Simpson v Rowe [2011] VSC 149 - barrister's lien over settlement proceeds

The matter of Simpson v Rowe [2011] VSC 149 (Simpson) involved a hearing in the Supreme Court of Victoria before Habersberger J. In Simpson, a barrister successfully argued that he had a lien over a client's settlement proceeds. I have included a case summary below.

A barrister was retained to work on a client's matter between 2006 and late 2010. The barrister had a costs agreement directly with the client because the solicitor did not want to be responsible for counsel's fees. This matter went to hearing in late 2010 and the barrister appeared for the client during that hearing. The barrister demanded his fees be paid in late 2010, and because they weren't paid in time, he returned the brief in accordance with a default clause in his costs agreement with the client. The client's matter settled in 2011 and the barrister claimed that he had a lien over any settlement proceeds. The barrister issued proceedings against the client seeking a declaration that he had such a lien.

The barrister had several cost agreements with the client including one dated 23 February 2010 which granted a lien over any settlement proceeds for the payment of counsel's fees. However, the barrister and the client entered into a further costs agreement dated 20 August 2010 which didn't have the above clause but which had a clause saying that the 20 August 2010 costs agreement superseded all previous costs agreements (see [2] to [5]). The barrister therefore could not rely on the costs agreement in respect of his claim that he had such a lien.

Habersberger J made the following observations of solicitor's liens at [5]: 

Despite the similarity of much of the wording of the August costs agreement there was no equivalent to clause 7(b) of the February costs agreement, so that there was no written agreement concerning a lien in favour of the plaintiff. It is well established that a solicitor has a lien over the proceeds of a settlement or judgment in respect of which he or she has done work which has contributed to the money being payable to the client. It is known as a “fruits of the action” lien. In all of the cases that I was referred to and in others that I have read, the context always seems to be a claim by a solicitor to exercise a lien. In days gone by that would be understandable because at one stage barristers were not able to sue to recover their fees. In more recent times the practice was that the solicitor who briefed the barrister was liable for his or her fees and the solicitor would then look to the client to put the solicitor in funds to pay the barrister's fees. As such there was no direct contractual relationship between the barrister and the client.

At [7] Habersberger J expressed his conclusion about a barrister's lien:

In my opinion, equity would recognise that it would be just where the barrister has done work which has contributed to the recovery of the judgment or the settlement proceeds, that the barrister should also be entitled to look to those proceeds for the payment of his or her fees.

At [9] and [10] Habersberger J noted that there may be issues about ascertaining the amount of the barrister's fees, but this does not affect whether or not a lien exists over a settlement sum. At [10] Habersberger J said as follows:

Nevertheless, the cases are quite clear that the lien arises regardless of the fact that the amount of fees is not ascertained. This is hardly surprising because, in the normal course of events, where solicitors are involved, the process of finalising the amount of the fees could take some time. It is clear that the lien arises when either a judgment is given in favour of the client or a settlement is entered into, and this occurs regardless of the fact that the fees may not be ascertained.

At [11] Habersberger J noted that a requirement of a barrister's lien is that there is a causal connection between the work performed and the settlement:

Another requirement of the existence of a lien is that there be a causal connection between the work performed by the legal practitioner, to use a neutral term, and the eventual settlement or judgment. It is also clear that the legal practitioner does not have to be still acting at the time of settlement or judgment. The evidence disclosed that the plaintiff’s role included drawing pleadings, providing advice, conferring with the defendant and witnesses and appearing with junior counsel between 18 October and 20 December 2010 on more than 30 hearing days. It seems to me this work satisfies the requirement of a causal connection. Without the plaintiff’s involvement it would be unlikely that the defendant would have been in a position to negotiate the eventual settlement, albeit that the settlement occurred with the assistance of replacement counsel. 

Because the barrister was not involved in the final settlement, he was not aware of the terms of the deed for the payment of settlement money. The defendant resisted providing this to the barrister in the proceedings on the basis that it was confidential: however Habersberger J ordered that it be produced because it was a relevant document (at [13]).

The deed provided for the defendant to be paid after other priority payments, which could have the effect of the defendant receiving nothing (at [14]). Habersberger J said that this does not affect whether or not a declaration could be made that there is a lien over the settlement proceeds (at [15]):

Habersberger J noted that there were other legal practitioners involved in the proceeding, and considered that they would have a similar lien, at [19]:

The evidence also establishes that apart from the unpaid fees claimed by the plaintiff, fees are also payable to the replacement counsel, the junior counsel and to the defendant's solicitors. They might also claim a lien if they have not been paid by the defendant at the time the proceeds of the settlement are to be paid to her. If the proceeds are insufficient to pay out all of the entitlements of the legal practitioners then there would probably have to be some sharing pari passu between them because, as Mr Triaca submitted, the plaintiff should not get all of his claim pursuant to an order made by the Court to the prejudice of the other legal practitioners.

By reason of the above, Habersberger J made orders along the following lines:

1. A declaration that the plaintiff has a lien over any proceeds of settlement in the sum of $127,550.74 in respect of outstanding fees, interest, anticipated taxation costs and the costs of this proceeding.
2. An order that any amounts payable in respect of the settlement (up to the amount of $127,550.74) be paid into Court.

To summarise, in Simpson the Supreme Court of Victoria made the following observations about a barrister's lien:

• A lien arises when either a judgment is given in favour of the client or a settlement is entered into, and this occurs regardless of the fact that the fees may not be ascertained.
• There must be a causal connection between the work performed by the legal practitioner and the eventual settlement or judgment.
• The legal practitioner does not have to be acting at the time of settlement or judgment.