Court affirms solicitors’ lien on funds

C Lawyers & Boulos [2021] FamCAFC 39

C Lawyers & Boulos (No.2) [2021] FamCAFC 72

C Lawyers (the applicants) acted as solicitors for Ms Boulos (the first respondent) in property settlement proceedings against Mr Zaman (the second respondent).

A judge of the Federal Circuit Court of Australia made consent property settlement orders (the consent orders), which provided for the second respondent to pay $100,000 to the first respondent.

The applicants became aware that the first and second respondents proposed to approach the court to make property settlement orders by consent. The applicants asserted they held a lien over funds to be received by the first respondent to secure the payment of legal fees owed, and filed an application to intervene in the proceedings to enforce their claimed lien. The applicants sought a series of injunctions to preserve those funds pending the determination of the appeal.

The primary judge of the Federal Circuit Court of Australia summarily dismissed the applicants’ interim application for injunctions because it was not prepared according to the relevant court rules, and because Her Honour was not satisfied it had prospects of success. Her Honour did not provide reasons as to why the application had no prospects.

The applicants appealed that decision in the Family Court of Australia.

Issue

The issue before the court was whether to grant the injunctions sought by the applicants.

Issue considered

The court was satisfied the applicants had made out a prima facie case that their application should not have been summarily dismissed and that they did have an arguable appeal.

The applicants claimed that the unpaid legal fees owed to them were in the sum of $165,835.82 and the first respondent entered into a series of costs agreements with the applicants which granted them a lien over any funds or assets the first respondent would receive from the property proceedings.

The court noted that “[i]t is also well established that such a lien, sometimes more correctly described as a charge, arises by the operation of equitable principles”.[1] There was no dispute that the sum had not been paid. The first respondent asserted that the fees were excessive. The court held that this did not prevent the making of an interim order to preserve the funds.

The court took into account the first respondent’s significant debts and Centrelink benefits, and was satisfied that a freezing order should be made as there was a real risk that the funds would not be available should the appeal succeed.

Accordingly, the court ordered the second respondent to pay the monies due to the first respondent pursuant to the consent orders, to the applicants’ trust account, to remain invested on behalf of the first respondent pending further order.

Addendum

In an ex tempore judgment dated 7 May 2021, the Family Court decided that C Lawyers had an arguable case for the relief sought, and thus be granted leave to intervene in the Federal Circuit Court proceedings. C Lawyers and the first respondent settled the costs by consent.

Meagan Liu is a Law Graduate in the QLS Ethics and Practice Centre. This article has been approved by Grace van Baarle, Manager.


Footnote
1 C Lawyers & Boulos [2021] FamCAFC 39, 10.

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