The court considers whether a third-party debt order can be obtained over funds held in a solicitor’s client account

In the case of BCS Corporate Acceptances Ltd and others v Terry [2018] EWHC 2349 (QB) it was considered whether an application for a third party debt order was appropriate against sums held in a solicitor’s client account on account of unbilled fees.

The claimant made an application for a third-party debt order as it had the benefit of a judgment that remained unpaid. The claimant had initially obtained a freezing injunction and subsequently became aware that the solicitors acting for the Defendant held substantial funds in their client account.

The court granted an interim third-party debt Order which the defendant sought to challenge. One of the reason behind the challenge was the defendant intended to use some of the funds held in his solicitors client account to provide security of costs for his appeal. The Defendant sought to set aside the interim third-party debt order. The defendant argued that the interim order was obtained as a result of an abuse of process and that the claimant was attempting to deprive him of funds that were needed to pay his legal costs. The Defendant further alleged the sums that had been paid into the solicitors client account had been lent to him for his billed and future solicitor’s costs.

The application to set aside the interim third-party debt order was dismissed by judge Morris J. The judge did not accept that an abuse of process had taken place.

The judge went on to consider if funds held in a solicitors client account could be subject to a third-party debt order. The judge held the determining factor is whether the solicitor’s fee had been billed. If the solicitor had rendered a bill it would be entitled to seek a set off. If the sums are in a solicitor’s client account but a bill had not been rendered prior to service of an interim order or if the funds are being held on account for future costs then an order could be made.

In summary, unless an invoice has been rendered, money standing in a solicitor’s client account, even if held on account and fees have been incurred but a bill not yet rendered, then an interim third-party debt order could be obtained.

A full hearing was ordered on the question of whether the funds had been lent to the defendant and to decide if the interim charging order should be made final.

You can read the full judgment here.

For advice on whether a third party debt order would be a suitable method to enforce an unpaid judgment that you have obtained, telephone us on 0333 2200244 or email Alexander Neale at amn@debenhamsottaway.co.uk.