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Cite as: [2008] EWHC 927 (QB)

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Neutral Citation Number: [2008] EWHC 927 (QB)
Claim No: 08/1470

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Claim No: 08/1470
Royal Courts of Justice
Strand. London. WC2A 2LL
07/05/2008

B e f o r e :

MR JUSTICE JACK
____________________

Between:
DEAN & DEAN (a firm)
Applicant/Claimant
- and -

G (also known as G) Respondent/Defendant

____________________

Christopher Semken (instructed by Dean & Dean) for the Applicant/Claimant
John Snider (instructed by Boardmans) for the Respondent/Defendant

Hearing dates: 25 April 2005

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Jack:

  1. On 9 January 2008 the claimant solicitors, Dean & Dean, practicing at 21 Gloucester place, London W1, obtained a world wide freezing order made by Underhill J. against their former client, Ms G, in the sum of 502,699 on account of costs alleged to be owed by her. The application to continue the order was eventually heard by me on 25 April. It was opposed on behalf of Ms G on a number of grounds, in particular that Dean & Dean had no cause of action against Ms G when the order was made, that no sufficient risk of dissipation of assets had been shown, and that there had been a number of matters which had not been disclosed to Underhill J. which should have been. There is a further application by Dean & Dean that Ms G be ordered to disclose her assets outside England and Wales as well as within.
  2. Ms G gives her address as xxx London, which is her home in England. She has two children one of whom is in her teens and is being educated in England. The other is between one and two and is at present in Moscow, where her mother is also. Ms G is described as a citizen of Georgia, which is apparently from where her family originates. Her brother is IG who lives with his wife and children in England, also at B. B is worth many millions of pounds, and the family is alleged to be of considerable wealth.
  3. On 1 February 2007 Ms G instructed Dean & Dean to act for her in criminal proceedings which she was facing in the Blackfriars Criminal Court for causing death by dangerous driving and doing acts intended to pervert the course of justice. It is alleged that she was the driver of a vehicle which had collided with a pedestrian, killing him and that she had subsequently caused her vehicle to be broken up and disposed of. Her defence is that she was not driving her vehicle that night. Dean & Dean state that they have traced the taxi driver who took Ms G to her home, and that they have also traced persons to whom the actual driver of her vehicle, a Georgian, admitted that he was the driver. He has subsequently committed suicide.
  4. Dean & Dean were instructed by Ms G in place of Kingsley Napley. The trial was due to begin in mid February. It has been adjourned a number of times. On 2nd February 2007 Ms G signed Dean & Dean's Terms & Conditions. These included rates of 750 per hour for a partner, 500 per hour for a senior solicitor and 250 per hour for an associate solicitor. It is Ms G's case that she agreed to these exceptionally high rates because of the urgency of her position in early February 2007, and that once that urgency was removed, ordinary rates should have been charged. Kingsley Napley had charged 350 per hour for a partner.
  5. Ms G and her brother also instructed Dean & Dean to act for them in other civil matters. Substantial fees were incurred, some of them to very little effect - as it seems on what I have read. How this came about is in dispute. Ms G asserts that she acted on the advice of Dean & Dean, in particular that of the senior partner, Dr Mireskandari. He asserts that he acted on Ms G's instructions. Dr Mireskandari has not produced any attendance notes as to the advice he gave in connection with these matters.
  6. In September 2007 an application was made to the Crown Court to vary Ms G's bail so she might attend a memorial service for her father in Moscow and visit friends and family there. The variation was granted on terms that she provide security of 200,000, which money she paid, and that her brother, IG, stand surety in the same sum, which he has done. He was not required to pay the money, but to give his undertaking. He has since offered to pay the money. Ms G went to Moscow where she fell ill with pneumonia and was admitted to hospital. She was subsequently visited there by an English doctor, Dr. Norman, on 17 November 2007. He found that she was by then suffering from petit mal epilepsy and clinical depression. She has remained in Moscow. It is unclear to me for how much of the time she has been in hospital. The medical evidence is unsatisfactory. The latest report is that of Dr. C.R.A. Clarke, a consultant neurologist, instructed on her behalf. It is hoped that he will shortly visit Moscow on the joint instructions of Ms G and the prosecution. It is his opinion based on what he has read that a civil airline would be unwilling to carry Ms G and that it would be inappropriate for her to travel by train from Moscow to London.
  7. Between 2 February and 17 May 2007 Ms G paid Dean & Dean 304,000 on account of their fees. She also paid 50,000 on 13 November 2007, after she had gone to Moscow. The trial had been due to commence on 18 November, with an estimate of 3 weeks. It appears that Dean & Dean agreed brief fees for leading and junior counsel totalling 130,000. They were anxious to be put in funds for this and other outstanding fees. The outstanding fees included fees for their own work and for disbursements which included investigation agencies instructed in connection with the criminal case. Ten invoices for fees were produced dated 14, 26 (three), 27, 28, 29 (three) and 30 November 2007 - pages 7, 9, 17, 34, 83, 89, 90, 91, 100 and 115 of exhibit SM2. These total 618,977. The statement of account relied on for the total sum of 502,699 for which the freezing order was obtained is at page 117 of the exhibit and has some overlap with the invoices. In December 2007 Ms G paid a further sum of 49,000. It is asserted by her that this sum and the 50,000 paid on 13 November were paid on account of the brief fees. Dean & Dean applied them to other matters. On 14 December Dean & Dean were informed that Boardman Solicitors, the solicitors now acting for Ms G, were representing the family's interest. There was correspondence with Boardmans. By letter of 18 December Boardmans informed Dean & Dean that Ms G intended to seek detailed assessment of Dean and Dean's bills. On 25 December (which is not Christmas Day in Russia) Ms G sent an email which must have been drafted by Boardmans saying she intended to have their fees assessed, saying she would appoint a costs draftsman to advise her and asking what the investigator's, Haymarket, had done. On 4 January 2008 Boardmans asked for copies of the invoices. There matters appear to have rested until the freezing order was applied for.
  8. The freezing order made on 9 January 2008 was not served until 15 January. It is asserted on behalf of Ms G that this delay was so a cheque for 50,000 which Ms G had provided to Dean & Dean in disputed circumstances in February 2007 could be presented for payment. It appears that Dean & Dean made no record of the function of this cheque. It was dishonoured for lack of funds in the relevant account. Underhill J. was told that it was intended to present the cheque. An explanation has been provided for the delay which is wholly inconsistent with delay on account of the cheque. I should accept that explanation.
  9. Following the granting of the order, on 11 January 2008 Dean & Dean commenced assessment proceedings in the Supreme Court Cost Office in respect of 8 of the 10 invoices I have referred to in paragraph 7 and one further invoice. These assessment proceedings are continuing. An application made on behalf of Ms G to have them dismissed on the ground that the bills did not comply with section 69 of the Solicitors Act 1974 was rejected, but in terms that left the point open to her. In consequence Dean & Dean have applied to introduce substitute bills in some cases and to amend the bills in others. I was told that Ms G intends to ask that the bills which Dean & Dean have treated as being paid should also be assessed. But it does not appear that she has taken any steps towards that. Lastly, under this head, the Cost Judge has recently rejected an application by Dean & Dean for an interim payment under CPR 25.
  10. Three of the bills totalling 31,833 have been paid. They related to disputes concerning work done to B and were addressed to Berry Creek Overseas Development Limited, the company owning the property. Arrangements have also been made that Dean & Dean shall not be responsible for 131,125 relating to counsels fees. The sum that now remains outstanding is 341,000. Of that, in excess of 100,000 relates to fees claimed by enquiry agencies instructed by Dean & Dean in connection with the criminal proceedings. These fees have not been accepted by Dean & Dean. It is unclear what if anything has been paid by them. I was told that Haymarket have commenced proceedings against Dean & Dean.
  11. Ms G has belatedly given disclosure of her assets within the jurisdiction. The only substantial assets are sums totalling 65,000 in two bank accounts. Although Ms G had warning of the possibility of a freezing order she did not remove these monies.
  12. I think that this is a sufficient explanation of the background for me to come to the issues to which the application to continue the order gives rise. There are a number of further matters in dispute between the parties additional to those to which I have referred.
  13. The first issue is whether Dean & Dean had a cause of action against Ms G to support the order at the time it was made. There are essentially two points. The first and major point is that Ms G only became liable to pay fees when she was presented with an appropriate bill. The retainer signed by Ms G provided "The total shown as due on an invoice is a debt owed to this firm". However four of the invoices exhibited in SM were marked in manuscript "Pro Forma", including one bill for 446,307, and these and all save two others had a number preceded by 'P'. It appears to be accepted by Dr Mireskandari in paragraphs 28 and 30 of his affidavit of 22 April 2008 that the P stands for Pro forma. He has provided no explanation of what was intended by the manuscript "pro forma" or the use of the 'P' notation. Pro forma invoices are used in various situations, but the essence is that a pro forma invoice is one which does not require payment. So the argument is that there were no invoices requiring payment presented for payment and so there was and is no cause of action.
  14. There was no reference in Dr. Mireskandari's affidavit of 9 January 2008 to the pro forma nature of most of the invoices. It is clear, however, that in late November and December 2007 Dean & Dean were pressing for payment and they also sent Ms G the statement of account totalling 502,699 which I have mentioned. That was the sum which was required. That was very arguably sufficient to provide a cause of action. For that was the sum demanded and the invoices were relied on in support of it.
  15. Sections 69 and 70 of the Solicitors Act may bar a solicitor from bringing proceedings. The effect of section 69 is to bar a solicitor from bringing an action unless he has complied with sub-section (2) and for one month after he has done so. Section 70 provides that where within a month of the delivery of the bill an application is made by the client the court shall order the bill to be taxed and no action shall be commenced until the taxation is completed. Although no check seems to have been made by looking at the invoices delivered to B, it was submitted to me that the invoices did not comply with section 69(2)(b) because they were not signed by a partner. It is the case of Dean & Dean that a partner signs their invoices. It was submitted that the invoices did not comply with section 67 because it was not stated that disbursements which had not been paid were unpaid. It seems to me very arguable that these problems are capable in an appropriate case of being overcome under the provisions of section 69(l)(b). That enables the court to order that an action may be commenced within the month following delivery of the bill where there is probable cause for believing that the client is about to do an act which would tend to prevent or delay the solicitor obtaining payment. I was referred to Ralph Hume Garry v. Guilliam [2003] 1 All ER 1038 as to the need to avoid technicality where the client knew enough to decide whether to have the bill assessed.
  16. My conclusion is that the points raised on behalf of Ms G as to cause of action are technical rather than of substance, and that if a sufficient case was otherwise made out for a freezing order the court should not be deterred by them.
  17. The next point which was taken was as to the amount of the fees likely to be recoverable. There may be a reduction, perhaps a substantial reduction, but there is not certainty nor can any estimate be made. There is also the possibility of orders for costs being made in favour of either party, which will affect the balance of account.
  18. An applicant for a freezing order must support his application with "solid evidence" as to the risk of dissipation of assets: the Niedersachsen [1983] 2 Lloyd's Rep. 600 at 606-607 per Mustill J. The picture presented to Underhill J. was that Ms G had decided to remain in Moscow because she was fearful of imprisonment if she returned to face her trial and that it was in the light of that decision that she was declining to pay Dean & Dean's bills. There is evidence that her intention was to remain in Moscow, but I do not regard it as cogent. In his evidence Dr Mireskandari suggests that she may well not be ill and that she could travel. In short the foundation stone for the case as to risk of dissipation of assets is Ms G's continuing absence in Moscow. There are however strong reasons for accepting her evidence and that of her brother that she wishes to return to England, face her trial, and in due course apply for British citizenship - an option which will soon be open to her. She has strong ties to England and her elder daughter is still at school here. If she does not return to face her trial, she will be tried in her absence if the medical evidence is against her, and her chances of acquittal will be affected. According to Dean & Dean she has a good defence. If she fails to attend her trial and is convicted and sentenced to imprisonment, she will be a fugitive from justice. She has put up 200,000 for her bail and her brother has stood surety for the same sum. Further, since she went to Moscow she has made two payments to Dean & Dean. She has not removed the 65,000 she has in English banks although she had been warned of the possibility of a freezing order. On the contrary she and her brother have instructed Boardmans to challenge Dean & Dean's fees. They may succeed in that challenge in a greater or lesser extent, but one can see why they took that decision. It is of course a decision which involves them in further costs. It is to be contrasted with remaining in Moscow and doing nothing. All of this favours the conclusion that Ms G is not seeking to dissipate her assets to avoid her due debts.
  19. Dean & Dean rely on what is said to have been done in Moscow in October 2007 in relation to B to suggest to the contrary. B is owned by Berry Creek as I have previously mentioned. Berry Creek is registered in the British Virgin Islands. The holding company of Berry Creek is Lintern Holdings Inc, also registered in the British Virgin Islands. The three issued shares in Lintern are held by Heritage Nominees, and in October 2003 declarations of trust were entered into in favour of Ms G, her brother and her mother in respect of one share each. In October 2007 this was rearranged so that Ms G's mother apparently holds the whole beneficial interest. It is said that she provided the whole purchase price for B and that she insists on having the whole beneficial interest. That is the history in brief outline. Dean & Dean assert that the transaction in October was an attempt to dissipate assets. If it was, it is surprising that her brother gave up several millions of pounds as well. It can only be relied on for that purpose if Ms G had intended to flee and to remain in Moscow before she left this country. While I understand why Dean & Dean regard the transaction as suspicious, I do not think that it outweighs the matters I have referred to in the previous paragraph.
  20. I do not consider that a sufficient case is made out that Ms G intends to dissipate her assets in order to defeat Dean & Dean's claim. For this reason the freezing order must be set aside.
  21. In the light of that conclusion I can deal with the case made on behalf of Ms G that the order should be set aside for non disclosure more shortly. Thirteen matters in all were raised. I will take the more important in turn.
  22. a) That Underhill J. was not told that Ms G had paid 403,000 on account of Dean & Dean's fees but only 49,000. It was submitted that this was highly relevant to risk of dissipation of assets. In paragraph 38 of his affidavit of 9 January 2008 Dr Mireskandari refers to previous invoices up to 10 months old as having been paid. Page 3 of exhibit MS2 shows the payments. But apart from that paragraph and the exhibit there was no reference to 403,000. The skeleton argument before Underhill J. referred only to 50,000 and 49,000 and gave the impression that these were the only payments to have been made.
    b) That the problems with the invoices being pro forma was not referred to, nor that the bills included unpaid disbursements as to which substantial amounts were disputed by Dean & Dean. It is correct that these matters were not disclosed. It was submitted on behalf of Dean & Dean that Ms G was estopped from attacking the validity of the bills or invoices because she had asked for them to be assessed. I am not persuaded that by asking for an assessment she gave up any right to challenge the bills as bills: she was not making an election but protecting her position.
    c) That it was not drawn to the attention of Underhill J. that Dean & Dean were charging unusually high rates. This could be seen from the retainer and it could be seen from the computer print outs backing the invoices. But the Judge was not otherwise alerted to it.
    d) That Underhill J. was not told that Ms G had put up 200,000 for her bail and that her brother had stood surety in a similar sum. Dr Mireskandari's affidavit referred to the variation of bail to permit her to travel to Moscow, but it did not state the terms.
    e) That Underhill J was informed by Dr Mireskandari's affidavit that Ms G had control over Lintern and Berry Creek and B. It was however made clear in paragraph 40 that her mother also had an interest in Lintern. The Judge said that he had the impression that Ms G owned B. He was then told that Dean & Dean did not then know much about Lintern - which I presume was then their position.

  23. It was submitted on behalf of Dean & Dean that the issue was whether their case was fairly presented to Underhill J on 9 January. It was submitted that an applicant cannot foresee every matter that may later be raised. I accept both propositions. I think that each of the first three matters should have been drawn expressly to the judge's attention. I think that the combination of the three meant that the Judge got the impression that the case was far more straightforward than it was. Likewise the substantial bail figures should have been mentioned. Taking these matters together I consider that they provide a second ground for refusing to continue the order.


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