Ex parte Patience; Makinson v The Minister

The amounts sought by the claimant solicitors Williams & Williams Weblaw now claims the sum of $20,175.10 plus costs. It originally sought interest on that sum as well, but later abandoned that claim, at least in the present proceedings. David M Brett & Associates Pty Ltd having recovered $653.40 as a refund from the Mediator now claims the sum of $19,846.60 together with interest, and costs.

The issues in dispute between Mrs Plumley and Williams & Williams Weblaw Mrs Plumley contends that the claim made by Williams & Williams Weblaw should be dismissed. She bases that contention upon a number of grounds. In summary, they are as follows: · The work performed by Williams & Williams did not contribute in any way to the successful resolution of the dispute with Color Point. In substance, all that Mrs Williams had done throughout the whole of her retainer was to make a single unsuccessful application to transfer the Color Point litigation into the Family Court. · Mr Williams had agreed with Mrs Plumley when she initially retained Williams & Williams that she would be liable to pay a total of $15,000. That sum was intended to cover all of the costs in both the Family Court and the Federal Court proceedings. Counsel's fees were to be paid by Williams & Williams from that sum. The terms of the retainer were later altered so that Mrs Plumley assumed direct responsibility for counsel's fees. However, the sum of $15,000 was all that Mrs Plumley had ever agreed to pay to Williams & Williams. In claiming a greater amount, as it now did, the firm was in breach of the retainer. · Williams & Williams had in fact been paid almost the whole of the $15,000 which formed the basis of the retainer. As noted earlier, there had been a payment of $5,000 made on 20 March 1998. In addition, a sum of $7,170 had been recovered by Williams & Williams from Marshalls and Dent, the solicitors who had previously acted for Mrs Plumley in the Family Court proceedings. Williams & Williams had also retained a further $1,700 which was the balance of the proceeds of a sum of $2,000 which Mrs Plumley had paid to have a particular bill of costs taxed. · Mr Williams had accepted as one of the terms of his firm's retainer that there would be no payment for any work performed in relation to the Color Point litigation until after the Family Court proceedings had finally been resolved. That had not yet occurred. · Mr Williams had breached the terms of his firm's retainer by demanding a further $17,000 from Mrs Plumley in May 1998. That conduct by Mr Williams should lead to his firm's claim being rejected. · The sum of $25,000 paid into court by Mr Zablud had nothing whatever to do with the settlement of the Color Point litigation. It related instead to an order for costs which had been made against Mr Zablud by the Victorian Court of Appeal in an earlier, unrelated, proceeding in which he had acted for Mrs Plumley. Williams & Williams could not, therefore, assert any rights over that sum. · All of the settlement monies had been assigned by Mrs Plumley to her father by the deed of assignment dated 24 December 1996. The existence of this deed had been disclosed to Mr and Mrs Williams by Mrs Plumley at or about the time she retained their firm. These monies having been assigned to Mr Markby, were not, therefore, available to be paid out under any form of lien. · The orders sought by Williams & Williams Weblaw were in conflict with the orders made by Frederico J in the Family Court on 8 August 1996. Pursuant to those orders the assets of the marriage were frozen. These included any possible benefits to Mrs Plumley from the Color Point litigation. In response, Mr and Mrs Williams dispute Mrs Plumley's version of the events leading up to their retainer. They also dispute her account of the terms of that retainer. They reject her criticisms of the manner in which their firm conducted the Color Point litigation. They deny her contention that Mr Zablud had paid the sum of $25,000 to settle an order for costs which had been made against him by the Victorian Court of Appeal. They submit that the payment by Mr Zablud of that sum related solely to the Color Point litigation. Mr and Mrs Williams also challenge the various legal contentions advanced on behalf of Mrs Plumley. They deny that the effect of the deed of assignment of 24 December 1996 is to defeat their claim. They deny also that their claim is in any way affected by the orders made on 8 August 1996 by Frederico J in the Family Court.

The issues in dispute between Mrs Plumley and Mr David Brett Mrs Plumley also contends that the claim made by Mr Brett should be dismissed upon a number of grounds. They may be summarised as follows: · Mr Brett had agreed to act as Mrs Plumley's solicitor in the Federal Court proceeding upon a contingency fees basis. By this Mrs Plumley understood that the basis of his retainer was "no win, no fee", with Mrs Plumley paying all disbursements save counsel's fees. The settlement which Mrs Plumley had negotiated did not entitle Mr Brett to be paid anything for his services. · Mr Brett had agreed that he would not, in any event, be paid anything in relation to the Color Point litigation until after the Family Court proceedings had finally been resolved. That had not yet occurred. · Mr Brett had conducted the Color Point litigation negligently. His negligence had prevented Mrs Plumley from achieving a settlement figure very much higher than the amount which she had received from Color Point. · The sum of $25,000 paid by Mr Zablud had nothing whatever to do with the Color Point litigation. That sum related instead to an order made against him by the Victorian Court of Appeal in an earlier, unrelated, proceeding that he pay certain costs arising out of his dilatory conduct in failing to have prepared an Appeal Book. The consequence had been that the appeal had been deemed to be dismissed, and had required reinstatement. · By the deed of 24 December 1996 Mrs Plumley had assigned to her father the fruits of the Color Point litigation. The existence of this deed had been disclosed to Mr Brett at or about the time he was retained. The settlement monies having been assigned to Mr Markby, were not, therefore, available to be paid out under any form of lien. · The orders sought by Mr Brett were in conflict with the orders made by Frederico J in the Family Court on 8 August 1996. Pursuant to those orders the assets of the marriage, including any possible benefits from the Color Point litigation, were frozen. Mr Brett challenges each of those contentions. He disputes Mrs Plumley's version of the terms of his retainer. He denies having been negligent in the performance of his professional responsibilities. He denies Mrs Plumley's contention that Mr Zablud had paid the sum of $25,000.00 into court to settle an outstanding order for costs made against him in other proceedings. He denies having ever been told of the deed of 24 December 1996. He disputes Mrs Plumley's contentions as to the legal effect of that deed. He challenges her contention that the orders made by Frederico J operate to prevent him from asserting his right to immediate payment from the monies paid into court by Color Point, and by Mr Zablud.

The evidence before the Court The main witnesses called on behalf of Williams & Williams Weblaw, and on behalf of David M Brett & Associates Pty Ltd were: (i) Mrs Jillian Williams; (ii) Mr John Williams; (iii) Mr David Brett; and (iv) Mr Peter Zablud. The main witnesses called on behalf of Mrs Plumley were: (i) Mrs Nerelle Plumley; and (ii) Mr Gerald Parncutt. In the case of Mr and Mrs Williams, Mr Brett, and Mrs Plumley, lengthy affidavits had been filed in advance of the proceedings. Annexed to these affidavits were a large number of documents which were received into evidence. In the case of Mr Zablud and Mr Parncutt, each gave viva voce evidence without any affidavits having previously been filed. All of the above witnesses were cross-examined, some at considerable length. It is necessary for me to make some general observations concerning the credibility of each of these witnesses.

The witnesses for the claimant solicitors (i) Mrs Jillian Williams Mrs Williams was, in my opinion, a truthful and reliable witness. She had a detailed and specific recollection of her dealings with Mrs Plumley. She gave direct and straightforward answers to the questions put to her in cross-examination. Her account of events was inherently plausible. It was supported by a number of contemporaneous documents, particularly those relating to the terms of her firm's retainer. One example of such a document is a letter dated 24 February 1997 sent by Mrs Williams to Mrs Plumley. In that letter, Mrs Williams confirmed that her fees would be charged at $200.00 per hour, with disbursements to be met by Mrs Plumley. Counsel's fees were to be paid prior to the date of hearing. The terms of that letter are inconsistent with Mrs Plumley's version of the terms of the retainer. Mrs Williams denied having ever had any knowledge of the deed of assignment of 24 December 1996. I accept her evidence. In all matters involving issues of credit in which she is in dispute with Mrs Plumley, I prefer the evidence of Mrs Williams. (ii) Mr John Williams Mr Williams had considerably less to do with Mrs Plumley than did his wife. He disagreed with Mrs Plumley's account of the basis of his firm's retainer. He also disagreed with the reasons given by Mrs Plumley for the termination of that retainer. Mr Williams vehemently denied having agreed to a retainer under which his firm had assumed an open ended liability for counsel's fees in relation to both the Family Court and Federal Court proceedings for a total sum of $15,000. Mr Williams stated that he had in fact given Mrs Plumley an oral quote of $45,000.00, inclusive of counsel's fees, to act for her in the Color Point litigation. His evidence as to the terms of the retainer is supported by a number of contemporaneous documents. These include the letter of 24 February 1997, written by Mrs Williams to Mrs Plumley. His evidence is supported also by a further letter written by Mrs Williams to Mrs Plumley on 1 May 1997. That letter reads, in part, as follows: "Dear Nerelle, RE: FAMILY LAW We confirm that in respect of your Federal Court and Family Court proceedings we were prepared to receive the sum of $15,000.00 for our costs and therefore limit our costs to this sum for the duration of both proceedings, and then be paid the balance on conclusion. We acknowledge that you have paid $5,000.00 of these costs. Our costs if taxed, would far exceed $15,000.00. As you have not paid us the balance outstanding, we are not able to continue with any further work until such time as the balance is paid. …" (emphasis added) The terms of that letter are broadly consistent with Mr Williams' account of the basis of his firm's retainer. They are wholly inconsistent with Mrs Plumley's account of her dealings with that firm. I accept Mr Williams' evidence in preference to that of Mrs Plumley. Mr Williams also denied having ever had any knowledge of the deed of assignment of 24 December 1996. I also accept his evidence on this point. (iii) Mr David Brett Mr Brett gave his evidence in a direct and forthright manner. He rejected the suggestion made by Mrs Plumley that he had undertaken the Color Point litigation upon a contingency fees or "no win, no fee" basis. His evidence in relation to his retainer is supported by a number of contemporaneous documents. For example, on 19 June 1997 Mr Brett wrote to Mrs Plumley in the following terms: "Dear Ms Plumley RE: Federal Court Action We refer to our conference of the 17th June, 1997 and, as indicated, enclose information required by the Legal Practice Act 1996 for your attention and, if in order, for execution by you and return to our office as confirmation that you wish us to act on your behalf. … We also confirm that we shall require from you an authority directed towards the solicitor handling your Family Law action whereby they are irrevocably authorised and directed to attend to payment to us of any costs outstanding to our firm from the proceeds of the Family Court action in due course. …" The enclosed information to which Mr Brett referred was contained in a document which read: "INFORMATION PURSUANT TO SECTION 86(1) OF THE LEGAL PRACTICE ACT 1996 BRETT & MATISI FEDERAL COURT ACTION Our method of costing the legal services to be provided is in accordance with the Schedule of Costs annexed hereto. In addition to the above, disbursements shall be charged. These are payments the legal practitioner must make on your behalf throughout the matter. You shall be required to pay disbursements as and when they are incurred, save and except for Counsel's fees. You shall not be required to pay costs during the course of the action unless you are in receipt of funds such as enable you to do so or unless we receive funds on your behalf. You shall be required to give authority for deduction of costs from monies received by other solicitors on your behalf. You have the right to negotiate an agreement about the payment of legal costs and to receive bills of costs. If the bill you receive is not in itemised form, you have the right to request an itemised bill within 30 days of receiving the lump sum bill. If you have any queries concerning the above information, you should discuss them with the legal practitioner conducting your case. Should you wish to engage Brett & Matisi to act on your behalf in this matter, please sign the enclosed copy of this document and return it to Brett & Matisi as soon as possible. I wish to engage Brett & Matisi to act on my behalf in this matter on the terms and conditions set out above. (signed N. Plumley 7.7.97)" The letter of 19 June 1997, and the enclosed information, are wholly inconsistent with Mrs Plumley's account of the terms of Mr Brett's retainer, and, in particular, her claim that Mr Brett took her case on a contingency fees or "no win, no fee" basis. Mrs Plumley signed the information annexure on 7 July 1997. I regret that I am unable to accept her explanation to me that she did not understand its terms. She is too astute a businesswoman for that explanation to be plausible. Mr Brett denied having been negligent in the performance of his duties as Mrs Plumley's solicitor. He asserted that Mrs Plumley's difficulties had been brought about by her unwillingness to expend even very modest sums in the conduct of the Color Point litigation. This had left her unprepared, and therefore in a weakened bargaining position, by the time the mediation took place on 25 February 1998. Mr Brett insisted that Mrs Plumley had been well aware on 23 February 1998, when they met in conference with Mr Parncutt, that he intended to attend the mediation, and that she had neither indicated to him then, or at the mediation, that she did not require his presence. He denied having ever had any knowledge of the deed of assignment of 24 December 1996. He disputed Mrs Plumley's contention that he had agreed that he would not be paid for his services in the Color Point litigation until after the Family Court proceedings had been resolved. Mr Brett was, in my opinion, a credible witness. I have no difficulty in regarding his evidence as truthful and accurate. I am prepared to act upon it.

(iv) Mr Peter Zablud Mr Zablud was called by the claimant solicitors to refute Mrs Plumley's contention that the sum of $25,000, which he had agreed at the mediation to pay, related to the earlier order for costs made against him by the Victorian Court of Appeal. He testified that he had agreed to pay that sum in order to settle the Color Point litigation, or rather that part of the proceeding brought against him by Mrs Plumley, and for no other reason. Mr Zablud referred in his evidence to the fact that by her cross-claim against him, Mrs Plumley had alleged that he had been negligent in performing his duties as her solicitor when acting for her in relation to the heads of agreement. The negligence alleged against him lay in his having failed to ensure that the 30% shareholding in Color Point had been assigned to Mrs Plumley, and to her husband, in accordance with that agreement. Mr Zablud also noted that the firm of Ebsworth & Ebsworth, which had represented his interests at the mediation, had been retained not by him, but by his professional indemnity insurer. That insurer had paid the bulk of the sum of $25,000, apart from the excess on the policy. Neither Ebsworth & Ebsworth, nor the insurer, had been involved in any way in the proceedings before the Victorian Court of Appeal. Mr Zablud had represented himself in those proceedings. He had made no claim upon his insurer in relation to the order for costs made against him. Those costs had been ordered by the Court of Appeal to be set-off, in any event, against a much greater amount owed to him by Mrs Plumley. Mr Zablud gave a plausible and coherent account of the basis upon which he had agreed to settle the Color Point litigation. Mrs Plumley produced what she claimed to be a handwritten note made at the mediation which, in part, supported her contention that the sum of $25,000 was understood to have related to the costs order against Mr Zablud. Nonetheless, I am satisfied that I should accept Mr Zablud's evidence on this point, supported as it is by so many objective indicia, in preference to that given by Mrs Plumley.

The witnesses for Mrs Plumley (i) Mrs Nerelle Plumley Mrs Plumley is no stranger to litigation. She appears to have spent much time during the past few years preparing for, or participating in, various legal proceedings. She plainly harbours a sense of grievance against a number of the very many legal practitioners who have acted for her throughout that period. She has a strong, and it seems to me genuine, belief that Color Point, and those associated with that company, have conspired with her husband to defeat her entitlement to a share in the Color Point assets. Regrettably, she appears to have become so convinced of the justice of her cause that she seems to have allowed her grievances to colour and distort her recollection of many significant events. Mrs Plumley's version of the terms upon which she retained Mr and Mrs Williams, and Mr Brett is, in my opinion, wholly implausible. They are all very experienced solicitors, well aware of the pitfalls associated with dealing with impecunious clients . Yet she attributes to them a willingness to deal with her on terms which would be viewed by anyone but a novice as being not merely uncommercial, but almost foolhardy. I simply cannot accept that Mr and Mrs Williams, and Mr Brett, agreed to retainers upon the terms claimed by Mrs Plumley. Under cross-examination, Mrs Plumley was often inclined to become defensive. She was extremely loquacious. She did not answer questions directly, but tended rather to make long and somewhat rambling statements. These statements tended to be couched in terms of self-justification. They were seldom responsive to the questions asked, and often went into matters which were of no relevance. Though Mrs Plumley seemed at times to have a detailed and quite specific memory of her dealings with the various solicitors with whom she has since fallen out (and these include Marshalls & Dent, Mr Zablud, Mr and Mrs Williams and Mr Brett) her evidence as to particular conversations was often difficult to reconcile with contemporaneous documents. Mrs Plumley was prone to exaggerate the perceived shortcomings of her solicitors. She seemed to me to underestimate the extent to which she, herself, may have been responsible for her own difficulties. She appears to have been a difficult and demanding client, but one who, while willing to impose upon her legal representatives significant burdens when it came to requiring them to devote care and attention to her needs, was unwilling, or at least reluctant, to see that they were renumerated properly for their work. Where Mrs Plumley's evidence conflicts with that of Mr or Mrs Williams, or with that of Mr Brett, I prefer their evidence to hers. It follows that, to the extent that Mrs Plumley's claim is to any significant degree based upon my accepting her credibility ahead of that of her former solicitors, her claim must fail. (ii) Mr Parncutt Mr Parncutt gave evidence which was not challenged to any significant degree. Much of what he had to say confirmed the evidence of Mr and Mrs Williams and Mr Brett. I do not believe that Mrs Plumley's case was strengthened in any way by the evidence which he gave.

The general principles There was little, if any, difference between the parties as to the principles which govern the claims made by Mrs Plumley's former solicitors. A solicitor's right to claim security for costs over the fruits of a judgment is well-established. The principles which govern the operation of this doctrine in Australia are reasonably clear. They may be summarised by reference to two leading authorities.

Ex parte Patience; Makinson v The Minister The starting point for any analysis of the right of a solicitor to have his costs paid out of the fruits of litigation must be the judgment of Jordan CJ in Ex parte Patience; Makinson v The Minister (1940) 40 SR(NSW) 96. The following passage appears at 99-100: "A solicitor is at common law entitled to a general possessory lien for all professional costs due to him by his client, which entitles him to keep in his possession all property of the client, which is in the solicitor's possession and has come into his possession in the course of his professional employment, until his costs have been paid. A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client's rights to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor's costs: Welsh v Hole 1 Doug. 238. If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor's claim is no answer to an application for such a rule: Read v. Dupper 6 T.R. 361; Ormerod v. Tate 1 East 464; Ross v. Buxton 42 Ch. D. 190. Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor's right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor's claim had been given to the judgment debtor prior to the arrangement: Ross v. Buxton 42 Ch. D. 190. These special rights have no resemblance to a solicitor's general possessory lien, although they are sometimes miscalled liens: Bozon v. Holland 4 My. & Cr. 354. In Barker v. St. Quintin 12 M. & W. 441 at 451 Parke B. said that "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 security for his debt," a remark which is reproduced in Chitty's Archbold, and has been repeated in many later authorities: cf also Smedley v. Philpot 3 M. & W. 573 at 585-7; North v. Stewart 15 App. Cas. 452 at 463. In practice, however, the solicitor has always been treated as possessing equitable rights in the judgment independently of any declaration of those rights, and the Court's assistance is invoked not to create the rights but to enforce them: Lord v. Colvin 2 Drew. & Sm. 82 at 92-3; Haymes v. Cooper 33 Beav. 431 at 433. The rights are assignable: Briscoe v Briscoe [1892] 3 Ch 543." (emphasis added)

Worrell v Power The principles stated by Jordan CJ as set out above in Ex parte Patience were followed by the Full Court of the Federal Court in Worrell v Power (1993) 118 ALR 237. The issue in the appeal in that case turned upon the right of a solicitor, as against a client's trustee in bankruptcy, to apply monies received on account of the client from another party to an action in payment of a bill of costs rendered to the client in connection with that action. The trial judge held that the solicitors were entitled to what was described as a "particular lien" in respect of their costs in the District Court proceedings upon the making of an order for costs in those proceedings. The order for costs had come about as a result of their exertions. They had a right, therefore, to apply to the Court to have the order for costs held as security for their debt. On the appeal, counsel for the trustee did not dispute that, under the general law, if the money in respect of which a solicitor claims a lien for costs is already in the hands of the solicitor, he may retain out of it the amount of the costs and pay over the balance to the client. Where the costs exceed the amount in hand, he may apply it towards those costs. Counsel submitted, however, that the solicitors acquired no interest in, or lien over, the money payable to their client pursuant to the costs order until that money was actually paid. That had occurred after the commencement of the bankruptcy. It was submitted that what the solicitors had previously enjoyed was, at best, a personal right or "mere equity" which was subsumed by the act of bankruptcy. In dismissing the appeal, Wilcox, Ryan and Gummow JJ considered in some detail the history of the "non-possessory lien" of a solicitor over the fruits of a judgment. Their Honours referred to the origins of that "lien", and stated at 240: "That the law authorises "self help" of this description has been settled since Welsh v Hole (1779) 1 Dougl 238; 99 ER 155. There, Lord Mansfield CJ said: "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."" The development of that doctrine in England had restricted the interest which a solicitor was said to have on a judgment to merely a claim to the equitable interference of the Court to have the judgment held as a security for his debt - Barker v St Quintin (1844) 12 M & W 441; 152 ER 1270 per Parke B; and Mercer v Graves (1872) LR 7 QB 499. These cases were distinguished, however, and, ultimately, not followed by the Full Court. Their Honours held that the decision in Mercer v Graves was not authority for the proposition that a solicitor has no more than a personal right to approach the court for a charging order, or no more than a mere equity arising from the recovery of the judgment for costs. Rather, their Honours set out several passages from the judgment of Jordan CJ in Ex parte Patience; Makinson v The Minister (supra) and then proceeded at 246: "His Honour went on to point that these "special rights" have no resemblance to a solicitor's general possessory lien, although they are sometimes miscalled liens. He also referred to the passage, discussed earlier in these reasons, from the judgment of Parke B in Barker v St Quintin, (supra), to the effect that the lien is "merely a claim to the equitable interference of the court" to have the judgment held as security for the debt. Jordan CJ then stated, however, that in practice the solicitor has always been treated as "possessing equitable rights in the judgment" independently of any declaration thereof and that the assistance of the court is invoked "not to create the rights but to enforce them" … With respect to what has been said upon the subject in other decisions, Ex parte Patience; Makinson v Minister contains a reasoned and thorough exposition of the nature and characteristics of the equitable rights which supports the operation of a solicitor's lien in a case such as the present. It is a decision of a strong Australian intermediate court of appeal, and one which we should follow. It indicates that the lien involves more than a personal right of the solicitor to approach the court to obtain a charging order, and that the lien arises when the judgment for costs is obtained, and before there has been a taxation of the costs. The assistance of the court is invoked not to create rights but to enforce them. So also the right of "self-help"."

Other relevant authorities Both Ex parte Patience: Makinson v The Minister (supra) and Worrell v Power (supra) have been followed on a number of occasions in other State Courts, and in the Family Court - see Kison v Papasian (1994) 61 SASR 567 (Full Court of the Supreme Court of South Australia); Akki Pty Ltd v Martin Hall Pty Ltd (1994) 35 NSWLR 470 per Windeyer J; Twigg v Keady (1996) 135 FLR 257 (Full Court of the Family Court) and Philippa Power & Associates v Primrose Couper Cronin Rudkin [1997] 2 Qd R 266 (Queensland Court of Appeal). A similar analysis has been accepted as correct in New Zealand - see Re H & W Wallace Ltd (In Liquidation) [1994] 1 NZLR 235 at 237 per Thomas J. The principles set out above are summarised in a helpful manner by Lehane J in Roam Australia Pty Ltd v Telstra Corporation Ltd (unreported, Federal Court, 22 September 1997) where his Honour observed: "Patience and the cases which have followed it make a number of things clear. First, the principle applies equally to judgments and compromises; secondly, the right does not depend upon any intervention by the Court, the assistance of which "is invoked not to create the rights but to enforce them …; thirdly, the amount which a solicitor is entitled to recover out of the judgment debt or amount owing under the compromise is the amount of costs and disbursements which the solicitor is entitled to recover from the client (no doubt that entitlement may depend upon agreement, taxation or assessment) and the claim may be asserted even though the precise amount to which the solicitor is entitled has not, by the appropriate means, been ascertained …" The right appears to be based upon the fact that the solicitor was "instrumental" in obtaining the judgment or compromise … or … that the judgment or compromise has "come about by reason of [the solicitor's] exertions". The entitlement may, nevertheless, arise although the solicitor's exertions came to an end before the judgment was obtained or the compromise negotiated. In Twigg, the solicitors acted in property settlement proceedings under the Family Law Act 1975 for some years, but ceased to act about 13 months before judgment in the proceedings was obtained. Their claim was, nevertheless, upheld." A useful explanation of the relevant principles is also to be found in the judgment of McLelland CJ in Eq in Doyles Construction Lawyers v Harsands Pty Ltd (unreported, Supreme Court of New South Wales, 24 December 1996). There solicitors had acted in certain District Court proceedings. The proceedings were settled by an agreement negotiated directly between the parties. The solicitors were not involved in that negotiated settlement. The agreement provided for payment to the solicitors' client of $40,000. Shortly after the agreement was made, but before any payment was made pursuant to that agreement, the solicitors ceased to act. His Honour observed: "It was submitted … that there was no sufficient causal link between work that Doyles had done in relation to the proceedings and the ultimate settlement, since the March settlement agreement was negotiated directly between the parties and Doyles had ceased to act before the ultimate settlement was negotiated. In my opinion it is unnecessary for Doyles to demonstrate that the settlement came about as the result of specific efforts by them. According to the statement of principle [in Patience] … it is sufficient to give rise to the equitable right that the settlement resulting in payment to the client came about as a result of the legal proceedings and that the solicitor had acted for the client in those proceedings, this being treated as a sufficient causal link." In Roam (supra) Lehane J expressed some reservations about the width of this statement by McLelland CJ in Eq. Lehane J observed that there would not necessarily be an entitlement in favour of solicitors to the equitable interest in the judgment or settlement proceeds commensurate with the amount they are owed for costs and disbursements no matter how slight or fleeting their participation may have been. As his Honour noted: "In each case, in my view, it must be a question whether the requisite causal link is established, whether the judgment or compromise is, on the evidence, to be regarded as brought about (or partially brought about) by the efforts of the solicitors … Where solicitors have been actively involved over a considerable period in acting for a party to successful litigation, the conclusion is likely to follow that the solicitors have been instrumental in obtaining the result, or that the result is (at least in part) due to the solicitors' efforts."

Summary of general principles The authorities seem to recognise that there are, in effect, two forms of solicitors' "lien" over costs. (a) The first is the common law "general" or "possessory" lien which enables a solicitor to retain all papers or other chattels of the client which have come into his possession as his client's solicitor until all his costs and charges as solicitor are paid: Barratt v Gough-Thomas [1951] Ch 242 at 250 per Evershed MR. This right depends upon an implied agreement. It is merely passive and possessory: that is to say the solicitor has no right of actively enforcing his demand. He may merely withhold possession of the documents or other property of his client until he is paid his legal costs. (b) The second is what is often described, though inaccurately, as a "non-possessory lien" over any property, other than real property (Shaw v Neale (1858) 6 HLC 581), recovered or preserved, or any judgment obtained, for the client by the solicitor's exertions in the litigation. This "lien" is equitable, and gives to the solicitor a charge upon the property in question. It does not depend upon the funds being in the possession of the solicitor. While it has been recognised that the term "lien" may be inappropriate to describe the nature of the solicitor's equitable interest in the fruits of the litigation, the terminology is less important than the nature of the particular interest, and its incidents. That interest arises when a solicitor undertakes professional services on behalf of a client in the course of litigation. It confers upon the solicitor an equitable interest in the fruits of that litigation, provided that those fruits are gained, at least in part, as a result of the solicitor's exertions on behalf of the client. It is a "particular" lien, rather than a "general" lien because it extends only to the costs of the proceedings in which the personal property is recovered, and not to all costs incurred on behalf of a client by the solicitor. Though in England there is some suggestion that the lien arises at common law (Re Born [1900] 2 Ch 433 at 435 per Farwell J), the position in Australia is that it is equitable in nature. It attaches to property which has been obtained for the client by the solicitor, either pursuant to a judgment, or a compromise of judicial proceedings which have been instituted. Though it has been said that the "so-called" lien is really only a right to ask for the intervention of the court to protect the solicitor when he finds that there is a probability of the client depriving him of his costs, and though it is correct to say that the solicitor can enforce the lien only by taking court action to prevent the property recovered from being paid or transferred to the client, the "lien" attaches by the recovery of the property. It is not dependent for its existence upon the judgment of the court. It should be noted that the "equitable non-possessory lien" is supplemented in some jurisdictions by a statutory lien in favour of solicitors over any property, real or personal, recovered or preserved through the instrumentality of those solicitors. In England the relevant provision is found in the Solicitors Act 1974, s 73. This provision stems from the Solicitors Act 1860. In Victoria, the Legal Profession Practice Act 1958 s 104(1) was to the same effect. That section gave to the solicitor priority over all persons claiming an interest in the property, so long as it remained under the control of the Court: Dallow v Garrold (1884) 14 QBD 543. The protection conferred upon the solicitor by these provisions is greater than that provided by the equitable lien. The Legal Practice Act 1996 (Vic) (which came into operation on 1 January 1997) does not replicate this statutory lien. It does not, however, purport to abrogate the equitable lien which has existed independently, and alongside the statutory lien, for over a century. The equitable charge which arises pursuant to the solicitor's non-possessory lien takes priority over the interest of the client's trustee in bankruptcy: Worrell v Power (supra). Similarly, that charge takes priority over the rights of an assignee of the assets recovered, or some part of them: The Paris [1896] P 77 at 82-3. See generally Snell's Equity, 29th ed (1990) at 459-462.

The rights of the claimant solicitors I am satisfied that the negotiated settlement arrived at on 25 February 1998 was, in part at least, the product of the efforts of Mrs Williams in the period between February and July 1997. The work performed by her in the Color Point litigation was substantial. It included instructing counsel, attending directions hearings, drawing and perusing documents, drawing lengthy affidavits, attending a court appointed mediation, drafting a preliminary list of documents, and giving consideration to the joinder of Mr Zablud as a cross-respondent in those proceedings. Similarly, the negotiated settlement was achieved, in part at least, by reason of the efforts of Mr Brett. In the period between July 1997 and February 1998 he did a great deal of work in the Color Point litigation. This included instructing counsel, drawing and perusing documents, drawing lists of documents, engaging valuers, preparing submissions on further and better particulars, and attending the mediation on 25 February 1998 where the proceeding was compromised. The rights which Mr and Mrs Williams and Mr Brett acquired to have their costs paid out of the settlement monies are, in accordance with the principles laid down by Jordan CJ in Patience (supra) properly to be regarded as "analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor".

The Zablud payment I have already indicated that I reject the suggestion that the payment of $25,000 paid into court by Mr Zablud related to the costs order made by the Victorian Court of Appeal in the Supreme Court proceedings, and is therefore not available to the claimant solicitors upon this interpleader. I reject also the contention that Mr Zablud was involved in the Color Point litigation only in so far as he might be required to indemnify Mrs Plumley if she herself were to be found liable to Color Point. The cross-claim which Mrs Plumley brought against Mr Zablud speaks for itself. Mrs Plumley alleged negligence on the part of Mr Zablud in that cross-claim. She sought damages against him. Whatever be the likelihood that such damages would have been awarded had the matter proceeded to trial, a commercial decision was taken by Mr Zablud's insurers to settle the claim made against him for $25,000. That sum represents part of the fruits of the Color Point litigation in favour of Mrs Plumley. It is, therefore, available to be utilised in favour of the claimant solicitors.

The effect of the deed of assignment of 24 December 1996 The deed is in the following terms: THIS DEED is made on the 24th day of December 1996 BETWEEN: NERELLE LEIGH PLUMLEY 4 Lawson Street ELWOOD VIC 3184 ("the Borrower") of the one part

• and - HENRY VICTOR MARKBY 167 Dendy Street BRIGHTON EAST VIC 3187 ("the Lender") of the other part WHEREAS: A. The Lender is the Borrower's father. B. The Borrower has instructed solicitors Marshalls & Dent of Level 12, 459 Little Collins Street, Melbourne, to act on her behalf in relation to various proceedings under the Family Law Act 1975 ("the Matrimonial Proceedings"), including proceeding numbered 7508 of 1996 filed at the Melbourne Registry of the Family Court of Australia. C. The Lender wishes to assist the Borrower to fund the Matrimonial Proceedings and any ancillary or related proceedings ("the related proceedings"), including any related proceeding against a third party, by paying, on behalf (sic) the Borrower and by way of loan to her, the Borrower's legal Costs of such proceedings ("the Costs"). The Borrower acknowledges that, to date, the Lender had paid $10,000.00 in costs to Marshalls & Dent. D. The Borrower acknowledges that the Lender's payments of the Costs are each by way of loan (collectively "the Loan") and must be repaid upon demand. IN CONSIDERATION of making of the Loan, the Borrower agrees to assign to the Lender the benefit of any Order for damages, interest and/or costs made in her favour in the Matrimonial Proceedings or in any of the related proceedings. NOW THIS DEED PROVIDES THAT: 1. The Borrower covenants with the Lender to repay the Loan upon demand by the Lender. 2. The Borrower hereby assigns all her right title and interest in the benefit of any amount of damages interest and costs awarded to her in the Matrimonial Proceedings and in any of the related proceedings. EXECUTED as a Deed: SIGNED SEALED AND DELIVERED ) by the said NERELLE LEIGH PLUMLEY ) (signed N Plumley) in the presence of: ) (signed by witness)" Although Mrs Plumley at one stage contended that both Mr and Mrs Williams and Mr Brett had been informed of the existence of this deed of assignment, they at all times all denied that this was so. Mrs Plumley eventually conceded under cross-examination that she had not referred to the deed of assignment, as such, in her dealings with Mrs Williams, or with Mr Brett. Rather, she stated, she had referred to the fact that she had a "loan agreement" with her father. She said that this was the way in which she characterised each of the deeds which she had entered into in December of 1996. There is, of course, a significant difference between a "loan agreement", and a deed of assignment of the type to which Mrs Plumley stated she had alluded. I am satisfied that neither Mr and Mrs Williams, nor Mr Brett, had any idea when they entered into their respective retainers with Mrs Plumley that she had purported to assign to her father the proceeds of the Color Point litigation. I do not, in any event, see how it can be said that the equitable interest which the claimant solicitors acquired in the settlement monies should be defeated by the purported assignment of those monies by Mrs Plumley to her father. The assignment would not meet the requirements of a valid statutory assignment pursuant to s 134 of the Property Law Act 1958 (Vic). There was no written notice of it given to either Color Point or to Mr Zablud. The assignment was, however, supported by consideration. I am prepared to assume, for present purposes, that the deed of assignment of 24 December 1996 operated as an equitable assignment of future property - see Holroyd v Marshall (1862) 10 HLC 191, 11 ER 999; and Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 25 per Windeyer J. The equitable interest which the claimant solicitors acquired in the fruits of the Color Point litigation is not defeated by such a deed of assignment. That deed, although expressed in terms which purport to assign in their entirety all of the proceeds of that litigation, was conceded by Mrs Plumley to have been poorly drafted, and to have been intended by her, and by her father, to be limited to a repayment of that part only of those proceeds equivalent to the amount which had been loaned to her. Had Mrs Plumley not made that concession, there would perhaps have been greater force in the contention made on behalf of the claimant solicitors that the deed represented an attempt on Mrs Plumley's part fraudulently to defeat the interests of her creditors, including those solicitors, by putting the entire proceeds of that litigation out of their reach. More importantly, as between the competing equitable interests in this case, namely that of Mr Markby on the one hand, and those of the claimant solicitors on the other, priority should be accorded to the solicitors' "non-possessory liens" over the fruits of the litigation. The solicitors' interests arose as a result of their efforts in conducting the litigation. They take priority over any interest which Mrs Plumley has in the settlement monies. Mrs Plumley cannot rely upon her father having a greater interest in those proceeds than that to which she herself would be entitled, absent the deed of assignment, in answer to the claims made by her former solicitors. This is perhaps no more than an application of the general principle that the interests of trustees, liquidators and receivers in recovering expenses incurred, and in being remunerated for their services, take precedence over the interests of debenture holders or equitable assignees of property: In re Universal Distributing Company Ltd (In Liquidation) (1933) 48 CLR 171 at 174 per Dixon J; and Moodemere Pty Ltd (in liq) v Waters & Anor [1988] VR 215 at 220-1 per Murphy J, and 229 per Tadgell J. Counsel for Mrs Plumley frankly conceded the difficulty which confronted him in relying upon the deed of 24 December 1996 in answer to the claims made by his client's former solicitors. As he observed in argument: "MR O'BRYAN: It seems to me that unless we can show that the retainers with the solicitors were subject to the operation of the deeds, then all other things being equal the proceeds of the litigation in the Federal Court would be net of costs and the deeds wouldn't have any effect on the solicitors' entitlement to costs." That concession seems to me to have been a proper one. It follows that, for the abovementioned reasons, I reject Mrs Plumley's contention that the deed of assignment of 24 December 1996 represents an answer to the claims made by her former solicitors.

The orders made by Frederico J on 8 August 1996 The relevant order is in the following terms:

"… 9. That until further order each of the parties be otherwise restrained from selling, transferring, encumbering, gifting, disposing of or dealing with any interest in Colour (sic) Point Pty Ltd or Markbys Communication Group (Australia) Pty Ltd or any other asset of the marriage. …" It is plain that the order operates, in its terms, upon Mrs Plumley and her husband in personam. It does not purport to prevent any third party from making whatever application to whatever Court might be regarded as necessary, in order to protect that third party's interest in the fruits of the Color Point litigation. The rights of third parties are not necessarily overridden by orders made by the Family Court when seeking to protect the rights of a husband and wife to the assets of the marriage pending the final determination of any property settlement. In Ascot Investments Pty Ltd v Harper & Anor (1981) 148 CLR 337 at 354 Gibbs J, as his Honour then was, stated: "It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform." In Rowell & Rowell; Deputy Commissioner of Taxation (Intervenor) (1989) FLC 92-026 the Full Court of the Family Court observed at 77,392: "Family law does not operate in a vacuum. By that I mean the legitimate rights of third parties are not ignored when determining the rights to property between the husband and wife inter se." In that case the wife made an application to the Family Court under s 79 of the Family Court Act 1975. She sought the transfer of her husband's interest in a particular piece of land. Her husband had just been sentenced to twelve years' imprisonment. Prior to his imprisonment, he had a judgment debt against him of $450,000 in favour of the Deputy Commissioner of Taxation, and insufficient assets to meet that debt. A judge of the Family Court ordered the transfer of the land to the wife notwithstanding having heard from counsel for the husband that the Deputy Commissioner of Taxation had obtained a Mareva injunction in the Supreme Court of New South Wales retraining him from disposing of any of his assets, and in particular, the land subject to the order. On appeal to the Full Court of the Family Court, the decision of the trial judge was set aside. The Mareva injunction was recognised as preventing the disposition ordered by the trial judge. There is no reason why the orders pronounced by Frederico J should operate to the detriment of the claimant solicitors. They have performed their obligations under their respective retainers. They have thereby contributed significantly to the settlement in favour of Mrs Plumley. They should not have to wait until after the Family Court proceedings have ended before they are entitled to assert their "particular lien" over the fruits of the Color Point litigation. That litigation was commenced in the Federal Court. It remained in the Federal Court notwithstanding attempts by Mrs Plumley to have it transferred to the Family Court. The claimant solicitors are entitled to the protection of the Federal Court in ensuring that they are paid their costs and disbursements out of the proceeds of the Color Point litigation. Orders which permit that result to be achieved are in no way in conflict with the orders pronounced by Frederico J. The matrimonial assets frozen by those orders are the net assets after deducting the legitimate expenses incurred in their being secured. Mrs Plumley's contentions regarding the effect of these orders upon the rights of the claimant solicitors must be rejected.

The allegations of negligence against Mr Brett If Mrs Plumley wishes to maintain her claim against Mr Brett, she has her remedies. She may institute proceedings for damages, both in tort and contract. There may be circumstances where a solicitor's lien over the fruits of litigation should be considered subject to some form of set-off in favour of the client. It is inappropriate, however, in my view, to treat her allegations of negligence, general and unparticularised as they are, as an answer to the claim made by Mr Brett on the interpleaders. Mr Brett's claim involves an assertion of an equitable interest in the proceeds of the Color Point litigation. It is a claim for a fixed sum based upon the work which he carried out on behalf of Mrs Plumley. It is that claim which should be considered on these interpleaders and not whether, by his conduct, he caused Mrs Plumley general loss and damage. An interpleader, brought without pleadings or other method of defining issues, (in accordance with O 44 of the Federal Court Rules), is scarcely a suitable vehicle for the determination of general allegations of negligence.

Conclusion In my opinion, the claims made by Williams & Williams Weblaw and David M Brett & Associates Pty Ltd should be allowed. In the case of Williams & Williams Weblaw, I was informed that the claim for $20,175.10 as set out in the bill of costs provided to Mrs Plumley is to be assessed upon a taxation in the very near future. In the case of David M Brett & Associates Pty Ltd, the bill of costs claiming the amount of $20,500.00 (less the sum of $653.40) is not subject to any such taxation because no application pursuant to s 115(2) of the Legal Practice Act 1996 (Vic) was made by Mrs Plumley. The time for making such an application has expired. I propose, therefore, to make the following orders:

1. Declare that the firm of Williams & Williams Weblaw has a lien over the proceeds of proceeding VG 749 of 1996.
2. Declare that the firm David M Brett & Associates Pty Ltd has a lien over the proceeds of proceeding VG 749 of 1996 .
3. Order that such amount as is approved upon the taxation of the bill of costs rendered by Williams & Williams Weblaw in relation to proceeding VG 749 of 1996 be paid to that firm from the proceeds of that proceeding, presently held in court.
4. Order that the sum of $19,846.60 together with interest of $1,110.21 on that sum be paid to David M Brett & Associates Pty Ltd from the proceeds of proceeding VG 749 of 1996, presently held in court.
5. The costs of Williams & Williams Weblaw and David M Brett & Associates Pty Ltd arising out of the applications for relief by way of interpleader brought by Color Point and by Mr Peter Zablud be paid from the proceeds of proceeding VG 749 of 1996, presently held in court, such costs to be agreed, or in default of agreement, taxed on a party and party basis.
6. The costs of Color Point Pty Ltd and Mr Peter Zablud arising out of their applications for relief by way of interpleader be paid out of the proceeds of proceeding VG 749 of 1996, presently held in court, such costs to be agreed, or in default of agreement, taxed on a solicitor/client basis. I certify that this and the preceding thirty-one (31) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg

Counsel for the claimant solicitors: Mr J Tsalanidis Solicitors for the claimant solicitors: David M Brett & Associates

Counsel for the 2nd Respondent & 3rd Cross-Claimant Mr G Plumley appeared in person

Counsel for the 3rd Respondent & Cross-Claimant: Mr J O'Bryan Solicitor for the 3rd Respondent & Cross-Claimant: Webb Korfiatis

Solicitors for the 10th Cross-Respondent Ebsworth & Ebsworth

Date of Hearing: 28 & 29 September, 1 October 1998

Date of Judgment: 27 November 1998