Next Generation Holdings Limited & Anor v Alec Finch & Ors

A solicitor’s lien over client-account money depends on the purpose for which the money is held. Money held under a freezing order to prevent dissipation is held for a purpose inconsistent with a new lien, although a lien arising before the order is not displaced. A freezing order does not override existing proprietary, contractual or common-law rights of set-off. Where a solicitor has an accrued right of set-off for billed fees, the relevant money is not a debt owed to the client and cannot be subject to a third party debt order to that extent. Adequate evidence of billed and payable fees may be established by invoices, the retainer and surrounding circumstances, even where the invoices contain limited narrative.

The claimants had obtained judgments against Alec and Robert Finch for £6,124,430.02, with pre-judgment interest increasing the judgment debt to £8,333,743.43. They sought to make final an interim third party debt order against money standing to Alec’s credit in Ward Hadaway LLP’s client account.

The money represented Alec’s share of proceeds from the sale of an Italian property. Ward Hadaway asserted a solicitor’s lien and contractual and common-law rights of set-off for unpaid legal fees. The central issues were whether those rights existed, whether the freezing order affected them, and what sum remained available for enforcement.

1. The interim third party debt order was made final in the sum of £109,529.69. Money paid into the account after service of the order was not caught by it.

2. The governing question for a solicitor’s lien was the purpose for which the money was held. Money held for a particular purpose inconsistent with a lien did not attract one. The proceeds paid into the account after the freezing order were held to prevent dissipation and to provide a fund for satisfaction of the judgment. No new lien therefore arose over those proceeds.

3. The £47,000 deposit paid into the account before the freezing order was unrestricted as to use and was capable of being applied towards Ward Hadaway’s fees. A lien arose over that sum. The later freezing order did not displace the pre-existing lien because it created no proprietary interest and did not override existing rights.

4. The retainer and terms of business gave Ward Hadaway a contractual right to deduct billed fees from money held for Alec. A corresponding common-law set-off also existed. The right accrued on presentation of the relevant invoices and amounted to £386,417.36 before service of the interim order. The freezing order did not affect those pre-existing contractual or common-law rights of set-off.

5. The expert-fee disbursements formed part of the fees for which set-off was available. The invoices, the retainer, their dates of presentation and the absence of challenge constituted sufficient evidence that the fees were due. Limited narrative in the invoices was not fatal in the circumstances.

6. To the extent covered by the lien or set-off, the money was not a debt owed by Ward Hadaway to Alec and therefore fell outside the third party debt order.

The judgment records that the claimants obtained judgment after a trial before HH Judge Alan Johns KC on 27 September 2023. Pre-judgment interest was determined at a further hearing on 17 November 2023. The present decision concerned enforcement by third party debt order.