- Bookmark
- Share
- CaseIQ
Candey Ltd v Crumpler & Anor, Re Peak Hotels and Resorts Ltd
Factual and Procedural Background
Company A (an English firm of solicitors) acted for Company B, a British Virgin Islands company, in extensive multi-jurisdictional litigation between April 2014 and March 2016. In October 2015 the parties replaced the original hourly-rate retainer with a fixed-fee agreement (“FFA”) and executed a Deed of Charge granting Company A a floating charge over all of Company B’s assets, subject to an earlier charge in favour of a litigation funder (“Company C”).
On 8 February 2016 Company B was placed into liquidation in the BVI and the Liquidators were appointed. Shortly afterwards the London proceedings (“the London Litigation”) were settled, generating funds (“the Settlement Proceeds”). Company A, having been dis-instructed, claimed an equitable solicitor’s lien over those proceeds and applied under section 73 of the Solicitors Act 1974 for a charging order.
A Deputy Judge of the Chancery Division held that Company A had waived its equitable lien by accepting the Deed of Charge (the “pre-liquidation waiver”), so the application failed. Other defences raised by the Liquidators were rejected. The Court of Appeal upheld the finding of pre-liquidation waiver and, additionally, held that omission of the lien from Company A’s proof of debt (“post-liquidation waiver”) would also defeat the claim. Company A appealed to the Supreme Court.
Legal Issues Presented
- Whether, by entering into the FFA and accepting the Deed of Charge in October 2015, Company A objectively intended to waive its equitable solicitor’s lien over the fruits of the litigation.
- If not waived at that stage, whether the lien was subsequently surrendered when Company A filed a proof of debt in the liquidation without mentioning the lien.
- Whether bringing the lien application after prolonged litigation concerning the Deed of Charge constituted an abuse of process, and if so whether relief should be refused in the court’s discretion under section 73.
Arguments of the Parties
Company A’s Arguments
- The courts should be slow to find an inadvertent waiver because that would chill solicitors’ willingness to act for impecunious clients and thus impede access to justice.
- Any doctrine of inferred waiver is inapplicable where, as here, the client took independent legal advice and Company A was not advising on the transaction.
- The lower courts applied the wrong test; overlap of security, differing priority or an interest clause were not inconsistent with retention of the lien and were equally compatible with the lien operating alongside the charge.
- Clause 7 of the FFA and provisions in the Deed of Charge expressly or impliedly preserved the lien.
- Failure to mention the lien in the proof of debt did not amount to waiver, and alleging abuse of process was misconceived.
Liquidators’ Arguments
- Intention is assessed objectively: new security that is inconsistent with the lien shows the parties meant to replace, not supplement, the lien.
- Specific indicators of incompatibility existed: (a) the charge covered the same property as the lien; (b) its priority differed because Company C’s prior charge was preserved; and (c) the FFA created a contractual right to interest absent from the lien.
- A solicitor who wishes to retain the lien must disclose that intention; Company A did not.
- Alternatively, any lien was surrendered when omitted from the proof of debt under the BVI Insolvency Act.
- Further alternatively, pursuing the lien after two years of litigation over the Deed of Charge was an abuse of process, and the court should in any event refuse discretionary relief under section 73.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21 | Defines nature of solicitor’s equitable lien as an equitable charge enforceable against proceeds with priority over the client. | Used to outline the security function of the lien and its role in access to justice. |
| Bott & Co Solicitors v Ryanair DAC [2022] UKSC 8 | Test for creation of the lien—significant contribution to recovery of a fund. | Cited to distinguish the present case (concerned with waiver, not creation). |
| Guy v Churchill (1887) 35 Ch D 489 | Lien prevents client benefiting from solicitor’s work without payment; fairness rationale. | Referenced to explain policy backdrop to the lien. |
| In re Born; Curnock v Born [1900] 2 Ch 433 | Solicitor’s lien survives insolvency. | Demonstrates that insolvency of Company B did not itself destroy any lien. |
| In re Meter Cabs Ltd [1911] 2 Ch 557 | Same proposition as Born. | Reinforces survival of liens post-liquidation. |
| In re Taylor, Stileman & Underwood [1891] 1 Ch 590 | When a solicitor takes inconsistent security without reserving the lien, waiver is inferred. | Key authority supporting inference of waiver in present case. |
| Bank of Africa v Salisbury Gold Mining Co Ltd [1892] AC 281 | Objective test for inferring waiver from transaction. | Adopted as the governing approach to intention. |
| In re Morris [1908] 1 KB 473 | Waiver depends on inconsistency; majority rejected a blanket rule that any new security waives the lien. | Cited in analysing overlap of security and priority changes. |
| Barclays Bank plc v Estates & Commercial Ltd [1997] 1 WLR 415 | Requirement to look objectively at terms and nature of transaction to infer exclusion of lien. | Relied on in formulating objective test. |
| Twigg Farnell v Wildblood [1998] PNLR 211 | Court may infer abandonment of lien from all circumstances. | Supports holistic assessment of intention. |
| Robarts v Jefferys (1830) 8 LJ (OS) (Ch) 137 | Promissory note bearing interest inconsistent with retaining lien. | Used to highlight incompatibility created by contractual interest. |
| Bissill v Bradford & District Tramways Co Ltd (1893) 9 TLR 337 | Taking substantial security without reserving lien implies waiver. | Cited in discussion of solicitor-client duty to disclose reservation. |
| Mackreth v Symmons (1808) 15 Ves 329 | Additional security can evidence relinquishment of equitable interest. | Historical source for principle. |
| Groom v Cheesewright [1895] 1 Ch 730 | Accepting lower-priority charge incompatible with first-priority lien. | Analogy for priority shift caused by Company C’s charge. |
| Clifford Harris & Co v Solland International Ltd [2004] EWHC 2488 (Ch) | Express contractual charge inconsistent with reliance on statutory charging order over same asset. | Applied directly to overlap between Deed of Charge and lien. |
| Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 | Negotiating retainer not a fiduciary act; does not disturb long-standing duties concerning liens. | Court held it had no bearing on present outcome. |
Court's Reasoning and Analysis
The Supreme Court framed a single overarching inquiry: would a reasonable observer, considering all the circumstances, infer that the parties meant the new arrangements to supplement or to replace the equitable lien?
Key steps in the analysis were:
- Objective intention. Following In re Taylor and similar cases, the court rejected any need for an “unequivocal representation” of waiver; objective incompatibility suffices.
- Overlap of security. The Deed of Charge expressly covered the same Settlement Proceeds that the lien would attach to. Creating consensual security while simultaneously relying on non-consensual statutory security was “obviously inconsistent.”
- Priority shift. Paragraphs 4-5 of the Deed of Charge subordinated Company A’s security to Company C’s earlier charge. A lien, by contrast, ranks first. Accepting lower priority could not be reconciled with preserving the first-ranking lien.
- Interest provision. Although less weighty, inclusion of 8% contractual interest in the FFA was another feature absent from the lien and pointed the same way.
- No reservation. Clause 1 of the FFA stated that it “supersedes and replaces” previous fee arrangements; neither the FFA nor the Deed of Charge expressly retained the lien. Professional practice requires a solicitor to notify the client if the lien is to be preserved—Company A did not.
- Independent advice irrelevant. Requiring Company B to obtain external advice did not relieve Company A of its duty to signal any intention to keep the lien; the independent adviser could not divine an undisclosed intention.
Considering these factors cumulatively, the court held that the reasonable inference was that the equitable lien was surrendered when the October 2015 package was executed.
Holding and Implications
APPEAL DISMISSED. The Supreme Court affirmed the Court of Appeal: Company A waived its solicitor’s equitable lien by accepting the Deed of Charge and FFA in October 2015.
Consequences are confined to the parties: Company A cannot claim priority over the Settlement Proceeds and must rely on its floating charge, valued at a much lower figure, in the liquidation. The judgment clarifies the circumstances in which solicitors will be taken to have relinquished an equitable lien but does not create a new substantive test; it re-states and applies long-standing principles of objective intention and professional disclosure.
Alert