Hakendorf v. Countess of Rosenborg

Facts

The claimant solicitor (H) applied to continue a freezing injunction made without notice over the interest of the respondent former client (R) in a property. H had acted for R in divorce proceedings between R and her husband until H's instructions had been terminated. Thereafter R had acted in person in the matrimonial proceedings. Those proceedings had been bitterly fought and highly complicated. During the period when H had had conduct of the case there had been nine applications to the court in which the wife had been 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. The husband had been ordered to pay to R the sum of £16,000, in monthly instalments of £4,000, on her undertaking to the court to pay to her solicitors towards the discharge of her legal fees all sums so received. The first payment under that order had been made to R and paid to H but the second payment made to R, before H's retainer was determined, had not been paid by R to H. On a without notice application H obtained a freezing order over R's interest in the property on the basis that R and the husband were probably in direct negotiations and might make or seek to make arrangements designed to make it difficult or impossible for H to obtain payment of the costs which she had incurred and were outstanding when her retainer was terminated in the sum of some £80,000. R submitted that (1) there was no real risk of dissipation of assets; (2) the cause of action was flawed because H had withdrawn and replaced her bill with one which was £212 less; (3) H had put before the court material which was in breach of legal privilege; (4) there had been material non-disclosure by H.

Held

HELD: (1) H had shown that it was likely that she would recover against R a substantial proportion of her bill for professional fees and that there were reasons to believe that R had assets to meet such an order but might well take steps designed to ensure that those were no longer available when the order for payment was made. (2) The court granted H permission to withdraw the original bill and to deliver the amended bill since there was a proper explanation for the amendment. If the court had been asked to strike out the claim under CPR r.3.4 as disclosing no reasonable grounds for bringing the proceedings, the court would have refused to make the order in the light of that permission, alternatively would have made the order only on such terms as would enable a properly constituted claim to have been brought. Accordingly H had or was to be treated as having a properly constituted cause of action and proceedings brought upon it. (3) R had not specified what precise information was both privileged and disclosed by H and on the facts it had not been established that H had, in disclosing what she had to the court, acted in breach of her duty. Further a communication by a solicitor to the court, made for the purpose of proceedings properly brought by the solicitor, would not of itself constitute a breach of legal professional privilege, Finers v Miro (1990) 1 All ER 182 considered. In the instant case justice required the order not to be discharged on the ground of privilege since H was 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 and those could not be achieved if H could not use the information which she had put before the court. Further if a former client gave a solicitor grounds for applying for a freezing injunction, while challenging a bill in whole or in part, it might well be that the request that the court investigate that complaint involved a waiver of privilege, Paragon Finance plc & ors v Freshfields (1999) 1 WLR 1463 considered. (4) H had overstated her case but the non-disclosure was not grave and H had not acted oppressively or in bad faith. There had been no prejudice to R. Discharging the injunction on grounds of non-disclosure would be disproportionate.

Application granted.

Comment

A solicitor was entitled in the circumstances to the continuation of a freezing injunction she had obtained without notice over a former client's interest in a property on the basis that the former client had assets to meet a costs order in the solicitor's favour but might well take steps designed to ensure that those were no longer available when the order for payment was made.

Read the full transcript here.

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