LI FU YAT TSO AND OTHERS v. GEORGE Y C MOK & CO (a firm)

HCA 2967/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2967 OF 2004

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J U D G M E N T

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Introduction

1.  Unfortunately this is one of those cases where the costs of the action are going to be completely disproportionate to the small solicitors’ bill of costs which has resulted in the Plaintiffs bringing the action.  I daresay that the losing party will be faced with a costs liability very much greater than that.

2.  The action comes about in this way.  The 1^st Plaintiff, which is a New Territories Tso, the 2^nd to the 4^th Plaintiffs being its managers and the remaining Plaintiffs its members, agreed with a property development company called Arta Properties Limited (“Arta”) to develop a plot of land which the 1^st Plaintiff owned at Yuen Long, N.T.  Their agreement was recorded in a Deed (“the Agreement”) dated 17 August 1992 [A72-83] which was drawn up by the Defendant, a firm of solicitors, who were instructed to represent the 1^st Plaintiff as well as Arta in drawing up the Deed and also in doing the necessary legal work which inevitably comes with a property development of this type.

3.  It is sufficient for me to refer to just a few of the provisions of the Agreement.  The background is that the 1^st Plaintiff and its members owned the land upon which indigenous New Territories individuals were permitted to build and own a house.  The specifications of such houses, as I believe is well known, must be of an area not exceeding 700 sq. feet per floor and must not exceed three storeys.  The parties agreed that the plot of land would be exchanged with Arta for a consideration of $550,000 and in addition the 1^st Plaintiff would be given three of the twelve houses which Arta would be permitted to build on the land.

4.  Clause 4 of the Agreement required Arta to deposit $1 million with the Defendant to hold as stakeholders as security against any failure by Arta to fulfil its contractual obligations in the building of these houses.  This amount, together with any interest earned on it, was to be returned to Arta upon successful completion of the building project, failing which both capital and interest would to be forfeited to the 1^st Plaintiff.

5.  Clause 3 of the Agreement [page 72] is important and so I will set out its material parts here.  They are as follows:

“In order to proceed with the said Development, the Developer [Arta] undertakes with the Owner [the 1st Plaintiff] as follows:
(a)	To pay all costs and expenses to be incurred in the said Development.  For the avoidance of doubt, such costs and expenses shall include:
	(1)	…
	(2)	…
	(3)
	(4)	Legal costs and disbursements payable to both the Developer’s solicitors and the Owner’s solicitors in connection with the said Development.
	(5)	All the expenses in connection with the said Development.”

6.  I should also set out Clauses 18 and 19 which recite that the Deed embodies the entire agreement and that it cannot be varied save by further written and signed agreement, of which there is none:

“18.   This deed embodies the entire understanding of the parties in respect of the matters contained or referred in it (i.e. including the security deposit and interest) and there are no promises terms, conditions or obligations oral or written express or implied other than those contained in this Deed.

and

19.    No variation or amendment of this Deed or commitment related to it shall be valid unless committed to writing and signed by or on behalf of the parties herein.”

7.  Having regard to the fact that it was the Defendant which had drafted the Agreement, it is not contested by it that it was fully aware of its terms and that it would have to look, at all events in the first instance, to Arta for payment of its fees.  This is amply confirmed by the fact that on a number of occasions it asked Arta for payment of professional fees arising out of the development which Arta duly paid.  This having been said its approach would seem to be best captured in paragraph 2 of Mr Mok’s (the Defendant’s principal) 5^th affirmation dated 1 April 2006.

8.  This was affirmed sometime into the litigation, as its number suggests, by which time there would have been sufficient time for Mr Mok to refine his thoughts on the matter.  Paragraph 2 says this:

“Though my firm was initially acting for the 1^st Plaintiff, the 1^st to 4^th Plaintiffs together with Arta Properties Ltd (“Arta”) had been jointly instructing my firm since August 1992.  From then onwards, both the 1^st Plaintiff and Arta were my joint clients.  I considered that both of them are legally responsible for my fees.  I was however given to understand that Arta was primarily responsible for providing all the costs incurred pertaining to the Development Project on Lot No. 539 in D.D. 112.  There were never any discussion amongst myself and my two clients as to what will happen if Arta does not pay for my bills.  I have never intended to relinquish my rights to seek payment of my fees from the 1^st Plaintiff in the event that Arta does not honour its payment obligation.”

9.  Given the way that the argument before me has developed, I will need to decide whether this interpretation of the agreement by Mr Mok is correct.  What is said on the Defendant’s behalf, and Mr Mok has also said so in his oral evidence, is that as the Defendant is not a party to the Agreement between the 1^st Plaintiff and Arta and whilst this Agreement may well regulate the situation between the two contracting parties it cannot and does not restrict the Defendant, as the solicitors doing the legal work for the contracting parties for the purposes of the property development, to only looking to Arta for payment of its fees.  Whilst the Defendant was prepared to follow the terms of the Agreement and in the first instance look to Arta for payment of its fees, it is not prevented from looking to the 1^st Plaintiff for such payment in the event that Arta fails to pay its fees nor, indeed, in any event.  Should the Defendant obtain payment from the 1^st Plaintiff, it would then be open to the 1^st Plaintiff to recover the payment of those fees from Arta by, if necessary, suing it under Clause 3(a)(4) [see para. 4 above] of the Agreement.  This being so because, as between the 1^st Plaintiff and Arta, it is Arta which is liable to pay for all legal fees under the Agreement.

10.  A contrary position is taken by Mr Harris SC, who appears for all the Plaintiffs.  He submits that before the Defendant can be entitled to look to the 1^st Plaintiff for payment of such fees it would have had to make that position crystal clear to the 1^st Plaintiff, represented as it was by the 2^nd, 3^rd and 4^th Plaintiffs, all of whom are simple New Territories folk with no knowledge of such matters.  Where this was not done the Defendant can only look to Arta for its fees in accordance with the terms of the Agreement.

11.  Having set out the parties respective positions on this aspect, I propose to leave the matter there for the moment and continue with the narrative of events that have given rise to the dispute.

The Events of 1997 and Thereafter

12.  Unhappily in 1997, the 1^st Plaintiff and Arta fell out.  On 29 July 1997, the Defendant, writing as the 1^st Plaintiff’s solicitors, wrote to Arta’s then solicitors [page 254 bundle A] alleging breaches of the Agreement complaining of a number of unauthorized deviations from the Agreement by Arta and threatening proceedings and forfeiture of the $1 million security deposit.  Complaint is made by Mr Harris that the Defendant should not have written this letter.  It was after all the solicitor to both parties to the Agreement and it was not right that it should have continued in the matter representing one client against its former client.  Mr Harris says that it should have withdrawn completely.  It seems to me that this particular issue is not one that I need to dwell upon because it does not really assist me in resoling the real point in the case which I shall come to shortly.

13.  The detail of the dispute between the 1^st Plaintiff and Arta is also something which I need not go into.  Suffice it to record that it culminated in Arta suing the 1^st Plaintiff over a number of issues arising from the Agreement itself.  The Defendant then continued to represent the 1^st Plaintiff in that High Court action which proceeded at a rather slow pace.  In November 2004, the 1^st Plaintiff then decided to change solicitors and instructed Clarence Wong, Cheung and Liu (“CW”), who are also its solicitors in this action, to represent them in defending Arta’s action against them.

14.  CW then wrote to the Defendant on 27 November 2004 [A94] and asked it to send them all the papers in their possession relating to Arta’s High Court action against the 1^st Plaintiff.  The Defendant did what it was asked to do save for three letters dated 29 July 1997, 22 August 1997 and 21 January 1998.  These letters are now at pages 254, 259 and 261 of bundle A.

15.  On 8 December 2004 [A96] the Defendant responded substantively and at length on matters concerning the Development and the dispute with Arta and concluded by saying that it would let CW have the letters that they were asking for when it had time to go through the various files.  Six days later, on 14 December 2004, CW responded, in my view intemperately in a manner that was bound to cause upset, and I am convinced that it is this letter which has resulted in this, quite needless, litigation [A99].  Given its significance it contents bear repetition:

“We refer to your letter of 8^th December 2004.

With respect to the second paragraph, we do not understand your assertion that the copy letters requested by ourselves were ‘exchanged in the previous conveyancing file’.  What do the words in inverted commas mean. Are you suggesting that the exchange of correspondence was contained in a conveyancing file, or that it was contained in some other file but was transferred to the conveyancing file.  Either way the subject letters had nothing to do with conveyancing and your explanation is obfuscatory and unacceptable.

Furthermore, we reject your explanation as to insufficiency of time due to so-called public appointments/commitments.

Your attention is drawn to s.23 of the Hong Kong Solicitors Guide to Professional Conduct which states:

‘On termination a solicitor should, subject to any lien, promptly deliver to the client or his new solicitor all pagers and property to which the client is entitled or hold them to his order and account for all funds of the client then held by the solicitor.’

You are not claiming any lien and your obligation as to promptness is not discharged by supplying us the requested documents which it suits your convenience.  You make it sound as if our request is too onerous, whereas, if documents in your files are kept in chronological order, as they should be, identifying and extracting the requested letters would be simple exercise.

Apart from the documents we request before, we also notice that an allegation of D2 to D10 had held a meeting at which a resolution was passed, of which was different to the one relied on by the Plaintiff (‘the so-called supplemental agreement).  We need such documents urgently as well.

Furthermore, as far as we understand, the Plaintiff and the 1^st Defendant selected villagers respectively and assigned land to them to enable them to apply for new grants and permission to build small houses.  There were at least 3 villages selected by the 1^st Defendant and they have assigned contracts (apart from the Assignments) either with the Plaintiff or with the 1^st Defendant which specified terms and conditions for assigning the land under their names.  We are informed that these contracts were executed at your office sometimes after the 1^st Agreement.  We would like to have the names of these 3 villagers and have copies of their contracts with the Plaintiff and/or the 1^st Defendant.

We are prepared to give you till Monday 20 December to accommodate our request failing which we shall seek an order from the court with costs.”

16.  Where up till now the Defendant had been perfectly co-operative it changed its tune completely.  Mr Mok, its principal, did not take kindly to being told what his professional obligations were and how he should be behaving over this matter.  If CW could be ‘shirty’ so could he.  Battle was well and truly joined.  The Defendant responded with a letter at A102.  It took in just about everything that could be argued over.  This is what it said:

“We refer to your letters of 14^th and 16^th December 2004.

We are very surprised that you would have made such allegations and issued such offensive letter to us, contrary to Principle 11.01 (Commentary No. 4), without verifying the facts or checking the relevant practice rules and regulations.  Your writer has almost completely damaged the good working relationship with us, unless you tender an apology forthwith. [Emphasis provided]  Please let us set out the facts of the matter as follows:

1.    On the morning of 13^th December 2004, Mr Lee Lin Wan (‘Mr Lee’) telephoned our Mr John Chow and asked him about the matters concerning the property development at Lot No. 539 in D.D.112.  In particular, Mr Lee would like to know the names of the managers who would be the ultimate owners of the three village houses to be erected thereon etc.  Our Mr Chow told him politely that we could not release any information, since the previous instructions from the managers of Li Fu Yat Tso to us were to keep everything confidential and not to disclose the same to any member of the Tso without the consent of the managers.  Mr Lee then asked Mr Chow to ask our Mr G.Y.C. Mok to telephone Mr Li Shu Fong, a manager of the Tso, on 24888979 and to let him know about the proposed ownership of these three houses;

2.    Mr Chow then informed our Mr G.Y.C. Mok who is still the solicitor in charge of Li Fu Yat Tso’s matters with us.  According to our file records, we are still currently acting for Li Fu Yat Tso in respect of the property developments in Lot No.539, D.D.112 (the developer is Arta Properties Ltd.), Lot No.1111, D.D.112 (the developer is Magnacarta Company Ltd.) and Lot Nos. 1372-1375, D.D.112 (the developer is Kennis Ltd.), although we have ceased to act for the Defendants in the above Action (the proceedings against Li Fu Yat Tso and its managers were in fact stayed).  As we were perfectly entitled to contact our own client in respect of the aforesaid development project(s), our Mr G.Y.C. Mok then spoke to Mr Li Shu Fong, as instructed, over the telephone and told him about the proposed ownership of the three village houses to be erected on Lot No.539, D.D.112, as well as briefing him on the other two development projects etc, as the major shareholder of the 3^rd development project went bankrupt and that Madam Fong Kwok Shan took over the control of the entire company etc.  The latter two development projects have nothing whatsoever to do with Arta Properties Ltd.;

3.    Mr G.Y.C. Mok also tried to remind Mr Li Shu Fong of the previous instructions of the director of the 1^st developer, i.e. Li Fu Yat Tso did not have to pay any legal costs and expenses for the development project and that our costs and expenses shall be deducted from the interest earned on the security deposit of HK$1 Million etc.  Our Mr G.Y.C. Mok also informed Mr Li shu Fong that, in view of the financial difficulty of Kennis Ltd., all our legal costs and expenses (HK$100,000.00 odd) have not yet been paid by the 3^rd developer or Madam Fong Kwok Shan etc.

As you should know by now, the above telephone conversation between our Mr G.Y.C. Mok and Mr Li Shu Fong had nothing to do with the above High Court Action.  Although Mr Li Shu Fung informed us that he was not aware of the arrangement with the director of Arta Properties Ltd. when such security deposit was paid to us, the facts remain the same, i.e. Li Fu Yat Tso’s security remains unchanged and its interest has not been prejudiced; Arta Properties Ltd. is responsible for all our legal costs and expenses which are to be deducted from the interests earned on such security deposit and we have a legal lien on the relevant title deeds and documents and on the interest so earned.

As we are entitled to a lien on the conveyancing documents until our costs and expenses are fully paid, it is not appropriate, at this stage, for us to extract the relevant letters from the conveyancing files, as requested by you in the second paragraph of your letter of 27^th November 2004.  However, we now send you herewith the draft Witness Statements concerning the above High Court Action, as requested by you under the last paragraph of your letter dated 16^th December 2004, the receipt of which please acknowledge. [Emphasis provided]

In accordance with the previous instructions given to us by Messrs Chan & Tsu (who told us that they had obtained your prior consent), we had instructed our banker to transfer the entire security deposit together with the accrued interests to a savings account specifically opened in the name of Li Fu Yat Tso on 13^th December 2004, upon the maturity of the said deposit together with accrued interests, with Hong Kong and Shanghai Banking Corporation.  A copy of the savings account passbook is enclosed for your reference.

In order to avoid expensive counsel fees being incurred on the proposed Inter-pleader Summons which will not be in the best interests of your client and Arta Properties Ltd., we hope you will properly advise your client to approach the matter sensibly and to have this minor dispute resolved amicably, since your client’s interest, so far as the security deposit is concerned, has not been prejudiced in any way.  If we cannot obtain the necessary written instructions from both Arta Properties Ltd. and Li Fu Yat Tso to settle our costs and expenses, we shall have no alternative but to pay the security deposit into the Court, after obtaining an appropriate Order.

We hope we have made the position crystal clear to you.”

17.  I am afraid to say that there was no recovering from that exchange of correspondence with the result that CW had to advise the 1^st Plaintiff, which was by then in urgent need of all the papers to comply with a deadline on directions given by the court in its litigation with Arta, to bring these proceedings to oblige the Defendant, which was now asserting a lien, to release to it the remaining papers, which really only amounted to these three letters, so that it could comply with the interlocutory orders in its action with Arta.

The Course of the Present Action

18.  In the ordinary course of events, as Mr Mok has rightly explained in his evidence, when a party changes solicitors and its new solicitors ask the previous firm of solicitors to let it have the papers, the newly instructed firm will provide an undertaking to ensure that in due course it will see to it that the previous solicitors’ fees will be settled by the client.  This ensures that delay, in effective representation of the client, is kept to a minimum.

19.  Unfortunately in this case the parties were not able to co-operate.  With the deadline for complying with directions in its action against Arta fast opproaching the Plaintiff brought this action to compel the Defendant to handover the papers that it needed.  There were interlocutory proceedings before me at the end of December 2004 which resulted in the Defendant handing over the necessary papers leaving over the critical issue to be resolved later as to whether the Defendant had a lien over the papers.  If I answer that question in the Defendant’s favour then the Plaintiffs will have to pay the Defendant’s outstanding bill of costs in the sum of $42,000 [A/144] and the costs of the action which, as I have already observed, will be very much greater than that.

The Law

20.  Mr Harris has in the course of a very careful submission drawn to my attention the principal authorities on when a lien will come into existence in favour of a solicitor over the papers relating to work done for his client.  The position it seems to me is perfectly clear.  The difficulty in this case arises from the application of the facts to these legal principles.  I do not need to go beyond Corderoy on Solicitors for the relevant principles.  In this instance, I am only concerned with what is generally referred to as a “retaining or general lien” which is a right to retain property already in the solicitors’ possession until he has been paid his costs.  Lord Evershed M R in Barrett v Gough-Thomas [1951] Ch 242 at 250 described it thus:

“It is a right at common law depending … upon implied agreement.  It has not the character of an incumbrance or equitable charge.  It is merely passive and possessory — that is to say, the solicitor has no right of actively enforcing his demand.  It confers upon him merely the right to withhold possession of the documents or other personal property of his client or former client …  It is wholly derived from and therefore co-extensive with the rights of the client to the documents or other property.”

Corderoy at page 237 indicates the extent of a lien as follows:

“The lien attaches on all deeds, papers, or other personal property which come into the solicitor’s possession in the course of his professional employment with the sanction of the client and are the client’s property, …”

The text also makes clear that the lien is limited to costs due in respect of work done on the client’s instructions. [Page 237 III]

“The lien is limited to costs due to the solicitor in respect of work done on the instructions of the client.  Thus where a solicitor does work and obtains a lien on the client’s documents he cannot retain those documents until he has been paid not only is costs due from the client but also costs due from a firm in which the client is a partner. … Being a general lien it extends to all costs due to the solicitor and is not limited to costs incurred in connection with the particular documents in question.  The lien cannot arise until the costs are due.”

Does a Lien Arise on the Facts?

21.  Subject to one matter which comes from the final sentence of the last passage in Corderoy which I have just cited to which the case of Re Birmingham Savage v Stannard (1959) Ch 253, may apply and which I will return to in due course, I propose to look at the facts, which are not entirely clear-cut, to decide whether a lien is available to the Defendant.

22.  This question has been complicated firstly, by the terms of the Agreement which places the duty of paying all legal expenses on Arta and secondly on the events after 1997 when the 1^st Plaintiff and Arta fell out and the Defendant continued to represent the 1^st Plaintiff against Arta.

23.  Put shortly what Mr Fung SC, who appears for the Defendant, submits is that on the evidence as it has developed the lien is in respect of work done for the 1^st Plaintiff from 1998 in respect of its dispute with Arta and that this cannot possibly be referable to the work done in respect of the Agreement between Arta and the 1^st Plaintiff.  He also submits, and this really comes from Mr Mok himself, that in any event even if the work related to the Agreement the Defendant is not precluded from looking to the 1^st Plaintiff for payment.  Whilst the Agreement places the obligation on Arta to pay all legal fees, that is an obligation between the two contracting parties — it cannot bind the Defendant or restrict it to only looking to Arta for payment, this despite the fact that in every instance prior to this dispute it had only submitted its bill to Arta for payment.  I will attempt to provide an answer to these questions in turn.

Can the Defendant Look to the 1^st Plaintiff for Payment for Legal Work which is Related to the Agreement?

24.  The short answer, in my judgment, is yes — it can.  It is clear that the Defendant was jointly instructed by Arta and the 1^st Plaintiff to do the legal work on the property development.  The Defendant following the terms of the Agreement only billed Arta and was paid by it.  This having been said I am satisfied that not being a party to the Agreement itself, and nobody has suggested otherwise, it seems to me that where it had been jointly instructed by Arta and 1^st Plaintiff to do the legal work covered by the subject matter of the Agreement, that the ordinary rules between solicitor and client applied to both the 1^st Plaintiff and Arta.  This being so the Defendant could have, as a matter of contract between solicitor and client, looked to either or both Arta and the 1^st Plaintiff for its fees.  I appreciate that as a matter of convenience and expected practice it would have been asked to send all its bills to Arta.  I am sure that if it had sent the 1^st Plaintiff an account it would have been told to send it to Arta for settlement in accordance with the Agreement, but such a practice would not and could not override the contractual position whereby both Arta and the 1^st Plaintiff would have been liable to pay the Defendant for all work done by it under the Agreement.

25.  This would be sufficient to dispose of the matter in the Defendant’s favour should it be the case that the bill at A/144 relates to work carried out by the Defendant under the Agreement.  The Plaintiffs say that it does and the Defendant says that it does not, it being work done after the breakdown of the relationship between the 1^st Plaintiff and Arta when the Defendant was then only representing the 1^st Plaintiff in order to protect its interests, as Mr Mok has described in his evidence.

26.  Unfortunately for the Plaintiff, having regard to my views on the contractual position between the Defendant and the two contracting parties under the Agreement, which I have ventured to explain in the proceeding paragraphs, the Plaintiffs must be taken to have failed in this action on their own case.

Do the Bill and the Papers Relate to Work under the Agreement?

27.  Mr Harris’ primary contention is that the advice given to the Plaintiffs by the Defendant after the breakdown of their relationship with Arta is also covered by the Agreement and that in such circumstances Arta should be responsible for their fees.  I have just held that the 1^st Plaintiff is at least concurrently liable to the Defendant for all work done by it in respect of the Agreement.  It follows therefore that if I were to hold that this legal work related to the Agreement then the Plaintiffs must fail for that reason.  Nevertheless, Mr Fung submits that this advice was not pursuant to the Agreement but separate advice following the breakdown of the relationship between Arta and the 1^st Plaintiff.  This is Mr Mok’s evidence.  Mr Harris submits that when one looks at the relevant part of the bill, the element at the top of the bill for $27,000 already having been settled by Arta, it is too vague to come to any conclusion that this does not relate to the property development covered by the Agreement.

28.  I do not think this can be right.  On its face, the top part of the bill clearly relates to the development when it was ongoing and before the breakdown of the relationship between Arta and the 1^st Plaintiff.  The bottom part speaks of the period from 1998 to 2004.  It is quite impossible to somehow relate this back to the Agreement as Mr Harris has bravely suggested.  This all very clearly relates to advice given by the Defendant to the 1^st Plaintiff and its officers in its dispute with Arta.  I accept Mr Mok’s evidence in this regard.  I also accept what he has said about having previously done work for the 1^st Plaintiff on other matters for which his firm had been separately paid by the 1^st Plaintiff.

29.  I find as a fact that this was legal advice after the breakdown with Arta for which the 1^st Plaintiff must be taken to have given separate instructions to the Defendant who were now separately representing them in the dispute with Arta and for which they, perfectly reasonably, were expecting to be paid.  This I believe to be the correct basis for the lien which went to protect the Defendant’s position in respect of their work for the Plaintiffs as evidenced in the lower part of the account for $42,000 [A/144].

30.  This being the case, the Defendant must succeed in the action.  But even if I am wrong in my interpretation of this account for $42,000 and this can properly be said to be work relating to the property development itself and thereby covered by the Agreement, the Defendant is still able to assert a lien on the papers as against both Arta and the Plaintiff for the reasons that I have already provided.

Miscellaneous Matters

31.  Mr Harris has relied on the case of Re Birmingham (decead) (supra.) to support his submission that as no bill of costs had been rendered, the one relied on at A/144 is dated 13 January 2005 which is after the lien had been asserted by the Defendant, no lien could arise and therefore the Defendant had no warrant to refuse to handover the papers.  In my judgment Re Birmingham is a different situation.  Crucially in that case the work had still not been completed and so no lien could be asserted and secondly, as Mr Fung has correctly pointed out, the solicitor in that case did not have possession of any documents upon which a lien could be exercised.  In such circumstances, this case does not help Mr Harris and, as Mr Fung submits, it would be very curious indeed if a solicitor who had done much work for a client and was asked to pass over papers as a matter of urgency to another solicitor but had not had time to draw up his bill, could then be said to have no lien on those papers.  It is for this sensible reason that solicitors will pass over papers on an undertaking that the incoming solicitor will see to it that its fees are paid.  I hold that it is not the law that a bill needs to be prepared before a lien can be asserted.  What is required is work actually done and the possession of papers upon which the lien can be exercised.

32.  Finally, in the course of the argument, I had asked Mr Harris whether the Defendant might have somehow waived its right to seeking payment from the Plaintiffs but virtue of its conduct in always looking to Arta for payment for work done.  Mr Harris has sought to address an argument in support of such a case but, I am afraid to say, the evidence simply cannot support such a conclusion.  In any event, waiver cannot run in respect of the work subject to this particular bill for $42,000 because it was all work done separately for the 1^st Plaintiff and even if it were to have related to the property development covered by the Agreement, the fact that the Defendant had directed all its bills to Arta, as contemplated by the Agreement, cannot be taken as an indication that it had “signed-off” on its right to obtain payment from the 1^st Plaintiff.

Conclusion

33.  In the circumstances, where I have found that a valid lien was exercisable on these papers against the Plaintiffs they must now pay the Defendant’s account for $42,000 against their undertaking to do so given to the court on 31 December 2006.  The amount itself being, in my view, entirely reasonable.  As this is the outcome the Defendant must have its costs of the action against the Plaintiffs to be taxed on a party and party basis.  The order for costs will be an order nisi.  If I have overlooked any other costs which I should have dealt with I would ask the parties to draw that to my attention.