Fox (John) v Bannister, King & Rigbeys (Note)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NICHOLLS,THE MASTER OF THE ROLLS |
| Judgment Date | 19 December 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J1219-3 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 86/1158 |
| Date | 19 December 1986 |
[1986] EWCA Civ J1219-3
The Master of the Rolls
(Sir John Donaldson)
and
Lord Justice Nicholls
86/1158
1984 F. No. 1928
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE TIBBER, sitting as a Deputy Judge of the High Court)
Royal Courts of Justice.
MR. A. CRIPPS, Q.C. and MR. S. COOPER (instructed by Messrs. Kidd Rapinet Badge & Co.) appeared on behalf of the (Plaintiffs) Respondents.
MR. R. TOULSON, Q.C. and MR. I. HUGHES (instructed by Messrs. Herbert Smith & Co., London agents for Messrs. James Chapman & Co. of Manchester) appeared on behalf of the (Defendants) Appellants.
This is a dispute between two firms of solicitors, both of whom at various times acted for a Mr. Geoffrey Watts. The issue concerns a solicitor's undertaking said to have been given in 1982 by Mr. J.W. Bannister, a partner in the defendant firm, to Mr. John Fox, who is the senior partner of the plaintiff firm. Before the court is an appeal from a decision, given on the 4th October, 1985, of His Honour Judge Tibber sitting as a High Court judge.
From about the middle of 1981 the plaintiff firm, which I shall refer to simply as "John Fox", acted as solicitors for Mr. Watts and companies of his in various pieces of litigation, all of which eventually were compromised in July 1982. A substantial amount of complicated legal work had been involved, and John Fox's taxed fees and disbursements, including value added tax, amounted to £59,311. Mr. Watts paid sums totalling £27,760 on account.
Mr. Watts' previous solicitors had been the defendant firm, to which I will refer as "Bannisters". Mr. Watts had been a client of that firm for some time. When John Fox started to act for Mr. Watts they did not take over the conduct of all Mr. Watts' affairs, and it was Bannisters, and not John Fox, who acted for Mr. Watts in selling two properties of his. One of these was known as King Street Coach Station, Stourbridge. The other was 14 Cemetery Road, Lye, Stourbridge.
Mr. Fox was very anxious about his lack of security for his firm's costs. His firm had incurred a substantial bank overdraft during the litigation. In February 1982 Mr. Fox obtained from Mr. and Mrs. Watts a charge over the Cemetery Road property, to secure his liabilities to John Fox, but that charge ranked behind a first charge granted to a bank and it seems there was or will be no surplus remaining after discharging the liabilities to the bank. It seems that Mr. Fox also obtained a charge over the King Street property but that this was never registered.
In 1982 the King Street property was sold, but part of the purchase price was retained pending the carrying out of demolition works on the site. In July 1982 Mr. Fox obtained from Mr. Watts a form of authority signed by him and addressed to Bannisters. It read as follows:
"I Hereby authorise and request you to give an Undertaking to account to Messrs. John Fox, Solicitors, of P.O. Box No. 2, Broadway, Worcestershire for the balance of the Retention moneys in connection with the sale of the King Street Garage and also the balance Proceeds of Sale of the Cemetery Road property."
On the 22nd July, 1982 John Fox sent that form of authority to Bannisters with a request for Bannisters' undertaking. Despite reminders from John Fox, the undertaking was not forthcoming.
By the end of September the demolition work was finished. On the 29th September Mr. Fox spoke to Mr. Watts. Mr. Watts, it seems, had had second thoughts about applying the balance of the price of the King Street property in paying John Fox's costs and disbursements and was considering using the money as a deposit for the purchase of an airfield. On the same day Mr. Fox wrote an agitated letter to Mr. Watts, reminding him of how much was owing, and pointing out reasons why Mr. Watts could not embark on the purchase of the airfield. Mr. Fox insisted that no part of the balance of the sale price should be used for that purchase until his firm's costs had been paid, and he told Mr. Watts that he was asking Mr. Bannister to account to Mr. Fox for the proceeds "in accordance with the irrevocable authority he holds."
I now come to the crucial day, the 30th September. According to the undisputed affidavit evidence, on that day Mr. Bannister met Mr. Fox and gave him a cheque for £11,500. Mr. Bannister retained £18,000, representing the balance of the proceeds after deducting Bannisters' own costs. Mr. Bannister retained that sum in accordance with instructions given to him by Mr. Watts. Mr. Bannister told Mr. Fox that he would not part with that sum of £18,000 without referring to Mr. Fox. When giving Mr. Fox the cheque for £11,500 Mr. Bannister also handed to Mr. Fox a letter on Bannisters' headed paper, the material part of which read as follows:
"…this leaves a balance in hand of £29,553.10 as I told you Geoff [Watts] wanted me to retain the £18,000 and I enclose a cheque for £11,500.00 in your favour. I see your letter of the 29th September and no doubt you and Geoff will sort out as to the £18,000 which is still in my account and which of course I shall retain until you have sorted everything out."
On the following day Mr. Fox wrote to Mr. Bannister thanking him for his efforts. He sent Mr. Bannister a copy of a further letter he had written to Mr. Watts, on the 30th September, in which he had said that unless Mr. Watts authorised Mr. Bannister to pay over to Mr. Fox the £18,000, he (Mr. Fox) would do no further work for Mr. Watts or his companies and would commence proceedings to recover the balance due. Mr. Fox commented to Mr. Bannister that so far there had been no response from Mr. Watts, and added that he would be grateful if Mr. Bannister would kindly retain the £18,000 pending resolution of the problem.
Mr. Bannister's response to that letter, on the 4th October, was to inform Mr. Fox that he had told Mr. Watts that he would not part with the £18,000 until Mr. Fox and Mr. Watts had "decided what to do about this."
Unfortunately Mr. Fox was unable to sort out the position with Mr. Watts. On the 18th October Mr. Watts wrote to Mr. Bannister asking for payment of the £18,000, which he proposed to use as a deposit for the purchase of the airfield, and three days later this was followed by a further written demand, delivered by hand, from another firm of solicitors, Cove & Company, acting for Mr. Watts.
Meanwhile, on the 19th October Mr. Fox had written to Mr. Bannister asking for the release of the money to him in view of the original authority given by Mr. Watts in July. On the 21st October he followed this up with a letter asking Mr. Bannister under no circumstances to part with the £18,000.
By now Mr. Watts' financial problems had become more pressing: an auction sale held on the 20th October of other properties belonging to Mr. Watts or his companies had been unsuccessful, and a winding up petition had been presented against one of his companies. Mr. Watts was threatening to hold Bannisters liable for the loss if they held on to the £18,000 and as a result his company was forced into liquidation.
Bannisters considered the matter and decided they had no alternative but to hand over the money to Mr. Watts. Whereupon, without reference to Mr. Fox, they did so.
John Fox then made efforts to recover their unpaid costs from Mr. Watts and his companies but without success. None of them has any money. Mr. Watts is now bankrupt.
On the 11th December, 1984 John Fox issued an originating summons against Bannisters, seeking an order for payment of the sum of £18,000 wrongfully released in breach of an undertaking given on the 30th September, 1982 or, alternatively, damages for breach of the undertaking. This was supported by an affidavit sworn by Mr. Fox in December 1984, and a short further affidavit sworn in September 1985. Bannisters adduced no evidence.
The judge decided that the letter of the 30th September, 1982 from Mr. Bannister to Mr. Fox contained an undertaking, which had subsequently been broken, and that Bannisters should now put John Fox in the same position as if the undertaking had been honoured. To achieve this he ordered that Bannisters should pay £18,000 into court or into a joint deposit account to the credit of Mr. Watts, that sum to remain there until further order of the court. He granted a stay pending appeal.
The basic principles applicable in the present case are not in doubt. The jurisdiction being invoked here is the inherent jurisdiction which the Supreme Court has over solicitors, who are its officers. It is a jurisdiction which is exercised, not for the purpose of enforcing legal rights, but for the purpose of enforcing honourable conduct on the part of the court's own officers: see In re H.A. Grey [1892] 2 Q.B. 440, per Lord Esher M.R. at page 443.
One of the areas in which this principle falls to be applied is the enforcement of undertakings given by solicitors in their capacity as solicitors. As officers of the court solicitors are expected to abide by undertakings given by them professionally, and if they do not do so they may be called upon summarily to make good their defaults: see United Mining and Finance Corporation Ltd. v. Becher [1910] 2 K.B. 296, per Mr. Justice Hamilton at page 305. Where a solicitor, directly or indirectly, still has it in his power to do the act which he undertook to do, the court may order him to do that act. Where the solicitor does not have it in his power, he may be ordered to...
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