Hakendorf v Vivian [2004] EWHC 2821 (QB)

Case No HQ04X03619[2004] EWHC 2821 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 14 December 2004
Before
THE HONOURABLE MR JUSTICE TUGENDHAT
Between
Mary Elizabeth HakendorfClaimantColette Vivian Countess of RosenborgDefendant
Mr. Rupert Butler (instructed by Mary Hakendorf & Co. Solicitors) for ClaimantMr. Dale Martin (instructed by Messrs. Hannah & Mould Solicitors) for DefendantHearing Hearing date: 24 November 2004
Judgment

Mr. Justice Tugendhat:

[1]On 8 November 2004 Royce J. granted a freezing injunction for which the return date was initially 15 November, but which has been extended to today. The Applicant is Ms. Hakendorf who is a solicitor practising under the name Mary Hakendorf & Co. Solicitors whom I shall refer to as the Solicitor. The Respondent is Collette Vivian Countess of Rosenborg whom I shall refer to as the Wife. The order of 8 November was made on an application without notice. The substance of the order was that the Wife must not `sell dispose` of` charge or otherwise deal with property, or any interest that she may have in it, at an address in Kensington: `and secondly` use spend or otherwise deplete any proceeds of sale due to her from her interest in the property if the effect would be to reduce the balance of those proceeds of sale below £80,000.[2]There was also a substantive provision in that order that the Solicitor be at liberty to commence proceedings against the Wife forthwith for recovery of the costs due to her in representing the Wife notwithstanding that a period of one month had not elapsed since delivery by the Solicitor to the Wife of a final bill of costs.[3]That is an order made under the Solicitors Act 1974 section 69 which reads as follows:
“Subject to the provisions of this Act, no action shall be brought to recover any costs due to a solicitor before the expiration of one month from the date on which a bill of those costs is delivered in accordance with the requirements mentioned in Subsection (2); but if there is probable cause for believing that the party chargeable with the costs – (a) is about to quit England and Wales, to become bankrupt or to compound with his creditors, or (b) is about to do any other act which would tend to prevent or delay the solicitor obtaining payment, the High Court may, notwithstanding that one month has not expired from the delivery of the bill, order that the solicitor be at liberty to commence an action to recover his costs and may order that those cost be taxed…”
[4]On 22 October 2004 the Solicitor had delivered what was described as a final bill to the Wife. On 5 November 2004 she delivered an amended version of that final bill to the Wife. Today the Wife seeks the discharge of the injunction and payment of her costs on an indemnity basis.[5]The background to this matter is that the Solicitor acted for the Wife in the matrimonial proceedings between the Wife and her husband from September 2003 until her instructions were terminated on 5 October 2004. Thereafter the Wife gave notice that she would act in person. She is still acting in person in the matrimonial proceedings, although she is represented by solicitors and counsel in these proceedings.[6]The divorce proceedings issued in the Principle Registry of The Family Division have been bitterly fought and highly complicated. There have been issues of competing jurisdiction, the amount of periodical payments for the Wife and her child, financial provision by way of ancillary relief and other issues relating to the child, who unhappily, is suffering from a serious illness which requires regular medical attention.[7]The Wife and husband are each citizens of states other that the United Kingdom, the husband being a citizen of a member state of the European Union. The Wife is now aged 37 and is a single mother with firm roots in this jurisdiction. However she also has connections with other countries including one in the Caribbean where her mother owns a house.[8]In the period of some thirteen months following the Solicitor taking over the conduct of the case in 2003 there were nine applications to the court in all of which the Wife was either successful or substantially successful. On each of those occasions the husband was either ordered to pay the costs, or agreed to do so or the costs were reserved. It is the Solicitor’s view that the opportunities for further resistance by the husband to the claims of the wife are now becoming limited. The Solicitor believes that the Wife and husband are probably in direct negotiations or are likely to be in the near future. Since the Wife is still acting in person, the Solicitor fears that the Wife, under pressure from the husband, may make or seek to make arrangements with him which are likely to or designed to make it difficult or impossible for the Solicitor to obtain payment of the costs which she had incurred and were outstanding when her retainer was terminated on 5 October 2004.[9]The Solicitor’s witness statement includes a quotation from Munby J. in which he referred to the husband’s conduct over the issue of jurisdiction as “litigation gamesmanship of the worst kind”. On 12 September 2003 the Solicitor was instrumental in the Wife obtaining from Munby J. a temporary Freezing Order over the husband’s interest in the former matrimonial home, that being an order which remains in force. At that time the Wife was nearing destitution. The Solicitor states that one of the reasons why she was willing to take on this complicated case in these circumstances was that the Wife promised at the outset that she would pay the Solicitor £20,000 from the sale proceeds of her mother’s car, which she said her mother was selling, to help her, the Wife, with her legal fees. The Solicitor states that thereafter various excuses were made by the Wife one of which was that, due to exchange control, the money could only be brought out in monthly sums of £2,500, none of which the Solicitor ever received. It was for that reason, she says, that she did not require a charge to be given in her favour over the former matrimonial home at the outset. She now says she believes that she was being strung along.[10]The costs of six of the nine hearings in which the Solicitor was involved were paid by the husband to the Solicitor. These amounted to £38,000 plus counsels` fees, VAT, and disbursements totalling £64,439. The Solicitor has received in addition £4,000 to which I will revert.[11]On 26 and 27 July 2004 there was a further hearing before Munby J. A number of matters were before the court, on all of which the Wife was successful or substantially so. The costs have been reserved. Directions were given. The case was listed for a Financial Dispute Resolution Hearing for half a day on 7 December 2004 and set down for a three-day trial in February 2005.[12]The order of 27 July 2004 includes the following: “Upon the Wife undertakings to the court to pay to her solicitors towards the discharge of her legal fees all sums received under paragraph 11 below… 11. The husband do pay to the Wife the sum of £16,000, in monthly instalments of £4,000 on her undertakings recited above, payable monthly in arrears with effect from 27 July 2004 and on the 27th day of each month thereafter”.[13]The first payment under that order was made to the Wife at the end of August 2004 and paid to the Solicitor two weeks later. The second payment, it is common ground, was made to the Wife at the end of September, before the Solicitor’s retainer was determined. But it has not been paid by the wife to the Solicitor.[14]In her affidavit made on 8 November 2004, the Solicitor says this as to that £4,000; “22. … I have asked the Defendant for it; I warned her that I would institute legal proceedings against her if she did not pay it; my bill to the Defendant specifically incorporated the dates of and amount of all time spent personally on her (whether in person or by telephone) since the said Order of 27 July 2004 was made, and the costs incurred on that aspect alone well exceeded the £8,000 which should have been paid to my firm, if the Defendant had honoured her undertaking to the court to pass the second instalment of £4,000 to me.23. The time spent personally on the Defendant from 27 July 2004 was, however, only one aspect of the costs incurred from that time. As will be seen from the Order, there was other work to be done prior to the hearing of the Financial Dispute Resolution on 7 December 2004 (that, incidentally, was why the A v A Costs Order was only payable for a period of 4 months, the last payment being due ten days before that hearing).24. Pursuant to that Order, I prepared two very substantial documents on behalf of the Defendant (namely the Scott Schedule re: house contents and her Replies to Questionnaire, so that the only work remaining, prior to preparation for the FDR, was to prepare a concise narrative, which would largely have been an amalgamation of evidence already before the Court). The preparation of the said two documents was exceedingly time consuming, and the Defendant was aware of that as well as the time spent on her personally…25. As will be apparent, no sooner had I finished the preparation of the second of those two lengthy documents, than the Defendant terminated my firm’s retainer. She was thus in possession of the important documentation required for the FDR. I was aware that the Defendant appeared to have stepped up the amount of my time that she was taking. Since the hearing on 27 July, 60.5 hours were spent in this matter, being £17,771.88 inclusive of VAT for that period alone, of which more than half the time was spent personally on the Defendant (and the rest on preparation of documents and dealing with the matter generally).26. After termination of my firm’s retainer I delivered a bill to the Defendant for the outstanding costs for work done on her behalf, which was faxed to her on 22 October 2004, and posted the following day. (Although an amended bill had just been sent, that did not affect any of the figures in the bill other than that the balance due and owing was £212 less than shown in the original bill.) The bill comprised legal fees totalling £64,350, plus VAT, disbursements and Counsel’s fees making a total of £88,859.40. After taking account of sums paid or held on account the sum owing is £78,582.74. … The covering letter and amended bill are at … (I have redacted part of the paragraph of the letter enclosing the original bill)”.[15]On 13 October 2004 the Wife gave notice of intention to act in person in place of the Solicitor. The Solicitor received a copy of that on 22 October 2004. The Solicitor goes on to say that, as a result of the work she has done, the negotiations that the Wife will probably undertake with the husband’s solicitor, or more probably the husband himself, will be comparatively easy because, says the Solicitor, the husband has been “beaten fairly comprehensively”.[16]The affidavit goes on to say that the Solicitor would normally expect to recover from the husband a significant proportion of her firm’s costs, in particular for the two outstanding hearings in which costs were reserved, and for her general ancillary relief costs, if the Wife were to seek them as part of her claim.[17]The Solicitor expresses the fear that the Wife may not deal properly with this part of her claim. She fears that the settlement which the wife may negotiate with the husband might be on the basis of what she calls “mutual non-payment of my fees”. She says “it is reasonable to infer that it would involve the husband transferring the former matrimonial home to the Defendant which would leave her free to sell it, if she should so decide, and repurchase, here or abroad, perhaps in her mother’s name." The Solicitor goes on to point out, as a matter of duty, that the Wife’s case had been that she would not relocate from England, but the Solicitor fears that she will in fact now do that, because that was something which the Wife was considering doing when she was considering whether or not to instruct the Solicitor to act for her at the outset.[18]The Solicitor then gives two reasons for suspecting direct negotiations. First, she says that the Wife negotiated direct with her former husband in the past and that she, the Solicitor, had no knowledge of this until she was informed of it by the husband’s solicitors. Secondly the Principle Registry of the Family Division has informed the Solicitor on 18 October and 1 November 2004 that the parties’ Replies to Questionnaire had not been filed. By then she says they were well overdue and the husbands solicitors had been insisting on immediate exchange. Further the Solicitor had heard nothing from the Wife since 20 October.[19]The affidavit goes on to state that the Solicitor accepts the Wife is entitled to apply for a detailed assessment of her firm’s costs, and that she is not asking this court to predetermine any of these matters. She says she is merely asking the court to give her protection whilst what would be lengthy procedures would be dealt with. She states that, in order that there would be no inconvenience to the Wife by the Freezing Order sought, she would be prepared to undertake to the Court to release the Restriction which she would propose to enter over the title of the former matrimonial home at the Land Registry, in exchange for adequate alternative security in the form of a Charge over any further property which the Wife may purchase in this country or over the proceeds of sale of the existing property.[20]The Freezing Order as it now stands includes a paragraph “9. The order will cease to have effect if the Respondent provides security by(a) paying the sum of £78,582.74, into court, to be held to the joint order of the parties or the order of the Court: or(b) makes provision for security in that sum by another method agreed in writing with the Applicant”.[21]In her affidavit the Solicitor gives a further reason for her mistrust of the Wife. The Solicitor states that one week before the hearing on 26 and 27 July the Wife made against the Solicitor a most serious allegations of wrongdoing on the Solicitor’s part. The Solicitor insisted that the allegations were unfounded and required the Wife to withdraw it, which the Wife did, in writing.[22]That was the material on the basis of which the without notice order was made. Before me there is an affidavit by the Wife made on 19 November, and a second affidavit of the Solicitor made on 23 November. That second affidavit was received by the Wife’s solicitor in this action during the day before the hearing. I have been told that the Wife does not accept everything that is in it and that she has not had a full opportunity to give instructions on it. She asks me to pay little regard to it.[23]The matters the Wife relies upon in support of her contention that the injunction should not continue, and should be discharged with costs, are: 1. That there is no real risk of dissipation of assets 2. That the cause of action is flawed 3. That the Solicitor has put before the court matters which are in breach of legal privilege 4 That there has been material non-disclosure by the Solicitor. It is noted that other disputed matters also exist which cannot be resolved by me in these proceedings.

IS A FREEZING ORDER THE APPROPRIATE RELIEF?

[24]Finally it is said that in any event injunctive relief is not required. The basis of this point is that the wife contends that it is open to the solicitor to apply under Section 73 of the 1974 Act for a charging order. That section provides as follows: “(1) Subject to subsection (2), any court in which a solicitor has been employed to prosecute or defend any suit, matter or proceedings may at any time(a) declare the solicitor entitled to a charge on any property recovered or preserved through his instrumentality for his taxed costs in relation to that suit, matter or proceeding; and(b) make such orders for the taxation of those costs and for raising money to pay or for paying them out of the property recovered or preserved as the court thinks fit; and all conveyances and acts done to defeat, or operating to defeat, that charge shall, except in the case of a conveyance to a bona fide purchaser for value without notice, be void as against the solicitor”.[25]As already stated, the Solicitor is willing to accept a charge in substitution for a Freezing Order. On 19 November 2004, the solicitors for the wife wrote to the Solicitor stating that she was at liberty to ask for a charge and continuing as follows:
“… if you were to (1) remove the ex-parte Freezing Injunction immediately (2) pay our client’s costs incurred to the time of your acceptance of this offer on an indemnity basis within 14 days of today’s date, then our client is prepared to register a Charge in your favour over her share of the matrimonial property for an unquantified sum. The charge would be worded so as to secure any sum which is found by a court to be ultimately due to you, if any, or that that sum which our client agrees to pay to you (and you agree to accept) in respect of your invoice dated 20 October 2004 and received by our client on 22 October 2004”
. It was said that this offer would be put before me, as it was. I enquired whether it was now the Wife’s position that she accepted that an order for a charge should be made, so that the only question for me to decide would then be costs. However it was made clear to me that was not the position. The Wife does not accept that any charge or Freezing Order should be made, and is only prepared to agree to a charge if at the same time an indemnity costs order is agreed or made in her favour.[26]It was explained to me on behalf of the Solicitor that she did not apply for an order under Section 73 for the following reasons. First she did not wish to prejudice the Wife’s position by making an application in the Family Division in proceedings where the husband had taken every opportunity, good and bad, for raising points which might obstruct the Wife’s claim. Secondly, she had interpreted Section 73 as meaning that the only court which could impose the order was a judge of the Family Division.[27]I am not persuaded by either of these points. Once the Wife had served the notice that she was acting in person it is hard to see what further information might have come to the notice of the husband which might have been used by him, rightly or wrongly, to obstruct the Wife’s claim. And my provisional view is that “the Court” in Section 73 for present purposes is the High Court. The High Court is a single court, although it has separate divisions, and judges of the High Court are assigned to one or more of those divisions. All the judges, subject to stated exceptions, “have in all respects equal power, authority and jurisdiction”: Supreme Court Act 1981 s.4(3). It is to be distinguished from, for example, a County Court, and because their jurisdiction is not general, each County Court is probably to be distinguished from each other County Court.[28]However, this is not an issue I have to decide. I have to decide whether the Solicitor is entitled to the relief she claims in this action, whether or not there might have been another route by which she might have proceeded. The position would have been different if the Wife had accepted unconditionally that the Solicitor was entitled to an order under Section 73. In effect the substantive ground why the Wife does not accept that the Solicitor is entitled to such an order is that she says there is no need for security at all, in any form. I turn then to that question.

RISK OF DISSIPATION OF ASSETS

[29]In her affidavit the Wife deals first with her personal circumstances. In addition to the matters set out by the Solicitor, she states that her former husband and she lived in the property between December 1996 and his departure in July 2003. Her daughter was born in June 1999 in London. The property is registered in both their names. She has lived in the United Kingdom for longer than she has lived in any other country and has applied for British Citizenship. It is her intention to live permanently here where most of her friends live and where she has the right to undertake work. Most importantly, because of her daughter’s profound medical needs, which are being met at the Chelsea and Westminster Hospital, less than 2 minutes walk from her flat, she wishes to stay where she is, and where her daughter is also at school. So she says the property is not on the market and she has no intention of selling or moving, and she has no other property to move to whether in the UK or abroad.[30]She submits that if she were minded to sell the property it would require the consent of her husband, or an order of the court, as well as a willing buyer and that none of this could take place instantaneously. She says all of these matters were known to the Solicitor.[31]None of this is disputed by the Solicitor. But the fear on the part of the Solicitor that the husband might seek a sale of the former matrimonial home in the divorce is not fanciful. On 19 December 2003 the husband’s then solicitors wrote to the Solicitor in terms indicating that prospective purchasers of the property wanted to do a survey that week.[32]I conclude that on this point the case for the Solicitor does not take her very far. All it shows is that, if the Wife were under sufficient pressure, at least she has the possibility of living outside the United Kingdom which is not open to all wives in her position.[33]Next the Wife says there is no basis upon which it could be believed that she and her husband would enter into an agreement to shortcut the divorce proceedings. She cites the conduct of her husband in these proceedings so far. She says that she has in fact now exchanged Replies to Questionnaires, and states that she has not been negotiating with him since the termination of the solicitor’s retainer. So far as the previous occasion on which she did negotiate with him directly is concerned, she explains that that was because of the extreme urgency of the situation and, she says, the Solicitor was well aware of the discussion and warned her that he might tape the conversation.[34]I cannot resolve the issue as to whether or not the Solicitor was informed by the Wife of the direct negotiation with the husband, which admittedly took place. I do not accept the submission, which is what it is, that there is no basis upon which it could be believed that the husband and Wife would enter into an agreement to shortcut the financial proceedings. The conduct of the husband, as both sides agree, has been one in which he has made strenuous and unreasonable attempts to prevent the Wife obtaining fair division of the matrimonial assets. It seems to me that there are grounds to believe that if the husband were to take the view that there were nothing more that he could hope to do in the way of reducing the liability the court will find he has to the Wife in respect of financial provision for her and the child, he would then seek to negotiate a deal with her with a view to reducing his liability in respect of costs. If that meant attempting to prevent the Solicitor obtaining a payment of the costs which his unreasonable conduct had caused her to incur, then I think there are reasonable grounds for believing that he might put pressure on the Wife to reach such an agreement. Acting as she is, without legal advice, and with extremely limited financial resources, it seems to me that she would be in a weak position to resist such attempts, assuming she were minded to do so.[35]As to this part of the case, the threshold test which the Solicitor has to pass, is to show that there are reasons to believe that the Wife has assets to meet an order for payment of costs, but may well take steps designed to ensure that these are no longer available or traceable when the order for payment is made. That is the test for the making of a Freezing Order. It seems to me to be very similar to the test to be applied under section 69 (1) of the 1974 Act. It is implicit in the Wife’s stance that she would contend that the order under section 69 should not have been made, but she has not in fact challenged the making of the order.[36]Next, the Wife raises an allegation of serious professional misconduct against the Solicitor. While she accepts that she signed the client care letter which appears fully to set out the terms of the retainer, she says that in fact it does not set out the terms accurately, or at all. She states that the Solicitor persuaded her to become a client by saying that she the Solicitor would charge the Wife a fixed sum of £10,000 (not including Luxembourg lawyers’ fees for obtaining an injunction) from 10 September 2003 to 1 October 2003, if she did not obtain a costs order against her husband. She says that the Solicitor promised her that the Solicitor would seek all costs from her former husband and that any additional costs remaining she would write-off. It is a consequence of such an agreement, if it had been made, that the Solicitor could not have obtained any costs against the husband at all because, by the indemnity principle, she can only obtain costs against the husband if the Wife is liable to pay them to the Solicitor.[37]The allegation of misconduct continues. The Wife raises again the allegation which she had raised before the hearing of 26 and 27 June, and which she had withdrawn in writing. It is an allegation of disclosure of confidential information. The Wife says now that although the allegation was true, as the parties were due in court in only one or two days, she felt that she had no choice but to withdraw it. She said she had a genuine complaint and a right to raise it. There is a statement from a lady alleging that unspecified confidential information was disclosed to her by the Solicitor.[38]These are very serious allegations upon which I can make no finding in these proceedings. Accordingly, it cannot assist the Wife to advance them, unless they are admitted by the solicitor. The Solicitor denies absolutely that any such impropriety occurred. The fact that the Wife has now revived an allegation, which she had withdrawn in writing, is a matter which casts doubt on the other assurances and statements which she has given to the court.[39]The wife disputes what the solicitor alleges was said about the proceeds of sale of the car. That again is an issue which I cannot resolve.[40]There is then the issue of the non-payment to the Solicitor of the second instalment of £4,000 ordered to be paid in July 2004. The Wife produces a copy of a letter dated 26 October 2004 from the husband’s solicitors in which they say that as the Solicitor ceased to act for the Wife from 5 October and has been without lawyers from that date the husband has been advised that he should suspend the £4,000 monthly payment ordered to be paid under the order of 27 July and that he will be sending a cheque of £640 in respect of the five days of October when she did have a solicitor acting for her.[41]It is submitted on behalf of the Solicitor that this is an absurd interpretation of the order because her fees could not be expected to accrue on a daily basis proportionate to the £4,000, that the £4,000 is a payment towards costs, and that if payments under the order are to be suspended that should be as a result of an application to the judge to vary the order. In any event it is submitted that issue, which is not one I can resolve, has nothing to do whether the Wife ought to have passed the money onto the Solicitor pursuant to her undertaking to the court.[42]As to that the Wife submits that she was entitled to an invoice and breakdown of her costs before paying the second instalment. It does not appear to me from reading the case of A v A that it is contemplated that the undertaking of the Wife should be subject to the delivery by the Solicitor of an invoice or breakdown of costs, rather than being treated as a payment to place the Solicitor in funds on account of costs generally.[43]The Order as to the wife’s legal costs made on 27 July 2004 is similar to one first made in the case of A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1WLR 605. In that case, at page 606, Holman J. described the order he was making in the following terms “£4,000 on her undertaking that she will pay it punctually to her solicitors on account of her costs of and incidental to these proceedings, to be credited against any ultimate liability of the husband to or pay to her costs (but not otherwise to be refundable by her to him)”.[44]The form of the Order by Munby J. on 27 July is therefore shorter and less explicit, but the judgment in A v A is useful to me as a guide to its interpretation. Counsel for the husband in that case had submitted that the wife’s solicitors should be willing to wait for their costs and run the risk of not recovering them. Holman J. rejected that submission of the basis, explained at page 613, that there is a real risk that if wives cannot obtain some funding as they go along solicitors simply will not be willing to act for them at all. Justice, and the principle of equality of arms, requires that such orders should be made.[45]Nothing in this judgement should be taken as a decision as to whether or not the Wife is in breach of the undertaking given by her to the court in the order of 27 July. That is a matter for the Family Division to rule upon, if asked.[46]The relevance to these proceedings of my interpretation of the Order of 27 July is the weight that I should attach to the Solicitor’s argument on the meaning of the undertaking, that is to say, whether it is sufficiently strong to be a ground she can rely on in satisfying the threshold test under section 69 and the corresponding test for a Freezing Order.[47]In my judgment the Solicitor has a better than good arguable case that the obligation of the Wife is to comply with her undertaking, that is, to pay the instalments “punctually to her solicitors on account of her costs of and incidental to these proceedings to be credited against any ultimate liability of the husband to pay or contribute to her costs” (in the words of Holman J. cited above.)[48]Next the Wife makes a submission, for that is what it is, in her affidavit, that if the Solicitor felt that the Wife owed her money “why did she not ask me for money or render me a bill” when Munby J. awarded her £18,000 with respect to back maintenance. That seems to me to betray a misunderstanding of how the order is to be construed. The order distinguishes between sums which are payable in respect of legal fees and other sums payable in respect of maintenance payments. It seems to me that it would have been improper for the Solicitor to seek to divert money ordered to be paid for other forms of maintenance towards payment of her legal fees.[49]The wife then explains other misfortunes, which she has suffered, and which explain the delay, such as it was, in the prosecution by her in person of her proceedings. I accept that the fire in the premises beneath her flat, and her problems with her daughter’s health, are an explanation for such delay as there was.[50]Next the Wife states that never at any point prior to her delivery of her bill on 22 October did the Solicitor indicate that there was a large amount of unbilled costs that she was expecting the Wife to pay. The Wife states that this was a further ground for her belief that the contingency fee arrangement that she alleges had been made orally some months earlier was valid. The issue remains one that I cannot resolve in these proceedings.[51]The Wife exhibits to her affidavit a copy of a letter dated 18 October 2004 to the Solicitor giving a further reason why she did not pay the £4,000. As the Solicitor stated in her first affidavit, (although she did not exhibit the letter in question) she had written on 14 October 2004 demanding payment of the £4,000, setting out the terms of the order relating to it and stating that she would have no alternative but to take proceedings unless the cheque was received. The deadline given on the letter is 1pm on Tuesday 19 October.[52]In response to that the Wife wrote a letter dated 18 October 2004, which is referred to (but also not exhibited), in the letter dated 20 October 2004 which was exhibited to the Solicitors first affidavit. Complaining of the threat of legal proceedings, the Wife wrote that the Solicitor had failed to submit any invoices or cost schedules towards the £4,000 she sought, and that the Solicitor had neglected to provide her with a copy of the Order of 27 July. She went on to say that the Solicitor should agree that no substantial work was performed by her on the Wife’s behalf until after the first week of September. And again she complains that no invoice or schedule of costs had been provided.[53]Exhibited to the Solicitor’s second affidavit there is a letter dated 23 August from the Solicitor to the Wife in which she writes that enclosed is a copy of the Order of 27 July sealed by the court on 18 August and received by her on 19 August. The Wife has disputed receiving this.[54]It is to be noted that in that letter of 18 October 2004 the Wife does not raise as a ground for non payment, the contingency fee agreement which she now alleges had been made. It was of course another four days before the Wife received the bill dated 20 October with the detailed narrative of the work that had been done as recited above. I have not been told that the Wife disputes the narrative in that bill. In the circumstances it is difficult to understand how the Wife could have invited the Solicitor to agree that no substantial work had been performed such as to justify the payment of £4,000 to the Solicitor, if such justification needed to be provided.[55]This is again a matter on which I cannot make findings of fact one way or the other in these proceedings. However these are matters which, unresolved as they are, give ground for believing that the word of the Wife cannot be relied on and that she is willing, or may be willing, to advance spurious arguments as to why the Solicitor should not be paid.[56]The Wife then raises matters as to the amount of the bill. I need not be concerned with these because they are a matter for the costs judge. I can conclude on this aspect of the matter that the Solicitor has shown that it is likely that she will recover against the Wife a substantial proportion of her bill for professional fees and that there are reasons to believe that the Wife has assets to meet such an order but may well take steps designed to ensure that these are no longer available when the order for payment is made.

IS THERE A CAUSE OF ACTION?

[58]I turn then to the point made that the cause of action is flawed. The point made is that the action is brought on the bill dated 5 November 2004, which is £212 smaller that the bill dated 20 October 2004 in respect of the same work. Although there is no application to strike out the proceedings, it is submitted that the defects in the proceedings are so plain that the Solicitor does not pass the threshold test set out by the House of Lords in American Cyanamid.[59]It is the law that a Freezing Order “will not be granted to an Applicant who has no cause of action against the Defendant at the time of application” see Siporex Trade v Comdel Commodities Limited [1986] 2 Lloyds Law Reports 428, 436 column 2. Nevertheless the court will in an appropriate case grant such an order in advance to take effect at the moment when the cause of action does arise: see A v B [1989] 2 Lloyds Lam Reports 423.[60]As stated in Halsbury’s Laws of England 4th Edition Reissue Vol. 44 (1) Para 199, for the purposes of taxation under the 1974 Act, the Solicitor is, as a general rule, bound by her bill as delivered, and is not entitled as of course to withdraw the bill delivered and substitute an amended one, whether on the first bill she has overcharged or undercharged her client, although the court has power to give leave to amend the bill.[61]The reason for this rule, as set out in footnote 2 to that paragraph, is to prevent any attempt being made by a solicitor to impose on her client, who does not know what the proper charges are, by sending in a bill which could not stand taxation, and then when taxation is insisted upon or threatened, which might result in the solicitor being liable for the cost of taxation, sending in another bill which she knows can stand taxation.[62]Amongst the authorities sighted by both sides, is Chappell v Mehta (1981) 1 All ER 349 in which Lawton LJ. said as follows:
“There is clearly jurisdiction for the court in special circumstances to allow solicitors to withdraw the bill. It is for the court to decide whether special circumstances arise. If the solicitors have acted honestly then maybe they should be allowed to have their original bills withdrawn. In this case the Defendant has alleged that the solicitors acted negligently and they tried to deceive the court, for which there is not a shred of evidence. In fact the evidence goes all the other way. From first to last they revealed to the court at all stages what the situation was”
. The Defendant in that case had taken up the attitude that as the solicitors had already presented bills and the master had made an order that those bills should be taxed, the Plaintiffs had no right to deliver any other bills. The Judge in Chambers in that case ordered that the solicitors should deliver a new bill and that it should be taxed within 28 days. The appeal against his order failed.[63]At a late stage in these proceedings the Solicitor asked me to make a similar order. The Wife objected.[64]In her letter dated 5 November 2004 exhibited to her first affidavit the Solicitor explained to the Wife as follows:
“Further to my letter to you of 20 October 2004 (faxed 22 October 2004), enclosing a note of my firm’s charges, my bookkeeper has pointed out that some of the disbursements referred to in that bill (namely £120 court fee, £21 swearing fees, £60 Court fee and £11 courier [the latter included in petty disbursements] equals £212), although met from Office Account had in fact been covered by a subsequent transfer from Clients Account. Thus, although the total of the costs in the bill was correct, the figure for the balance due and owing should, in fact, have been £212 less. I have therefore, redrawn the bill accordingly, which I enclose, together with the Narrative and the Statement of Disbursements met from Clients Account which was sent to you previously”
. She enclosed a credit note in respect of the previous bill.[65]No suggestion has been put to me as to why I should regard this explanation as being one which is in any way doubtful or requiring of investigation. I can see no reason why I should not grant the Solicitor permission to withdraw the bill dated 20 October and to deliver the amended bill.[66]In spite of this, it is still submitted that the 5 November bill could not found a cause of action when the Claime Form was issued on 10 November 2004. In that Claim Form the delivery of both bills is pleaded together with the explanation, which is given in paragraphs 7 and 9 of the Particulars of Claim, and both bills are attached as part of the Schedule to the statement of case.[67]This is a case where attention to the overriding objectives set out in the Civil Procedure Rule 1 is required. It deserves setting out: “1.1(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly.(2) Dealing with a case justly includes, so far as is practicable – (a) ensuring that the parties are on an equal footing; (b) saving expense; (c) dealing with the case in ways which are proportionate – (i) to the amount of money involved; (ii) to the importance of the case; (iii) to the complexity of the issues; and (iv) to the financial position of each party; (d) ensuring that it is dealt with expeditiously and fairly; and (e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.[68]If I had had before me an application to strike out the case under CPR 3.4 as disclosing no reasonable grounds for bringing the proceedings, I would, in the exercise of my discretion have refused to make the order in the light of the permission that I have now given to the Solicitor. Alternatively, I would have made the order only on such terms as would enable a properly constituted claim to have been brought without need for any delay. Accordingly, as matters now stand, the Solicitor has or is to be treated as having a properly constituted cause of action and proceedings brought upon it and this argument therefore fails.

USE OF PRIVILEGED MATERIAL

[69]Next the Wife says in her affidavit that the Solicitor did not seek her permission or a waiver of her legal privilege in the matters which the Solicitor has set out in her affidavit and exhibits and she states that she does not give this permission. She then goes on to say that she has been informed by her legal advisers and believes that the injunction should be discharged because it was based on material that her solicitor had an obligation not to reveal to the court for her own purposes or at all.[70]The Wife herself in her affidavit exhibits a number of documents which the Solicitor did not exhibit, including that portion of the letter of 20 October which the Solicitor had redacted. The Wife then deposed “I also do not seek to waive privilege by serving and relying upon this affidavit as I do it purely in defence to the Claimant’s unlawful reliance on matters which are the subject of legal privilege”.[71]It does not seem to me that the Wife is entitled to take up inconsistent positions in that way. She is entitled to take the point, if she can, that the Solicitor has acted in breach of her duty in disclosing confidential and legally privileged material. But if she herself chooses to produce legally privileged documents to the court in response to that action of the Solicitor, that is not something which is forced upon her, but it necessarily, in my view, amounts to a waiver of privilege by her. Nevertheless it is not a waiver which is to be treated as back dated to the time when the Solicitor made the disclosure. So I shall consider whether this complaint is made good in relation to the original disclosure by the Solicitor.[72]There is no doubt that there are circumstances where a client makes a complaint against a solicitor, whether in an action in negligence in the Civil Courts, or as a ground of appeal in a criminal case, in which the request that the court investigate that complaint necessarily involves a waiver of privilege. See Paragon Finance v Freshfields [1999] 1 WLR 1183. The principle is explained in the judgment delivered by Lord Bingham of Cornhill CJ at 118D-G as follows – “When a client sues a solicitor who has formerly acted for him, complaining that the solicitor has acted negligently, he invites the court to adjudicate on questions directly arising from the confidential relationship which formerly subsisted between them. Since court proceedings are public, the client brings that formerly confidential relationship into the public domain. He thereby waives any right to claim the protection of legal professional privilege in relation to any communication between them so far as necessary for the just determination of his claim: or, putting the same proposition in different terms, he releases the solicitor to that extent from the obligation of confidence by which he was formerly bound. This is an implication of law, the rationale of which is plain. A party cannot deliberately subject a relationship to public scrutiny and at the same time seek to preserve its confidentiality. He cannot pick and choose, disclosing such incidence of the relationship that strengthen his claim for damages and concealing from forensic scrutiny such incidence as weaken it. He cannot attack his former solicitor and deny this solicitor the use of materials relevant to his defence”.[73]Neither party has put before me any authority on waiver of privilege in relation to actions brought by a solicitor against a former client. That such actions are open to a solicitor is not in doubt, and is expressly contemplated by the 1974 Act. Also contemplated by the Act is that a solicitor may need to apply for an order under section 73. Whether the solicitor makes an application under section 73 in existing proceedings, or commences fresh proceedings in the same court, is a technicality which cannot determine what the solicitor is entitled to put before the court.[74]There is of course no breach of confidence or breach of privilege in a solicitor reminding her client of matters communicated to her by her client. The potential for breach of confidence arises, if at all, when there is disclosure to a third party. Where proceedings are not in public and the dispute is between the solicitor and her former client, the disclosure complained of, if any, must be limited to disclosure to the court and to the former client’s new solicitor, if such are instructed. I offered the Wife an opportunity to make an application that the proceedings before me be heard in private, but she did not do so.[75]In any event it is not the disclosure to me in hearing the application which was the totality of the complaint. She complained that the Solicitor had used the material in bringing these proceedings and disclosing them to the judge who heard the without notice application. Problems of legal professional privilege, as they arise in relation to contested hearings for the assessment of costs, are considered in the notes to the White Book Part 47 Note 47.14.3. They provide little assistance to this case, because in such cases the dispute is between the two original litigants. There is no complaint in this case of disclosure of privileged material to the husband by the Solicitor.[76]The first answer to the point seems to me this. The Wife has not specified what precise information she says was both privileged and disclosed by the Solicitor. Precision in this matter is important. I have been told that the divorce proceedings were in public and that a public judgment has been delivered by Black J. I have not seen what is made public in that judgment.[77]Moreover, in paragraph 6 of her first affidavit the Solicitor said this: “Before proceeding further in this affidavit I wish to draw certain circumstances to the attention of the court. In making this application without notice I am aware that I am under a duty to the court to make full and frank disclosure of all relevant matters. As against that I am aware of two rules of practice, namely, that communications between solicitor and client are normally privileged, and that documents obtained by compulsion in one legal proceeding may not normally be used in another legal proceeding without the permission of the court. As to the first of those rules (privilege) I have taken the view that it cannot as a general rule apply to proceedings brought by the solicitor with a view to obtaining payment of her bill or else no solicitor could ever prove her fees were properly incurred. Even so, I have chosen in my discretion to preserve certain of my former client`s secrets but I reserve my rights in case the Defendant wishes to open up those matters. As to compliance with the second of those rules (use of documents in other proceedings) I have sought to refrain from using information supplied by the former husband under compulsion unless those matters were disclosed in open court”.[78]On the facts of this case so far as they have been enlarged upon in submissions by counsel, I conclude that it has not been established that the Solicitor has, in disclosing what she has to the court, acted in breach of her duty.[79]Further, it seems to me that a communication by a solicitor to the court, made for the purpose of proceedings properly brought by the Solicitor, will not of itself constitute a breach of legal professional privilege. That appears to be the assumption in Finers v Miro [1991] 1 LWR 35. That case concerned an application made by a firm of solicitors to the court for directions in relation to assets that were under the solicitor’s legal control and belonged to the Defendant. In particular the solicitors asked whether they should give notice of the proceedings to certain named individuals and companies, and if so what information they should give. After innocently receiving the assets in question the solicitors became aware of grounds for suspecting that they may have been acquired by fraud on the part of the client.[80]In upholding the judge’s order that notice of the proceedings should be given to the liquidators of certain companies, Dillon LJ considered, at page 40, that the difficultly about that course was that any communication which gave enough information to be of practicable use would breach the legal professional privilege to which the client was entitled as against the solicitors. No similar concern appears to have been expressed by the Court about the disclosure to the Court itself in the application for directions.[81]If I were wrong about this, it seems to me that justice requires that I should not discharge the order on that account. A solicitor is entitled, in suing for her fees, to the same rights as other litigants, in particular to access to justice, equality of arms and a fair hearing. I do not see how these can be achieved if she cannot use the information which the Solicitor put before the court in this case.[82]If I were wrong about that, and if I had to resolve the question of principle, I would also decide that in favour of the Solicitor. If, as happened in this case, a former client acts so as to entitle the Solicitor to relief under section 69, or gives the Solicitor grounds for applying for a Freezing Order, while challenging a bill in whole or in part, it seems to me that there may well be a situation analogous to that in Paragon Finance. In other words the former client cannot put the former solicitor in that position, and at the same time deny the solicitor the use of materials relevant to the action, which the law plainly permits the solicitor to take.

NON-DISCLOSURE

[83]I turn now to the case on material non-disclosure. The principles to be applied are stated in Memory Corporation v Sidhu (No 2) [2000] 1 WLR 1443. At page 1459 to 1460 Mummery LJ summarised the duties to the court as follows:
“It cannot be emphasised too strongly that at an urgent without notice hearing for a Freezing Order … there is a high duty to make full, fair and accurate disclosure of material information to the court and to draw the courts attention to significant factual, legal and procedural aspects of the case.”
At page 1455E, in relation to a breach of that duty, Robert Walker LJ (now Lord Walker of Gestingthorpe) said: “It will however always be necessary for the court, in deciding what should be the consequences of a breach of duty, to take account of all the relevant circumstances including the gravity of the breach, the excuse or explanation offered and the severity and duration of the prejudice occasioned to the Defendant (which will include the question whether the consequences of the breach are remediable and have been remedied). Above all the court must bear in mind the overriding objective and the need for proportionality. As Balcombe LJ said in Brink’s Mat limited v Elcombe [1988] 1 WLR 1350, 1358, “this judge – made rule cannot itself be allowed to become an instrument of injustice”.[84]The Wife relies relies on five alleged breaches of that duty identified (a) to (l). At (a) she points to the omission to show to the Court that the Wife had written a letter to the Solicitor on 18 October asking for a schedule of costs which, it is said, is not consistent with the Wife attempting to evade her responsibilities to pay. It is said that the Court should have had its attention specifically drawn to the last paragraph of the letter dated 20 October 2004, which is exhibited, and which ends with the words:
“I shall look forward to hearing from you with confirmation that you agree my firm’s enclosed bill within the next 28 days.”
It is said that this shows a lack of urgency.[85]In response to this the Solicitor submits that she had, in paragraph 22 of her first affidavit, informed the court that she had warned the Wife that she would institute legal proceedings against her if the Wife did not pay the £4,000. It is true she did not exhibit that letter which is dated the 14 October. She submits that if she had exhibited that letter it would have made the urgency of the matter and the imminence of the proceedings all the clearer, the deadline being 1pm on Tuesday 19 October 2004. And if she had exhibited the Wife’s response dated 18 October 2004, she would have submitted that it contains a false statement that she had failed to provide a copy of the Order of 27 July. The complaint about absence of invoices had in any event been superseded, she submits, by the invoice which was submitted on 20 October, so that that point made on behalf of the Wife ceased to be material.[86]These points are made in the Solicitor’s letter dated 23 October, which she would also have exhibited at that stage. In my judgment these are sufficient explanations for the course the Solicitor took and there has been no material non-disclosure on these points.[87]Under the same heading (a) a further point is taken. It is said that the Solicitor wrote the letter dated Friday 5 November 2004, which I have already quoted, and that this must have been at a time when she was also preparing for her application on Monday 8 November 2004. The letter of 5 November did not refer to there being any urgency. However, the urgency arose out of the inference drawn from the non-payment of the £4,000 amongst other things. That had been put before the judge, and the letter of 5 November does not suggest that there was any retraction of what had been said on 14 October.[88]The next point (b) is alleged to be failure to give full disclosure of the Wife’s personal circumstances as explained in her affidavit and summarised above. The Solicitor stated in her first affidavit that the Wife has lived in this country since about 1994 and that she had applied for naturalisation and that she had subsequently obtained permission to remain in this country during her daughter’s minority. I accept that this is an understatement of the true position, in that there is no mention of the compelling factors arising out of the daughter’s ill health, which would make it likely that the Wife would remain where she is, if she could.[89]The third matter (c) is said to be a failure to canvas the relevant law relating to privilege or even to justify the exception assumed at paragraph 6 of the Solicitor’s affidavit which I have set out above. I see no substance in this point. Paragraph 6 lays the matter squarely before the judge. I have already given reasons why I reject the substantive point on waiver of privilege, and there is no separate non-disclosure point.[90]The fourth matter (d) is the alleged failure to draw to the court’s attention the flawed nature of the bill of 5 November 2004. It is said that this may be a matter of oversight, but that that is not a complete answer to a charge of material non-disclosure, as appears from the authorities.[91]It is correct that the body of the affidavit and the exhibits do not refer to the consequences of the issue of the second bill, but the fact of its issue and the reason for it is explained in the letter dated 5 November 2004, which is exhibited. It should have been drawn to the court`s attention that the court’s permission would be required to issue the second bill.[92]The fifth complaint (e) is said to be the exaggeration of the danger of the husband and wife negotiating directly. This seems to me to be dependent upon the issue as to whether there is such a risk or not, and I have held that there is. There is no separate non-disclosure point.[93]The sixth point (f) is the alleged failure to put before the court (if it was known) the number of months that have elapsed since the husband and wife last negotiated directly, which is said to be twelve months ago. The seventh point (g) is the alleged failure to put before the court an argument that, in view of the husband’s highly uncooperative behaviour, it was unlikely that he would have a sudden change of heart and deal direct with the Wife. The next point (h) is the alleged failure to point out the absence of evidence of an intention by either the wife or the husband to release the Freezing Order already in existence in relation to the husband’s interest in the property.[94]All of these point seem to me in the same category as point (e) and to fail for the same reason, namely, that I have held that the Solicitor did make out a sufficient case, and because these points, however strongly advanced, do not seem to me to weigh against the Solicitor’s contentions as to the risk, but rather to show a misunderstanding of the basis for the solicitor’s fears.[95]The next point (i) is that one submission in the skeleton argument used on the without notice application is that the solicitor “wishes to assert her right to protection as a way of keeping her interest in the forefront of [the wife’s] and her husband mind. It is said that this is not a legitimate point to make. Whether that is so or not, does not make it a material non-disclosure.[96]The next point (j) is that the Wife’s position was as described by the Solicitor during the divorce litigation, and so that any intention on her part expressed in the past as to moving abroad was likely to have changed in the meanwhile. This point seems to me to add nothing to point (b) above.[97]Next it is said, point (k), that the solicitor had already received £72,000 from the husband for representing the Wife in a divorce where the assets were worth not much more than £1,000,000, and was asking for an additional £88,000 odd, even though the case had not proceeded to FDR and there were no custody or access issues. It does not seem to me that the judge would have been assisted by this information. He was not being asked to assess the costs, and the fact that such disproportionate fees were incurred in this case as a result of the conduct of the husband is not a reason to question the invoice that the Solicitor has sent, at this stage of the proceedings in any event.[98]Finally, it is said at (l) that as regards the £4,000 outstanding under the order of 27 July the Wife had asked for an invoice prior to payment. This seems to me to be the same point as considered in (a) above. Further under this heading it is submitted that it is arguable that the payments were to be in consideration of future legal expenses and that no sums payable after termination of the retainer should be payable to the Solicitor. The Solicitor does not consider that this is arguable and it does not seem to me that this is a point which she should have advanced in the Wife’s favour on the without notice application.[99]I must therefore decide what is the appropriate conclusion I should reach in the light of the limited acceptance I have made of the Wife’s complaint, namely in respect of points (b) and (d). It is accepted that the second matter may be one of oversight and I find that to be so. The understatement of the Wife’s links with this country is one aspect of the evidence of whether there is probable cause for believing that the Wife is about to do any act which would tend to prevent or delay the Solicitor from obtaining payment (in the words of Section 69 of the 1974 Act) or the similar test in relation to Freezing Order. Overall I do not consider that it can be said that the Solicitor overstated that part of her case as a whole. Indeed in one very significant respect she understated by redacting from the letter of 20 October a passage which appears in un-redacted form of the letter which the Wife has exhibited.[100]In consequence I consider that such breach of duty as may be said to have taken place is not grave, and that the Solicitor has not acted oppressively or in bad faith. There has been no prejudice occasioned to the Wife. Bearing in mind the overriding objective and the need for proportionality, it would be unjust if I were to accede to the Wife’s submissions and discharge the injunction on the ground of non-disclosure.[101]It follows that in my judgment the Solicitor is entitled to the injunction she obtained without notice and it should be continued until trial or further order in the meantime. I will hear the parties as to any variations that may be appropriate to the terms of the existing order. A new order should be drawn up which does not require reference to any preceding order in order to be understood.

Cited in 2 later judgments