise why solicitors in relation to litigation work may be regarded as enjoying a favoured position over others doing similar work or over solicitors doing different work that also results in a fund over which a lien could be enforced.'

If the Equitable Lien was available to other types of lawyers, for their fees, the name would presumably need to change to something like: 'litigation Equitable Lien' or 'lawyers' Equitable Lien' or similar:

(a) Lord Burrows in Bott, at paragraph 78, described it as the 'solicitor's litigation equitable lien';

(b) Speaking of what type of work solicitors' Equitable Lien covers (i.e. how early into a case, it would cover), Lord Briggs in Bott said, at paragraph 145:

'It was taken for granted in the Edmondson case that the solicitors' equitable lien was a litigation lien, using "litigation" in the broad general sense of pursuing a legal claim, rather than in the specific sense of the conduct of proceedings in court.'

[12] In Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634 ('Bott'), as to effective access to justice being central to the development and purpose of the solicitors' Equitable Lien, Lady Arden said, at paragraphs 110 and 111:

'As I see it, because of [Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052], effective access to justice has become a foremost animating principle of the equitable lien. Access to justice here is about a claimant having an effective means of having his claim determined and enforced. It is about facilitating the making of claims in any manner recognised by law. That is usually a court, but it may also be an arbitration or under a pre-action protocol. The aim of access to justice is that a person with a claim should be able to recover the amount of that claim in any manner recognised by law if the claim is a good one in law. The claimant is not bound to submit to an independent tribunal. He may be able to get proper redress without issuing proceedings or engaging in some other form of adjudication...

Beyond that, it is also appropriate to recall that effective access to justice is not a unidimensional subject. It includes the wherewithal for effective adjudication in a court of law, for instance the provision of sufficient resources for the court system, so that the courts are available as and when people who need them can get access to them. By parity of reasoning, there must be sanctions for steps taken by parties to prevent the solicitor from receiving his costs out of the fruits of the action (as in Welsh v Hole (1779) 1 Doug KB 238). Those steps would, if not sanctioned, diminish the reliance that the solicitor would be prepared to place on the equitable lien. The equitable lien of a solicitor is a recognition of the importance of the services of a solicitor in pursuing a claim and thus securing their fees is also apt to achieve access to justice. But the key issue here is the availability of the solicitor's equitable lien and the role it must play in the provision of effective access to justice.'

[13] In Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 ('Edmondson'), Lord Briggs said, at paragraphs 2 to 4:

'Solicitors have, since time immemorial, been entitled to a common law retaining lien for payment of their costs and disbursements. That is an essentially defensive remedy, which merely enables them to hold on to their clients’ papers and other property in their actual possession, pending payment. It affords no assistance where there is nothing of value in the solicitor's possession, and is powerless where, in a litigation context, the defendant to the claim pays the judgment debt or agreed settlement amount direct to the solicitor's client, the claimant. 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 the litigation, against anyone who, with notice of it, deals with the fruits in a manner which would otherwise defeat that interest.

Originally the fruits of the litigation were first identified in the judgment debt. Later this was extended to the debt due under an arbitration award and, later still, to the debt due to the claimant under an agreement to settle the claim. Each of those types of debt was identified as a form of property, a chose in action, in which equity could recognise and enforce an equitable interest in favour of the solicitor. It was called a lien because the chose in action represented the fruits of the solicitor's work. But it is better analysed as a form of equitable charge. Traditionally, the solicitor's interest could not be identified as a beneficial share in the chose, because that would have offended the laws against maintenance and champerty. Rather it was, from the earliest times, recognised as a security interest, enforceable against the fruits of the litigation up to the amount contractually due to the solicitor, in priority to the interest of the successful client, or anyone claiming through him. It did not depend upon the fruits of the litigation including a specific amount for party and party costs, such as a judgment for costs, or an element in a settlement sum on account of costs.

In the ordinary course of traditional litigation, with solicitors acting on both sides, the amount due under a judgment, award or settlement agreement would be paid by the defendant's solicitor to the claimant's solicitor. Or the claimant's solicitor might recover the sum due to his client by processes of execution. In either case the equitable lien would entitle the solicitor not merely to hold on to the money received, but to deduct his charges from it before accounting to his client for the balance. But equity would also enforce the security where the defendant (or his agent or insurer) paid the debt direct to the claimant, if the payer had either colluded with the claimant to cheat the solicitor out of his charges, or dealt with the debt inconsistently with the solicitor's equitable interest in it, after having notice of that interest. In an appropriate case the court would require the payer to pay the solicitor's charges again, direct to the solicitor, leaving the payer to such remedy as he might have against the claimant. This form of remedy, or intervention as it is sometimes called, arose naturally from the application of equitable principles, in which equitable interests may be enforced in personam against anyone whose conscience is affected by having notice of them, either to prevent him dealing inconsistently with them, or by holding him to account if he does.'

Later, under the heading 'The solicitors’ equitable lien: the existing law', Lord Briggs said, at paragraphs 30 to 38:

'30. The earliest decision to recognise the equitable lien is Welsh v Hole (1779) 1 Doug KB 238. The plaintiff obtained judgment for £20 and costs in a civil claim for assault, but then compromised the claim for a direct payment by the defendant of £10. There was no collusion to defeat the solicitor's right to payment of his bill. Lord Mansfield said this, at pp 238–239:

“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.”

There having been no notice in that case, the solicitor's claim against the defendant failed. It is implicit in Lord Mansfield's reasoning that, if there had been notice to the defendant, he would have had to pay a second time, up to the amount of the solicitor's bill. The typically terse judgment may be said to have dealt with legal and equitable lien without clearly distinguishing between the two, but the analogy of an assigned debt shows that Lord Mansfield recognised that the solicitor had an interest in the judgment debt which the court would protect, provided that notice of that interest had been given to the debtor before payment to the judgment creditor. An interest dependent upon notice is typical of an equitable interest.

31. Confirmation that payment of the judgment debt to the claimant after notice of the solicitor's interest exposed the payer to having to pay again was provided in Read v Dupper (1795) 6 Durn & E 361. In that case the defendant's solicitor paid the plaintiff direct, after notice of the plaintiff's solicitor's interest, and had to pay again. Lord Kenyon CJ began, at p 362:

“The principle by which this application is to be decided was settled long ago, namely that the party should not run away with the fruits of the cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expense, those fruits are obtained.”

Lord Kenyon CJ explained Lord Mansfield's reference to assignment in Welsh v Hole in terms of equitable principle. He said:

“according to the rules of equity and honest dealing if the assignee give notice to the debtor of such assignment, he shall not afterwards be suffered to avail himself of a payment to the principal in fraud of such notice.”

32. In Ormerod v Tate (1801) 1 East 464 the fruits consisted of the debt arising from an arbitration award. That appears to have been a case of collusion, because Lord Kenyon CJ, at p 465, described the arrangement to pay the claimant direct as: “no other than a mere shuffle between the plaintiff and defendant to cheat the attorney of his lien.” He described the extension of the principle to accommodate arbitration awards as justified by “convenience, good sense and justice” and recognised a public interest in the extension, to encourage litigants to use arbitration.

33. Two early cases demonstrate that access to justice lay behind the development of the principle. The first is Ex p Bryant (1815) 1 Madd 49. Plumer V-C said, at p 52:

“I do not wish to relax the doctrine as to lien, for it is to the advantage of clients, as well as solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their costs under the doctrine as to lien.”

The Vice Chancellor also said, obiter, that knowledge of the solicitor's lien on the part of the payer would be as effective as notice. To the same effect is Gould v Davis (1831) 1 Cr & J 415.

34. The second case is In re Moss (1866) LR 2 Eq 345, although it was about a legal rather than equitable lien. Lord Romilly MR said, at p 347:

“I think it of great importance to preserve the lien of solicitors. That is the real security for solicitors engaged in business. It is also beneficial to the suitors. It would frequently happen, but for the lien which solicitors have upon papers and deeds, that a client who is not able to advance money to enable them to carry on business would be deprived of justice, through inability to prosecute his claims in the suit …”

35. Barker v St Quintin (1844) 12 M & W 441 shows, better than any other, that the equitable lien operates by way of security or charge. Parke B said, at p 451:

“The lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the court to have that judgment held as a security for his debt.”

A similar analysis is provided by Lord Hanworth MR in Mason v Mason [1933] P 199, 214. The use of the concepts security and charge imply that there must be identified some fund over which it can operate. This was described as a necessary condition of equitable interference under this principle in In the Estate of Fuld, decd (No 4) [1968] P 727, 736, per Scarman J. The requirement for a fund may be satisfied not just by a judgment debt or arbitration award, but also by a debt arising from a settlement agreement. Provided that the debt has arisen in part from the activities of the solicitor there is no reason in principle (and none has been suggested) why formal proceedings must first have been issued, all the more so in modern times when parties and their solicitors are encouraged as a matter of policy to attempt to resolve disputes by suitable forms of ADR, and when pre-action protocols of widely differing kinds have been developed precisely for that purpose.

36. The authorities on the solicitors’ equitable lien (including many of those summarised above) were recently reviewed by the Court of Appeal in Khans Solicitors v Chifuntwe [2014] 1 WLR 1185. The fund in question consisted of a debt arising from the agreement of the Home Secretary to settle pending judicial review proceedings by a payment of a specific sum on account of the claimant's costs. The payment was made direct by the Treasury Solicitor to the claimant (by then acting in person) after express notice from the claimant's former solicitors that they claimed a lien. The Home Secretary was ordered to pay the settlement sum a second time to the solicitors, less an amount already paid by the client on account. Sir Stephen Sedley provided this summary, at para 33:

“In our judgment, the law is today (and, in our view, has been for fully two centuries) that the court will intervene to protect a solicitor's claim on funds recovered or due to be recovered by a client or former client if (a) the paying party is colluding with the client to cheat the solicitor of his fees, or (b) the paying party is on notice that the other party's solicitor has a claim on the funds for outstanding fees. The form of protection ought to be preventative but may in a proper case take the form of dual payment.”

37. I consider that to be a correct statement of the law. It recognises that the equity depends upon the solicitor having a claim for his charges against the client, that there must be something in the nature of a fund against which equity can recognise that his claim extends (which is usually a debt owed by the defendant to the solicitor's client which owes its existence, at least in part, to the solicitor's services to the client) and that for equity to intervene there must be something sufficiently affecting the conscience of the payer, either in the form of collusion to cheat the solicitor or notice (or, I would add knowledge) of the solicitor's claim against, or interest in, the fund. The outcome of the case also recognised that the solicitor's claim is limited to the unpaid amount of his charges. Implicit in that is the recognition that the solicitor's interest in the fund is a security interest, in the nature of an equitable charge.'

Lord Briggs in Edmondson then dealt with a narrow point, about whether:

(a) a defendant to RTA claims, had, in respect to the claimants' solicitors lien claims, '...the requisite notice and knowledge to make a subsequent payment of settlement moneys direct to the claimant unconscionable, as an interference with the solicitor's interest in the fruits of the litigation.' (paragraph 50)

(b) the Court of Appeal had been correct that, the claimant's solicitors could deploy the solicitors' Equitable Lien, as a equitable remedy, to recover from the defendant (Haven Insurance) fixed costs, disbursements and success fee provided for under the RTA Protocol, regardless of the amount agreed to be paid in settlement.' (it was not). Rather, Lord Briggs said, at paragraph 65:

'By contrast the remedy exists to provide security for the solicitor's charges under his retainer, limited to the amount of the debt created by the settlement agreement.'

and, 

'In the present cases, one effect of the retainer was to limit those recoveries to the amount recoverable from the defendants or their insurers. To the extent that the fixed costs regime limits those recoveries below that recoverable under the tables in the CFAs, that limitation would have to be taken into account, as it has been by the Court of Appeal's order.'

[14] It is widely acknowledged that calling it a 'lien' is a misnomer. A 'lien' properly so called, can only exist over property that person, the lienholder, has in his possession. The solicitors' Equitable Lien reaches over funds not in the lienholder's possession.

On top of this, it is/was a misnomer, whether:

(a) the 'old' James Bibby Ltd v Woods (Howard, Garnishee) [1949] 2 KB 449 [1949] 2 All ER 1 mischaracterisation applied (see footnote below); or

(b) the 'new' Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 ('Edmondson') (correct) characterisation applies (as it does).

[15] Here we will consider the 'old' Bibby mischaracterisation of the solicitors' Equitable Lien.

In substance, formerly it was (wrongly) thought that what the solicitor had, was (only) a right to apply to court for protection, and until the court intervened on such an application, the solicitor had no right over/interest in, the targeted fund/property.

(a) in Mercer v. Graves (1872) L. R. 7 Q. B. 499, 503, Cockburn C.J. said:

'...it is only a claim or right to ask for the intervention of the court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs'

(b) in Mason v. Mason [1933] P. 199, Lord Merrivale P. at 205:

'The nature of a solicitor's lien...is merely a right to claim the equitable interference of the court, who may order that the judgment obtained by the solicitor's client do stand as security for her costs and that payment of such an amount as will cover them be made to the solicitor in the first instance. That lien is one which prevails over a fund which is in sight; the right is one which, so to speak, cannot prevail at large.'

(c) In James Bibby Ltd v Woods (Howard, Garnishee) [1949] 2 KB 449 [1949] 2 All ER 1 ('Bibby'), Lord Goddard (with whom Birkett J and Lynskey J agreed) considered an appeal where there was:

(a) Mr Woods - a litigant in actions (in Court of Passage and the Liverpool County Court) against Mr Howard. Mr Woods and Mr Howard compromised the actions, by entering into a compromise agreement, wherein, Mr Howard agreed to pay Mr Wood 90L.

(b) Mr Woods was also a judgment debtor. The judgment creditor was James Bibby Ld [sic].

(c) to enforce its judgment, James Bibby applied for, in essence, a third party debt order (then called a garnishee order), to attach to the debt Mr Howard owed Mr Woods.

(d) On 25.2.49, the judgment creditor obtained a garnishee order nisi, and on 28.2.49, Mr Woods' solicitor heard of the garnishee order.

(e) James Bibby applied for a garnishee order absolute. At the hearing before a registrar, for the garnishee order to be made absolute, Mr Woods' solicitor asserted for the first time that he had a lien on the debt of 90l. for his costs in the proceedings between Mr Woods and Mr Howard. The registrar at the hearing, made the garnishee order absolute.

There was an appeal (there is an irrelevant oddity with who appealed).

Lord Goddard in Bibby on appeal said, at:

(i) paragraph 3:

'A "lien," in the strict sense of the word, can only exist where the person claiming the lien has the property which he claims to be subject to the lien in his possession. An artificer has a lien on property on which he has spent time, labour and trouble in making repairs or other work because he has that property in his possession and can refuse to give it up until he is paid.'

(ii) paragraph 4:

'A solicitor has a lien on papers of his clients which are in his possession; he can refuse to give up those papers so long as his costs are not paid. He is also commonly said to have a lien on a sum of money which comes into existence owing to his exertions, but in that case the term "lien" is really a misnomer. The solicitor's right in that case is not strictly and accurately a lien because it has not the characteristics of a lien. That was made clear by Cockburn C.J. in Mercer v. Graves [(1872) L. R. 7 Q. B. 499, 503.], in which he said: "There is no such thing as a lien except upon something of which you have possession...although we talk of an attorney having a lien upon a judgment, it is in fact only a claim or right to ask for the intervention of the court for his protection, when, having obtained judgment for his client, he finds there is a probability of the client depriving him of his costs." That passage was cited by Lord Merrivale P. in Mason v. Mason [[1933] P. 199, 205]. When that case went to the Court of Appeal, Lord Hanworth M.R., referring to Mercer v. Graves [(1872) L.R. 7 Q. B. 499, 503.], said [Idid 214]: "The nature of a solicitor's lien is pointed out in the course of that case. It is merely a right to claim the equitable interference of the court, who may order that the judgment obtained by the solicitor's client do stand as security for her costs and that payment of such an amount as will cover them be made to the solicitor in the first instance. That lien is one which prevails over a fund which is in sight; the right is one which, so to speak, cannot prevail at large."'

Lord Goddard in Bibby then continued, at paragraph 4:

'Those dicta show what the nature of the solicitor's lien is in such a case as the present. It is the solicitor's right to go to the court and to ask the court to charge property in his favour; until that is done he has no right in it. In the present case, when the application for the garnishee order absolute was before the district registrar no charging order had been made or applied for. There was therefore no lien or charge on the money at that time. There was no lien on it in the strict sense of the term, and there was no charge on it because a charging order had not been applied for.'

Earlier, Lord Goddard in Bibby had said, at paragraph 3:

'The district registrar could only have ordered the solicitor to appear and state the nature of his claim if it was proved, or suggested, to him that the solicitor had a lien or charge on the money. It was said that he had a lien or charge on it because he had a right to apply to the court for a charging order. But he did not in fact so apply. The fallacy which underlies that argument is that it does not take into account the nature of a solicitor's lien on a fund of money which is recovered by his exertions. I will assume that, if the solicitor had in the present case applied to the appropriate court, which would have been either the Court of Passage or the Liverpool county court, or to both, for a charging order, he would have got one. But until he got the charging order he only had at the most an inchoate right to apply for one; he had not a lien on the money. That is clear if the nature of his so-called "lien" is understood.'

Later, Lord Goddard in Bibby said, at paragraph 6:

'Garnishee proceedings are one form of execution and, as I have said more than once in the course of the argument, it not infrequently happens that, where there are several claims, or may be several claims, against money, the person who gets in first gets the fruits of his diligence. If the solicitor in the present case had applied for a charging order when he heard, as he did on February 28, that the garnishee order nisi had been made, he might have got a charging order. If he had got it his charge would have taken precedence over the judgment creditors' claim. But when the application to make the order absolute came before the district registrar, there was no charge in existence. The so-called "lien" had not been perfected because no charging order had been made, and I think therefore that the district registrar was right, and that this appeal must be dismissed.'

In Bibby, Lynskey J said, at paragraph 8:

'The position, as my Lord has pointed out, is that a solicitor's so-called "lien" upon property which is not in his possession is not strictly a lien at all, but a right to go to the court and to ask the court to charge the property for the amount of his costs.'

[16] In Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs L.R. 907 ('Tonstate'), Zacaroli J, after considering: (a) Lord Briggs in Gavin Edmondson Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 (which Zacaroli J abbreviated to 'Haven Insurance', but Lord Briggs abbreviated it to 'Edmondson'); and (b) Lord Goddard in James Bibby Ltd v Woods and Howard [1949] 2 KB 449, said, at paragraphs 26 to 27:

'While Lord Briggs did not in terms say that the proposition, stated in that way by Lord Goddard CJ in Bibby was wrong, I agree with [counsel for the solicitors] that the proposition cannot stand with the reasoning and conclusion of the Supreme Court and must be taken to have been at least implicitly overruled (notwithstanding the obiter comment to the opposite effect by Lewison LJ in Bott & Co Solicitors v Ryanair DAC [2019] 1 WLR 3375, at [33], in a case where no question of priority as between the solicitor's lien and a security right of a third party arose).

That is reinforced by the fact that the earlier authority cited by Lord Briggs is equally inconsistent with Lord Goddard CJ's proposition.'

As an aside, extra-judicially, Lord Briggs agreed Zacaroli J in Tonstate, while giving a lecture on this area. In a lecture entitled 'Solicitors’ Equitable Liens' (Lecture to the Chancery Bar Association Annual Conference 14 January 2023), Lord Briggs said, at paragraph 50:

'Although Edmondson did not expressly overrule the Bibby line of authority, I would respectfully agree with Mr Justice Zacaroli that it did so by necessary implication, so that any case which suggests that the solicitor has no security right over a specific fund prior to a charge actually being granted by the court can no longer be regarded as good law.'

[17] In Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634 ('Bott'), the majority were Lord Burrows, Lady Arden and Lord Briggs. Each gave a judgment. The minority were Lord Leggatt and Lady Rose (who gave a joint judgment, dissenting). Observations were made about the nature of the solicitors' Equitable Lien (with a focus on when in the earliest stages, it first arises):

(a) Lord Burrows in Bott, under the heading 'The solicitor's litigation equitable lien and the modernisation achieved by Gavin Edmondson' said, at paragraphs 78 to 84 (at paragraph 84, Lord Burrows said he would depart from Edmondson):

'78. I do not think it is possible to rationalise, so as to produce coherence, all the situations in which non-contractual liens are imposed by law (whether at common law or in equity or by statute). Equitable liens have been described as "something of a themeless rag-bag" (by Donovan Waters, "Where is Equity Going? Remedying Unconscionable Conduct" (1988) 18 University of Western Australia Law Review 3, 24: see also John Phillips, "Equitable Liens—A Search for a Unifying Principle" in Norman Palmer and Ewan McKendrick (eds), Interests in Goods (1993) 635, 637, reprinted in 2nd ed (1998) 975, 977). But it is clear from long-established authority that a solicitor is entitled to an equitable lien over the fruits of litigation in order to give the solicitor security for the recovery of the costs (i e the fees) legally owed to the solicitor by his or her client. This is the solicitor's litigation equitable lien.

79. In Meguerditchian v Lightbound [1917] 2 KB 298, it was held by the Court of Appeal that the trigger for the solicitor's equitable lien was the issuing of proceedings. Even if a solicitor carried out extensive work in achieving a settlement, if proceedings had not been issued, the solicitor was not entitled to a lien over the settlement fund. As Rowlatt J said in that case at first instance [1917] 1 KB 297, 303, there could be no equitable lien "upon the fruits of a mere negotiation conducted by a solicitor".

80. In Gavin Edmondson the Supreme Court examined the role of the solicitor's equitable lien in the context of modern litigation, in particular in a climate where access to justice is a central underlying goal and out of court settlements and alternative dispute resolution are encouraged. On the facts of the case, the solicitor had entered the relevant claim on an online portal in line with the pre-action protocol for low value personal injury claims. The Supreme Court decided that the solicitor was entitled to an equitable lien over the settlement fund because the work had made a significant contribution to the settlement of the client's personal injury claim.

81. Three points about the decision in Gavin Edmondson are particularly significant. First, no proceedings had been issued (i e no action had been commenced). Although Meguerditchian v Lightbound was not expressly mentioned in the reasoning of the Supreme Court, it is clear that the triggering requirement laid down in that case (the issuing of proceedings) was being rejected. To that extent, Meguerditchian v Lightbound was implicitly overruled (although the actual decision in that case remains correct for the further reason relied on by Rowlatt J, upheld by the Court of Appeal, as set out in the minority's judgment above at para 29).

82. Secondly, in Gavin Edmondson there was no "dispute" in any realistic sense of the word. The insurer had given no indication that it would be denying liability or that it was not willing to agree quantum. For example, in the case of Mr Tonkin, quantum was agreed a few days after a phone call with Mr Tonkin and that phone call was a few days after his claim had been entered by the solicitors on the online portal.

83. Thirdly, although the Supreme Court in Gavin Edmondson insisted on the solicitor making a significant contribution to the obtaining of the settlement fund that was treated as a low threshold. In Mr Tonkin's case, the solicitors had done little more than entering his claim on the online portal.

84. It has not been suggested by [counsel for the airline], that we should depart from the decision in Gavin Edmondson. In any event, I would not have wanted to do so because, in my view, it recognises in an important way the realities of modern litigation and dispute resolution. In other words, it updates the role of the solicitor's equitable lien in recognition of the modern approach to litigation and dispute resolution (using the latter as a term of art that can include instances where there is no real dispute as in Gavin Edmondson).'

Under the heading 'Applying Gavin Edmondson', Lord Burrows said, at paragraph 85:

'It follows that we are required in this case to apply Gavin Edmondson. The fact that Gavin Edmondson means that, in a wider range of situations than before, a solicitor is entitled to an equitable lien when others doing similar work are not so entitled is largely irrelevant. Similarly, it is largely irrelevant that solicitors doing transactional work, and not work that can be classed as "litigation or dispute resolution" work, are not entitled to an equitable lien. They are largely irrelevant factors because the historical position we are required to apply takes the fact that solicitors are entitled to an equitable lien in respect of litigation work as a starting point even if others doing the same or very similar work have no such lien. It would not be appropriate in this case—and neither counsel is suggesting that it is—to try to rationalise why solicitors in relation to litigation work may be regarded as enjoying a favoured position over others doing similar work or over solicitors doing different work that also results in a fund over which a lien could be enforced.'

Under the heading 'The outer reaches of the solicitor's equitable lien', Lord Burrows in Bott said, at paragraph 97, that the threshold of significant contribution to the recovery of compensation by the clients required, 'is a low one.' 

Lord Burrows made 3 further points in Bott, of which two warrant noting here. At paragraphs 100 and 101, Lord Burrows said:

'...an equitable lien only goes so far as to give the solicitor security for the costs to which it is contractually entitled. Although there is a wide-ranging debate as to how far the law should ever provide proprietary security, where it has not been contractually agreed (see, for example, in the context of unjust enrichment, Goff & Jones: The Law of Unjust Enrichment, 9th ed (2016), paras 37-07 to 37-26), there is no question of the equitable lien resulting in the solicitor obtaining more than the amount to which the solicitor is contractually entitled. What the law is doing is making it more certain that the solicitor will be paid the costs to which it is contractually entitled; and this in turn enhances the willingness of solicitors to extend credit to clients.'

and

'...in accordance with the standard principles applicable to the equitable lien, [the defendant airline] was here bound by the equitable lien because it had notice of it. Once it had notice of the lien, it was taking the risk of double liability if it chose to pay the client direct.'

(b) Lady Arden in Bott said, at paragraphs 103 to 111 (the reference in paragraph 104 to 'para 23 above' is to a description of s.73 of the Solicitors Act 1974):

'103. The equitable lien constitutes an equitable charge and it has been held to arise where there is a compromise made directly with the solicitor's client in pending litigation (see, for example, Swain v Senate (1806) 2 Bos & P NR 99), or in an arbitration (In re Meter Cabs Ltd [1911] 2 Ch 557), or under the Pre-action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents ("the RTA Protocol") (Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] 1 WLR 2052).

104. The solicitor's equitable lien has been developed over time to meet new circumstances. It is at least 200 years old. It began as a principle to enable the court to intervene if a solicitor obtained a judgment for his client, and that led to a recovery for the client. It was extended to a case where the parties decided to refer their dispute to arbitration and most recently where the claimant uses a protocol or scheme for presenting a claim that enables him or her to receive a settlement offer without having to issue court proceedings. The equitable lien is therefore a dynamic legal concept, not one which is hard-edged, circumscribed by immutable rules and incapable of further development. Courts have developed the law to meet changing times and on the basis that they were satisfied that it was appropriate to do so. Parliamentary approval to the equitable lien can be seen in the creation of the parallel scheme for charging orders described by Lord Leggatt and Lady Rose JJSC, at para 23 above. But that is a parallel stream of development limited to litigation that does not affect the equitable lien. But, although the concept is capable of development, in my judgment it should be developed only if there is a coherent principle which justifies that development.

105. The recent decision of this court in Gavin Edmondson established at least two points.

106. Firstly, and most obviously, it established that an equitable lien can arise where no litigation has yet been commenced and indeed may never be commenced. In this regard the decision impliedly overruled the first holding in Meguerditchian v Lightbound [1917] 2 KB 298 (referred to by Lord Leggatt and Lady Rose JJSC, at paras 28–31 above) which is said to lay down a "mere negotiation" rule: I consider this further at para 112 below.

107. Secondly, and importantly from the point of view of my emphasis on coherent principle, it establishes a clear link between the lien and access to justice. This point appears in para 1 of the judgment of Lord Briggs JSC: "It is a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice."

108. Lord Briggs JSC developed this point with the assistance of authority at paras 33 and 34 of his judgment:

"33. Two early cases demonstrate that access to justice lay behind the development of the principle. The first is Ex p Bryant (1815) 1 Madd 49. Plumer V-C said, at p 52: 'I do not wish to relax the doctrine as to lien, for it is to the advantage of clients, as well as solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their costs under the doctrine as to lien.' The Vice Chancellor also said, obiter, that knowledge of the solicitor's lien on the part of the payer would be as effective as notice. To the same effect is Gould v Davis (1831) 1 Cr & J 415.

"34. The second case is In re Moss (1866) LR 2 Eq 345, although it was about a legal rather than equitable lien. Lord Romilly MR said, at p 347: 'I think it of great importance to preserve the lien of solicitors. That is the real security for solicitors engaged in business. It is also beneficial to the suitors. It would frequently happen, but for the lien which solicitors have upon papers and deeds, that a client who is not able to advance money to enable them to carry on business would be deprived of justice, through inability to prosecute his claims in the suit …'"

109. So, the purposes of the solicitor's equitable lien always included helping to ensure that people who have claims, whether to recover property, payment of a sum of money or damages, can pursue their claims even if they have limited means, which makes it difficult for them to retain a solicitor. This is because the solicitor will have the assurance that if the claim is pursued on his advice and judgment is obtained, he or she will have the benefit of the equitable lien, and this will make the solicitor more willing to act for people of limited means.

110. As I see it, because of Gavin Edmondson, effective access to justice has become a foremost animating principle of the equitable lien. Access to justice here is about a claimant having an effective means of having his claim determined and enforced. It is about facilitating the making of claims in any manner recognised by law. That is usually a court, but it may also be an arbitration or under a pre-action protocol. The aim of access to justice is that a person with a claim should be able to recover the amount of that claim in any manner recognised by law if the claim is a good one in law. The claimant is not bound to submit to an independent tribunal. He may be able to get proper redress without issuing proceedings or engaging in some other form of adjudication. In my judgment, freed of authority, there is no logical reason why his solicitor should be entitled to rely on the fruits of his labour as security for his fees in pursuing a claim for his client if court proceedings or arbitration or some process under a pre-action protocol has been initiated but not if the settlement has been obtained without doing that. If such a distinction exists it may act as an incentive to issue proceedings or arbitration when some equally effective but less expensive course is open to the client.

111. Beyond that, it is also appropriate to recall that effective access to justice is not a unidimensional subject. It includes the wherewithal for effective adjudication in a court of law, for instance the provision of sufficient resources for the court system, so that the courts are available as and when people who need them can get access to them. By parity of reasoning, there must be sanctions for steps taken by parties to prevent the solicitor from receiving his costs out of the fruits of the action (as in Welsh v Hole (1779) 1 Doug KB 238). Those steps would, if not sanctioned, diminish the reliance that the solicitor would be prepared to place on the equitable lien. The equitable lien of a solicitor is a recognition of the importance of the services of a solicitor in pursuing a claim and thus securing their fees is also apt to achieve access to justice. But the key issue here is the availability of the solicitor's equitable lien and the role it must play in the provision of effective access to justice.'

Disapproving of the minority in Bott's suggestion of a 'dispute' threshold, Lady Arden said, at paragraphs 118 to 122:

'118. I agree with Lord Burrows JSC's criticisms of the "dispute" threshold (paras 91–96 of his judgment). The minority's test of "dispute or anticipated dispute" also leaves it unclear who must anticipate the dispute and on what basis. If it is the anticipation of the claimant, is it to be tested, as one would have thought it must, by reference to the information that he has? One would have thought that that was necessary for the test to be fair, but the difficulty is that that may involve the disclosure of legally privileged information which the claimant cannot be expected to disclose. If the test is wholly objective, it would seem to be irrelevant whether the claimant himself anticipated the dispute, which again seems wrong in principle.

119. In my judgment, that situation self-evidently falls within the animating principle which I have identified above. Processes for the resolution of complaints and claims by customers are nowadays not unknown and, in my judgment, recognition of the relationship between such processes and effective access to justice reflects our expanding understanding of what is needed to promote and obtain effective access to justice. The extension of the solicitor's equitable lien to cover costs incurred as part of such processes constitutes, therefore, an area in which, in my judgment, judge-made law may properly be developed in accordance with the principles already detailed above.

120. Accordingly, it seems to me that the equitable lien can and should be held to arise where there is no dispute as such, but the client has a claim which has not been admitted and which must be formulated and communicated to the service provider or other prospective defendant in order to elicit whether there is a dispute. In my judgment this is a principled and coherent test for the reasons that I have already given. It is not, as I see it, inconsistent with the historical roots or rationale of the principle. Nor is it to be characterised as an illegitimate extension of the law (paras 45 and 67 above). The majority provides an explanation of where the boundary lies.

121. In so far as the reasoning of Dyson LJ in Gaynor v Central West London Buses Ltd (trading as First Transforming Wave) [2007] 1 WLR 1045, paras 16–18 leads to a contrary conclusion, I would hold that his conclusion is distinguishable because it was made in the different context of specific statutory provisions.

122. Since drafting my judgment, I have had the privilege of reading the draft judgments of Lord Briggs and Lord Burrows JJSC, and my approach accords with the approach of Lord Burrows JSC, with which Lord Briggs JSC agrees. Where the client is a potential claimant, it is a claim-based approach: was the solicitor asserting a legally enforceable claim on behalf of the client and was his work instrumental in obtaining the compromise or transfer of property or collateral benefit from the dispute which the client has obtained? This read with para 125 below precisely matches in relation to the recovery of a fund the test put forward by Lord Burrows JSC in para 88 of his judgment.' [bold added]

Under the heading 'Importance today of out of court settlement of disputes', Lady Arden said, at paragraphs 123 and 124:

'123. Times have moved on since cases such as Welsh v Hole (see para 111 above) were decided. There is today an enormous pressure on court resources, human and physical. Accordingly, the courts in certain circumstances encourage parties to seek to resolve their disputes in other ways, if that is appropriate, before pursuing court proceedings. So, for example, in a dispute about financial services, the client may be encouraged to use some mediation service, or process involving an ombudsperson, before bringing any court proceedings.

124. A reference to arbitration has long been recognised as in the public interest. It follows that other forms of dispute resolution out of court which have been developed since should be regarded in the same way. Lord Kenyon CJ recognised that there was a public interest in arbitration when he held in Ormerod v Tate (1801) 1 East 464 that the solicitor's equitable lien was available where, after proceedings had been commenced, the parties agreed to go to arbitration. He added (immediately after the passage cited by Lord Leggatt and Lady Rose JJSC, at para 21 of their judgment): "The public have an interest that it should be so; for otherwise no attorney will be forward to advise a reference" (p 465). The relevant area of law may be sufficiently clear to a person who is legally trained, but in reality a layperson may well be unfamiliar with it, or unwilling to act without some advice. Compensation for delayed or cancelled flights may not be straightforward in every case (see for example Gahan v Emirates [2018] 1 WLR 2287) but I accept that it will be relatively so in many cases.'

Lady Arden then touched on 'instrumentality' of the solicitor, under the heading 'Recovery must be through the instrumentality of the solicitor', at paragraph 125:

'Clearly, for the equitable lien to arise, the sum recovered must have been obtained through the instrumentality of the solicitor's services. It has been held to extend to collateral benefits obtained on losing the litigation (Hyde v White [1933] P 105).'

She did not find it necessary to consider the meaning instrumentality any further.

Lady Arden in Bott, made 3 other points:

(1) 'The animating principle of effective access to justice does not extend to the transactional services provided by a solicitor.' (paragraph 126)

(2) Actual court intervention - where the paying party decides to pay the lay party on the other side, rather than the lay party's solicitor, the court has a discretion to interfere. On this, Lady Arden said, at paragraphs 127 and 128:

'127. The court will not of course automatically interfere if the paying party decides to pay the amount of the claim to the client and not to his solicitors. The court has a limited discretion not to come to the aid of the solicitors. It is a judicial discretion which must be exercised in accordance with settled principles.

128. As Lord Briggs JSC explained in Gavin Edmondson at para 37, "for equity to intervene there must be something sufficiently affecting the conscience of the payer, either in the form of collusion to cheat the solicitor or notice (or, I would add knowledge) of the solicitor's claim against, or interest in, the fund". There are many illustrations of this in the authorities, including the decision of the Court of Appeal in The Hope (1883) 8 PD 144, in which, it should be noted, the only ground of appeal was collusion. Notice was not raised.'

(3) This third point is set out in the main body of the article (it is paragraphs 130-131 of Lady Arden's judgment).

(c) Lord Briggs in Bott said:

(i) that Edmondson did not deal in detail with the narrow point in Bott. What early stage to litigation activities, can first give rise to the solicitors' Equitable Lien? Lord Briggs, at paragraph 147 of Bott, said, 'Apart from agreeing with the parties that the equitable lien did not depend upon the issue of proceedings (or the commencement of an arbitration) and thereby implicitly overruling the first ground of reasoning in [Meguerditchian v Lightbound [1917] 2 KB 298], this court did not set out in the Edmondson case to make new law.'

(ii) of Bott's largely automated online scheme for claims for compensation for delayed/cancelled flights - 'This scheme was probably not the first, and is unlikely to be the last, attempt by solicitors to devise ways of providing their professional services to clients in the profitable pursuit of modest claims at proportionate cost, by undertaking a large number of claims of particular types based on narrow profit margins per case. Since, as Lady Arden emphasises and Edmondson establishes, access to justice for persons of modest means is the animating principle underlying the solicitors' equitable lien, that objective will be served by as clear as possible a definition of the work which constitutes "litigation" for the purpose of attracting the lien, in a form which enables those working out the economics of a proposed scheme to know in advance whether the lien will or will not be available.' (paragraph 151)

(ii) however, '...equity (when it is working properly) operates by reference to principles rather than in accordance with strict rules. Even when the general conditions for the obtaining of equitable relief are satisfied, the court retains discretion as to the grant of relief. Nonetheless solicitors ought to be able to be reasonably sure, when deciding whether to act for a client on credit, what conditions will need to be satisfied in order for them to have recourse to the equitable lien, and so ought the contemplated defendants and their advisors.' (paragraph 148)

(iv) 'Potential defendants need similar certainty. The equitable lien operates against a defendant who pays the claimant direct only if the defendant has notice of the lien, or colludes with the claimant to defeat the solicitors' entitlement to their fees. In that context "notice" means notice of the facts which, as a matter of law, give rise to the lien. Those conditions reflect the underlying notion that it is only where the defendant has acted in some way unconscionably in paying the claimant direct that it incurs the liability to make an additional payment of the solicitors' fees. There may be perfectly proper reasons why a defendant would prefer to pay the claimant direct. The inhibition from paying direct constituted by having notice of the solicitors' equitable lien assumes knowledge of whether or not the relevant facts of which the defendant has notice do give rise to a lien. But if there is real uncertainty whether those facts do in law give rise to an equitable lien, then the notice condition may fail to serve its proper purpose.' (paragraph 152)

(v) that the Bott Supreme Court was agreed on some principles, mainly derived from Edmondson. Lord Briggs said, at paragraph 154:

'We are however all agreed about the main principles, most of which derive from Edmondson. First, as already noted, the animating principle behind this equitable lien is that it promotes access to justice for potential claimants with insufficient means to pay lawyers up front, by enabling solicitors to act for them in the pursuit of their claims on credit, with reasonable security for their fees, against recoveries. Secondly, the requirement that the recovery be made through the instrumentality of the solicitors' work sets a low threshold. The work does not have to pass any test of skill or sophistication, nor need it be the sole or effective cause of the client's recovery. It is no objection that the carrying out of the "work" may be largely automated, with minimal human intervention. Thirdly, payment for transactional work is wholly excluded from protection. Fourthly, the lien provides security for the earliest stages of work done in the pursuit of the client's claim (such as the preparation and sending of a pre-action letter of claim, or the notification of the claim on a pre-action portal), and regardless whether the recovery eventually made is the result of court proceedings, arbitration, mediation, negotiation or any other method of dispute resolution. It is in principle sufficient if the intended defendant agrees to pay in full simply in response to the solicitors' pre-action letter of claim. Fifthly, none of the various statutory definitions of litigation or contentious business assist. Finally, the question whether the lien arises must in principle be able to be decided at the time when the solicitors agree to act for the client, provided of course that some recovery ensues, to which the lien can attach. All this sufficiently appears from paras 5–63 of the joint judgment of Lord Leggatt and Lady Rose JJSC, with the substance of which Lady Arden and Lord Burrows JSC agree. I also agree, although Lord Leggatt and Lady Rose JJSC use the word "litigation" in a narrower sense than I do, as confined to proceedings in court, using the phrase "dispute resolution" to include litigation, arbitration and all other methods of ADR (alternative dispute resolution) including mediation and negotiation by which a claim may be pursued to the making of a recovery.'

(vi) Lord Briggs then considered the rival positions of the Supreme Court in Bott: (a) Lord Leggatt and Lady Rose vs Lord Burrows and Lady Arden, from paragraphs 155 onwards, on the narrow point 'whether it matters that there is an "actual or reasonably anticipated dispute" about the claim, at the time when the solicitors agree to act.' (paragraph 155). Lord Briggs concluded by rejecting Lord Leggartt/Lady Rose's 'test based on the existence of an actual or reasonably anticipated dispute' (paragraph 180), favouring the 'claim-based test' (paragraph 180). At paragraph 179, Lord Briggs stated:

'I agree with Lord Burrows JSC's test for the existence of a solicitor's equitable lien and my reasoning and his are closely aligned. Lady Arden also agrees with Lord Burrows JSC's test for the existence of a solicitor's equitable lien, and it will be apparent from the foregoing that I agree with the central thrust of her reasons for doing so.'

(v) Separately, it is noted that Lord Briggs said, at paragraph 175: 'If the retainer is to act in connection with a transaction, then no lien arises.' before going on to consider hybrid retainers (paragraph 176)

[17] In Candey Ltd v Crumpler [2023] 1 WLR 342, [2023] 2 All ER 527 ('Crumpler') Supreme Court, Lord Kitchin (with whom Lord Reed, Lord Briggs, Lord Hamblen and Lord Stephens agreed) said, at paragraphs 38 to 41:

‘This lien is one of a number of liens which arise by operation of equity from the relationship between the parties and which take effect as a form of equitable charge upon property until certain claims are satisfied. Other examples include the vendor's lien for the purchase money and the purchaser's lien for the deposit.

The creation of the solicitor's equitable lien is underpinned by fairness. It is based on the principle that it is not just that the client should get the benefit of a solicitor's labour without paying for it, as Cotton LJ explained in Guy v Churchill (1887) 35 Ch D 489 at 491. This fairness has an important further aspect for, as I have explained, the lien encourages solicitors to take on cases which their clients would not otherwise have been able to afford, and so promotes access to justice.

Another feature of the solicitor's equitable lien, and one which it shares with other equitable liens, is that [it] does not depend upon possession of the property over which it exists. Instead, it operates by law as a first ranking right of the solicitor to be paid his or her fees out of the proceeds of the litigation, and as a form of equitable charge which binds third parties with notice of it. It is in this sense akin to a right of salvage. But it will not be effective against a purchaser for value of a legal estate without notice of it.

Importantly, the solicitor's equitable lien survives insolvency events concerning the client and so solicitors, acting for a liquidator, who recover funds which then form part of the assets falling in the liquidation, will have a lien for their costs (incurred prior to and after the liquidation) on those funds: Re Born, Curnock v Born [1900] 2 Ch 433 at 435, [1900–3] All ER Rep 923 at 924 per Farwell J; Re Meter Cabs Ltd [1911] 2 Ch 557 at 559, [1911–13] All ER Rep 1118 at 1118–1119 per Swinfen Eady J.'

[18] In Candey Ltd v Crumpler [2023] 1 WLR 342, [2023] 2 All ER 527 ('Crumpler (Supreme Court)') in the Supreme Court, Lord Kitchin (with whom Lord Reed, Lord Briggs, Lord Hamblen and Lord Stephens agreed), said, at paragraphs 38 to 41:

'This lien is one of a number of liens which arise by operation of equity from the relationship between the parties and which take effect as a form of equitable charge upon property until certain claims are satisfied. Other examples include the vendor's lien for the purchase money and the purchaser's lien for the deposit.

The creation of the solicitor's equitable lien is underpinned by fairness. It is based on the principle that it is not just that the client should get the benefit of a solicitor's labour without paying for it, as Cotton LJ explained in Guy v Churchill (1887) 35 Ch D 489 at 491. This fairness has an important further aspect for, as I have explained, the lien encourages solicitors to take on cases which their clients would not otherwise have been able to afford, and so promotes access to justice.

Another feature of the solicitor's equitable lien, and one which it shares with other equitable liens, is that [it] does not depend upon possession of the property over which it exists. Instead, it operates by law as a first ranking right of the solicitor to be paid his or her fees out of the proceeds of the litigation, and as a form of equitable charge which binds third parties with notice of it. It is in this sense akin to a right of salvage. But it will not be effective against a purchaser for value of a legal estate without notice of it.

Importantly, the solicitor's equitable lien survives insolvency events concerning the client and so solicitors, acting for a liquidator, who recover funds which then form part of the assets falling in the liquidation, will have a lien for their costs (incurred prior to and after the liquidation) on those funds: Re Born, Curnock v Born [1900] 2 Ch 433 at 435, [1900–3] All ER Rep 923 at 924 per Farwell J; Re Meter Cabs Ltd [1911] 2 Ch 557 at 559, [1911–13] All ER Rep 1118 at 1118–1119 per Swinfen Eady J.'

[19] Lady Arden in Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634. added, just after this, at paragraph 133:

'The paying party is protected by the rule that he will not have to pay twice if he did not have the requisite notice and did not collude with the client.'

See Lord Briggs in Bott, at paragraph 178, about how, if: (a) a solicitor sends a demand or other communication to a debtor, for a claimant creditor, but (b) prior to receipt/prior to the demand/communication being sent, the debtor had already decided to pay the creditor, then 'the solicitor would generally fail to demonstrate that its activity crossed even the low threshold of having made a significant contribution to the claimant's recovery.'

[20] Parliament's Act in 1860 seems to be called Solicitors Act 1860, however, in Clifford Harris and Co v Solland International Ltd [2005] EWHC 141 (Ch), Christopher Nugee QC sitting as deputy judge of the High Court referred to it as the 'Attorneys and Solicitors Act 1860' in the following sentence:

'The section replaces earlier statutory provisions to the same effect dating back at least as far as s 28 of the Attorneys and Solicitors Act 1860.' (paragraph 21)

[21] Solicitor Act 1860, s.28 (now obsolete), was entitled 'Power to Courts of Justice to charge Property recovered with Payment of Costs' and read (when originally enacted):

'In every Case in which an Attorney or Solicitor shall be employed to prosecute or defend any Suit, Matter, or Proceeding in any Court of Justice, it shall be lawful for the Court or Judge before whom any such Suit, Matter, or Proceeding has been heard, or shall be depending, to declare such Attorney or Solicitor entitled to a Charge upon the Property recovered or preserved, and upon such Declaration being made such Attorney or Solicitor shall have a Charge upon and against and a Right to Payment out of the Property, of whatsoever Nature, Tenure, or Kind the same may be, which shall have been recovered or preserved through the Instrumentality of any such Attorney or Solicitor, for the taxed Costs, Charges, and Expenses of or in reference to such Suit, Matter, or Proceeding; and it shall be lawful for such Court or Judge to make such Order or Orders for Taxation of and for raising and Payment of such Costs, Charges, and Expenses out of the said Property as to such Court or Judge shall appear just and proper; and all Conveyances and Acts done to defeat, or which shall operate to defeat, such Charge or Right, shall, unless made to a bonâ fide Purchaser for Value without Notice, be absolutely void and of no Effect as against such Charge or Right: Provided always, that no such Order shall be made by any such Court or Judge in any Case in which the Right to recover Payment of such Costs, Charges, and Expenses is barred by any Statute of Limitations.'

[22] Solicitor Act 1932, s.69 (now obsolete), was entitled 'Charging orders' and read (when originally enacted):

'Any court in which a solicitor has been employed to prosecute or defend any suit, matter or proceeding may at any time declare the solicitor entitled to a charge on the property recovered or preserved through his instrumentality for his taxed costs in reference to that suit, matter or proceeding, and may make such orders for the taxation of the said costs and for raising money to pay, or for paying, the said costs out of the said property as they think 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 :

Provided that no order shall be made if the right to recover the costs is barred by any statute of limitations.'

[23] Solicitor Act 1957, s.72 (now obsolete), was entitled 'Charging orders' and read (when originally enacted):

'Any court in which a solicitor has been employed to prosecute or defend any suit, matter or proceeding may at any time declare the solicitor entitled to a charge on the property recovered or preserved through his instrumentality for his taxed costs in reference to that suit, matter or proceeding, and may make such orders for the taxation of the said costs and for raising money to pay, or for paying, the said costs out of the said property as they think 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:

Provided that no order shall be made if the right to recover the costs is barred by any statute of limitations.'

[23] 'Section 75 of the Arbitration Act 1996 extended the powers of the court to make declarations and orders under section 73 of the Solicitors Act 1974 to arbitral proceedings "as if those proceedings were proceedings in the court".' - Lord Leggatt and Lady Rose, in Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634.

Section 75 of the Arbitration Act 1996 is entitled 'Charge to secure payment of solicitors' costs' and provides:

'The powers of the court to make declarations and orders under section 73 of the Solicitors Act 1974 or Article 71H of the Solicitors (Northern Ireland) Order 1976 (power to charge property recovered in the proceedings with the payment of solicitors' costs) may be exercised in relation to arbitral proceedings as if those proceedings were proceedings in the court.'

[24] The language has has been updated from 'taxation' to 'assessment', and 'taxed costs' to 'assessed costs'.

[25] Two cases here:

(a) Clifford Harris and Co v Solland International Ltd [2005] EWHC 141 (Ch) ('Clifford'), High Court (Christopher Nugee QC sitting as deputy judge of the High Court); and

(b) Hammonds v Thomas Muckle [2006] BPIR 704 ('Hammonds'), High Court (HHJ Langan QC sitting as a High Court Judge).

Referring to the statutory right in s.73, the deputy Judge in Clifford said, at paragraph 21 (so far as not overruled by later developments in the law; it being noted the deputy Judge is seemingly referring to a common law General Lien rather than a solicitors' Equitable Lien):

'Certain points in relation to this statutory right were not disputed before me:

(i) At common law a solicitor had a similar right to a so-called “lien” on a sum of money (or other personal property) which is recovered for his client, whether by judgment or compromise, in the course of litigation.

(ii) In Re Born [1900] 2 Ch 433 Farwell J accordingly decided that in making a charging order under the Act (then the 1860 Act) he was not giving the solicitor any new right but giving the statutory charge in aid of the existing common law lien, that is “merely enabling them more cheaply and speedily to enforce a right they already possess”. The section is therefore largely procedural (although not wholly so; for example it has been held to extend to real property which the common law right does not).

(iii) ...

(iv) ...The jurisdiction can be exercised as soon as there is a “fund in sight” (Re Fuld deed [1968] P 727, 736C per Scarman J)...

(v) There is no need for present purposes to distinguish between the right to apply to the court at common law and the right to apply under s 73. I will refer to the latter as the solicitor's s 73 right, but in the present case if that right has been waived, it is not suggested that the position could be any different for the common law right. 

In Hammonds, HHJ Langan QC sitting as a High Court Judge, after quoting s.73, said, at paragraph 9:

'These provisions did not create any new right, but rather provided solicitors with a procedure for enforcing a right which they possessed at common law (Re Born; Curnock v Born [1900] 2 Ch 433). This right was to a so-called ‘lien’ on money or other personal property which a solicitor had recovered for his client in litigation.'

[26] In Curnock v Born (also known as Re Born) [1900] 2 Ch 433 ('Born'), Farwell J considered an application by a solicitor, for a charging order under s.28 of the Solicitors Act 1860 (now obsolete). The solicitor had been employed by a limited company. The company, employing the solicitor, had prosecuted and recovered a claim against an estate (the estate of GE Born, deceased). That resulted a fund in court to the credit of the claim, against which the company had a share (the law report is insufficiently detailed as to why?). In any event, the company subsequent went into liquidation (winding up), and the solicitor made his s.28 Charging Order application.

Farwell J dealt with 2 issues:

(1) delay in issuing the charging order application - the issue being: did delay by the solicitor in issuing his s.28 Charging Order application (summons) fatally undermines the application. Farwell J concluded, no, it did not. Farwell J said, at 435 'But the mere lapse of time from January, 1897, when the claim was made and admitted, to March 19, 1900, when the summons was issued, is immaterial, seeing that the company closed their office and ceased to carry on business in June, 1897, and that no intervening rights have arisen. Unless other rights intervene, the question of delay has no bearing on the point.';

(2) ought or ought not to make the order - which in turn, required consideration of what was being granted. Farwell J said, at 435-436:

'It is also contended that, having regard to the winding-up, I ought not now to give the applicants a charge under the statute. But though this application is under the statute, it is very material to consider whether, if I make a charging order, I am thereby giving the applicants a new right, or merely enabling them more cheaply and speedily to enforce a right they already possess. Now, it is plain that they have a common law lien on the company's share of the fund in court for the amount of their costs. It would be monstrous if this were not so, as the company would never have recovered the money without their exertions. It resembles the case of debenture-holders who have to allow a liquidator's costs when they take the benefit of his exertions, and it is clear that justice calls for such a lien.

Now, this common law lien has not been abrogated by the statute— Haymes v. Cooper [33 Beav. 431] —or affected by the winding-up, and all I and really asked to do is to give the statutory charge in aid of the already existing common law lien, which is prior to any right of the official receiver or liquidator. I express no opinion on cases where there is no common law lien. The statutory charge is in no sense an execution under s.163 of the Companies Act, 1862.

I think I ought to make the order;'

[26a] It is right to note, the author knows of no authority which categorises s.73 into these stages.

[27] In Candey Ltd v Crumpler [2020] EWCA Civ 26; [2020] Bus. L.R. 1452, in the Court of Appeal (McCombe LJ, Moylan LJ, Rose LJ), Rose LJ (with whom McCombe LJ and Moylan LJ agreed) said, at 95:

'As to the exercise of discretion, the cases are clear that if the lien exists, it should be enforced by the court unless there are good reasons why not: see for example Fairfold Properties Ltd v Exmouth Docks Co Ltd (No 2) [1993] Ch 196, 204E, per Ferris J and Solland (No 2) [2005] 2 All ER 334, para 22 and the cases cited there.'

On the facts in Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs LR 907, Zacaroli J said, obiter, at paragraph 65:

'Had I concluded that the lien took priority over the claimant's charging order, I would not have refused to enforce it as a matter of discretion.'

[28] In Fairfold Properties v Exmouth Docks Co [1993] Ch 196, Ferris J said, in paragraph 9:

'In the course of argument some comment was made on behalf of [costs order debtor] concerning the propriety of [solicitors/s.73 applicant] making the present application, by which, on the face of it, [solicitors/s.73 applicant] seek to obtain for their own benefit the fruits of an order made in favour of their former client, [costs order creditor/client], without first having obtained an order taking their name off the record as solicitors for [costs order creditor/client],. Put in this way the position may seem surprising, but looking at the substance of the matter, I do not think that there can be any valid criticism of [solicitors/s.73 applicant] Certainly I see no basis for refusing to entertain the application because of any supposed conflict of interest. The reality is that [costs order creditor/client], has shown no interest in implementing the order for costs made by Millett J. The benefit of this order seems to represent [costs order creditor/client's] only asset and if [costs order creditor/client] were to take any steps to tax the costs dealt with by this order and thereafter to enforce the order against [costs order debtor], [solicitors/s.73 applicant]. would undoubtedly seek to attach any money received from [costs order debtor] pursuant to the order, either by agreement with [costs order creditor/client], or, in the absence of such agreement, by acting on their own account, leaving [costs order creditor/client], to act through other solicitors. No doubt [solicitors/s.73 applicant] could quite easily obtain an order under R.S.C., Ord. 67, r. 6 declaring that they have ceased to act for [costs order creditor/client],. However, the making of such an order would be of no possible advantage to [costs order debtor], which is correspondingly suffering no detriment by [solicitors/s.73 applicant] remaining on the record. Moreover, in circumstances where [solicitors/s.73 applicant] have no current instructions from [costs order creditor/client], and the action which they are taking is not disadvantageous to [costs order creditor/client],, I see no objection to their making the present application. It will always be inherent in an application under section 73 of the Act of 1974 that solicitors who have acted for a client will be seeking to obtain for themselves the property which they have recovered or preserved for their client.'

[28a] Friston on Costs (4th Ed) states (paragraph 40.97):

‘Property' - ‘Property' includes both real and personal property, That word is to be construed widely and to encompass choses in action, which may include an order for costs where no assessment has yet taken place.’

[28b] In Fairfold Properties v Exmouth Docks Co [1993] Ch 196, Ferris J said, in paragraph 10 (200):

The principal issue on this appeal is whether the order for costs which was made by Millett J. is "property" for the purposes of section 73 of the Act. If it is, there is no doubt that it was recovered or preserved through the instrumentality of L.W.D.'

The basic facts are: LWD were the solicitors / lienholder, asserting that it had a lien over the benefit of an (unassessed/untaxed) costs order made in favour of its client Fairfold, and against a company called Exmouth, in litigation the solicitors represented the client in]

Ferris J then went through the authorities, at paragraphs 11 to 22 (200 to 204):

'In relation to the issue whether the benefit of the order of Millett J. constitutes "property," there is a preliminary question whether that order is or is to be treated as an order for payment of costs to be taxed. As has already been noted, the minute signed by counsel provided for Exmouth to pay Fairfold's costs in any event, such costs to be taxed if not agreed, but the order as drawn up made no provision for taxation. No reason was put forward as to why this should have been so and it appears to me that there would be a clear case for amendment of the order of Millett J. under the slip rule ( R.S.C., Ord. 20, r. 11). Even if it were established that it was not intended that there should be taxation of costs at that stage, it would be open to Fairfold to apply for an order for taxation of its costs now under Ord. 62, r. 8(2), or to apply to a taxing officer to tax forthwith the costs of the proceedings before Millett J. pursuant to Ord. 62, r. 8(9). It is difficult to see what answer there could be to either application unless it were shown that the benefit of the order of Millett J. has been extinguished under the compromise. That is a matter which I shall consider later. Subject to my conclusion on that point, I consider that it would be right to treat the order of Millett J. as an order for costs to be taxed, even though a further application of some kind will be necessary before it has that effect. If I am otherwise prepared to make a charging order in favour of L.W.D., I apprehend that it would be permissible for me to authorise L.W.D. to make any necessary application for a further order in their capacity as chargees.

As to the effect of section 73, it is to be noted that that section has existed in substantially the same form in every Solicitors Act since that of 1860. The statutory provision supplements the lien to which a solicitor is entitled at common law, although "lien" in this context is something of a misnomer because the so-called lien may extend to things not in the possession of the solicitor...

On the substantive question whether an order for costs constitutes "property" for the purposes of section 73, it was not disputed that once costs have been taxed and paid pursuant to such an order there exists property which may be made subject to such a charge. This appears clearly from Dallow v. Garrold, Ex parte Adams (1884) 13 Q.B.D. 543; and on appeal, 14 Q.B.D. 543. Moreover, there is "property" for the purposes of the section even when the order for costs is the only asset which is recovered or preserved through the instrumentality of the solicitor: see In re Blake; Clutterbuck v. Bradford [1945] Ch. 61. What was contended on behalf of Exmouth was that there is no authority for the proposition that a solicitor can have a charge under the section over a mere order for costs where the costs themselves have not yet been taxed. It was contended that until taxation all that a solicitor has is his so-called lien at common law. This being, as appears from the authorities which I have already mentioned, merely a claim to the equitable interference of the court, it was said that there can be no basis for the court going further, at any rate in the absence of evidence that the solicitor's client or a third party is trying to deprive the solicitor of his proper costs. It is said that there is no such evidence here. In order to evaluate this argument it is necessary to consider some of the many reported decisions on section 73 and its predecessors.

In Birchall v. Pugin (1875) L.R. 10 C.P. 397 Pugin had obtained judgment for a total of £179 in an action against an individual named Molloy in which a solicitor named Button had acted for Pugin. In a later action Birchall obtained judgment against Pugin for a sum which is not stated in the report but which must have been greater than £179. Birchall then applied for a garnishee order in respect of the £179 due from Molloy to Pugin, and Button applied for a charging order over the same sum under the predecessor of section 73. The judge made a charging order in favour of Button and rejected the claim of Birchall, who appealed. One of the arguments on appeal was that the sum in question (which at that stage was money due under an unsatisfied judgment) was not "property" within the meaning of the relevant section. On this point Lord Coleridge C.J. said, at p. 399:

"I am of opinion that that objection cannot prevail. The words used in the section are of the widest possible character, and include all property of whatsoever kind; not only property known to the common law, but property of every kind. It seems to me that this is property of some kind: it is a chose in action."

Brett J., who was the judge who had made the order appealed from, said, at pp. 400-401:

"Something has been recovered for Pugin by the exertions of Button. That something is the right of immediate payment of two ascertained and specified amounts or sums of money. They are two judgment debts. The words in the section, which are 'property of any kind,' seem to me to be large enough to cover such a right as Pugin has to these two sums. If Pugin had paid money into his own account at his bankers, the amount would obviously, I think, be property, although the bankers would not be bound to repay or pay out the same coins. These two sums, ascertained by legal decision to be due to Pugin, though still in the hands of Molloy, seem to me to be equally capable of being called property. I think that even before the Act in equity money recovered by a decree was treated as property upon which an attorney would have an equitable lien."

In The Paris [1896] P. 77 the plaintiff in an Admiralty case obtained a consent order for damages to be assessed by an arbitrator. After the damages had been so assessed the defendants' solicitors, claiming to act in accordance with an authority given by the plaintiff, deducted from the damages payable by the defendants various sums due to the solicitors and to certain third parties. The plaintiff's solicitors applied under the predecessor of section 73 in the Solicitors Act 1860 for a charging order on the damages unreduced by the deductions which the defendants' solicitors had made. It was contended that no declaration could be made under the Act because there was no fund as to which the declaration could be made. As to this, Sir Francis Jeune P. said, at p. 82:

"it is true there was no judgment, or what was equivalent to an actual judgment, until November 2; but there was a compromise early in June, and it appears to me that that fixed, not the actual sum due, because that had to be worked out by the arbitrator, but created property recovered by the exertions of the solicitors. There was a sum which, though its exact amount was not yet ascertained, was recovered within the meaning of the Act."

In In re Blake; Clutterbuck v. Bradford [1945] Ch. 61 an order for payment of costs out of a deceased person's estate was made in favour of a party who was otherwise unsuccessful in the proceedings. The costs were taxed at some £38-odd but remained unpaid. The solicitors for the party in whose favour the order for costs had been made then applied for a charging order over the taxed costs. This application was opposed by other creditors of the party in question on the ground, among others, that the costs were not property for the purposes of the relevant section. It was argued that Dallow v. Garrold, Ex parte Adams, 13 Q.B.D. 543 only covered a case in which, in addition to the judgment for costs, there is a judgment for the recovery of some specific property or sum of money. This argument was rejected. Lord Greene M.R. said, at p. 67:

"I come, therefore, to the opinion that an application for a charging order in a case where the judgment is merely a judgment for costs is competent. If it were not so, the case of a solicitor for a successful defendant would be very unfortunate, since the only thing that a successful defendant gets is a judgment for costs."

In relation to the exercise of the court's discretion, Lord Greene M.R. said, at p. 68:

"I do not propose to assert as a matter of principle that the discretion should be exercised against the solicitor only in cases where some conduct of his own makes it unjust to give him the relief asked for. That, I think, would not be the proper course to take in view of the language of the section, but I think I am entitled to say that, in a case where no conduct of the solicitor was involved, it would require very exceptional circumstances to justify the court in refusing to the solicitor that security in respect of the fruit of his labours to which he is prima facie entitled."

The other two members of the the Court of Appeal agreed with the judgment of Lord Greene M.R.

Finally, I come to In the Estate of Fuld, decd. (No. 4) [1968] P. 727. In that case, after a lengthy trial of a probate action, an order for the payment of her costs out of the estate of the deceased was made in favour of a Miss Ledivitch who, in the course of the action, had been represented by nine different firms of solicitors as well as acting in person from time to time. When the stage for taxation of the costs payable out of the estate was reached Miss Ledivitch was again acting in person and doing so in such a way as to cause at least one of her former solicitors to fear that she would not put forward his complete bill for taxation. This solicitor then sought an order giving him the right to tax his own bill. This order was sought by way of the equitable intervention of the court to protect the solicitor's common law position and was said to be justified by analogy with section 72 of the Solicitors Act 1957, the immediate predecessor of section 73 of the Solicitors Act 1974. Scarman J. observed, at p. 736, that if the solicitors were to obtain the assistance of the court "they must first show that there is a fund in sight." He then dealt with an argument that where the subject matter is costs payable by one party to another there is no fund in sight before taxation has determined the amount of the fund. He said, at pp. 736-737:

"As a matter of common sense, the fund has been in sight, at least since the court's order for the payment of these costs became final by dismissal of the appeal proceedings. Is it to be suggested, merely because the client has not ascertained the amount of the fund by agreement or taxation, that there is no fund? If this were the law, the client would indeed be able to deprive the solicitor of his lien, which, as was emphasised in Ex parte Bryant (1815) 1 Madd. 49, it is the policy of the law to protect. The cases stress that the solicitor's right is to the exercise by the court of an equitable jurisdiction. It would be an absurdity if such a jurisdiction could be stultified by the failure of the client to take the steps necessary to realise the solicitor's security. Equity looks on that as done which ought to be done - the old maxim has validity in such circumstances. In my opinion, therefore, there is a fund over which the lien may prevail, and the court has jurisdiction at this stage to intervene."

As to the analogy with section 72 he said, at p. 739:

"I accept the analogy of section 72. Indeed, one way in which the court may enforce a solicitor's lien is to act under the section. Whether the court, therefore, is intervening in the exercise of its inherent jurisdiction to protect the solicitor, or proceeding under section 72, the same considerations apply."

On the facts of the particular case before him Scarman J. declined to intervene in accordance with the solicitor's application at that stage because he regarded such intervention as premature. However, he did give directions designed to protect what he had described as "the fund," by directing that no payment of costs be made out of the estate to Miss Ledivitch without prior notice to the solicitors.'

[29] Zacaroli J noted this in Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs LR 907, at paragraph 58.

[30] In Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs LR 907, Zacaroli J dealt with an argument that 'a sum due to a solicitor pursuant to the [damages based agreement ('DBA')]' (paragraph 56) could not be made subject to a s.73 charging order, because section 73 permits the court to grant a charge as security for a solicitor's "assessed costs". It being contended that '[t]he DBA is not, itself, assessed.' (paragraph 59). Zacaroli J rejected this argument, stating, at paragraph 61:

'Attractively though the point was put, I do not think that the limitation to "assessed costs" in s 73 precludes a solicitor from obtaining a charge over property recovered in the action, merely because the solicitor is entitled to be paid pursuant to a DBA. I consider that the interpretation of "assessed costs" by Jacob J in the Harrod's case as "proper costs" which would be ultimately recovered by the solicitor from the client is equally apt to encompass such amount as is properly chargeable by a solicitor under a DBA. The rationale behind the solicitor's lien – that recoveries in the action should be appropriated, first, in satisfaction of the costs of the solicitor whose efforts led to those recoveries in the first place – applies irrespective of the basis upon which the solicitor's fees are to be calculated. There is a safety valve of sorts, in that the client can challenge the DBA as unreasonable.'

[31] Charging order can be made:

(1) In In the Estate of Fuld, decd (No 4) (also known as Hartley v Fuld (Costs: Taxation) [1968] P 727, Scarman J said, at 739, in respect to the then applicable predecessor to s.73 of the Solicitors Act 1974, namely s.72 of the Solicitors Act 1957 (now obsolete):

'In his reliance upon the terms of section 72 of the Solicitors Act, 1957, counsel for the solicitors emphasised that under its provisions the court could at any time make a charging-order in favour of a solicitor who had acted in his client's litigation. This is clearly so:'

A charging order can be made, though both or either: 

(a) the size of the fund (if over a fund) encumbered, is not known (i.e. the amount of money in the fund is not known); and/or

(b) the amount properly due to the solicitor, as solicitor/client costs, is not known. 

After the quotation above, Scarman J continued, at 739:

'...and the charging-order may be accompanied by an order for the taxation of the solicitor's costs. But it is plain that the charge and any consequential order for its enforcement by payment must be limited to costs properly incurred. As Sir George Jessel M.R. remarked in Emden v. Carte, of the Attorneys and Solicitors Act, 1860 [(1881) 19 Ch.D. 311, 318, CA]), when discussing an earlier section to the same effect (section 28

"It is the duty of the Judge in making an order to limit the order to the costs properly incurred, and to direct taxation of the costs properly incurred."

I accept the analogy of section 72. Indeed, one way in which the court may enforce a solicitor's lien is to act under the section. Whether the court, therefore, is intervening in the exercise of its inherent jurisdiction to protect the solicitor, or proceeding under section 72, the same considerations apply. In either case the court must limit its order to costs properly incurred. How can a solicitor's proper costs in a contentious matter be ascertained in the absence of agreement, save by taxation of the bill he delivers to his client?...

Nevertheless, the court can intervene at this, or, indeed, at any stage to protect the solicitor, though its order must be adjusted to the particular circumstances operating at the time it is made. In my judgment, the solicitors in this case are entitled to have the fund, which is the security for their costs, protected, even though neither the amount of the fund nor the amount of their costs has yet been ascertained.'

(2) Lady Arden in Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8; [2022] 2 WLR 634 said, at paragraph 104, of s.73 of the Solicitors Act 1974, that it was 'parallel scheme for charging orders';

(3) Lord Kitchin in Candey Ltd v Crumpler [2023] 1 WLR 342, [2023] 2 All ER 527 said, in paragraph 42 '...in making a charging order under s 73 of the 1974 Act...'

(4) charging orders were made in Fairfold Properties v Exmouth Docks Co [1993] Ch 196, High Court (Ferris J), see paragraph 28 (205) 'if I make the charging order which they seek' + paragraph 37 (209) 'In my view, I ought, in exercise of my discretion, to make an order of the kind which is sought by [the solicitors].'

[32] Section 70 of the Solicitors Act 1974 is entitled 'Assessment on application of party chargeable or solicitor.'

'(1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is completed.

(2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the assessment), order-

(a) that the bill be assessed; and

(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the assessment is completed.

(3) Where an application under subsection (2) is made by the party chargeable with the bill-

(a) after the expiration of 12 months from the delivery of the bill, or

(b) after a judgment has been obtained for the recovery of the costs covered by the bill, or

(c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill, no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the assessment as the court may think fit.

(4) The power to order assessment conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill.

(5) An order for the assessment of a bill made on an application under this section by the party chargeable with the bill shall, if he so requests, be an order for the assessment of the profit costs covered by the bill.

(6) Subject to subsection (5), the court may under this section order the  assessment of all the costs, or of the profit costs, or of the costs other than profit costs and, where part of the costs is not to be assessed, may allow an action to be commenced or to be continued for that part of the costs.

(7) Every order for the assessment of a bill shall require the costs officer to assess not only the bill but also the costs of the assessment and to certify what is due to or by the solicitor in respect of the bill and in respect of the costs of the assessment.

(8) If after due notice of any assessment either party to it fails to attend, the officer may proceed with the assessment ex parte.

(9) Unless—

(a) the order for assessment was made on the application of the solicitor and the party chargeable does not attend the assessment, or

(b) the order for assessment or an order under subsection (10) otherwise provides, the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.

(10) The costs officer may certify to the court any special circumstances relating to a bill or to the assessment of a bill, and the court may make such order as respects the costs of the assessment as it may think fit.

...

(12) In this section “profit costs” means costs other than counsel's fees or costs paid or payable in the discharge of a liability incurred by the solicitor on behalf of the party chargeable, and the reference in subsection (9) to the fraction of the amount of the reduction in the bill shall be taken, where the assessment concerns only part of the costs covered by the bill, as a reference to that fraction of the amount of those costs which is being assessed.'

[33] see Harrod's Ltd v Harrod's (Buenos Aires) Ltd (Costs) [2014] 6 Costs L.R. 975 (2000), Jacob J, paragraph 29.

[34] There are three sources for this:

(a) Fairfold Properties v Exmouth Docks Co [1993] Ch 196, Ferris J said, paragraph 29 (206): 'I do not consider that I am bound to make an order for taxation of costs as between [the solicitors] and [client]. I would only be so bound if the word "may" in the opening part of section 73(1) meant "must," which it clearly does not' And even then, only likely, if it would make a difference (i.e. if there is any chance that the assessment amount will be less than the value of the thing subject to the lien).

(b) Harrod's Ltd v Harrod's (Buenos Aires) Ltd (Costs) [2014] 6 Costs L.R. 975 (2000), Jacob J said, at paragraphs 22 to 24:

'Going back to s 73 the language is peculiar. What the court may declare is a charge on any property recovered, et cetera, “for his taxed costs”. Does that mean there must be a taxation? The court plainly has an overall discretion as to whether a charging order should be made. The provision says “may at any time (a) make the declaration; and (b) make orders for a taxation”.

A number of the cases cited show that it would be ridiculous to have a taxation and yet very sensible to have the charge. Ferris J held that “may” applies separately to (a) or (b) in Fairfold Properties v Exmouth Docks Co [1993] Ch 196. I do not think that quite solves the problem of the language. The problem is that the court may declare the charge “for taxed costs”. Can it declare a charge for costs which are not taxed?

[Counsel for the solicitors] submits that really, to make sense of this section, “taxed costs” means costs which would be granted on taxation – the proper costs. Sometimes one is driven to construe a provision in such a way that one goes beyond the literal meaning of the words used to a meaning that it is obviously intended to be conveyed. I think this is one of these sections. I think, therefore, as did Ferris J, that there is a discretion whether or not to order a taxation. I proceed on that basis.'

(c) Friston on Costs (4th Ed), wherein, the learned authors state (paragraph 40.102):

‘No mandatory need for an assessment
Notwithstanding the use of the phrase assessed costs' in Solicitors Act 1974, s 73(1)(a), there is no need for the court to order that there be a solicitor-and-client assessment of costs.’

[35] A possible way to structure the order, would be similar to a charging order made under Charging Order Act 1979 (main order, with schedules). For instance:

'Pursuant to section 73 of the Solicitors Act 1974:

(a) it is declared that the Applicant is entitled to a charge on the interest of the Respondent in the property/land specified in Schedule A to this order for the Applicant’s assessed costs in relation to the claims/actions/proceedings listed in Schedule B to this order; and

(b) the interest of the Respondent in the property/land specified in Schedule A to this order stands charged with the payment of the assessed costs due to the Applicant in relation to the claims/actions/proceedings listed in Schedule B to this order.

Schedule A

HM Land Registry Title No.[title No], being [freehold/leasehold] title to land known as [description from Title]

Schedule B

(i) Claim No.[Claim No], [name] v [name]

(ii) Claim No.[Claim No], [name] v [name]

(iii) Claim No.[Claim No], [name] v [name]'

[36] In Clifford Harris and Co v Solland International Ltd [2005] EWHC 141 (Ch) ('Clifford'), see paragraph 24 onwards. 

At paragraph 40, the deputy Judge said:

'...if there is an inconsistency, the solicitor will be regarded as having waived his rights unless he expressly reserves them.'

At paragraphs 43, the deputy Judge said (the majority is the majority (Lord Alverstone CJ and Buckley LJ) in Re Morris [1908] 1 KB 473):

'In my judgment, what the majority meant by inconsistency is that there is some feature of the security which is incompatible with the lien such that the two rights cannot sensibly have been intended to subsist in parallel. Thus for example a security which gives time to pay is inconsistent with the solicitor's retaining lien even though it gives the client not the solicitor something which he did not otherwise have. The solicitor cannot at the same time agree that the client can have three years to pay, and keep the client's papers in the meantime: see the judgment of Lord Eldon in Cowell v Simpson as summarised in the judgment of Sir John Leach MR in Robarts v Jefferys (1830) 8 LJ (OS) (Ch) 137, 140. There is nothing incompatible in this sense with a solicitor having a security both by way of a charge on real property and by way of a charge on property recovered in proceedings, especially if the former is limited in amount and may prove insufficient to meet the costs.'

[37] Zacaroli J in Candey Ltd v Tonstate Group Ltd [2021] EWHC 1826 (Ch); [2021] Costs LR 907 continued, at paragraphs 37 to 41:

This is illustrated by Scholey v Peck [1893] 1 Ch 709. In that case, S, the claimant, sought to enforce a contract to purchase a house. The claimant's rights under that contract had been mortgaged to C. S's solicitors sought a lien over the house. Romer J held that the property was preserved by the action brought by the solicitors on behalf of S and, but for those proceedings, C would have lost her security. Accordingly, the solicitors were entitled to a charge not only as against S but also as against C "who is taking the benefit of the action, and over whose mortgage they must have priority".

A similar principle underlies the conclusion that a solicitor's lien survives the insolvency of the client. The insolvency estate, which comes into being on the liquidation or bankruptcy of the corporate or individual client, as the case may be, has the benefit of the recoveries only because of the solicitor's efforts: see Guy v Churchill (1887) 35 Ch D 489. In that case, solicitors to the plaintiff were held entitled to a lien on a sum recovered by the plaintiff (although the recovery of the sum was not the direct result of the action). The solicitors' entitlement to that lien was not affected by the bankruptcy of the plaintiff. In the Court of Appeal, Cotton LJ said: "Here the official receiver wishes to get the benefit of the solicitor's exertions by which the [sum] has been recovered, without paying for them". Lindley LJ said: "I agree and have nothing to add. It is right that they who get the benefit of the recovery of money should bear the expense of recovering it."

The position in this case is different, however, because the Shares were always the property of Mr Wojakovski. The claimants, in their capacity as holders of the final charging order over the Shares, cannot I think be described as someone taking the benefit of the action or of Candey's exertions. Moreover, the fact that the Shares are not "recoveries", in the sense of having been recovered in the proceedings, means that the reasoning which fixes third parties with knowledge of a solicitor's lien does not apply.

[Counsel for the solicitors] submitted that the claimants had notice of the lien because they knew that Candey had entered into the DBA and must be taken to know that Candey would therefore be entitled to a lien over the Shares. He relied on the passages from Haymes v Cooper and Faithful v Ewen I have referred to above, to the effect that knowledge that a solicitor is involved in litigation is sufficient to constitute notice that the solicitor will have a lien over the fruits of the litigation. I do not accept this submission in the circumstances of this case. As I have noted, this is not a case where the litigation between Mr Wojakovski and the claimants has led to a right in Mr Wojakovski to receive anything. At most, he was entitled, as a result of the settlement of the Shares Claim, to retain a portion of the shares held by him in TGL. I do not accept that the claimants knew, or must be taken to have known, that the DBA entitled Candey to a lien over the Shares. Any such entitlement would depend on the terms of the DBA. It is not suggested that the claimants were aware of the terms of the DBA. Even if they had been, it is difficult to see how they could be said to be on notice of the fact that it gave Candey any entitlement to recover fees as a result of the settlement of the Shares Claim, given that I have concluded that on its proper construction it did not.

In my judgment, in circumstances such as this, the better view based on the authorities to which I have referred above is that Candey's lien, although it exists from the date of the consent order of 21 May 2020, is defeated by the claimant's interest under the final charging order, which was acquired for value (foregoing a right to costs against Mr Wojakovski) without notice of the lien.'

So, the conclusion was, on the facts, that the final charging order took precedence over the solicitors' Equitable lien.