Christie and Another v Official Receiver and Others (C.A. 11/1936.) [1936] EACA 82 (1 January 1936)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR JOSEPH SHERIDAN, C. J. (Kenya); HALL, C. J. (Uganda); and WEBB, J. (Kenya).

ROSS & CHRISTIE, Appellants (Original Applicants)

JAMANDAS TULSHIDAS MODI as Trustee of the Composition of ALI BIN AWATH, ALI BIN AWATH EL-AMRI and THE OFFICIAL RECEIVER,

## Respondents (Original Respondents).

C. A. $11/1936$ .

Lien—Bankruptcy—Charging $\operatorname{Law}$ Solicitor—Costs—Common Order on dividend—Bankruptcy Jurisdiction.

Held (7-9-36).—That, where a creditor's proof in respect of a judgment against a bankrupt is admitted, the solicitor who acted for the creditor in the action cannot obtain from the Court in bankruptcy a charging order on the dividend for his costs. In re Cook ex parte Cripps (1889 1 Q. B. D. 863) followed.

Christie for Appellants.

Inamdar for First and Second Respondents.

The facts fully appear from the ruling appealed from and from the judgment of the Court of Appeal.

The appellants appealed from the ruling of the Supreme Court of Kenya, which was as follows:-

LUCIE-SMITH, J.—This is an application by way of motion for a charging order on certain monies in the hands of the Deputy Official Receiver as Trustee of the Estate of one Sheikh Nassor bin Mohamed, a bankrupt.

These monies are claimed to meet costs arising out of legal work done by the applicants for one Ali bin Awath, a creditor in the said bankruptcy and the claim is based on the common law lien of a solicitor in respect of property recovered or preserved. by the exertions of the solicitor. The history of the case is as $follows:$ —

On the instructions of Ali bin Awath, Messrs. Ross & Christie obtained judgment in civil cases Nos. 83 and 84 of 1933 against Sheikh Nassor bin Mohamed and another. In execution of the decree in C. C. 84/33 and again on the instructions of Ali bin. Awath the same advocates and solicitors obtained an order for the personal arrest of Sheikh Nassor and the Court made a receiving order against him under section 99 of the Bankruptcy Ordinance.

$1899$

An appeal was lodged by the debtor against such order and. again on instructions. Messrs. Ross & Christie appeared for the respondent in the appeal. Following the decision of the Court of Appeal for Eastern Africa in Markus v. Bracia (1 E. A. C. A. 17) the appeal was allowed, (see $(2 E. A. C. A. 15)$ ). The decision of the Court of Appeal in the Bracia case was subsequently reversed by the Privy Council and the original order of WEBB, J. restored, see $\pm$ 1 A. E. L. R. 944).

Again acting on instructions of Ali bin Awath Messrs. Ross and Christie then served a bankruptcy notice on Sheikh Nassor under section 3 (8) of the Bankruptcy Ordinance in respect of the decree obtained in C. C. 83/33, after which and still on instructions they filed a creditors' petition on 8-10-34 and a receiving order was made on 19-10-34. Messrs. Ross & Christie appeared for the petitioning creditor at the Public Examination at the close of which the debtor was adjudicated bankrupt on 28-11-34.

On the ex parte motion of the Deputy Official Receiver in bankruptcy the Court on 1-2-35 ordered that the Deputy Official Receiver have liberty to employ Messrs. Ross & Christie for the purpose of taking proceedings to set aside two wakfs made by Sheikh Nassor and to pay the costs of that motion and the proceedings thereunder from the bankruptcy contingency fund. By notice of motion taken out by Messrs. Ross & Christie and dated 27-2-35, notice was given that "Counsel on behalf of the Official Receiver will move the Court for an order that the two wakfs made by Sheikh Nassor should be set aside under section 44 of the Bankruptcy Ordinance''. On 4-12-35 the Court declared the said wakfs to be void and vested the property comprised therein in the Deputy Official Receiver as Trustee of the bankrupt's estate. The Deputy Official Receiver subsequently sold the said property and the proceeds of such sale were credited to the bankrupt estate of which Ali bin Awath was practically the sole unsecured creditor.

Messrs. Ross & Christie's costs as advocates for the petitioning creditor and as advocates for the Deputy Official Receiver in the motion to set aside have been paid by the Deputy Official Receiver. The costs for which they are now claiming a charging order are those in respect of C. C. 83 and 84 of 1933, the appeal in respect of the Receiving Order made in execution and the Public Examination of Sheikh Nassor.

Mr. Ross' argument is that the setting aside of the wakfs and the monies obtained therefrom was the final fruit of his firm's labours in all the matters which I have above detailed. It has not, I think, been seriously contended before me that the Solicitors Act of 1860 applies to this Colony and on this point I respectfully concur with the expressions of opinion by BARTH J.

in Rasul Bux v. Dalal (4 E. A. L. R. 99) and SHERIDAN J. in. John and Edward v. C. S. Lezar (12 K. L. R. 66). Mr. Ross. himself has based his argument on his common law lien.

It was laid down in an 1842 case Hall v. Lever (66 E. R. 1158) that the lien of a solicitor upon a fund recovered in a suit. which he has conducted is confined to the costs of that particular The first point then that I have to decide is whether the suit. costs which Mr. Ross is now seeking to recover were costs. incurred in the application to set aside the two wakfs as a result of which the fund now sought to be charged came into existence. It is with some regret that I must answer that question in the negative. I find that the order setting aside the wakfs was. obtained as the result of fresh instructions given by the Deputy Official Receiver and was not attributable to anything done on the instructions of Ali bin Awath and that therefore no lien on the proceeds of that setting aside order exists in respect of the costs incurred on Ali bin Awath's instructions. I would refer to Mequerditchian v. Lightbound and Others (1917 2 K. B. D. 298) which is a Court of Appeal case and in many ways is strikingly like the present case. It is now unnecessary to decide the other points argued before me.

The motion is dismissed with costs.

The grounds of appeal were set out in the memorandum of appeal as follows: $\longrightarrow$

1. The learned judge misunderstood the nature of the lien. claimed by the appellants and the authorities referred to by him.

· 2. The learned judge erred in not finding that the lien existed from the dates of the judgments obtained against Sheikh Nassor although the claim for costs increased with the subsequent. proceedings to recover the judgment-debts.

3. The learned judge erred in finding that the order for setting aside the pretended wakfs was not attributable to anything done on the instructions of Ali bin Awath.

4. The learned judge erred in not finding that the appellants. had been instructed by Ali bin Awath to render Sheikh Nassor bankrupt with the express object of recovering the property affected by the pretended wakfs and the subsequent instructions. of the Official Receiver were merely in aid of the instructions. of Ali bin Awath.

5. In any event the Official Receiver, having no interest to oppose the application and being merely a nominal defendant, should not have been allowed costs against the appellants for opposing the application.

6. In any event only one set of costs should have been allowed to the other respondents.

Christie.—The lien claimed by the appellant is the lien defined by Lord Mansfield in Welsh v. Hole (99 E. R. 155). It is the common law lien of a solicitor for his costs over property recovered or preserved for his client by the exertions of the solicitor in litigious proceedings. A common law lien of this nature applies here as in England though the profession in England relies on a statutory lien. The lien can arise whenever any advantage has been obtained for the client by the exertions of the solicitor, see Eisdell v. Connigham (28 L. J. Exch. 213), Berchall v. Pugin (10 C. P. 397), Jones v. Turnbull (150 E. R. 897), Guy v. Churchill (35 Ch. D. 489), Ormerod v. Tate (102) E. R. 179), Cole v. Eley (1894 2 Q. B. 180), Tyabji Dayabhai and Co. v. Jetha Devji (51 Bom. 855), Ross v. Buxton (42 Ch. D.190), In re Wadsworth (29 Ch. D. 517) and In re Meter Cabs Ltd. $(1911 2 Ch. 557).$

The lien does not apply unless there has been litigious proceedings, Meguerditchian v. Lightbound (1917 2 K. B. 298). The lien prevails in bankruptcy, see Ex parte Bryant (56 E. R. 19). Jones v. Turnbull (supra) and Guy v. Churchill (supra).

The appellants had such a lien as from the judgments in C. C. 83 and 84 of 1933 and have never lost it. The form of remedy is a charging order on the dividend: In re Born (1900) 2 Ch. 433) and Brereton v. Edwards (21 Q. B. D. 488). The Court can make a charging order quite apart from statute: Shippey $v$ . Grey (49 L. J. Q. B. 524) at 527.

There was a lien from date the judgments were obtained and it extended to the costs of execution proceedings and other incidental costs. It was not affected by the bankruptcy.

The appellants having conducted litigious proceedings which. were necessary to the ultimate result, the lien applies to all the costs of such proceedings and is not affected by the fact that the culminating step was taken by the Deputy Official Receiver who as representative of the general body of creditors, was the agent of the principal creditor, the appellants' client.

Inamdar.—The appellants' claim is in respect of the costs of several actions to be paid out of property recovered in the bankruptcy cause. The lien only applies with respect to the costs of the suit in which the property is recovered or preserved, see Hall v. Laver (66 E. R. 1158), Mhatre v. Mhatre (52 Bom. 336), Lann v. Church (56 E. R. 749) and Verity v. Wylde (62) E. R. $164$ ).

No property was recovered or preserved by the judgments in Civil Cases 83 and 84 of 1933. The action to set aside the wakfs was a different cause. The lien does not exist in bankruptcy because it does not exist outside the common law jurisdiction: In re Cook (1899 1 Q. B. 863).

Christie in reply.—The case of In re Cook (supra) has been over-ruled: In re Prior (1921 3 K. B. 333) at 337, In re Deakin (1900 2 Q. B. 484) and In re Wood (1897 1 Q. B. 314).

SIR JOSEPH SHERIDAN, C. J.—Ali bin Awath is a proved creditor in the bankrupt estate of Nassor bin Mohamed in respect of two judgments obtained for him by the appellants prior to the bankruptcy; he was actually the petitioning creditor in the bankruptev. The costs or at least some of the costs as between solicitor and client in connection with the obtaining of the judgments have not been satisfied and the appellants are asking this Court to declare that they have a common law lien for the unpaid costs, including costs which they say have been incurred in execution and other proceedings subsequent to the judgments. On the 3rd August, 1935, a Receiving Order was made against Ali bin Awath and a composition scheme has been approved. The claim of the appellants is opposed by the Trustee of the composition scheme and Ali bin Awath. Our attention has been attracted by Mr. Inamdar for the respondents to the case of In re Cook ex parte Cripps (1899 1 Q. B. 863) the headnote to which reads: "Where a solicitor employed to prosecute an action for the recovery of a debt obtains judgment on behalf of his client and the judgment-debtor becomes bankrupt, the Bankruptev Court has no jurisdiction to order the trustee of the bankrupt's estate to pay to the solicitor, on account of his costs incurred in recovering the judgment, the amount payable to the judgment-creditor by way of dividend". In the course of his judgment, with which BIGHAM J. (as he was then) agreed, WRIGHT J. said that "the common law jurisdiction did not exist in the case of bankruptcy", which on the facts of the case must be taken to mean that where the judgment-debtor becomes bankrupt the solicitor has not got a common law lien on the dividend payable to his client on foot of a judgment obtained prior to the bankruptcy. This appears to us to have been stated by the learned judge as a matter of well-settled law, bankruptcy being entirely the creation of statute law (Halsbury 2 ed. $2$ , $5$ ). Mr. Christie for the appellants has sought to show that the decision referred to has been over-ruled, but this does not appear to be so from the cases he has cited, all of which were claims under section 28 of the Solicitors Act, 1860. On the contrary the decision is quoted in (Halsbury 2 ed. Vol. 2) in support of par 426 p. 318 which reads: "Where a creditor's proof in respect of a judgment obtained against the bankrupt is admitted, the solicitor who acted for the creditor in the action cannot obtain from the Court in bankruptcy a charging order on the dividend for his costs". In our opinion the appeal should be and is dismissed with costs but for reasons different from those grounding the learned trial judge's decision.

To deal with the fifth ground of appeal in which Mr. Inamdar's clients have no interest, we consider that the Official Receiver, who was a mere stakeholder, should have his costs out of the estate but that the appellants should not be responsible for his costs and we vary the order in the Supreme Court accordingly. As for the sixth ground of appeal allowing costs in respect of two sets of instructions, we consider this was a matter for the learned judge's discretion. In connection with the ruling given in the course of the appeal Mr. Christie will have one day's costs payable by the respondents.

HALL, C. J.—I agree. $\cdot$

WEBB, J.—I agree. $\mathbf{V}$