Scottish Court of Session Decisions

This was a sequel to the case of Carruthers v. Carruthers' Trustees, reported ante ut supra.

The question raised by this note was, whether the pursuer's law-agents were entitled to a charging order under the Law-Agents and Notaries Public (Scotland) Act 1891, section 6, against the sum recovered in the action.

On 4th December 1896 the pursuer presented a petition to the Second Division of the Court of Session, praying the Court to apply the judgment of the House of Lords, whereupon the Court on 9th December pronounced the following interlocutor.—“Having considered the petition, 274 of process, apply the judgment of the House of Lords of date 13th July 1896, and in respect thereof decern against the defender William Carruthers and James Glegg as individuals, and Ann Forbes or Forbes as executrix of the deceased Hector Forbes, and as such representing him as an individual, and that all conjunctly and severally for payment to the defender William Carruthers as remaining trustee under the trust-disposition and deed of settlement of the deceased David Carruthers mentioned in the petition, that the same may be applied along with the rest of the trust-estate in terms and for the purposes of the said trust-disposition and deed of settlement, of the sum of £104, 2s. 7d., sterling with interest thereon at the rate of £4 per centum per annum from and after the 31st day of January 1891, and until payment: Find the petitioner (pursuer) entitled to the expenses incurred by her in the Inner House, and the expenses of the petition: Remit,” &c.

Thereafter Messrs Finlay & Wilson, S.S.C., Edinburgh, the pursuer's agents, presented a note to the Lord Justice-Clerk in which the above interlocutor was set forth, and his Lordship was craved to move their Lordships of the Second Division to declare the said Finlay & Wilson entitled to a charge upon, and against, and a right to payment out of, said sum of £104, 2s. 7d. and interest, for the taxed expenses incurred by the pursuer to said Finlay & Wilson in connection with said action, in so far as the same should not be recovered under the award of expenses already made as aforesaid by his Lordship's Division, and to remit the account of their expenses so to be charged to the Auditor to tax and report, and thereafter to approve of said report, and to decern against the said William Carruthers as remaining trustee foresaid for payment to the said Finlay & Wilson of the said sum of £104, 2s. 7d. and interest thereon, so far as required for payment of the taxed amount of such expenses remaining after deduction of any sum recovered as aforesaid, the said sum of £104, 2s. 7d. and interest thereon being first received by the said William Carruthers as remaining trustee foresaid, or to do further or otherwise in the premises as to their Lordships should seem proper.

The Law-Agents and Notaries-Public (Scotland) Act 1891 (54 and 55 Viet. cap. 30), section 6, enacts as follows:—“In every case in which a law-agent shall be employed to pursue or defend any action or proceeding in any court, it shall be lawful for the court or judge before whom any such action or proceeding has been heard or shall be depending, to declare such law-agent entitled to a charge upon and against, and a right to payment out of, the property of whatsoever nature, tenure, or kind the same may be, which shall have been recovered or preserved on behalf of his client

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by such law-agent in such action or proceeding, for the taxed expenses of or in reference to such action or proceeding, and it shall be lawful for such court or judge to make such order or orders for taxation of, and for raising and payment of, such expenses out of the said property as to such court or judge shall appear just and proper; and all acts done or deeds granted by the client after the date of the declaration, except acts or deeds in favour of a bona fide purchaser, shall be absolutely void and of no effect as against such charge or right.”

The account for which Messrs Finlay & Wilson craved a charging order considerably exceeded in amount the sum of £104, 2s. 7d., for which decree had been obtained in the action.

The whole of the income of the trust-estate under the charge of the defender William Carruthers as trustee was employed in paying off debt, principal and interest. The revenue in the meantime was more than sufficient to pay the interest on the debts still outstanding, but the balance was used by the trustees to pay off principal. It was not disputed that this was a proper application of revenue. In the event of the debt being reduced at the same rate as at the date of presenting the present note, it was calculated by the pursuer's law-agents that the estate would be free of debt, and the income would be available for the benefit of the pursuer, the liferentrix, in about five years from that date; but, on the other hand, in the event—quite possible in the circumstances—of the creditors taking steps for the immediate payment of the principal sums due, or in the event of the pursuer's death before the expiry of the five years, she might never take any benefit from the present action, and in the meantime, until the estate was cleared of debt, she could take no benefit from it whatever.

Argued for the law-agents—The sum against which the law-agents craved an order was property recovered in the action. In England, under the corresponding statute—Solicitors Act 1860 (23 and 24 Vict. cap. 127), section 28—it had been held that the property, if recovered in the action, need not necessarily have been recovered solely on behalf of the solicitor's own client, if the persons for whom it had been recovered adopted the benefit obtained by the proceedings, and that the solicitor's claim was of the nature of salvage —Greer v. Young (1882), 24 Oh. D. 545, esp. per Bowen, L.J. at p. 556; and Scholey v. Peck [1893], 1 Ch. 709. It was true that the words “on behalf of his client," did not occur in the English Act, but in this case that did not make any difference, because it was not disputed that the pursuer had a title to sue, and the property had been recovered at least indirectly on her behalf, for it would enable debt to be paid off sooner, and so make it possible to pay her liferent at an earlier date than would have been otherwise possible. If it were held that the statute was not applicable to such a case as the present, then no law-agent acting for a liferenter could ever take benefit from its provisions. The analogy of salvage was sound, even where the amount of the account exceeded the sum decerned for, as the Court might in their discretion give an order for part of the taxed account only.

Argued for the trustee—The statute did not apply to this case. The sum decerned for was not property “recovered or preserved on behalf of their client” by the pursuer's law-agents. It had been recovered on behalf of the trustee, and through him for the creditors. It was at least doubtful whether the pursuer would ever take any benefit from the decree, and in any case she was only entitled under it to a liferent of £104. The words “on behalf of his client,” did not occur in the English Act, and therefore the cases cited were not in point. Moreover, they could be distinguished from the present, because in both the client took some immediate benefit. It was further submitted that these decisions were erroneous. The analogy of salvage was unsound, for a salvage claim must always be less than the value of the property salved, whereas a law agent's account was often, as in this case, in excess of it. The true purpose of the statute was to prevent the client dealing with property recovered or preserved in an action to the prejudice of his law-agent. In any view this was not a case in which the Court, in the exercise of the discretion they had under the Act, ought to grant the order craved.

At advising—