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Candey Ltd v Crumple and another

Lawyers who took their fight for £4m litigation costs to the Supreme Court – only to suffer a unanimous loss – today said they had ‘no regrets’ about pursuing the case so far.

Candey Ltd v Crumple and another

In Candey Ltd v Crumple and another, justices found the Court of Appeal had been entitled to rule that London firm Candey's equitable lien was waived when the parties entered into a fixed fee agreement to continue providing representation.

Candey had acted for Peak Hotels & Resorts Ltd for two years in worldwide litigation, including a case at the High Court in London. Halfway through the retainer, the firm agreed to switch from an hourly rate to a fixed fee, which would be deferred until the handing down of the judgment or until Peak entered an insolvency process. The London litigation was settled shortly before trial and Candey dis-instructed by the liquidators in March 2016.

The firm argued that its outstanding fees were payable in priority to sums payable to other Peak creditors, and asserted an equitable lien over sums of money recovered or preserved in the litigation.

Having lost on first instance and on appeal, Candey challenged the decision in the Supreme Court but was unsuccessful.

The court found that the fixed fee agreement and deed of charge entered into on the same day formed a ‘package of rights and obligations’ which were inconsistent with the equitable lien.

Giving the lead judgment, Lord Kitchin said the new arrangement had ‘substantially altered’ the position of a solicitor’s lien taking first priority. He added: ‘The Court of Appeal was entitled to find that Candey’s equitable lien was waived when the parties entered into the FFA and the Deed of Charge in October 2015.

‘The lien was not expressly reserved and there were ample grounds to infer that the parties intended the lien to be replaced by the deed of charge in conjunction with the FFA.’

Following the ruling, Candey said it had taken on extra risk by switching to a fixed fee and had sought to recoup this risk element through the action.

Managing partner Ashkan Candey said: ‘We believe that lawyers should take more risk on behalf of meritorious clients and have adopted an active approach to litigation in this area, given that absent such risk taking, often only those with cash can win litigation.

‘Where we have sued in our own name, where we are the client, we do so with a greater appetite for risk. We obviously act in our own financial interest but we are also motivated by a desire to fight for change to the law, to seek to make new law and influence the jurisprudence of the English court.’

Paul Hollands, who acted for Stephenson Harwood for the respondents of the appeal, said the ruling was an important decision about the extent of a solicitor’s right, on the insolvency of its client, to be treated as a priority creditor.

He added: ‘Although many of the key takeaways from this decision concern the position of solicitors, the principles involved may well have ramifications more widely, for commercial and other parties seeking to rely on other types of equitable lien and security (for example, a vendor’s lien for the purchase money and the purchaser’s lien for the deposit), since this is the first time that the Supreme Court has considered the principles involved.’

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