Scottish Court of Session Decisions

The Law Agents and Notaries Public (Scotland) Act 1891 (54 and 55 Vict. cap. 30) enacts—Section 6—“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 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 whatever nature, tenure, or kind the same may be, which shall have been recovered or preserved on behalf of his client 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 and judge shall appear just and proper; and all acts done or deeds granted by the client after the date of 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.”

David Philip, S.S.C., presented a petition for a charging order in terms of the foregoing section on the sums recovered and remaining due under decrees in actions conducted by him in the Court of Session on behalf of the Bay of Islands Slate Syndicate, Limited, against the Reid Newfoundland Company.

Answers were lodged for Christopher Charles Willson, accountant, London,

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Liquidator of the Syndicate, and Ernest William Hart, accountant, London, receiver on behalf of the debenture holders of the Syndicate, who pleaded (1) that as the Syndicate was registered in London, and had no assets in Scotland, and as the sums on which the charge was sought so far as recovered had been paid over to the liquidation assets, and as far as outstanding represented by bills which along with the extract decrees had been lodged in bank in Montreal, the Court had no jurisdiction to grant the order craved, and (2) that as the Syndicate had gone into liquidation in England, the petition was incompetent.

The following narrative is taken from the opinion of Lord Salvesen—“The material facts, which are not in dispute, are that the petitioner conducted a number of litigations on behalf of the Bay of Islands Slate Syndicate, in which his clients were successful in obtaining a decree for £3000 and interest. The sum of £3000 has been paid, and there is no reason to doubt that the bills which have been granted for the balance, consisting of interest and other debts constituted by separate decrees, will be met at maturity. The petitioner's accounts, so far as passed by the Auditor as good charges against the unsuccessful litigants, have also been paid, but there remains a balance of £568, 3s. 1d. due by his clients to him in terms of the taxed accounts. In consequence of an agreement entered into before the litigations were commenced these accounts have been taxed by the Auditor, not as between agent and client, but as between party and party.”

On 16th June 1911 the Lord Ordinary ( Guthrie) pronounced the following interlocutor—“Finds that the amount due by the respondents the Bay of Islands Slate Syndicate, Limited, to the petitioner is £568, 3s. 1d., and decerns against the said Bay of Islands Slate Syndicate, Limited, and against Ernest William Hart, accountant, Finsbury Pavement House, London, E.C., as receiver appointed by the debenture-holders of said Syndicate, as such receiver, and against Christopher Charles Wilson, incorporated accountant, London, as liquidator of said Bay of Islands Slate Syndicate, Limited, for payment to the petitioner of said sum of £568, 3s. 1d., with interest thereon at 5 per cent. per annum from 31st May 1911 till payment: Further, finds and declares, in terms of the Statute 54 and 55 Vict., cap. 30, sec. 6, the petitioner entitled to a charge upon and against, and a right to payment out of, the sum of £3000 recovered by the said liquidator from the Reid Newfoundland Company mentioned in the petition, and all other sums due by the Reid Newfoundland Company to the said Syndicate as and when further sums have been paid to the said liquidator or to said receiver; the said charge forming the first claim on said sums, and being always preferable to the claims of the said debenture-holders or other creditors of said Syndicate; and decerns.”

Opinion—“I think this charging order must be granted. The objections which have been raised seem to come under three heads. The petitioner founds on the Statute of 1891 (54 and 55 Vict. cap. 30, sec. 6), under which it is competent to the tribunal before whom an action has been brought, in which a sum of money has been recovered for a client by a law agent, to grant a charging order which will operate on the funds so recovered. It is alleged by the respondent, and not denied, that in this case there is no money so recovered which is at present within the jurisdiction, or indeed ever was within the jurisdiction.

The first question is whether the statute operates in these circumstances. Mr Ingram has founded on the origin of the statute, but I think I must confine my attention to the words of the statute, and I find no such limitation as Mr Robertson has maintained should be read into the statute. I am not able, apart from the words of the statute, to see any reason in principle why such a limitation should be read in. It appears to me I have nothing to do with where the money recovered is. If there was an averment that it had been all bona fide spent before this charging order was asked for, that might raise a different question. But with an averment as I have stated, my duty is to hold that the statute applies to the present circumstances, leaving the petitioner to work out the charging order, subject to any special rules, if there be any, in the liquidation of the company in England.

Next, it is said that at all events where a company has either been sequestrated or where a liquidator has been appointed in the case of a limited company, a charging order cannot be granted at all. Next, it is said further in the answers for the liquidator that in the case of debenture holders ‘the liquidator is vested with the duty of distributing the funds of the liquidation according to priority of ranking among the creditors in terms of the Companies Consolidation Act 1908. The charge craved is an effort to obtain an absolute preference over funds in England, belonging to an English company in liquidation where there exist, among other creditors, debenture holders holding a floating charge over the assets.’ Again, I see no warrant for that in the statute, nor in principle either. I say that apart from the fact that in this particular case we have no averment that the company is, in point of fact, insolvent. I do not think that the cases quoted to me apply.” [ His Lordship dealt with a defence on the merits which was abandoned in the Inner House.]

The respondents reclaimed, and argued — (1) The Court had no jurisdiction to grant the order craved. An agent's right to a charging order on a fund which was not in his hands depended in Scotland as in England entirely on statute—Law Agents and Notaries Public (Scotland) Act 1891 (54 and 55 Vict. cap. 30), sec. 6; Solicitors Act 1860 (23 and 24 Vict. cap. 127), sec. 28. Prior to 1891 the law in Scotland was the same as that in England till 1860, and the agent's rights in regard to his account

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depended on lien— Shaw v. Neale, 1858, 6 Cl. H.L.C. 581. The Act of 1891 was not intended to extend the jurisdiction of the Court in dealing with expenses beyond that exercised under the Act of Sederunt of 6th February 1806, and did not confer jurisdiction in a case like the present, where the client was a company registered in England and now in liquidation. The liquidator was not subject to the jurisdiction of the Scots Courts, the fund recovered was not under the control of the Scots Courts, and the balance was due by a foreign creditor. Further, the order if granted would avail the petitioner nothing, for it could not be enforced except in England, and the Judgments Extension Act 1868 (31 and 32 Vict. cap. 54) would not apply to such a case, while a decree conform could not be obtained, as the English and the Scottish Acts were different— per Lord Justice-Clerk in Carruthers' Trustee v. Finlay & Wilson, January 7, 1897, 24 R. 363, 34 S.L.R. 254. If, therefore, the petitioner could not enforce his decree, the Courts would not grant it. There was no case in which a charging order had been granted in circumstances similar to the present. In Bannatyne, Kirkwood, France, & Company, 1907 S.C. 705, 44 S.L.R. 553, the application was made by minute in a depending cause. The petitioner might have so proceeded here, instead of allowing the decrees to be extracted before making his application. In Tait & Company v. Wallace, October 27, 1894, 2 S.L.T. 261; Patonv. Paton's Trustees, June 1, 1905, 13 S.L.T. 96; and the Automobile Gas Producer Syndicate, Limited v. Caledonian Railway Company, 1909, 1 S.L.T. 499, the fund was in Scotland and the client subject to the jurisdiction. (2) The petition was incompetent. It involved a preference in an English liquidation, and that the English Courts alone could deal with— Phosphate Sewage Company v. Lawson & Sons' Trustee, July 5, 1878, 5 R. 1125, 15 S.L.R. 666. Further, the order craved in the petition was of the nature of diligence or execution in the meaning of sections 211 and 213 of the Companies (Consolidation) Act 1908 (7 Edw. VII, cap. 69), and was therefore incompetent — Allan v. Cowan, November 15, 1892, 20 R. 36, 30 S.L.R. 114. In any event, the petition could not be granted to the effect of creating a preference over the receiver for the debenture holders. The case of Brunton v. Electrical Engineering Corporation, [1892] 1 Ch 434, founded on by the petitioner, turned on the terms of the particular deed creating the debentures. Even if the petitioner were entitled to a charging order, the Lord Ordinary's interlocutor was wrong in so far as it gave decree against the reclaimers.

Argued for the petitioner (respondent) — (1) The Court which tried the cause was the Court empowered to grant the order—Law Agents and Notaries Public (Scotland) Act 1891, sec. 6; Poley, Law Affecting Solicitors, p. 365. (2) The question of preference did not prejudice an agent's right to a charging order under the Act— Automobile Gas Producer Syndicate, Limited v. Caledonian Railway Company ( cit.), Brunton v. Electrical Engineering Corporation ( cit.). Further, the liquidation was a voluntary one, and it was not averred that the Syndicate was insolvent. That did not stop diligence, even assuming the proceedings here were of the nature of diligence.

At advising—