The Gazette 1958-61

45 / 338

SAN FRANCISCO : Washington, Oregon, California,
Nevada, Arizona, Utah, Idaho, Montana, Wyoming,
Colorado, New Mexico, and Alaska-
WASHINGTON : Washington D.C.
DECISIONS OF PROFESSIONAL
INTEREST
Solicitor s lien on papers upon change of solicitor upheld
on appeal.
THE facts of this case were reported in the Gazette
of July, 1958, page 30.
On 29th July, 195 Court of Appeal (Hodson,
Morris and Sellers, .) reversed Wrangham, J.,
and held that the solicitor concerned was entitled
to a lien on the papers until his costs had been paid.
Hodson, L. H., delivering the judgment of the
Court said that there was no doubt that a solicitor
who was discharged by his client during an action
otherwise than for misconduct could retain any
papers in the cause in his possession until his costs
had been paid (In re Rapid Road Transit Co.,
119091, i Ch. 96).
The Judge (in the Court below), however, while
recognizing the rule as being unqualified where no
other parties were interested held that divorce
proceedings were in the same catagory as actions in
which third parties were interested having regard to
the public interest involved and therefore disregard–
ed the lien.
It was true, as he said, that divorce affected status
and the public interest was involved, but the fact
remained that divorce proceedings inter paries were
still litigation and their Lordships could not see any
compelling reason why the rights of solicitors should
in such cases differ from their rights in other cases.
The litigant need not change his solicitor without
good cause. It would be odd if he were in effect
able to get solicitors' work done for nothing by the
simple expedient of changing his solicitor as often
as he chose, leaving a trail of unpaid costs in his
wake and demanding the papers without payment
when he had no just cause to complain of the conduct
of the solicitors instructed and discarded.
If he was hampered in the presentation of his case
to his own disadvantage by having changed his
solicitors without good cause the public interest did
not require that a litigant who sought to put away
his wife should be in a better position to obtain
documents over which the solicitor had a lien than
a litigant in any other civil proceedings. This lien
should be preserved in the public interest in order
that litigation might be properly conducted with
due regard to the interest not only of litigants but
also of the officers of the Court who serve those
interests. (Hughes v. Hughes, The Times, 30th July,
1958.)
In damagesfor loss of earnings tax position should be taken
into account.
The plaintiff was injured by reason of the negli–
gence of the defendants. The trial judge awarded
him .£37,720 damages in respect of loss of earnings
actual and prospective, paying no regard to the
income tax and surtax he would have had to pay
on the amount of such earnings had he not been
injured. The judge alternatively assessed these
damages at £6,695 taking such hypothetical tax
into account. It was agreed that the plaintiff would
incur no tax liability on the £37,720 or £6,695 :
Held by the House of Lords (Earl Jowitt, Lord
Goddard, Lord Reid, Lord Radcliffe, Lord Tucker
and Lord Somervell, Lord Keith of Avonholm
dissenting), reversing the Co of Appeal
(Somervell, Birkett and Romer, L.JJ.) and the
High Court (Pearce, J.), that the judge ought to
have taken the tax position into account and that
the award in respect of loss of earnings should be
reduced to £6,695.
Per Lord Goddard (Lord Radcliffe and Lord
Somervell of Harrow agreeing) : Such damages are
awarded as compensation, not restitution, and must
be decided by the application of reasonable common-
sense, taking all matters which might have affected
the plaintiff's tax liability into account. The same
principles would be applicable in wrongful dismissal
actions.
Per Earl Jowitt : There may well be a difference
between actions for personal injuries and actions for
wrongful dismissal in regard to the obligation of the
plaintiff to pay tax on the amount of damages re–
ceived and cases on the one topic may therefore be
a dangerous guide to follow on the other.
Per Lord Tucker : Expenditure which, although
not actually a charge on earnings, is imposed by law
as a necessary consequence of their receipt is relevant
to the ascertainment of the loss suffered by the party
injured.
Note.— As a result of this decision, the Lord
Chancellor asked the Law Reform Committee to
report on its effect. This Committee of 15, repre–
senting Judges, barristers and academic lawyers,
has just issued its report, and as it cannot agree, it
does not in effect recommend any consequential
change.
Nine members of this Committee (including
Lord Justice Jenkins, Lord Justice Parker, Lord
Justice Pearce, Mr. Justice Diplock, Professor
Goodhart and Mr. Megarry) took the view that the
decision in this case gives full effect to the well-
settled principle that damages for tort or for-breach
of contract are intended to compensate the injured
party for the loss that he has suffered, and ordinarily
do no more than this.