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Evidence, Practice and Procedure: Funding Family Proceedings – The Solicitor’s Charge and Sears Tooth

Date:18 OCT 2013
Solicitor Advocate

David Burrows - Practice of Family Law: Evidence and Procedure

David BurrowsThe purpose of this note is to ask whether, in the light of the solicitors' statutory charge (Solicitors Act 1974, s 73(1)), there is ever any need for clients to sign a ‘Sears Tooth' agreement; or, as it is termed in Matrimonial Causes Act 1973, s 22ZA(4)(b) ‘a charge over any assets recovered in the proceedings' (echoing the words of Wilson LJ in Currey v Currey (No 2) [2007] 1 FLR 946 CA on an application for a costs allowance: that the applicant must ‘demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery' (para [20])). A Sears Tooth assignment, properly so called, is named after Sears Tooth v Payne Hicks Beach [1997] 2 FLR 116, where Wilson J held that an assignment of the capital benefit of the outcome of ancillary relief proceedings to cover solicitor's costs was not champertous, and could be a means for a client to secure to her solicitor ultimate payments of her costs.

 The aim of what follows, however, is to suggest that - whatever s 22ZA(4) may mean, or what a Sears Tooth agreement may look like - concerns on the point are largely redundant.

 Solicitors Act 1974, s 73(1) sets out in statutory form the long recognised equitable remedy of the solicitors lien. It is now known as the statutory charge, familiar to legal aid practitioners (see LASPOA 2012, s 25(1)). It provides as follows (emphasis added):

 (1) ... 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 assessed costs in relation to that suit, matter or proceeding; and

 (b) make such orders for the assessment 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.

 A client could be asked to agree, in consideration of the lawyers not charging her immediately (as with the wife in ST), that she will charge the proceeds of the litigation immediately when any order is made. At that stage, and upon decree nisi being granted (Mountney v Treharne [2002] EWCA Civ 1174, [2002] 2 FLR 930) there will be specific assets on which a charge can attach (not just a ST assignment).

 If within a very short period of time the client fails or refuses to sign, the solicitor can prepare a bill for detailed assessment (‘his assessed costs in relation to that suit, matter or proceeding': s 73(1)), submit it to the court (in family proceedings: FPR 2010, Part 18, with draft order (declaration) which can set out a sum which the solicitor seeks (r 18.7(2)). The court must assess the bill (s 73(2)), and make its declaration (s 73(1)). Any property recovered or preserved (ie not just freehold property; and there is a variety of legal charge case law on what this means) is then subject to the lien charge. In the case of land or interests in land the charge must be registered; but otherwise on other assets it operates as a form of garnishee declaration).

 There are anti-avoidance provisions in the proviso to s 73(1). As soon as there is default a notice of pending action should be filed against the property in case the - by this time former - client goes elsewhere and sells to a bona fide purchaser; and these appear to be intended to operate retrospectively to the date of the order (when the charge bites) if eg there is delay in detailed assessment.

 The result of all this is that the solicitor, for his/her instrumentality costs, can short-circuit entirely the need to issue a civil claim for costs, face a defence of that claim; and then even if the claim is successful, make a separate claim for costs. The only court process required by s 73(1) is a form of statutory detailed assessment.

 To bring the s 73(1) charge in line with the legal aid charge, there is not at present the equivalent position for lawyers: to the extent that a party who has notice of legal aid (eg the husband in this example) can only get a good receipt for cash which he pays, from the solicitor to whom he makes payment. In effect, the legal aid charge is effective immediately on the making of a lump sum order. It operates from then against the payer spouse.

 A post-script is that, strictly speaking, and as a matter of law the benefit under the prospective order can only be assigned, it cannot be charged: there is nothing, at that stage, on which any charge can bite. Wilson J was scrupulous to make this clear in Sears Tooth. His semantic guard dropped as Wilson LJ in Currey (see above). His inaccurate wording has been preserved by the Parliamentary draftsman in s 22ZA(4). The statutory intent may be sufficient that legal and semantic weakness does not matter; but if Parliament genuinely thought a person can charge an inchoate amount, and it is wrong, then that may render that clause a nullity.

David Burrows, solicitor advocate, is author of Practice of Family Law: Evidence and Procedure (Jordans, 2012).