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[2026] NSWCA 193
respondent. Time for filing the summons for leave to appeal was extended to 19 May 2026; leave to appeal was granted; the appeal was dismissed; Studio B was ordered to pay the respondent’s costs; and the...
The Court of Appeal held that a solicitor’s general retaining lien can cover all client money in the solicitor’s trust account, not merely an amount matching the solicitor’s outstanding bill. The lien is a right to hold the money, not a right to pay the solicitor without the client’s direction. The Court also held that the lien can cover reasonable costs the solicitor incurs to quantify or enforce the costs claim. An issued costs assessment certificate could meet the statutory test of costs being reasonably due and owing even though it had not been filed as a judgment. Studio B obtained leave to appeal, but lost the appeal.
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2,453 words · generated 08/10/2026
Studio B Hair Design Pty Ltd sold a hairdressing business in 2020. A dispute arose with a former employee, Larissa Chick, who claimed 50 per cent of the sale proceeds. The net proceeds, $147,521.60, were initially held by Kalde Legal. Studio B changed solicitors and directed the money to be transferred to Robert Kerrison’s trust account. The transfer occurred on 9 November 2020. Mr Kerrison invoiced Studio B $37,940 on 12 December 2020, and Studio B terminated his retainer on 24 December 2020 ([8]-[10]).
10 cited instruments linked from this judgment.
Studio B later directed Mr Kerrison to transfer the trust money to its new solicitors and, following settlement of the dispute with Ms Chick, to pay her $24,994. Mr Kerrison initially did not make those payments, relying on the unpaid costs claim. After costs assessment and review, his assessed costs for acting for Studio B were fixed at $30,035.56. Those costs were paid from the trust money by garnishee order, but Mr Kerrison continued to retain the remaining balance ([11]-[22]).
A further costs dispute concerned proceedings before Garling J. Mr Kerrison had successfully obtained an extension of time to seek review of the costs assessment, and Studio B had been ordered to pay the costs of those proceedings. Those costs were assessed at $18,334.25, although the assessor’s certificate had not been filed to turn the amount into a judgment ([20]-[23], [28]-[30]).
Before Schmidt AJ, Studio B claimed the balance of the trust account. Mr Kerrison argued that he could retain all of it under a general retaining lien until his assessed costs, including the costs of the proceedings, were paid. The primary judge rejected Studio B’s claim and made orders concerning payment of costs from the trust funds ([31]-[36]).
Studio B appealed. The Court of Appeal first extended time and granted leave, because the appeal raised important legal questions despite the Court not being persuaded that there was a reasonably clear injustice in the primary judge’s decision ([37]-[39]). It then dismissed the appeal. The orders extended time for the summons, granted leave, dismissed the appeal and required Studio B to pay Mr Kerrison’s costs ([121]).
The judgment addresses two central questions: whether a general lien over client money covers the entire trust-account balance or only an amount equivalent to costs outstanding; and whether the lien can include costs the solicitor incurs in litigating to establish or enforce the costs claim ([5]-[6]).
On the first question, the Court relied principally on Johns v Law Society of New South Wales. It read Johns as establishing that a solicitor has a general lien over all money held for the client, but that the lien is “a mere retaining lien”. It permits the solicitor to withhold the property until costs are paid, but does not itself authorise the solicitor to pay money to the solicitor ([53]-[56]). The Court distinguished this general lien from a particular, or “fruits of the action”, lien, which can entitle the solicitor to payment out of money recovered for the client ([56]).
Studio B relied on Miller v Atlee and secondary sources treating money as divisible, such that a lien over money could extend only to the amount of the debt. The Court questioned the accuracy or basis of the reported reasoning in Miller v Atlee, and concluded that the limited-lien proposition could not be reconciled with the authorities, particularly Johns ([42]-[54]). It also referred to Re A Barrister and Solicitor, Stewart v Strevens, Legal Services Board v Gillespie-Jones and Barratt v Gough-Thomas. These authorities supported the understanding of the lien as possessory and protective, rather than a right to take money for payment ([58]-[65]).
The Court’s practical reasoning was that, until costs and disbursements are actually paid, it may not be possible to determine the final amount properly recoverable. It therefore considered it correct in principle for the lien to attach to all money held for the client until payment, just as it can attach to other client property ([66]). It saw no unfairness in that result because the client can direct the solicitor to transfer the claimed amount from the trust account. The client can still seek a costs assessment and seek recovery of any amount found to have been overpaid ([67]). On that basis, Mr Kerrison could retain all funds in the account, although he could not simply pay himself from them without authority ([68]-[69]).
On the second question, the Court held that the general lien could cover costs incurred to enforce the solicitor’s legal costs claim. It treated Gray v Graham as establishing that point. Although the facts involved a solicitor’s claim against competing interests in land, the judgment read the decision as recognising that enforcement costs could fall within a lien against the client. The solicitor’s claim failed against an earlier-ranking security interest, not because enforcement costs could never be covered by a lien ([78]-[82]).
The Court rejected the interpretation of White v Bini that a general lien excludes costs incurred by a solicitor as an adverse litigant. It considered that the authorities cited in White v Bini did not support that proposition. Taylor concerned money advanced by a solicitor in a non-professional capacity, rather than legal costs. Long involved a lien that had already been waived, so the Court regarded the relevant statement about the solicitor acting as an adverse party as, at most, obiter ([83]-[90]). The Court also treated observations in Kirk as obiter because there had been no legal services and therefore no general lien on the facts of that case ([91]-[96]).
Finally, the statutory scheme did not displace the common-law conclusion. The Court read s 144(2)(a) of the Legal Profession Uniform Law as permitting a lien for legal costs “reasonably due and owing”, while distinguishing that from the separate statutory procedure for withdrawal of trust money. It declined to read the words “for the provision of legal services” as if they were limited to services “for the client”. The Court considered that recovery costs could fall within “legal costs” and that this construction better advanced the purpose of promoting payment for legal services ([105]-[109]).
Before this decision, the authorities and texts presented competing propositions. Some material, tracing the proposition to Miller v Atlee, treated a solicitor’s lien over money as limited to the amount of the outstanding costs. Other authorities, particularly Johns, described the lien as applying over all money held for the client and as a right to retain rather than to withdraw funds ([42]-[55]).
There was also uncertainty about costs incurred after the solicitor-client retainer had ended. White v Bini had been cited for the view that a general lien did not extend to the solicitor’s costs of obtaining advice about the lien or recovering unpaid fees. But the Court considered that the authorities relied on for that view did not establish the proposition. It regarded Gray v Graham as authority for the contrary position: a general lien can cover costs incurred in enforcing the solicitor’s costs claim ([76]-[82], [90], [103]).
The Court of Appeal’s decision states the applicable NSW Court of Appeal position in this judgment: the lien can extend to the whole trust-account balance and can secure the solicitor’s enforcement costs, provided the costs fall within the relevant legal-costs framework and the solicitor is otherwise entitled to the lien ([55], [103], [105]-[109]). The decision does not say that a solicitor may use trust money for self-payment without authority. To the contrary, it confirms the distinction between retaining the funds and withdrawing them ([55], [68]).
The Court also clarified that a costs assessment certificate need not have been filed as a judgment before costs can be “reasonably due and owing” for the statutory lien provision. The procedural effect of filing under UCPR r 36.4(2) and the substantive statutory question under s 144(2)(a) have different purposes ([110]-[114]). The judgment therefore separates the existence and scope of the lien from the procedural steps needed to make a costs amount enforceable as a judgment.
At [55], the Court described the lien as a right to “retain the whole of the funds in the trust account” until payment, without a right to be paid from those funds without a client direction. In plain English, the solicitor may be able to keep the money in place as security, but that does not mean the solicitor owns it or can transfer it to the solicitor’s own account.
At [66], the Court said the lien should extend over all the money “until the costs and disbursements are paid.” The reason was not that the whole balance is necessarily owed to the solicitor. Rather, the Court considered that the final amount recoverable may not be settled until costs are paid or assessed, and it treated the lien as protective during that period.
At [67], the Court explained that a client can authorise payment of the amount claimed from the trust money. If the amount is later found to exceed what was properly due, the client may seek to recover the excess. This passage describes the Court’s reasoning about why an all-funds retaining lien is not, in its view, equivalent to the solicitor taking the money.
At [103], the Court stated that Gray v Graham establishes that the general lien can cover costs “incurred in enforcing a solicitor’s claim for legal costs.” In plain English, the costs secured by the lien are not necessarily confined to work done while the solicitor was providing services under the original retainer.
At [112], the Court distinguished a judgment from an amount “reasonably due and owing”. Filing a certificate may be necessary to give it the procedural status of a judgment, but the Court held that this is not the same question as whether the amount meets the threshold for a lien under s 144(2)(a).
At [120], the Court added an important qualification. A solicitor who fails to follow a client’s written payment direction may, in some circumstances, be treated as having brought the lien to an end. The Court did not find that consequence applied to Mr Kerrison on the evidence and circumstances before it.
The decision is most directly relevant where a solicitor holds money beneficially belonging to a client in a trust account, the solicitor claims unpaid legal costs, and the client seeks transfer or distribution of the remaining funds. The judgment supports a distinction between the amount of the solicitor’s costs and the amount that may be retained under the general lien: on the Court’s analysis, the lien can cover the entire balance while costs remain unpaid, even though the solicitor cannot treat that balance as money payable to the solicitor ([53]-[56], [66]-[69]).
It is also relevant where the client disputes the amount of costs or the solicitor has had to bring proceedings to quantify or enforce the costs claim. The judgment holds that such enforcement costs may themselves be covered by the general lien, rather than being excluded solely because the solicitor is acting as a litigant against a former client ([70], [103], [105]-[109]).
A further relevant pattern is where costs have been assessed but the certificate has not been filed as a judgment. The Court’s reasoning indicates that the absence of a filed judgment does not, by itself, prevent costs from being “reasonably due and owing” under s 144(2)(a) ([110]-[114]).
The judgment also identifies factual limits and questions. The general lien is possessory and passive; it does not authorise unilateral withdrawal from trust money. The consequences of a client’s written direction, the timing of compliance, whether the solicitor had a proper basis for resisting the direction, whether costs are properly recoverable, and whether a competing interest has priority may all matter. The Court’s general observation at [120] indicates that a solicitor’s failure to comply with a direction capable of ending the lien may affect whether the lien continues.
The supplied judgment cannot establish how courts have treated this 2026 decision after it was delivered. It contains no later judicial treatment of the decision itself.
It does, however, assess how earlier decisions had treated White v Bini. The Court noted that Ferrer Lawyers Pty Ltd t/as Ferrer Lawyers v Khanchedar and Re Estate of Cervo had referred to White v Bini, but had not analysed the authorities supporting its proposition about enforcement costs. The Court considered the lack of analysis unsurprising given the interlocutory or urgent nature of those applications ([89]-[90]).
The judgment also revisited Kirk, explaining that the observations about liens over divisible trust money and costs incurred on the client’s instructions were obiter in that case. The funds there had been deposited in advance of legal work, so no general lien had arisen on the facts ([91]-[96]). Its analysis of Miller v Atlee, Taylor and Long likewise explains why the Court did not accept those authorities as displacing the rule it derived from Johns and Gray v Graham ([51]-[54], [83]-[88], [103]).
The judgment decides the principal questions raised on this appeal, but it does not resolve every possible dispute about a solicitor’s lien. It does not determine whether every cost incurred in litigation between a solicitor and former client will be covered. The reasoning concerns costs connected with quantifying or enforcing a solicitor’s claim for legal costs; the statutory requirement that the costs be legal costs “reasonably due and owing” remains relevant ([105]-[109]).
The precise application of the Court’s observation at [120] is also fact-sensitive. The Court stated a general proposition about failure to comply with a written direction that would terminate the lien, but found no basis to apply it to Mr Kerrison. The judgment does not set out a comprehensive test for when non-compliance will bring a lien to an end.
Nor does the judgment eliminate the distinction between a general retaining lien and a particular lien over the fruits of an action. It confirms that the general lien permits retention, while a particular lien may entitle a solicitor to payment from recovered funds ([55]-[56]). How those distinct rights interact in other factual settings is not decided here.
The judgment finally leaves the usual statutory and procedural questions to be answered in context: what costs are properly recoverable, what amounts meet the statutory “reasonably due and owing” threshold, whether a solicitor has complied with trust-money directions, and what effect any competing proprietary interest may have. Those matters are not replaced by the broad statement about the potential scope of a general retaining lien.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have a qualified Australian lawyer check it.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Studio B Hair Design Pty Ltd trading as Studio B Hair Design v Kerrison trading as Kerrisons Legal Services [2026] NSWCA 193
Hearing dates: 8 September 2026
Decision date: 16 September 2026
Before: Payne JA at [1]
Adamson JA at [2]
Ball JA at [122]
Decision: (1) Extend the time for filing the summons for leave to appeal to 19 May 2026.
(2) Grant leave to appeal.
(3) Dismiss the appeal.
(4) Order the appellant to pay the respondent’s costs.
(5) Note that the respondent’s costs of the proceedings in this Court are covered by his general lien.
Catchwords: LEGAL PRACTITIONERS — general lien — dispute over trust monies held in solicitor’s trust account — where primary judge found solicitor holds a general retaining lien over all trust monies in its possession — whether general lien is over all monies in trust account or only the portion of the monies payable pursuant to the costs judgment — whether general lien extends to enforcement costs or only to costs incurred on the instructions of the client
LEGAL PRACTITIONERS — appeals — leave to appeal — where leave ought be granted as authorities are inconsistent and the appeal raises important matters of principle regarding scope of a solicitor’s general lien
Legislation Cited: Civil Procedure Act 2005 (NSW), s 101
Interpretation Act 1987 (NSW), s 33
Legal Profession Uniform General Rules 2015 (NSW), r 42
Legal Profession Uniform Law (NSW) No 16a of 2014, ss 6, 138, 142, 144
Legal Profession Uniform Law Application Act 2014 (NSW), ss 70, 71, 83, 84, 86
Supreme Court Act 1970 (NSW), s 101
Uniform Civil Procedure Rules 2005 (NSW), r 36.4
Cases Cited: Alessio v Daniels (Supreme Court (Vic), 19 October 1983, Kaye J, unrep)
Barratt v Gough-Thomas [1951] Ch 242
Bolster v McCallum [1966] 2 NSWR 660
Ferrer Lawyers Pty Ltd t/as Ferrer Lawyers v Khanchedar [2023] NSWSC 1085
Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564
Goldberg v Beckett [2015] NSWSC 1966
Gray v Graham (1855) 2 Macq 435
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15
In re Long [1929] VLR 318
In re Taylor, Stileman, & Underwood [1891] 1 Ch 590
Johns v Law Society of New South Wales [1982] 2 NSWLR 1
Kerrison’s Legal Services v Studio B Hair Design Pty Ltd [2022] NSWSC 1801
Kirk v Commissioner of the Australian Federal Police (Full Federal Court, Fox, Davies and Beaumont JJ, 8 July 1988, unrep)
Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35
Miller v Atlee (1849) 3 Ex 799; 154 ER 1068
Oliveri v P M Sulcs & Associates Pty Ltd (in liq) [2013] NSWSC 590; (2013) 16 BPR 31,803
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Re A Barrister and Solicitor (1979) 40 FLR 26
Re Cao (A bankrupt); ex parte Dixon [1996] ANZ ConvR 321
Re Estate of Cervo (Admin Pendente Lite Apptd) (2024) 21 ACTLR 226; [2024] ACTSC 253
Re Meter Cabs Ltd [1911] 2 Ch 557
Stewart v Strevens [1976] 2 NSWLR 321
White v Bini [2003] FCA 669
Texts Cited: Cordery on Legal Services (9th ed, 1996, LexisNexis)
E.I. Sykes, The Law of Securities (4th ed, 1986, The Law Book Company Ltd)
Halsbury’s Laws of England (3rd ed), vol 36 (1961), Lien
Halsbury’s Laws of England (4th ed), vol 44 (1997), Solicitors
W.T.S. Daniel, History of the Law Reports (1883, Oceana Publications Inc)
Category: Principal judgment
Parties: Studio B Hair Design Pty Ltd trading as Studio B Hair Design (Applicant)
Robert Kerrison trading as Kerrisons Legal Services (Respondent)
Representation: Counsel:
A Crossland / K J Sanders (Applicant)
J Dooley (Respondent)
Solicitors:
Watson Law (Applicant)
Gilchrist Connell (Respondent)
File Number(s): 2026/205816
[This headnote is not to be read as part of the judgment]
The applicant, Studio B Hair Design Pty Ltd (Studio B), seeks leave to appeal against the refusal by Schmidt AJ (the primary judge) in the Common Law Division of the Supreme Court (the Court below) to make orders that monies in the trust account of the respondent, Robert Kerrison trading as Kerrisons Legal Services, ought be paid out to Studio B. The primary judge held that the respondent retained a general lien over all the funds in his trust account until he had been paid the quantum of costs owed to him by Studio B since the solicitor’s general lien extended to amounts incurred by the solicitor as litigant (in enforcing his right to legal costs) and not just as solicitor: Johns v Law Society of New South Wales [1982] 2 NSWLR 1 (Johns).
The costs in issue were costs assessed in proceedings before Garling J in the Common Law Division of the Supreme Court in which Mr Kerrison sought an extension of time to apply for a review of the costs assessment in relation to legal fees owed to him by Studio B.
The principal questions on appeal were: whether a solicitor’s general lien extends to all money held in a trust account for the client or only to the amount of money claimed by the solicitor for legal costs; and whether the solicitor’s general lien extends not only to legal costs incurred on the instructions of the client but also to the costs of enforcement of the right to those costs.
The Court (Adamson JA, Payne and Ball JJA agreeing) held granting leave and dismissing the appeal:
Ground 1: alleged error in finding that Mr Kerrison had a general lien over the funds in his trust account
(1) Johns establishes that a solicitor has a general lien over funds in a trust account (as well as any other property of the client’s which the solicitor holds) and that the lien is a retaining lien so that the solicitor has a right to retain the whole of the funds in the trust account until payment of the solicitors costs but is not entitled to be paid out of those funds without a direction from the client. These principles are consistent with the purpose for which the lien exists: to secure the payment of costs and disbursements properly recoverable by the solicitor and have been applied in (or are consistent with) several relevant decisions: [55], [58]-[67].
Johns v Law Society of New South Wales [1982] 2 NSWLR 1; Re A Barrister and Solicitor (1979) 40 FLR 26; Stewart v Strevens [1976] 2 NSWLR 321; Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35; Barratt v Gough-Thomas [1951] Ch 242 followed.
(2) The statement that a solicitor has no lien over money beyond the amount of his outstanding costs (for which Miller v Atlee was cited) is contrary to principle and authority: [41]-[52].
Miller v Atlee (1849) 3 Ex 799; 154 ER 1068; Bolster v McCallum [1966] 2 NSWR 660; In re Taylor, Stileman, & Underwood [1891] 1 Ch 590; Alessio v Daniels (Supreme Court (Vic), 19 October 1983, Kaye J, unrep) distinguished.
Gray v Graham (1855) 2 Macq 435; Johns v Law Society of New South Wales [1982] 2 NSWLR 1 followed.
History of the Law Reports (1883, Oceana Publications Inc) by W.T.S. Daniel; Halsbury’s Laws of England (3rd ed), vol 36 (1961) Lien; Halsbury’s Laws of England (4th ed), vol 44 (1997), Solicitors; Cordery on Legal Services (9th ed, 1996, LexisNexis) cited.
Ground 2: alleged error in finding that the general lien extended to costs incurred by the solicitor as litigant
(3) The law as established by Gray v Graham – that a solicitor’s general lien covers not only costs incurred on the instructions of a client but also costs incurred in enforcing a solicitor’s claim for legal costs – continues to apply: [104]. (For the case law analysis, see [76]-[103].)
Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564; Re Meter Cabs Ltd [1911] 2 Ch 557; Gray v Graham (1855) 2 Macq 435; Oliveri v P M Sulcs & Associates Pty Ltd (in liq) [2013] NSWSC 590 followed.
Miller v Atlee (1849) 3 Ex 799; 154 ER 1068; White v Bini [2003] FCA 669 distinguished.
In Re Long [1929] VLR 318; In re Taylor, Stileman, & Underwood [1891] 1 Ch 590; In Kirk v Commissioner of the Australian Federal Police (Full Federal Court, Fox, Davies and Beaumont JJ, 8 July 1988, unrep); Ferrer Lawyers Pty Ltd t/as Ferrer Lawyers v Khanchedar [2023] NSWSC 1085; Re Estate of Cervo (Admin Pendente Lite Apptd) (2024) 21 ACTLR 226; [2024] ACTSC 253 considered.
The Law of Securities (4th ed, 1986, The Law Book Company Ltd) cited.
(4) The common law position is consistent with the statutory regime in relation to general liens: [105]-[110].
Ground 3: alleged error in finding that the general lien extended to the costs order made by Garling J in circumstances where those costs were not “reasonably due and owing*”*
(5) A final certificate of costs assessment (which had been issued in the present case, although not filed) meets the statutory test of “reasonably due and owing” even when it has not been converted into a judgment by having been filed. The primary judge’s conclusion and reasoning were correct. Ground 3 was not made out.
Re Cao (A bankrupt); ex parte Dixon [1996] ANZ ConvR 321 followed.
Ground 4: allegation that the primary judge erred in finding that the costs of the proceedings were covered by the general lien
(6) The primary judge’s conclusion that the general lien covered the costs of the proceedings in the Court below is correct and follows from the resolution of ground 2. The general lien also extends to Studio B’s liability for the costs of the proceedings in this Court (which is contingent until a costs order is made): [116].
On the question of whether leave ought be granted
(7) The appeal raised important matters of principle as to whether a solicitor’s general lien extends to the whole of the money held in a trust account or only over an amount equivalent to the costs outstanding and whether the lien extends to costs incurred by the solicitor in quantifying or recovering those costs. The parties’ submissions highlighted inconsistencies in the authorities and the texts which ought be resolved by this Court. On this basis, leave to appeal ought be granted: [37]-[39].
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 cited.
PAYNE JA: I agree with Adamson JA.
ADAMSON JA: By summons filed on 19 May 2026, the applicant, Studio B Hair Design Pty Ltd (Studio B), seeks leave to appeal against orders made by Schmidt AJ (the primary judge) on 20 October 2025 in the Common Law Division of the Supreme Court (the Court below) concerning monies which had been deposited into the trust account of the respondent, Robert Kerrison trading as Kerrisons Legal Services. Leave to appeal is required as the value of the amount in issue is less than $100,000: s 101(2)(r) of the Supreme Court Act 1970 (NSW).
The primary judge dismissed Studio B’s claim that monies in the trust account ought be paid out to it. Her Honour also entered judgment in favour of Mr Kerrison for an amount claimed in respect of costs. The primary judge delivered two judgments: the first on 15 August 2025 (Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services [2025] NSWSC 924 (J1)), in which her Honour’s reasons were set out; and the second on 20 October 2025, (Studio B Hair Design Pty Ltd t/as Studio B Hair Design v Kerrison t/as Kerrisons Legal Services (No 2) [2025] NSWSC 1222 (J2)), which contained the final orders, including costs orders. References to paragraphs of these judgments will be indicated as J[x].
Studio B requires an extension of time for leave to appeal.
The principal questions for this Court’s determination, if leave to appeal is granted, are:
whether a solicitor’s general lien extends to all money held in a trust account for the client or whether the general lien extends only to the amount of money claimed by the solicitor for legal costs; and
whether the solicitor’s general lien extends not only to legal costs incurred on the instructions of the client but also to the costs of enforcement of the right to those legal costs.
Studio B submitted that both questions ought be answered in the negative. For the reasons which follow, both questions ought be answered in the affirmative, as was submitted on behalf of Mr Kerrison.
In July 2020, Studio B sold a hairdressing business operated by its director, Amanda O’Brien. Larissa Chick, a former employee of the hairdressing business, claimed to be entitled to 50% of the proceeds of sale. Studio B retained Kalde Legal to act on its behalf. On settlement of the sale in August 2020, the net proceeds of sale, $147,521.60, were transferred into the trust account of Kalde Legal.
Studio B subsequently terminated Kalde Legal’s retainer and retained Mr Kerrison. On 1 November 2020, it authorised and directed that the funds from Kalde Legal’s trust account be transferred to Mr Kerrison’s trust account. This transfer was effected on 9 November 2020. On 12 December 2020, Mr Kerrison issued an invoice for $37,940 in respect of his legal costs. On 24 December 2020, Studio B terminated Mr Kerrison’s retainer.
On 15 January 2021, Studio B retained new solicitors (Watson Law), who continue to act on its behalf.
On 27 January 2021, Studio B directed Mr Kerrison to transfer the proceeds of sale to Watson Law. Mr Kerrison, whose invoice had not been paid, refused to make the transfer. On 3 June 2021, Studio B filed an application for Mr Kerrison’s costs to be assessed.
The dispute between Studio B and Ms Chick was resolved. On 28 October 2021, Studio B directed Mr Kerrison to pay the agreed settlement amount ($24,994) to Ms Chick. Mr Kerrison, whose outstanding costs had not been paid, did not make that payment.
On 8 November 2021, the costs assessor issued a certificate of determination of costs assessment in respect of Mr Kerrison’s costs in the amount of $29,328.81. On 9 November 2021, Watson Law sent an executed trust account authority to Mr Kerrison for payment of Mr Kerrison’s costs as assessed with the balance of the trust funds to be transferred to Watson Law’s trust account.
On 13 December 2021, Studio B paid the fees of the costs assessor in order to obtain the certificate of determination. On 13 December 2021, the Manager, Costs Assessment sent the assessor’s certificates and reasons to the parties.
The text of the certificate included the following statement:
Subject to allowance for amounts paid in respect thereof, the total amount specified in this certificate is payable to the abovenamed *law practice by the abovenamed *client.
(Emphasis in original.)
Dear Mr Kerrison
Studio B Hair Design Trust & Kerrison[s] Legal Services
Costs Assessment
We refer to our correspondence dated 25 October 2021, 29 November 2021, 30 November 2021, 3 December 2021 and 10 December 2021.
We note on 13 December 2021 the parties received the Cost Assessment Certificate and reasons for the determination.
The Cost Assessor determined that:
1. The costs have been assessed as $29,328.81 as payable to you;
2. The costs of the Assessor in the amount of $3,338.78 be payable by you.
As our client paid the costs of the Assessor to the Court to enable the Certificate to be provided, the amount due and payable to you is $25,990.03.
We note that you currently hold the amount of $147,521.60 in trust on behalf of our client, please IMMEDIATELY attend to payment of those funds as follows:
1. The sum of $24,994 to Larissa Chick in accordance with the written authority dated 25 October 2021 and forward to you on 28 October 2021;
2. The sum of $25,990.03 to you as payment per the Cost Assessment Certificate issued on 8 November 2021;
3. The balance of $96,537.57 to Watson Law’s trust account in accordance with the written authority dated 25 October 2021 and forward to you on 28 October 2021.
Yours faithfully
Watson Law Pty Ltd
On 24 January 2022, Mr Kerrison filed an application for review of the determination of the costs assessor. As he was out of time by 12 days, he required an extension of time pursuant to s 83(1A) of the Legal Profession Uniform Law Application Act 2014 (NSW) (the Application Act).
On 28 January 2022, Mr Kerrison paid $24,994 from his trust account to Ms Chick but retained the balance of $122,527.60. He did not pay himself the amount of $25,990.03 which he had been directed to pay in the letter of 21 December 2021 as, by that time, he had sought review of the costs assessment.
On 16 March 2022, the Manager, Costs Assessment refused Mr Kerrison’s review application as it had been brought out of time. On 14 April 2022, Mr Kerrison filed a summons in the Court below seeking review of this decision pursuant to s 93B(3) of the Application Act, which provides that the acts and decisions of the Manager, Costs Assessment, are reviewable in the same manner as acts and decisions of other registrars are reviewable by the Court.
On 1 December 2022, Garling J extended time for Mr Kerrison to seek review of the costs assessment and ordered Studio B to pay the costs of the proceedings: Kerrison*’*s Legal Services v Studio B Hair Design Pty Ltd [2022] NSWSC 1801. His Honour considered that a sufficient explanation for the delay of 12 days had been provided by the evidence that Mr Kerrison had suffered from COVID-19; that there was a lockdown; and that much of the intervening period was covered by the court vacation. His Honour noted that Studio B had put forward no evidence of prejudice. There was no appeal from the orders made by Garling J.
36.4 Date of effect of judgments and orders
(1) A judgment or order takes effect—
(a) as of the date on which it is given or made, or
(b) if the court orders that it not take effect until it is entered, as of the date on which it is entered.
(2) Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor’s certificate is filed.
(3) Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.
(Emphasis added.)
legal costs means—
(a) amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services; or
…
including disbursements but not including interest …
138 Holding, disbursing and accounting for trust money in general trust account
(1) Except as otherwise provided in this Part, a law practice must—
(a) hold trust money deposited in the law practice’s general trust account exclusively for the person on whose behalf it is received; and
(b) disburse the trust money only in accordance with a direction given by the person.
Civil penalty: 50 penalty units.
(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.
(3) The law practice must account for the trust money as required by the Uniform Rules.
Civil penalty: 50 penalty units.
…
142 Trust money subject to a written direction
(1) A law practice that receives a written direction to deal with trust money (other than cash) in a particular way must comply with that direction within the period specified in the direction, or otherwise, as soon as practicable after it is received.
Civil penalty: 50 penalty units.
(2) The law practice must keep the written direction for 7 years after the matter has been finalised.
Civil penalty: 50 penalty units.
…
144 Withdrawal of trust money
…
(2) A law practice may do any of the following, in relation to trust money held in the practice’s general trust account or controlled money account—
(a) exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the law practice, where the law practice is otherwise entitled to do so;
(b) withdraw money for payment to the law practice’s account for legal costs owing to the practice if the relevant procedures or requirements specified in the Uniform Rules for the purposes of this Division are complied with;
(c) deal with the balance as unclaimed money, after—
(i) deducting any legal costs properly owing to the practice; and
(ii) exhausting any other means of distributing it in accordance with the client’s instructions.
(Emphasis added.)
42 Withdrawal of trust money for payment of legal costs
(1) This rule prescribes, for the purposes of Division 2 of Part 4.2 of the Uniform Law (see section 144(2)(b) of that Law), the procedure for the withdrawal of trust money held in a general trust account or controlled money account of a law practice for payment of legal costs owing to the law practice by the person for whom the trust money was paid into the account.
(2) The trust money may be withdrawn in accordance with the procedure set out in any applicable subrule of this rule.
(3) The law practice may withdraw the trust money if the law practice has given the person a bill relating to the money and referring to the proposed withdrawal, and—
…
(c) if the money otherwise becomes legally payable.
…
70 Certificate as to determination of costs to parties
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(5) In the case of an amount of money specified in a certificate that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid money. The rate of any interest payable in respect of that amount of money is the rate of interest in the court in which the certificate is filed.
Section 71 of the Application Act provides for a certificate as to the determination of the costs of the costs assessor and Manager, Costs Assessment to be issued.
Section 83(1) of the Application Act provides that a party to a costs assessment may apply for a review within 30 days of the certificate of costs assessment having been forwarded to the parties. Under s 83(1A), the Manager, Costs Assessment may extend the period for lodging the application. Section 86(1) of the Application Act provides that an application to a review panel to review a costs assessor’s determination under ss 83 or 84 effects a suspension of the operation of the determination.
On 3 June 2022, Studio B commenced proceedings against Mr Kerrison in the Court below. The primary relief claimed was restitution of the amount standing to Studio B’s credit in Mr Kerrison’s trust account, which was said to be $122,527.60. The figure claimed took into account the payment to Ms Chick but did not take into account the certificate of assessed costs of the proceedings before Garling J ($18,334.25). The amount of $30,035.56 which was the subject of the review panel’s assessment had already been paid as a result of monies garnisheed.
This claim was modified in the course of the oral hearing. Ultimately, Studio B claimed to be entitled to the balance of the trust account, $91,180.38. It submitted that there ought be no deduction for the assessed costs of $18,334.25 since they arose out of litigation in which Mr Kerrison was the client rather than the solicitor: J1[23]-[25]. In the alternative, Studio B claimed to be entitled to be paid $69,905.63 ($91,180.38 less $21,274.75 ($18,334.25 plus interest)): J1[31].
Mr Kerrison defended the claim on the basis that he had a right to retain all the money held on trust ($91,180.38) until payment of his assessed costs for the proceedings before Garling J ($18,334.25) with interest; and any costs ordered to be paid by Studio B in the proceedings before the primary judge: J1[5]. Mr Kerrison submitted that he had no right to withdraw $18,334.25 from the trust account unless and until he was authorised by Studio B and that no such direction had been given: J1[28].
The issue before the primary judge was whether Mr Kerrison was entitled to assert a general lien over the money remaining in his trust account ($91,180.38) in respect of the assessed costs of the proceedings before Garling J ($18,334.25) and the costs of the proceedings in the Court below. The primary judge found that he was.
The primary judge held that:
as Studio B had not authorised Mr Kerrison to pay himself the $18,334.25 in respect of the costs order made by Garling J, Mr Kerrison was not entitled to pay himself that amount;
although Mr Kerrison had not filed the certificate for the costs of $18,334.25 (which would have given rise to a judgment), the amount certified was payable by Studio B with interest;
Mr Kerrison retained a general lien over the funds in his trust account until he had been paid the amount of the costs order and any costs order made in the proceedings before the primary judge, since the lien extended to amounts incurred by the solicitor as litigant and not just as solicitor: Johns v Law Society of New South Wales [1982] 2 NSWLR 1 (Johns);
Studio B had not established that the funds held in trust exceeded the amount of the legal costs due to Mr Kerrison and owing by Studio B for the assessed costs and the costs of the proceedings before the primary judge;
had Studio B directed Mr Kerrison to withdraw from the funds he held on trust the amount of the assessed costs, s 138 of the Uniform Law would have required him to disburse those funds in accordance with the direction: Goldberg v Beckett [2015] NSWSC 1966 at [36] (Harrison J); and
Studio B was, accordingly, not entitled to the orders sought.
The primary judge dismissed Studio B’s claim, entered judgment for Mr Kerrison and ordered that he transfer $23,379.70 of the funds in his trust account to himself for the payment of the assessed costs, with interest, of the proceedings before Garling J and ordered Studio B to pay Mr Kerrison’s costs of the proceedings.
To obtain leave to appeal, the applicant needs to demonstrate an issue of principle, a question of public importance or a reasonably clear injustice going beyond something which is merely arguable: see the summary of authorities in PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6] (Bell P and Simpson AJA).
I am not persuaded that there was any error in the primary judge’s analysis of the relief sought or in her Honour’s denial of relief in the particular circumstances of the present case. Nor am I persuaded that there is any reasonably clear injustice going beyond the merely arguable.
However, the proposed appeal raises important matters of principle as to whether a solicitor may claim a general lien over the whole of the money held in a trust account or only over an amount equivalent to the costs outstanding and whether the lien extends to costs incurred by the solicitor in quantifying or recovering costs. The parties’ submissions have highlighted inconsistencies in the authorities and the texts which ought be resolved by this Court. The present application provides an opportunity for this Court to state the applicable principles on a topic which is of significance to solicitors and clients and to the administration of justice generally. On this basis, leave to appeal ought be granted.
1 The learned Primary Judge erred in finding ([44] and [48] of her reasons (PJ1)) that if the Appellant owed the Respondent solicitor costs for legal services in a sum less than what the Respondent held in his trust account for the Appellant, s 144(2)(a) of the [Uniform Law] or the common law entitled the Respondent to exercise a lien over all the funds held in trust.
2 The learned Primary Judge erred ([44] and [58] of PJ1) in finding that the costs order made by Garling J against the now Appellant and in favour of the Respondent in Kerrison’s Legal Services v Studio B Hair Design Pty Ltd [2022] NSWSC 1801, entitled the Respondent, where the costs were unpaid, to exercise a lien over all of the Appellant’s funds in (the Respondent’s) trust account.
3 Where the Respondent had not pursuant to s 71(3) of the [Application Act] filed the costs assessor’s certificate obtained following the costs order made by Garling J (as to which, see Ground 2), the learned Primary Judge erred ([64]-[67] of PJ1) in finding that the legal costs in respect of the costs order were “reasonably due and owing” for the purposes of s 144(2)(b) of the [Uniform Law].
4 The learned Primary Judge erred in finding ([44], [54] and [68] of PJ1) that the Respondent was entitled to exercise a general retaining lien over the total sum in the trust account by reason of a contingent liability of the Appellant for the Respondent’s costs in the proceedings before his Honour.
In the Court below and in this Court, Mr Crossland, who appeared with Ms Sanders for Studio B, argued that if it owed Mr Kerrison less than the balance in the trust account, Mr Kerrison was not entitled to exercise a general lien over all the funds in the trust account. He principally relied on Miller v Atlee (1849) 3 Ex 799; 154 ER 1068 and cases and texts which cited it as authority for that proposition.
In Miller v Atlee, the plaintiff, a solicitor, claimed in debt for work done as an attorney and a solicitor for the defendant, his client. The defendant proved that the plaintiff held money for the defendant’s use. At 800, the report said:
… the plaintiff had no lien on the money which he received for the defendant’s use, beyond the amount in which the latter was indebted to him. [Pollock, C. B. There is a distinction, in that respect, between money received on account and a number of chattels. If a creditor has a security on all the furniture in a house, the owner cannot demand any part without offering the whole debt. A lien upon money is different.] Money is divisible, and the plaintiff has no lien beyond the amount of this bill. [Parke, B. If it were otherwise, the defendant must first pay the bill, and then run the risk of the solvency of the attorney.] The same observation would apply to auctioneers, agents, and others.
(Emphasis added.)
This passage would appear to support the proposition that a lien over money held on trust for the client extends only as far as the amount of the debt owing by the client to the solicitor. However, it is not clear that the report is accurate. The observation attributed to Baron Parke that “[i]f it were otherwise, the defendant must first pay the bill, and then run the risk of the solvency of the attorney” would appear to disregard the client’s right to give a direction to the solicitor to pay himself from the trust money and pay the balance to the client. If that mechanism were followed, the risk of the solicitor’s insolvency would not be borne by the client. The reported observation does not take account of the client’s right to give such a direction. Yet, it would appear to be the basis for the conclusion that because “[m]oney is divisible … the plaintiff has no lien beyond the amount of this bill”. It may be that the Court was saying no more than that once the bill has been paid, there is no longer a lien. However, the words highlighted in the extract above have been relied on by decisions and academic texts for the proposition for which Mr Crossland contended.
The standard of the reporting of Miller v Atlee is to be contrasted with the report of Gray v Graham (1855) 2 Macq 435 (referred to below) which contains the reasons of the Lord Chancellor in full: see generally, History of the Law Reports (1883, Oceana Publications Inc) by W.T.S. Daniel at pp 6, 10-11 and 23.
Mr Crossland also relied on Bolster v McCallum [1966] 2 NSWR 660 for the proposition that the general lien extends only to the amount of the outstanding legal costs. However, Asprey JA, who was in dissent, was the only judge to address the extent of the general lien. His Honour said at 664, in reliance on Halsbury*’s Laws of England (3rd ed), vol 36 (1961) Lien [238] (Halsbury’s **3*rd ed):
At common law a solicitor has a lien upon any documents which come into his possession in the course of his employment and in his capacity as a solicitor with the sanction of his clients and which are ‘the property of his clients (see *Halsbury’*s Laws of England, 3rd ed., vol. 36, para. 238). The lien extends only to the solicitor’s taxable costs, charges and expenses incurred on the instructions of the clients against whom the lien is claimed and for which those clients are personally liable; and the lien is a general lien extending to all costs due to the solicitor and is not limited to the costs incurred in relation to the particular documents in question or upon the particular instructions in consequence of which the documents came into the possession of the solicitor (see Halsbury, supra, para. 239).
(Emphasis added to indicate the passage relied on by Studio B in support of both issues that arise on the appeal.)
The most recent authority cited in Halsbury’s 3rd ed for the proposition that the lien extends only to the solicitor’s taxable costs, charges and expenses is In re Taylor, Stileman, & Underwood [1891] 1 Ch 590 (Taylor). For the reasons given with respect to ground 2 below, Taylor provides no authority for this proposition. None of the authorities cited in Halsbury’s 3rd ed for the proposition that these amounts must have been incurred on the instructions of the clients against whom the lien is claimed addresses the question whether enforcement costs are covered by the general lien (which is the subject of ground 2).
Mr Crossland also relied on the following passage from Alessio v Daniels (Supreme Court (Vic), 19 October 1983, Kaye J, unrep) (Alessio), in which Kaye J, relying on the passage from Halsbury’s Laws of England (4th ed), vol 44 (1997), Solicitors, [226]-[227], said:
The principle of law in relation to a solicitor’s lien is set out in Halsbury, 4th Edn, vol. 44, under the title “Solicitors” in paras. 226 and 227. Those paragraphs read as follow:
“At common law a solicitor has two rights which are termed liens. The first is a right to retain property already in his possession until he is paid costs due to him in his professional capacity, and the second is a right to ask the court to direct that personal property recovered under a judgment obtained by his exertions stand as security for his costs of such recovery. …
Para. 227 is headed “Retaining Lien”, with a sub-heading. “Property affected by retaining lien”. It reads:
“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.
Thus, a bill of exchange, a cheque, a policy of assurance, a share certificate, an application for shares, a debenture trust deed, letters patent, letters of administration, money, including money in a client account although only the amount due to the solicitor … may be subject to the lien.
(Emphasis added.)
Miller v Atlee … Since money is divisible the solicitor’s right to retain can only extend to such part as is equal to the sum justly due to him. …
At common law a solicitor has a general lien to retain any money or papers or other property belonging to his client which properly comes into his possession until payment of his costs, whether or not the property was acquired in connection with the matter for which the costs were incurred. The solicitor may retain the property, other than money, to any value even if it greatly exceeds the amount due, until payment of his costs, but he cannot hold the money in excess of the amount due.
(Emphasis added.)
No authority is cited by the authors of the text for the highlighted proposition.
Miller v Atlee would appear to be the principal source of the statements in the texts on which Mr Crossland relied. For the reasons given above, the report may not be accurate and, if accurate, would appear to have been based on a misapprehension.
For the reasons that follow, the statement that a solicitor has no lien over money beyond the amount of his outstanding costs cannot be accepted since it is contrary to the authorities referred to below and cannot be justified as a matter of principle.
Johns concerned disciplinary proceedings against a solicitor who used money held in trust to pay himself without any legal direction to do so from the relevant client. In the course of addressing these issues, Hope JA (Mahoney JA agreeing) said at 18-19:
A solicitor may receive money to be held for or on behalf of a client either from that client, or from a third person. When it is received from a third person, it may be money which the solicitor has recovered from his client, or it may be money otherwise paid to the solicitor for his client. Over all money which the solicitor holds for his client, as well as other property of his client which he holds, the solicitor has a general lien for costs. This lien, however, is a mere retaining lien, ie, it gives a right to withhold the property from the client until payment of costs; it does not give any right to payment out of money (or other property) which is the subject of the lien.
(Emphasis added.)
It is significant that Hope JA uses the words “[o]ver all money”, does not distinguish between money and other property and does not say that the extent of the lien is limited to the amount owing by the client to the solicitor. This decision provides a strong indication that the distinction drawn in Miller v Atlee between money in a trust account and other property is not good law and ought not be followed.
Johns establishes that:
a solicitor has a general lien over funds in a trust account (as well as any other property of the client’s which the solicitor holds); and
the lien is a retaining lien: that is, the solicitor has a right to retain the whole of the funds in the trust account (or the property) until payment of the solicitor’s costs but is not entitled to be paid out of those funds without a direction from the client.
A general lien is to be distinguished from the situation where a solicitor has recovered money for the client, which gives rise to a particular lien (also referred to as a “fruits of the action lien”) which entitles the solicitor to be paid out of the recovered money: Johns at 19.
The principles established by Johns have been applied in, or are consistent with, the following decisions.
In Re A Barrister and Solicitor (1979) 40 FLR 26, the Full Court of the ACT Supreme Court (Blackburn CJ, Connor and Davies JJ) considered a solicitor’s misconduct with respect to his trust account. In that context, their Honours said, at 39:
Something must be said about the solicitor’s liens. It is to be noted, first, that neither of these sections (46(4) and 51(3) [of the Legal Practitioners Ordinance 1970 (ACT)]) creates a lien; each provision is a saving clause which refers to a lien which the solicitor may have apart from that provision. There are two different liens which a solicitor may have. One is the general or retaining lien. This is purely a protective right - a right to refuse to transfer to a claimant property for which that claimant would be entitled to a transfer were it not for the existence of a claim by the lienor which the latter is entitled to protect by means of the lien. The lien can be enforced against money in the solicitor’s trust account standing to the credit of the client, only by refusing to pay it to the client or his order. The lien exists for the protection of the solicitor’s claim for costs and disbursements, and for no other purpose; it is impossible to see any logic in the assertion that the existence of the lien affords the solicitor a further benefit, namely the implication of the client’s authority to transfer money from the trust account when that authority has not in fact been given.
(Emphasis added.)
As in Johns, it is necessarily implicit in the Court’s language in this extract that the lien is not limited to the amount outstanding but extends to the whole amount of the trust account standing to the credit of the client for as long as there are costs outstanding. It is also important to note the statement that the purpose of the lien is to protect the solicitor’s claim for costs and disbursements “and for no other purpose”.
Stewart v Strevens [1976] 2 NSWLR 321 is, relevantly, to similar effect. Helsham J said, at 328:
I am sure that what is stated in the notes to s. 40 of the Legal Profession Act 1958 (Vic.) in the textbook The Victorian Solicitor by Gifford and Heymanson, 3rd ed., p. 61, correctly state the position in New South Wales; s. 40 (3) is virtually in identical terms to the portion of s. 41 of the New South Wales Act that I have been discussing. The learned authors state: “A solicitor has a general lien over moneys in his possession, even although he has placed them in a trust account. The client cannot obtain the moneys until he has paid his bill of costs; …”.
It is significant that there is no indication that the general lien is limited by the amount outstanding for costs.
In Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 (Gillespie-Jones), the High Court confirmed that s 144(2)(a) of the Uniform Law (extracted above) does not alter the position at common law which is summarised above. Their Honours said at [105]:
In relation to trust money held in its general trust account, a law practice is authorised by s 3.3.20(1)(a) [the Victorian equivalent] of the Act to “exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the practice”. The incidents of a general retaining lien of a law practice over money held on trust for a client are well understood. The lien is a common law right, implied by law, to retain the money until the costs of the law practice are paid. It is wholly passive and possessory in nature [citing Barratt at 250**].** It “does not mean that the money is not beneficially the money of the client” and it does not mean that the law practice can pay any part of the money to itself [citing Johns].
(Emphasis added.)
The nature of a solicitor’s general retaining lien has more than once been authoritatively stated. It is a right at common law depending (it has been said) upon implied agreement. It has not the character of an incumbrance or equitable charge. It is merely passive and possessory: that is to say, the solicitor has no right of actively enforcing his demand. It confers upon him merely the right to withhold possession of the documents or other personal property of his client or former client — in the words of Sir E. Sugden, L.C., “to lock them up in his box, and to put the key in his pocket, until his client satisfies the amount of the demand” (Blunden v. Desart).
(Footnotes omitted and emphasis added.)
There was no reference in Barratt to a distinction between money on the one hand and personal property on the other which is consistent with the premise in Johns that there is no relevant distinction between them in the context of the width of the general retainer. Had the lien been limited to the quantum of the outstanding costs, it is reasonable to infer that different language would have been used to signify that limitation. It is also significant that the passage in Barratt referred to in Gillespie-Jones adopted the metaphor of the property covered by the lien being locked up in the solicitor’s box, for which the solicitor has the key which may be kept in his pocket until the client satisfies the amount of the demand. This metaphor was used in the context of documents in Barratt but its use by the High Court in the context of a trust account is a telling indication that there is no material difference between money and other property in this context and that Miller v Atlee is wrong.
The reference in Gillespie-Jones to the lien being “over money held in trust” and the right of the solicitor to “retain the money until the costs of the law practice are paid” is consistent with the lien extending to the whole of the money in the trust account and not just to the quantum of the costs then owing by the client.
These decisions are consistent with the purpose for which the lien exists, which is to secure the payment of costs and disbursements properly recoverable by a solicitor. At first sight, it may appear attractive to say in the case of money, which is divisible and which has a specific value, that the lien should only exist up to the amount of those costs and disbursements. However, as the facts of this case demonstrate, until the costs and disbursements are actually paid, it may not be possible to determine the amount the solicitor is entitled to recover and therefore the amount that ought to be the subject of the lien. Consequently, it is correct in principle that the lien should exist over all money, just as it exists over all other property of the client in the hands of the solicitor, until the costs and disbursements are paid.
There is no unfairness in this result. At any point, the client can give the solicitor authority to transfer the amount claimed by the solicitor out of the trust account. On transfer the costs will have been paid, interest on outstanding amounts would cease to run and the lien ceases to exist. The client would still be at liberty to make an application for costs assessment and to seek to recover any amount that was found to have been overpaid.
Mr Kerrison has a general lien over all of the funds in his trust account. He is entitled to retain all of the funds in the trust account until his costs have been paid in full and is therefore not obliged to comply with a direction that he pay out those funds until he has been paid in full.
The primary judge correctly stated and applied the relevant principles. Ground 1 has not been made out.
Ground 2 raises the separate question whether the general lien is confined to costs incurred by the solicitor in providing services to the client or whether it extends to costs incurred by the solicitor as a litigant in proceedings brought by or against the client regarding the determination of the quantum, or the enforcement, of legal costs.
The primary judge relied on Firth v Centrelink (2002) 55 NSWLR 451; [2002] NSWSC 564 (Firth), which concerned a particular lien as the solicitor had recovered monies for the client and was entitled to be paid out of the recovered money. In that case, the solicitor brought proceedings against the client in the Local Court to establish the quantum of the solicitor’s costs. Campbell J held at [117]:
In my view, the taking of proceedings against Mr Koushkarian in the Local Court to establish the quantum of the costs owed properly falls within the scope of the solicitor’s lien. Even though there was a costs agreement between the parties, that judgment in the Local Court finally determined, as between Mr Firth and Mr Koushkarian, the amount which was owing in accordance with that costs agreement. Thus, the amounts for court costs and service fees, and professional costs, included in that judgment are part of the amount for which the lien existed. However, I do not think that the costs of the application to issue execution are properly part of the lien. On the other hand, the costs of the application to set aside the judgment in the Local Court are, properly, part of the costs of quantifying the amount really owing by Mr Koushkarian to Mr Firth, and so are part of the amount for which the lien exists. There has been no court order, however, quantifying the amount of those costs. Mr Firth is entitled to whatever amount is properly allowable on taxation, for those costs of the application to set aside judgment in the Local Court, as part of the amount for which the lien exists.
The primary judge reasoned that because Mr Kerrison would not have incurred any of the costs in the proceedings before Garling J had Studio B not retained him to advise in relation to the sale of its hairdressing business, these costs were covered by the general lien.
Studio B submitted that the primary judge’s conclusion (that the costs of the proceedings before Garling J were covered by the general lien) was erroneous since those costs did not fall within the definition of legal costs in s 6 of the Uniform Law. Mr Crossland submitted that the requirement in the definition that the legal costs be “for the provision of legal services” contained a necessary gloss that the legal costs be for the provision of legal services for the client. On this basis, he submitted that legal costs incurred in proceedings against the client (such as the proceedings before Garling J, the proceedings before the primary judge in the Court below or, indeed, the proceedings in this Court) to enforce the legal costs did not fall within the definition. He submitted that this construction accorded with the common law position: that enforcement costs were not covered by the general lien.
To address this submission it is necessary to consider the decisions to which the parties referred.
In this Court (but not in the Court below) Studio B relied on White v Bini [2003] FCA 669 (Finkelstein J) at [8] in support of the proposition that a solicitor’s general lien does not extend to costs which were incurred for the solicitor’s own benefit (to enforce the costs) and not on the instructions of the client. In White v Bini, the question arose whether the general lien which Mr Bini, a solicitor, claimed, extended to the cost of his obtaining advice about his right to retain the conveyancing file of a client who had terminated his services without paying his fees in full.
His Honour said at [8]:
The issue that I must determine is whether Mr Bini’s lien extends to the cost of obtaining advice on his right to retain the conveyancing file. Here Mr Bini is not on solid ground. In In Re Long [1929] VLR 318, 320-321 Lowe J said that a solicitor has a general lien over his client’s papers in respect of “taxable costs, charges and expenses incurred by him as solicitor for his client” (emphasis added). He added (at 321) that the lien does not extend to the recovery of those costs because “the solicitor is not at that stage acting as solicitor towards a client, but as an adverse party to a former client”. This is consistent with the view taken in Gray v Graham (1855) 2 Macq 435. There Lord Cranworth (at 440) said:
“When the law agent who had this demand, having first constituted his debt, proceeded next to the process of adjudication, there is no doubt that by virtue of that adjudication … he becomes a real creditor upon the lands - but he becomes a real creditor upon the lands not in virtue of his lien, but in virtue of the proceedings which he has instituted.”
See also In re Taylor, Stileman, & Underwood [1891] 1 Ch 590, 599 where Kaye LJ said that a solicitor’s lien does “not extend to general debts, but only to what is due to him in the character of attorney”.
(Emphasis added to indicate the decisions on which Finkelstein J relied for the proposition in [8] that a solicitor’s general lien does not extend to costs which were incurred for the solicitor’s own benefit and not on the instructions of the client.)
In Gray v Graham, Mr Gray, the appellant, was the law agent of the late solicitor, Mr Cunningham. His bill of costs was 690I, 12s, 7d. Mr Gray brought an action before the Sheriff who made a decree for the whole demand and interest. Mr Gray raised a summons of adjudication, seeking to affect three of Mr Cunningham’s estates, including an estate known as Stonelaw. Stonelaw was subject to a bond in favour of the Bank of Scotland. Mr Gray was in possession of the title deeds to Stonelaw. A dispute between Mr Gray and the Bank of Scotland led to an agreement between Mr Cunningham, Mr Gray and the Bank whereby the bank would pay 425l to Mr Gray which had the effect of reducing Mr Gray’s demand to 380l including interest. Mr Gray obtained a decree.
Mr Gray claimed that his general lien over the title deeds to Stonelaw gave him priority for the 380l, interest and 155l for subsequent expenses incurred by him in enforcing his claim against Mr Cunningham. Mr Graham was the holder of an anterior heritable bond for 2500l over the lands and asserted, as noted at 438, that, “as to the 155l, a law agent has no lien for costs incurred against his employer for enforcing a demand against him”.
The Lord Chancellor said, of the argument concerning Mr Gray’s costs of enforcement (155l), at 439-440:
My Lords, as to the point with reference to the 155l, the Lord Ordinary decided, and his decision was adopted by the Court of Session, in these terms:
“Finds, That the objection to Gray’s claim of hypothec in so far as founded on the accounts, amounting to 155l. 14s. 3d., incurred subsequent to the 17th April 1835, before which date the relation of agent and client between these parties had been dissolved, cannot be maintained in competition with the claims of the Respondents heritable creditors, so as to enable Gray to draw preferably and to the prejudice of the said Respondents.”
I confess that on this part of the case I have very considerable doubts; because if a solicitor has a lien upon his client**’**s deeds for costs incurred by him, and the client upon application refuses to pay those costs, and the solicitor is consequently driven to bring an action, undoubtedly by the law of England, according to all principle, though there is no direct authority upon the subject, except a case very shortly reported in Barnewall and Cresswell, the lien must extend as well to the costs of enforcing the bill of costs as to costs incurred by the client himself.
The Court of Session have held that as to this 155l. incurred in the process of adjudication, the principle to which I have adverted does not apply. And though I had some doubt about it, yet having regard to the special circumstances of the case, upon full consideration I think the Court of Session is right, and for this reason. The right of retention is primarily a right against the client, and the client only, the owner of the estate. But by the law as administered in Scotland, which certainly gives rise, as text writers have suggested, to very great anomalies, it is a right which prevails against the holder of the heritable security also. Now this is a very anomalous state of the law, because it enables the debtor to prejudice the rights of his creditors. And then the question is, How are those rights affected by the law agent obtaining adjudication? When the law agent who had this demand, having first constituted his debt, proceeded next to the process of adjudication, there is no doubt that by virtue of that adjudication and what subsequently follows upon it, viz., the … other proceedings, he becomes a real creditor upon the lands, — but he becomes a real creditor upon the lands not in virtue of his lien, but in virtue of the proceedings which he has instituted. And what the Court of Session has decided is this, that the costs which he incurred in making himself a creditor with a real security, though they may constitute a very good ground of lien or retention against the client who employs him, cannot prejudice the rights of heritable creditors who had claims upon the estate prior to his lien. The Court of Session held that there was no authority to warrant any such extension of the law — that the law itself is subject to very considerable anomalies, and there being no precedent for it they thought that it ought not to be extended. And in that view of the case I entirely concur. That therefore disposes of the first question as to the 155l.
(Emphasis added and footnote omitted.)
Gray v Graham established that if a solicitor (in that case, Mr Gray) has a lien for costs incurred by the solicitor and the client (in that case, Mr Cunningham) refuses to pay these costs and the solicitor brings an action, the general lien extends to the costs of enforcing the bill of costs against the client (being the 115l expended by Mr Gray on enforcement). The reason Mr Gray’s lien did not prevail over Mr Graham’s interest was because Mr Graham’s right as the holder of an anterior heritable bond was prior in time to the creation of the lien and therefore had priority.
Gray v Graham does not stand for the proposition which was sought to be derived from it by Finkelstein J in White v Bini. Indeed, it supports the primary judge’s conclusion that the lien covered the costs order made against Studio B by Garling J, which was subsequently assessed, because the proceedings before Garling J were brought as part of the enforcement of Mr Kerrison’s recovery of legal costs against Studio B. Unlike in Gray v Graham, no superior interest has been suggested which would defeat Mr Kerrison’s general lien over the funds in his trust account. Studio B’s beneficial interest in the funds is subject to the general lien.
What the solicitor so paid is no more taxable as between him and his client than if the sheriff had been in possession under a judgment against me, and she had asked the solicitor to pay him out. This advance, therefore, must come under the category of advances for which there was no lien, and not in the category of costs, charges and expenses.
Such a payment is not as I understand it a payment made in his capacity of solicitor, but in the same way as an ordinary friend might make such a payment at her request in order to release her furniture. It appears to me that a sum so paid could not be reduced by the Taxing Master, and does not come under the head of taxable costs, charges, and expenses, for which a lien can be claimed by a solicitor.
I do not find in any of the cases cited nor in any of the books to which I have referred during the course of this appeal any exact definition how far the lien of a solicitor extends. Morgan and Wurtzburg on Costs states simply, “A solicitor has a lien on the papers of his client in his hands for the amount of his costs.” In another text-book I find “his professional charges,” and the nearest approach to a definition that I can discover is by Sir Thomas Plumer in 1820, who says (Worrall v. Johnson): “There are two kinds of lien that a solicitor has for his bill of costs; one on the funds recovered, and the other on the papers in his hands. If there be no fund and no cause, still the client cannot get back the papers without paying what is due, not only in respect of that business for which the papers were used, but for other business also. This lien, however, does not extend to general debts, but only to what is due to him in the character of attorney. That he has a right to retain, and it is in consequence the general practice for the client when he applies for an order for the delivery of his papers, to submit to pay the bills of costs generally.” I think the meaning of that has been very clearly expressed by both the Lords Justices, that the lien extends to all those items which are properly included in the bill of costs, or; in other and more definite words, to all such claims against his client as the Taxing Master has a right to consider, and if necessary moderate. This definition will be found, I think, to work extremely well in practice.
(Emphasis added and footnotes omitted.)
I do not agree with Mr. Lewis’s [who appeared for the solicitor] contention that respondent has a lien for costs which the applicants may have to pay to him under sec. 103 of the Supreme Court Act 1915 in the event of the taxation not resulting in one-sixth of the bill being taxed off. One sufficient answer, in my opinion, to such a contention is that if any costs are so incurred on the taxation the solicitor is not at that stage acting as solicitor towards a client, but as an adverse party to a former client.
In his comprehensive submissions, Mr Dooley referred to subsequent cases which have referred to White v Bini, of which only two referred to [8] in that case: Ferrer Lawyers Pty L**td t/as Ferrer Lawyers v Khanchedar [2023] NSWSC 1085 (Ferrer) at [30] (an interlocutory decision made in the course of the Equity Duty List to refuse to extend a caveat on the basis that adequate security was given for the interest claimed); and Re Estate of Cervo (Admin Pendente Lite Apptd) (2024) 21 ACTLR 226; [2024] ACTSC 253 (Cervo) at [44] (an application by the administrator pende lite of the deceased’s estate, for urgent ex parte advice as to whether she ought take steps to compel the production of files from a solicitor who asserted a lien over the files for unpaid fees). In neither case was there any analysis of the authorities. This is unsurprising having regard to the nature of the applications and the lack of argument to challenge White v Bini. Decisions such as Ferrer and Cervo provide powerful reasons why leave to appeal ought be granted in the present case.
The dicta at [8] in White v Bini is not supported by the decisions which are said to give rise to the proposition that a solicitor’s general lien does not extend to enforcement costs. The decisions referred to above which have followed it contain no analysis of the authorities. The proposition is contrary to the law as established by the House of Lords in Gray v Graham in 1855.
In Kirk v Commissioner of the Australian Federal Police (Full Federal Court, Fox, Davies and Beaumont JJ, 8 July 1988, unrep) (Kirk), the Full Federal Court heard an appeal from an interlocutory decision of Pincus J. The appellants, who were defendants in criminal proceedings, had deposited $1 million into their solicitors’, Bailey & Bailey, trust account on account of defence costs to be incurred. The question was whether the Official Trustee in Bankruptcy could take control of these funds.
Both parties relied on the following passage from Davies J’s reasons:
It follows that, as the retainer given to Bailey & Bailey was an open retainer with no special conditions save as to the payment of fees in advance, the terms upon which that payment of fees was to be held were to be implied from the ordinary rights and obligations developed by the law to regulate the relationship between solicitors and their clients. One of the terms was the general lien for costs which a solicitor has over the property including such funds which the solicitor holds for his client, as to which see the remarks of Hope J.A. in Johns v. Law Society of New South Wales which I have set out above, the exposition by Evershed M.R. in Barratt v. Gough-Thomas (1961) 1 Ch 242 at p 250 and Halsbury’s Laws of England 4th Ed. Vol 44 paras 226-235. **When the property held is trust money, which is necessarily divisible, the lien extends only to such part of the fund as is necessary to secure the solicitor’**s costs already chargeable; Miller v. Atlee (1849) 3 Exch R 799 at p 800.
(Emphasis added to indicate the passage relied on by Studio B.)
Mr Dooley relied on the endorsement of Johns and Barratt and submitted that Miller v Atlee was not, for the reasons given above, good law. Mr Crossland relied on the endorsement of Miller v Atlee.
Both parties referred to the following passage from Beaumont J’s reasons:
14. It may be added that no question of any general lien could arise here because, although such a lien is enforceable against persons, including the Official Trustee, who have no higher right than the client (see E.I. Sykes, The Law of Securities, 4th ed., 1986, at p 663), the lien is available only in respect of legal taxable costs incurred on the client’s instructions (see Sykes, ibid.). As at 28 September, there were apparently no such costs unpaid. The appellants did not, in any event, seek to rely upon any such lien.
(Emphasis added to indicate the passage relied on by Studio B.)
Mr Dooley relied on the last two sentences to indicate that the decision was not on point. Mr Crossland relied on the highlighted passage as support for the proposition that enforcement costs (such as were incurred by Mr Kerrison in the proceedings heard by Garling J) were not covered by the lien since they were not incurred “on the client’s instructions”. The only authority cited by E.I. Sykes, The Law of Securities (4th ed, 1986, The Law Book Company Ltd) for the highlighted passage is Taylor, which, for the reasons given above, does not support the proposition.
The observations in Kirk which were referred to by the parties to the proceedings before this Court were clearly obiter since in Kirk monies had been deposited in an account with the appellants’ solicitor in advance of legal costs but no legal services had been provided and therefore there was no general lien. There is no reference in Kirk to Gray v Graham. Had there been, it is difficult to imagine that Miller v Atlee would have been cited at all, much less for a proposition which is inconsistent with Gray v Graham.
In Re Meter Cabs Ltd [1911] 2 Ch 557 (Re Meter Cabs), there was a dispute between Meter Cabs Ltd (Meter Cabs) and its insurer. Mr Walker, solicitor, acted for Meter Cabs in the arbitration of that dispute. When Meter Cabs went into liquidation its liquidator instructed Mr Walker to continue to act in the arbitration. Up until Meter Cabs’ liquidation, Mr Walker’s costs were 20l. After the liquidation, Mr Walker’s legal costs increased by 3l. The amount standing to the credit of Meter Cabs’ trust account was 29l, which constituted the amount accepted in satisfaction of the arbitration claim.
Mr Walker claimed a “fruits of the action” lien in respect of the 29l. The liquidator argued that he had not retained Mr Walker prior to the liquidation and that, accordingly, Mr Walker would have to prove in the liquidation for the 20l (his costs incurred prior to the liquidation) since the lien covered only the 3l for legal costs after the liquidation.
Swinfen Eady J held that the lien covered the 29l (which supports the conclusion in ground 1). His Honour also held, at 562, that the lien was for “[the solicitor’s] bill [of 23l] and the costs of this application” (emphasis added). Re Meter Cabs was a similar case to Firth in that it concerned a particular lien which arose over the fruits of the action. Campbell J in Firth referred to and applied Re Meter Cabs in the following passage at [113]:
Amount for which the equitable lien exists
The solicitor’s costs in relation to which a lien exists include not only those incurred in recovering the judgment, but also expenditure which is “immediately incidental thereto”: Re Meter Cabs (at 559) per Swinfen Eady J; Carew Counsel Pty Ltd v French (at [33]). The lien can include the cost of litigation which the solicitor engages in to establish his lien against someone who denies that the solicitor was retained by the client: Re Meter Cabs (at 562).
The analysis of the common law position is consistent with the statutory provisions referred to above.
The structure of s 144(2) of the Uniform Law is significant. Section 144(2)(a) provides that a law practice may “exercise a lien, including a general lien, for the amount of legal costs reasonably due and owing by the person to the law practice, where the law practice is otherwise entitled to do so” (emphasis added). However the entitlement to withdraw money for payment to the law practice’s account in s 144(2)(b) does not contain the qualifying adverb “reasonably”. It would seem to follow that the ambit of the lien which may be exercised is greater than the right of withdrawal. The word “reasonably” might be thought to extend to such matters as the legal costs of enforcement action. The words “otherwise entitled to do so” can reasonably be understood as a reference to the authorities which provide that enforcement costs are also covered by the general lien.
Rule 42(3)(c) provides, in substance, that a law practice may withdraw trust money for payment of legal costs “if the money otherwise becomes legally payable”. The primary judge found that, following a costs order, money can become legally payable after costs assessment and registration of a certificate as a judgment: J1[52] and [64]-[65]. I accept Mr Kerrison’s submission that it would be a curious outcome if a solicitor had to incur costs to comply with r 42(3)(c) by using the costs assessment process but those costs were not covered by the solicitor’s general lien. The Uniform Rules contemplate that a solicitor may have to incur costs in order to vindicate or enforce an entitlement to costs. I reject Mr Crossland’s submission that “provision of legal services” ought be read as if the words “for the client” were added at the end of the phrase. There is no warrant for reading in that additional limitation. I consider that such costs fall within the definition of “legal costs” in s 6, with the consequence that “legal costs” in s 144(2)(a) and (b) includes costs incurred by the solicitor in recovering unpaid invoices pursuant to costs assessment or in defending a lien.
The evident purpose of the general lien, which is recognised by the Uniform Law, is to promote payment for legal services. This purpose was also identified in Re A Barrister and Solicitor in the passage extracted above as “for the protection of the solicitor’s claim for costs and disbursements, and for no other purpose.” This purpose would not be advanced by the construction for which Studio B contended since it would enable a client to cause a solicitor to expend potentially unrecoverable costs to enforce a right to payment. This Court is obliged to prefer a construction which would promote the purpose or object underlying the Act or statutory rule to a construction that would not promote that purpose or object: s 33 of the Interpretation Act 1987 (NSW).
In support of this ground, Studio B submitted that, as the costs order made by Garling J did not “take effect” for the purposes of UCPR, r 36.4(2) since it was not a judgment, it could not be said to be “reasonably due and owing” within the meaning of s 144(2)(a) of the Uniform Law. This does not follow, for the reasons given below.
The primary judge found that a final certificate (which had been issued in the present case, although not filed) met the statutory test of “reasonably due and owing” even if the costs order had not been converted into a judgment (which would have occurred had the certificate been filed): J1[64]-[66].
The purposes of UCPR, r 36.4(2) and s 144(2)(a) of the Uniform Law are different. UCPR, r 36.4(2) is designed to convert a certificate into a judgment and thereby attract the provisions in the UCPR and the Civil Procedure Act 2005 (NSW) which apply to judgments. These include UCPR, r 39.35 (garnishee orders) and s 101(3) of the Civil Procedure Act (which provides that interest runs at post-judgment rates only from the date at which the judgment takes effect unless paid within 28 days). However, “reasonably due and owing” in s 144(2) of the Uniform Law has a different focus and a different purpose. There is no warrant for eliding the distinction between a judgment on the one hand and an amount “reasonably due and owing” on the other or for supposing that the legislature did not use different words advisedly to delineate different concepts. As set out above, the text of the certificate states that, subject to allowance for amounts paid, the total amount specified in the certificate is “payable” to the law practice by the client.
The quantification of costs is not a precondition to the creation of a general lien. In Re Cao (A bankrupt); ex parte Dixon [1996] ANZ ConvR 321, Beazley J, in the Federal Court, said:
I am of the opinion that a lien may still exist even though no bill has been rendered to the client, provided of course that costs have been incurred. My view in this regard is predicated upon two factors. First, it accords with common sense. It would be strange if an important right such as a lien could be defeated by the mere absence of bill notwithstanding that costs had been incurred. Secondly, it seems to me that it is falls within the ordinary meaning of the word “due” to say that costs are due once incurred. See The Macquarie Dictionary definition which includes: “due: owing, irrespective of whether the time for payment has arrived”. In my opinion, it is not the point that “due” may have other meanings, especially in a statutory context. Nor is it relevant that there may be statutory restrictions upon the recovery of costs: see s 192 Legal Profession Act (NSW) 1987.
A further question arose in the course of the oral hearing as to the effect, if any, of Mr Kerrison’s apparent non-compliance with the written direction given by Studio B on 21 December 2021. The reason that this is important is that, if Mr Kerrison had made the payments which he was authorised and directed to make by the letter, the lien would have ceased as no further monies would have been owed to him by Studio B as at that date. Although it would still have been open to Mr Kerrison, had he complied with the direction, to apply for an extension of time to challenge the costs assessment, his costs of doing so and any further costs incurred by him would not have been covered by any general lien because that lien would have ceased with the payments in accordance with the direction given on 21 December 2021. There would, in that event, have been no property over which a lien could operate in respect of any future costs incurred by Mr Kerrison (such as the costs of the proceedings before Garling J, the primary judge or this Court).
The first question is whether there was any non-compliance with the direction. The terms of the direction were that the payments had to be made “immediately”. Section 142 of the Uniform Law requires a law practice to comply with a direction within the period specified “as soon as practicable”. In the context, a direction to pay immediately must be understood as a direction to pay as soon as practicable. The date of the direction is significant because, typically, solicitors’ firms (as well as other businesses and institutions in Australia) close for a period before and after Christmas. The date of the direction, 21 December 2021, was the last Tuesday before Christmas, which fell on a Saturday that year. Further, the evidence relied on by Mr Kerrison in support of his application for an extension of time to challenge the costs assessment included that he was ill with COVID-19.
Mr Kerrison filed his application for review and for an extension of time on 24 January 2022, which was 12 days late. Although the Manager, Costs Assessment refused the extension, Garling J granted an extension. In these circumstances, I am not persuaded (nor did Studio B submit that this was the effect of the delay) that Mr Kerrison’s non-compliance with the written direction amounted to a breach of s 142 of the Uniform Law. Nor am I persuaded that Mr Kerrison’s conduct was such as to attract the principle that a party ought not be permitted to rely on its own breach: see, generally, the discussion in Hawkins v Clayton (1988) 164 CLR 539 at 590 (Deane J); [1988] HCA 15.
As a general proposition, a solicitor who fails to comply with a written direction to make payments which, if complied with, will result in the termination of the general lien, may be treated as having brought the lien to an end in any event. If it were otherwise, a solicitor could, by not complying with a client’s direction to pay the solicitor’s outstanding costs from monies in a trust account, maintain the general lien for the solicitor’s own benefit. The evidence does not indicate that this was what has occurred in the present case. Mr Kerrison had a right to apply for an extension of time to challenge the costs assessment. Garling J was persuaded that the time ought be extended, with the consequence that Mr Kerrison’s application was brought within the extended time. Thus there is no warrant for treating Mr Kerrison’s non-compliance with the written direction given by Studio B on 21 December 2021 as effecting the destruction of the general lien, although this would have been the consequence had he transferred the funds in compliance with the direction.
For the reasons given above, I propose the following orders:
Extend the time for filing the summons for leave to appeal to 19 May 2026.
Grant leave to appeal.
Dismiss the appeal.
Order the appellant to pay the respondent’s costs.
Note that the respondent’s costs of the proceedings in this Court are covered by his general lien.
BALL JA: I agree with Adamson JA.
**********
Studio B Hair Design Pty Ltd trading as Studio B Hair Design
Kerrison trading as Kerrisons Legal Services
(2002) 55 NSWLR 451
(1988) 164 CLR 539
(2013) 249 CLR 493
(1979) 40 FLR 26
(2024) 21 ACTLR 226
Time for filing the summons for leave to appeal was extended to 19 May 2026; leave to appeal was granted; the appeal was dismissed; Studio B was ordered to pay the respondent’s costs; and the respondent’s costs of the proceedings in this Court were noted as covered by his general lien.
Studio B has not advanced any principled basis on which the costs incurred by a solicitor in quantifying costs or enforcing their recovery ought be covered by a particular lien but not by a general lien or suggested any satisfactory basis on which Firth or Gray v Graham ought be distinguished.
For these reasons, the error as alleged in ground 2 has not been established. The primary judge was correct to find that the costs incurred by Mr Kerrison in the proceedings before Garling J were covered by the general lien over the trust account.