Equitable lien waived by security

The Supreme Court dismissed an appeal by solicitors asserting an equitable lien over settlement monies, arising out of proceedings they had acted on, and were subsequently granted security for.

The Claimant solicitors acted for a party in worldwide litigation resulting in large exposure for which a fixed fee was agreed, and security subsequently granted. The company went into liquidation, the solicitors filed a claim for the fixed fee, without mentioning any lien, and the liquidators shortly thereafter settled the litigation.

The solicitors then asserted an equitable lien over the proceeds in respect of their costs. The liquidators contended that, to the extent any lien existed, it was waived by the granting of the security and proceedings were issued.

In the meantime, directions were sought about the nature of the security, and it was held that the security was only floating charge security and only secured services to the value of about 25% of the fixed fee meaning that, if the lien argument failed, the solicitor’s recovery would be substantially less under the charge.

At first instance, the Deputy Judge agreed with the liquidators. The Court of Appeal agreed with the Judge and dismissed the solicitor’s appeal. The solicitors appealed to the Supreme Court.

The Supreme Court also agreed with the liquidators and held that the requesting and granting of security waived any equitable lien, which was only asserted after liquidation and a claim had been submitted in any event. Other issues were raised by the solicitors, which the Supreme Court did not consider in light of their preliminary finding.

Candy Limited v Crumpler and others [2022] UKSC 35

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