Ondhia v Ondhia

A contractual reference to monies held to a client’s order concerns money held by the solicitor on trust at the date of the agreement. It does not include a later statutory debt owed by the solicitor, even where the debt arises from an obligation to make a payment in lieu of interest. A general intention to settle all disputes cannot expand clear contractual language or justify implying an unexpressed term where the relevant asset was unknown to the parties. An appeal court may determine a short and clear construction issue itself where it has the necessary evidence and argument.

Two brothers settled long-running Chancery Division proceedings concerning their respective interests in a pharmacy business. Their written Settlement required them to instruct their solicitors to pay £100,000 to one brother and the balance to the other from monies held to their order in an escrow account. The account was in fact the solicitors’ general client account.

After the Settlement, the solicitors calculated a further sum under Rules 24 and 25 of the Solicitors’ Accounts Rules as payment in lieu of interest. The claimant sought a declaration that this sum fell within clause 23. Roth J granted summary judgment in his favour. The defendant appealed on the construction of clause 23 and the court’s jurisdiction to grant a declaration without a cross-application.

1. Appeal allowed. The declaration granted by Roth J was set aside. Clause 23 did not cover the sum calculated or payable by the solicitors under Rule 25 of the Solicitors’ Accounts Rules.
2. The phrase monies held to their order was a term of art. It referred to money held by the solicitors on a bare trust for the clients, namely sums credited to the client account under the 2004 Letter of Authority and standing to the brothers’ order when the Settlement was made. The Rule 25 sum was different. Once calculated, it was a statutory debt owed by the solicitors and was not part of any fund held in an account on 9 November 2010.
3. The Settlement’s recital recording an intention to settle all disputes did not alter that construction. The court could not insert words extending clause 23 to money which might later become payable under Rule 25. Nor was there a basis for implying such a term, since the parties were unaware of the debt or expectation.
4. The outstanding issue as to the destination of the Rule 25 sum was remitted to the Chancery Division for further directions.
5. The Court of Appeal had jurisdiction to resolve the construction issue and grant an appropriate declaration. Under Rules 3.1, 3.3 and 52.10 of the Civil Procedure Rules, the appeal court had the powers of the lower court. Where all necessary evidence and argument were available, remitting a clear issue would waste costs and resources. Exercising that power was fair and appropriate and advanced the overriding objective in Part 1 of the Civil Procedure Rules.

• Court of Appeal (Civil Division): Appeal allowed. The declaration granted by Roth J was set aside. The construction issue was determined by the Court of Appeal, and the issue concerning the destination of the Rule 25 sum was remitted to the Chancery Division.
• High Court of Justice, Chancery Division: Roth J granted summary judgment and declared that clause 23 covered the further sum calculated under Rule 25 of the Solicitors’ Accounts Rules.