Hakendorf v Vivian

A freezing order may support a solicitor’s claim for unpaid costs where there are reasons to believe that the former client has assets sufficient to meet a costs order but may take steps designed to make those assets unavailable or untraceable when payment is ordered. That test is materially similar to the statutory test in section 69 of the Solicitors Act 1974.

The possible availability of a charging order under section 73 does not prevent the court granting a freezing order where the claimant otherwise satisfies the relevant test. Defects arising from withdrawal and amendment of a solicitor’s bill may be cured with the court’s permission. Alleged non-disclosure on a without-notice application must be assessed proportionately, having regard to its gravity, explanation, prejudice, the overriding objective and whether any prejudice is remediable.

The claimant solicitor sought recovery of unpaid professional costs from her former client, who had represented herself in ongoing matrimonial proceedings. A freezing injunction had been granted without notice under section 69 of the Solicitors Act 1974 and continued pending the return hearing.

The defendant sought discharge of the injunction, alleging that there was no real risk of dissipation, that the claim was founded on a defective bill, that privileged material had been disclosed and that there had been material non-disclosure. The court also considered whether a charging order under section 73 provided an alternative route which made injunctive relief inappropriate.

1. Freezing order. The solicitor had to show reasons to believe that the defendant had assets available to meet a future order for payment of costs, but might take steps designed to ensure that those assets were no longer available or traceable when the order was made. This was the threshold for a freezing order and was materially similar to the test in section 69 of the Solicitors Act 1974. The evidence of likely direct negotiations between the defendant and her former husband, the defendant’s financial position and the unpaid instalment provided sufficient grounds. The injunction was therefore justified.
2. The possible availability of a charging order under section 73 did not determine whether the solicitor was entitled to relief in the present action. The defendant had not unconditionally accepted that a charge should be granted, and the court therefore had to decide the freezing-order application.
3. The solicitor was permitted to withdraw the earlier bill and deliver the amended bill, the reduction being explained by a correction to disbursements. The claim form pleaded delivery of both bills and the reason for the amendment. Applying the overriding objective in CPR 1.1, the claim was properly constituted, or was to be treated as properly constituted. The objection based on the cause of action failed.
4. The defendant’s own reliance on privileged documents in response amounted to a waiver of privilege, although not retrospectively. The court held that the solicitor had not establishedly acted in breach of duty by disclosing material to the court for proceedings properly brought to recover her fees. In any event, access to justice, equality of arms and a fair hearing supported allowing the solicitor to use relevant material.
5. The solicitor had understated the defendant’s ties to England and should have drawn attention to the need for permission to issue the amended bill. Those matters were not grave breaches, were not oppressive or dishonest, and caused no prejudice. Applying proportionality and the overriding objective, the injunction should not be discharged.
6. The injunction was continued until trial or further order. The parties were to address any appropriate variations, and a new comprehensible order was to be drawn up.