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High Court of Ireland Decisions |
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Galway City Council -v- QDM Capital [2015] IEHC 171 (10 March 2015) URL: http://www.bailii.org/ie/cases/IEHC/2015/H171.html Cite as: [2015] IEHC 171 |
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Judgment
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Neutral Citation: [2015] IEHC 171 THE HIGH COURT [Record No.2015/13 MCA] BETWEEN GALWAY CITY COUNCIL APPLICANT AND
QDM CAPITAL LIMITED RESPONDENT AND [Record No. 2011/284 JR] QDM CAPITAL LIMITED APPLICANT AND
NEW ROSS TOWN COUNCIL RESPONDENT JUDGMENT of Ms. Justice Iseult O’Malley delivered the 10th day of March 2015. Introduction 2. In the second, Brian Lynch & Associates Solicitors, the solicitors for QDM in the New Ross case, seek an order pursuant to s. 3 of the Legal Practitioners (Ireland) Act 1876, declaring that they are entitled to a charge upon the judgment and costs in those proceedings. 3. It is common case that the solicitors are entitled to apply for the charge. The issue is whether Galway City Council’s claim has priority. 4. The applications were heard two days apart but it is agreed that the order in which they were listed cannot be a deciding factor. Background facts 6. The two cases were heard on 20th, 21st and 22nd July, 2011. Costs were ultimately awarded to the City Council on the 23rd January, 2012, arising from the successful defence of both judicial reviews. 7. Thereafter, the taxation process commenced and the City Council was awarded taxed costs for the two judicial review proceedings for a sum totalling €113,342.80. Interest at a rate of 8% is accruing on these sums from the date of Certificate of Taxation, the 8th November, 2013. 8. The taxed bill of costs for both judicial review proceedings remains outstanding in full. 9. Galway City Council became aware that QDM had previously taken judicial review proceedings against New Ross Town Council. That case resulted in a settlement, reflected in a consent order made on the 12th July, 2011, on favourable terms for QDM, including an order for costs in its favour to be taxed in default of agreement. The bill of costs arising from that settlement is awaiting an imminent decision from the Taxing Master, on the 12th March, 2015. 10. The City Council obtained a conditional garnishee order in an ex parte application on the 26th January, 2015, pursuant to O.45 of the Rules of the Superior Courts. 11. On the 17th February, 2015, Brian Lynch & Associates made an application pursuant to s.3 of the Legal Practitioners (Ireland) Act 1876, for a declaration that they are entitled to a charge upon the judgment and costs ordered by the High Court on 12th July, 2011, in respect of their costs, charges, and expenses in the New Ross proceedings. QDM has consented to this order being made. 12. The amount of costs claimed in the bill, the subject of taxation, is €40,520.67 plus VAT at 23%, plus €16,617.32 in disbursements. 13. Galway City Council says that it obtained the conditional order before the solicitors initiated their application, and that as it was the first in time it must prevail. The solicitors say that their entitlement arose on the day that QDM became entitled to its costs in the New Ross proceedings, long before the conditional order of garnishee and in fact before the City Council got an order for costs in its own proceedings. Statutory provisions
16. In James Bibby Ltd. v. Woods and Howard [1949] 2 K.B. 449 judgment creditors were seeking an order against money, which the garnishee had agreed to pay to the judgment debtor. At the hearing of the application to make the order absolute the debtor’s solicitor claimed, for the first time, that he had a lien on the money for his costs in the proceedings. The order was nonetheless made and the debtor appealed. 17. Giving the leading judgment of the divisional court, Lord Goddard C.J. noted, firstly, that in truth the appeal was not that of the debtor but of the solicitor, who had never applied to the court for a charging order. Secondly, the argument that the solicitor had a lien was misconceived. A lien, properly so called, can only exist where the person claiming it has in his or her possession the property which is claimed to be subject to the lien. What the solicitor in this case had was a right to claim the equitable interference of the court, seeking an order that the judgment obtained by his efforts stood as security for his costs. If he had obtained such an order before the application to make absolute the garnishee order came on, his charge would have taken precedence over the creditor’s claim. However, having made no such application he had no right in the property. 18. Bibby was approved in this jurisdiction by O’Hanlon J. in Fitzpatrick v DAF Sales [1988] I.R. 464. In that case the plaintiff had obtained judgment against one defendant, while the second defendant succeeded in getting judgment against the plaintiff in a counterclaim. The second defendant sought a garnishee order in respect of the money owed by the first defendant to the plaintiff. 19. In an affidavit sworn on behalf of the plaintiff for the purpose of opposing the garnishee application, his solicitor claimed that the plaintiff had agreed to pay him a specified sum by way of costs. It was argued by the plaintiff that the judgment creditor should rank behind the solicitor, in reliance on the solicitor’s lien for costs. 20. On this issue O’Hanlon J. opted to follow Bibby, finding that the judgments were convincing and that it had “stood the test of time” over the forty years since it had been given. He also rejected an argument that, where a party had notice of a solicitor’s lien that was sufficient to preserve the priority of the solicitor’s claim against the fund. The authority sought to be relied upon for this latter proposition is not named in the judgment but according to O’Hanlon J. it was one where the solicitors had written formally to put the other party on notice that they were claiming a lien and proposing to assert it against the fund in question. The learned judge concluded that the entitlement of the judgment creditor to have the order of garnishee made absolute was not affected in any way by the solicitor’s claim. 21. In Larkin v Groeger [1990] 1 I.R. 461, the competing claims against an unsuccessful plaintiff were those of i) a judgment creditor whose claim was secured on an undertaking given by the plaintiff’s solicitor; ii) a judgment in favour of a bank, secured by way of a conditional order of garnishee attaching the proceeds of an award in the plaintiff’s favour in an arbitration and iii) the claim of the plaintiff’s solicitors for a s.3 order relating to their costs in the arbitration and subsequent High Court proceedings. The defendants in the action also sought to set off their award off costs in the High Court against their liability on foot of the arbitrator’s award. 22. With reference to the solicitors’ position, Barrington J. noted that the court had to decide which of two innocent parties was to bear a loss. He rejected the defendant’s claim that, since the conditional order had been obtained before the s.3 application was brought, the “first in time” principle applied and accepted the argument that the solicitors were relying, not upon a mere equity, but upon a statutory right to invoke the discretion of the court.
25. Clarke J. considered the relationship between s.3 and the common law, noting that solicitors enjoyed, at common law, a lien for costs on money in the solicitor’s hands recovered by the solicitor concerned for his client, but that the section operated in addition to the common law. Analysing the terms of the section, he further noted that it was not mandatory but conferred a discretion on the court. At paragraph 4.8 he said, with reference to The Law of Solicitors in Ireland (O’Callaghan, 2010),:
… it is well established that a charging order under s.3 gives the relevant solicitor priority over all other creditors and all claims except that of a purchaser for value without notice of the rights of the solicitor to a charging order. …”
29. Birmingham J. held that on the facts a Mareva order was not warranted. Although unimpressed by the defendant’s conduct in relation to the fees, he also refused the s.3 order as being inappropriate at the interlocutory stage where the existence of liability was hotly disputed. In so ruling, he held that the section did not require the amount due to have been quantified but that it must be established that some fees are due. 30. For present purposes it is worth noting that Birmingham J. cited Mount Kennett as demonstrating the significance of a s.3 order for third parties as well as for the solicitor and client. 31. Finally, I note that in the textbook by Mr. O’Callaghan cited by Clarke J. in Mount Kennett, the following advice is given (at p. 187):
Conclusions 34. The order granting Galway City Council its costs against QDM was not made until the 23rd January, 2012. In seeking an order of garnishee against the taxed costs, the City Council was, by definition, on notice of the solicitor’s entitlement to be paid. In the circumstances it is not, in my view, unjust to deny to the Council a right to take priority over the solicitor’s entitlement. 35. On the facts of this case, the solicitors for QDM have demonstrated that they come within the terms of the statute and that there has been no culpable delay or other culpable behaviour on their part such as might unjustly affect the rights of third parties. 36. That being so, I do not think it possible for the City Council to claim priority. It cannot claim to be a bona fide purchaser for value without notice, since it manifestly was on notice of the fact that the taxation process involved an assertion of the right to legal fees. Although the conditional garnishee order was obtained before the s.3 application was moved, the statute prevents the latter claim from being defeated once it is initiated before a garnishee order is made absolute. 37. Since the solicitor’s claim is based on statute rather than a common law lien, it does not depend on the solicitor having actual possession of the money and takes effect once the order is made. 38. In my view, therefore, the declaration under s.3 of the Legal Practitioners (Ireland) Act 1876, should be granted. |
