White v Bini

REASONS FOR JUDGMENT 1 In O'Brien v Lewis (1863) 66 ER 761, Sir John Stuart said, "[a] solicitor's lien is a right which is founded … on the principles of common-sense". The parties in dispute about a solicitor's lien in this proceeding are motivated by other factors. The amount for which the lien is claimed is $1,908.00 The costs of this application will exceed that amount by a considerable margin. The fact that the parties could not resolve this dispute themselves does them no credit. 2 The facts are not in dispute. The respondent, Mr Bini, was retained to act for Terra Firma Project Management Pty Ltd, the trustee of the Faithful Street (Wangaratta) Property Trust on the sale of a trust asset being a property at Wangaratta. Shortly before settlement, by an order made on 2 May 2002, Terra Firma Project Management Pty Ltd was removed as trustee, the applicants, Messrs Newman and White, were appointed as new trustees with all trust property vested in them. Messrs Newman and White retained new solicitors (McDonald & Associates) to complete the sale. Ms Campbell, from that firm, informed Mr Bini that new trustees had been appointed and requested that the conveyancing file be forwarded to her office. The matter was reasonably urgent because the settlement date had passed. Mr Bini retained Garland Hawthorn Brahe to advise him of his rights. Mr Price, from Garland Hawthorn Brahe, informed Ms Campbell that his client "wanted to retain the file and attend to settlement of the conveyance". A few days later Mr Price told Ms Campbell that Mr Bini would hand over the file subject to payment of his costs; Mr Price said that his client had unbilled costs and disbursements owing on the file which totalled $24,346.71. A summary of these costs was provided which included the following entry: "5b. work from 15 May 2002 has not been included (including GST) $3,250.00." This amount represented the fees of Garland Hawthorn Brahe. In due course Mr Bini offered to release the conveyancing file subject to the new trustees paying (1) his costs and disbursements (calculated on the solicitor and own client basis) and (2) his costs for all work undertaken by himself and his agents Garland Hawthorn Brahe from 2 May 2002 until the date of the acceptance of his offer. Whereas the new trustees had no objection to paying Mr Bini in relation to the conveyance, they were not prepared to pay the costs incurred following their appointment. This caused an impasse; the new trustees had to act quickly because the purchaser of the Wangaratta property had served a recission notice. The impasse was broken when the new trustees applied for an order that Mr Bini release the file. At the hearing, orders were made that Mr Bini deliver the conveyancing file to the applicants' solicitors upon the undertaking that the new trustees pay into court the sum of $27,500. Both the undertaking and the order have been complied with. 3 It is unclear whether the parties adverted to the possibility that the delivery of the file might destroy Mr Bini's lien. A person generally requires possession of the property over which the lien is claimed: Pennington v Reliance Motor Works, Limited [1923] 1 KB 127, 129 per McCardie J: ("Even if the defendants had at one time an enforceable lien against the plaintiff they lost it by voluntarily giving up possession"). However, the rule is not absolute. For example, it is now well established that lodgement of documents with the court pending the determination of the existence of a lien "[does] not discharge the lien, if, in fact, such lien existed.": Re Ly and Another; Ex parte Dixon v Ly and Others (1995) 62 FCR 432, 433. See also Bolster v McCallum [1966] 2 NSWR 660, 665 per Asprey JA: ("In neither case is the lien of the solicitor destroyed by the procedure to which I have referred as possession of the documents, which is essential to the retention of the lien, is not lost because, for the purposes of the litigation, the Court has temporary custody of them"). Therefore, a solicitor will not lose his claimed lien if he parts with possession of the documents on the basis that the amount claimed is paid into court. In Beneficial Finance Corporation Ltd v Conway (No.2) [1971] VR 594, 607 McInerney J said that "[t]he result of such an order is to substitute the fund in court for the documents as the security for the defendant's claim". See also In re Galland (1885) 31 Ch D 296, 303 per Chitty J: (The Court in the exercise of its discretion says that if the solicitor is completely secured, and it takes care not to enter upon a matter of controversy as to the amount, but to give him the amount which he claims and a sum to answer the costs of the taxation, it is inequitable that he should be allowed to embarrass the client further by holding the papers"). 4 Another exception is where property the subject of a lien is delivered for a limited and specific purpose which is not inconsistent with an intention of maintaining the lien: Albemarle Supply Company Limited v Hind and Company [1928] 1 KB 307. Caldwell v Sumpters and Another [1972] Ch 478 provides an interesting illustration. The plaintiff's former solicitors forwarded title deeds over which they claimed a lien to the plaintiff's new solicitors. The former solicitors did so on the basis that (at 493) "[the new solicitors] will hold them to our order, pending the payment of our fees …". The new solicitors advised that they were unable to agree to this. Salmon LJ held that the former solicitors' delivery of the deeds did not extinguish their lien. He said (at 495-496): "The law does not, in my view, allow retention of the documents and repudiation of the terms upon which they are offered. This seems to me to be clear on principle. There is little authority on the point, possibly because it is so plain. What authority there is tends to support the view I have formed. There is certainly no authority the other way. The textbooks all proclaim that a lien is not lost by parting with physical possession if the circumstances show, as in the present case, that the lien is being expressly or impliedly reserved". 5 Pursuant to orders I made, Mr Bini's costs in relation to the conveyance were taxed at $19,048.66. This amount was subsequently paid to Mr Bini out of the money paid into court. Mr Bini's costs following the appointment of the new trustees have been assessed at $1,908.00. The present dispute between the parties is whether Mr Bini should also have these costs out of the money held by the Registrar. 6 It is convenient to begin with a brief description regarding the nature of a solicitor's lien. A solicitor's retaining lien is the right to withhold possession of documents or other personal property until the client pays his costs. In Barratt v Gough-Thomas [1951] Ch 242, 250 Evershed MR said: "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 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." (Citations Omitted). See also Chapter 8 in Cordery's Law Relating to Solicitors (1988); Chapter 25 in Palmer and McKendrick's, Interests in Goods (1998) and Chapters 26 and 27 in G.E. Dal Pont's Law of Costs (2003). 7 I note that Mr Bini's costs had not been taxed when he originally asserted his lien; a bill of costs in taxable form was delivered eleven months later. It was once the case that a lien did not arise until a bill of costs had been rendered: In re Birmingham, Decd. Savage and Another v Stannard and Others [1959] Ch 523, 531. Presumably this was to prevent a solicitor from holding his client to ransom by failing to render a prompt bill. On the other hand, the absence of a lien would leave the solicitor unprotected until he prepared his bill. There is now authority that a party's failure to provide a bill will not stand in the way of a lien: Loescher v Dean[1950] Ch 491, 495; Re Jalmoon Pty Ltd [1986] 2 Qd R 264, 268. In In the Estate of Fuld, decd. (No.4)[1968] P 727, 736 Scarman J said: "It might, however, be argued that there is no fund in sight before taxation has determined the amount of it. … Is it to be suggested, merely because the client has not ascertained the amount of the fund by agreement or taxation, that there is no fund? If this were the law, the client would indeed be able to deprive the solicitor of his lien, which, as was emphasised in Ex parte Bryant, it is the policy of the law to protect". (Citations Omitted). 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". 9 On the facts it is clear that Mr Bini was, to use the words of Lowe J, a "true adverse party to [the successor of his] former client". Mr Bini's lien does not extend to costs which were incurred for his own benefit and were not on the instructions of his client. 10 There is another basis for rejecting Mr Bini's lien. It is trite law that a lien will be lost if it is claimed for the wrong cause or the wrong amount: Automobile & General Finance Co. Ltd v Cowley-Cooper (1948) 49 SR (NSW) 31, 37. A lien will also be lost if a person claims it for two debts (one due and one not due) and intimates that he will not part with possession unless both debts are satisfied: Jones v Tarleton (1842) 152 ER 285; Kerford v Mondel (1859) 28 LJ (Ex) 303. In Albemarle Supply Company, Limited v Hind and Company [1928] 1 KB 307, 318-319, Scrutton LJ said: "A person claiming a lien must either claim it for a definite amount, or give the owner particulars from which he himself can calculate the amount for which the lien is due. The owner must then in the absence of express agreement tender an amount covering the lien really existing. If he does not, unless excused, he has no answer to a claim of lien. He may be excused from tendering (1.) if he has no knowledge or means of knowledge of the right amount; (2.) if the person claiming the lien for a wrong cause or amount makes it clear that he will not release the goods unless his full claim is satisfied, and that amount is wrongful. The fact that the claim is made for more that the right amount does not matter unless the claimant gives no particulars from which the right amount can be calculated, or makes it clear that he insists on the full amount of the right claimed." The evidence in this case indicates that the trustees were always willing to pay Mr Bini's costs of the conveyancing transaction. Mr Bini insisted, however, that he would only release the file if both his conveyancing costs and the costs incurred by him following the order substituting the trustees were paid. Mr Bini's refusal to release the file by claiming a lien for a wrong cause (the costs incurred following the removal of the trustee) is sufficient to extinguish his lien. 11 This leaves outstanding the costs of this application. These costs should be borne by Mr Bini. They should be taxed in default of agreement. In Re Hanbury Whitting and Nicholson (1896) 75 LT 449, 451 Stirling J ordered a former solicitor who had refused his former clients tender for documents over which a lien was claimed to pay the costs of the motion as it was caused "by the old solicitors taking up a wrong ground, and … if a reasonable claim had been put forward by them it would have been acceded to by the present solicitor". The order will also direct the Taxing Master to include the costs of the applicants' attempt to recover the conveyancing file which are not "incidental" to the motion. For a discussion of the meaning of "costs of and incidental to a proceeding" see: In re Gibson's Settlement Trusts; Mellors and Another v Gibson and Others [1981] Ch 179, 184-185; McIntyre v Perkes (1988) 15 NSWLR 417, 426-427; Comcare v Labathas (1995) 61 FCR 149, 154-156. Such an order is necessary or proper for the attainment of justice: Société Anonyme Pecheries Ostendaises v Merchants' Marine Insurance Company [1928] 1 KB 750, 763; Frankenburg v Famous Lasky Film Service, Limited [1931] 1 Ch 428, 435-436. It will ensure that the applicants are not out of pocket (subject to the costs being paid on a party/party basis) as a result of their dealings with Mr Bini. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.