Lien refused

A solicitor has no more right to assert a lien to secure his fees than his client has to use the money, the Court of Appeal has held.

In Withers v Langbar International [2011] EWCA Civ 1419, [2011] All ER (D) 22 (Dec) Withers’ clients, Rybak, had been sued by Langbar and settled for £30m, which was almost equal to Rybak’s worldwide assets. Under the settlement agreement, a property in Monaco would be sold and €7.6m paid from the proceeds to Langbar, regardless of the sale price. A court order provided that the proceeds would be paid into an escrow account.

The property sold for €13m, which left about €5m in the account.

Rybak started a new action concerning the settlement against Langbar, who counterclaimed. Langbar succeeded to the tune of €3.8m, plus €0.9m in costs. Rybak applied for an order that £400,000 be released from the account to pay Withers’ legal costs. Withers asserted a lien or equitable charge over the money in the account. The court held that Withers had a common law lien over the money claimed, but dismissed the claim that Withers had an equitable charge. Langbar appealed and Withers cross-appealed.

Langbar successfully argued that the money was in the account and would remain available subject to the court’s directions.

Upholding Langbar’s appeal, Lord Justice Lloyd said: “The solicitor can have no better right to assert a lien over the money than his client has to use the money for payment of the sums due to the solicitor…it was still necessary for the Rybaks to obtain the consent of Langbar to any withdrawal from the account of any sum to be paid out by way of legal expenses...That seems to me to make it impossible to contend that the money held in the account at that stage was available for payment of legal costs by the Rybaks. If it was not, then I do not see how it can have been subject to a lien to secure the payment of such costs on the part of Withers.”