Bell v Birchall & Ors

This is an application by the Applicant in his capacity as Trustee in Bankruptcy of the first respondent (“the Trustee”) for an order that the time costs and expenses of the Trustee said to have been incurred in (a) preserving the files and records of Birchall Ryan (a solicitor’s practice carried on by the first respondent as sole principal at the date he was made bankrupt (“the Practice”)) (b) reconciling the client accounts of the Practice together with incidental connected costs and (c) the costs of these proceedings should be deducted pro rata from the client accounts of the Practice. This application is opposed by the third respondent (“SRA”) on the grounds that the order sought is (a) one that the court does not have jurisdiction to make and (b) in any event is not an order that the Court ought to make in the exercise of its discretion. The first respondent supports the SRA’s position.

The first and second respondents are both solicitors who were in practice together in partnership using the name “Birchall Ryan” until the second respondent was declared bankrupt on 19 March 2012. The first respondent continued the Practice as a sole practitioner until he too was declared bankrupt on 13 August 2013. The Trustee was appointed trustee in bankruptcy of the first respondent on 21 August 2013. The second respondent’s bankruptcy has been discharged but discharge of the first respondent’s bankruptcy was suspended by a consent order made on 3 October 2014 following an application by the Trustee. The reasons for that application are controversial between the parties and are immaterial to this application.

At the date when the first respondent was made bankrupt the Practice possessed a large number of files said to fill some 25 pallet boxes and 210 large sacks. These files and papers related to or very largely related to non-current instructions but would or might be needed by anyone carrying out a reconciliation of the Practice’s client accounts. In addition, the practice held sums totalling about £250,000 in 12 separate client accounts, summarised at paragraph 12 of the Trustee’s first statement in support of his application. Before me it was accepted by the Trustee that these funds were exclusively client monies and that it was not alleged that any sums were owing to the Practice’s office accounts from the client accounts.

The Trustee’s case is that following his appointment, the SRA decided not to intervene and in those circumstances it was necessary for him to make arrangements for the files to be held securely and since the client accounts had not been reconciled (the process by which what is held on client account is checked periodically against sums owing to each client so as to ensure that there is not a shortfall between what is held on client account and what is due to clients) prior to the first respondent being declared bankrupt it was or would be necessary for the Trustee to carry out that exercise for the protection of clients. The Trustee maintains that he had no choice but to act by storing the files and reconciling the client accounts because neither the second respondent nor the SRA were undertaking that activity.

The SRA’s position is that the Trustee has no role to play in the safeguarding of client monies (or files held in connection with the administration of client monies), which is the responsibility of the solicitor (who, it maintains, is not entitled to charge for such activity) or, in the event that the solicitor fails to discharge his responsibilities, the SRA when exercising powers of intervention, again it maintains at no costs to clients.

Before turning to the issues that arise it is necessary that I set out the principal communications between the Trustee, the SRA and the second respondent because the Trustee maintains that it was the failure or refusal of the first respondent to comply with his professional obligations and the SRA’s refusal until recently to intervene that created a lacuna in the protection that should have been afforded to clients that left him with no choice but to act as he did. It is said that in any event the Trustee was not aware of the powers of the SRA and that it was necessary for him to secure the files because they formed part of the bankrupt’s estate.

The first contact between the Trustee and the SRA took place on 23 August 2013. The Trustee’s attendance note records that the SRA “… have no intervention plans at the moment …”. There is nothing within the attendance note that suggests the Trustee informed the SRA at that stage that the Practice or client accounts were in disarray or that the first respondent was not complying with his professional obligations. In Paragraph 11 of his first witness statement, the Trustee says that he was concerned that the Practice’s offices were insecure and that “… as a professional, I saw the only correct action to protect the interests of the Firm’s clients was to have JPS remove the hard copy client files retained at the premises and stored securely. I also wished to secure that any value in the cases concerned (in particular the bank of wills) was preserved as they may have had a value to the bankruptcy estate.”. This does not appear to have been passed on to the SRA.

On 27 February 2014, the Trustee’s manager wrote to the SRA informing it that “there are substantial monies in two client accounts, both of which were frozen on the making of the bankruptcy order.”. She added

“I am merely writing to you as a matter of courtesy to advise that the trustee is currently undertaking a full reconciliation of these accounts following which the monies will be disbursed appropriately.”

At that stage the existence of 9 other client accounts had not been discovered by the Trustee. The letter did not inform the SRA that the accounts were in disarray, that a reconciliation had not been carried out immediately prior to the first respondent being declared bankrupt or that the Trustee was incurring, or about to incur, costs in carrying out the exercise that he would seek to recover from the sums held in the client accounts. The Trustee does not appear to have appreciated that the client monies were held by the first respondent on trust for the clients, that it was not any part of the function of the Trustee to distribute those funds and that distribution was a matter for either the first respondent or the SRA following an intervention. The SRA could have but did not at that stage respond making these points. It would have been better had it done so.

The next contact that took place between the Trustee and the SRA took place on 26 March 2014. In the course of that conversation Ms Wakefield on behalf of the SRA informed the Trustee’s manager that the SRA “… had decided not to make any intervention as Mr Birchall seemed to be making an orderly wind down of his practice.” It is not suggested that the Trustee informed the SRA of his concerns in relation to either the monies held in the client accounts or the files, or that he had taken the files into storage, or that costs were being incurred as a result or that he would be seeking to recover those costs from client monies, or what those costs were.

On 7 April 2014, the SRA contacted the first respondent. This contact followed a complaint about the delay in winding up the estate of Mr Ankers deceased. This led to contact being made by the Office of the Legal Ombudsman with the SRA and to the SRA making contact with the first respondent. The attendance note of the conversation between Mr Khan of the SRA and the first respondent records that the SRA was concerned that the practice as not being wound down in an orderly fashion and that such may trigger an intervention. The first respondent’s response as recorded in the attendance note was that the sole reason why there had not been an orderly wind down was because the Trustee had “… frozen the firm’s office and client accounts and have also taken away all files that were in the firm’s possession …”. He alleged that the Trustee was obstructing him. The note also records Mr Khan as having asked the first respondent whether he had the means of storing the files held by the Trustee safely to which the first respondent’s recorded response was in essence that he was not sure. The note goes on to record Mr Khan as having told the first respondent that “… it was his responsibility to effect orderly wind down … that client account balances are brought down, matters completed and client files are safe”. Finally, the note records the first respondent as not wanting to see an SRA intervention and that if the Trustee would provide him with the files and access to the accounts he could effect the orderly wind down within a couple of months.

On 9 April 2014, Mr Khan contacted the Trustee’s manager. In summary, the Trustee’s manager is recorded as having informed Mr Khan that “… the position was very muddled. … the files were not in any particular order and so they were finding it difficult to match up accounts with files to do the reconciliations.”. The note of this conversation goes on to record that the SRA would exercise powers of intervention “… as a last resort if the files were not safe …”. Again there is no mention of costs being incurred by the Trustee either in storing the files, which were described as being”… held at their agent’s storage facility …”. The note suggests that from the perspective of the Trustee, the first respondent was not cooperating.

At that stage the position in summary was that the first respondent’s position was that he would be in a position to complete the orderly wind down of the Practice within two months if given access to his files and the client accounts, whereas the Trustee was asserting that the first respondent had been given access to the files at least but that he had not availed himself of the opportunity.

On 22 May 2014, there was a further telephone conversation between the Trustee’s manager and Mr Khan. In that conversation, Mr Khan was informed that there had been very little contact between the first respondent and the Trustee or his office, Mr Khan confirmed that there had been very little contact between him and the first respondent and that “… an intervention is looking more likely …”. It was agreed that there should be a further discussion in early course. In fact that discussion took place on 15 July 2014.

The note of the 15 July conversation records the SRA’s principal concern as being that “… money held in the firm’s client account had been frozen and seized by …” the Trustee. The solicitor acting for the Trustee participated in the telephone conversation. He offered as the explanation for the treatment of the client accounts that they “… had been frozen to protect [the Trustee’s] position …”. It was unclear what position needed to be protected given that client monies were trust monies that did not vest in the Trustee on the first respondent being made bankrupt. The Trustee’s solicitor added that the Trustee was continuing to reconcile the monies in the client accounts and that the task was proving difficult because of the non-cooperation of the first respondent. He added that in consequence the Trustee was in the course of making an application to court for an order enabling the Trustee “… to recover the costs incurred and future costs for reconciling the firm’s accounts and for storage of the firm’s client files.” from the client account monies. This was the first indication that such an application would be made.

On 17 October 2014, the SRA wrote to the Trustee’s solicitors in relation to the threatened application. The trigger for this letter was a refusal by the Trustee to pass on sums held to the credit of the client account in relation to one of the estates that the first respondent was concerned with winding up. It had been proposed that the funds and files be passed to Gladstones, a firm of solicitors to which the first respondent was providing services as a consultant. The Trustee had refused to agree to this course because he intended to apply to the court for an order permitting him to recover from the client account the Trustee’s costs of determining the entitlement of clients to the funds held in the client account. The letter from the SRA made clear that any such application would be opposed on the basis that all the money held in the client account were client monies and that monies held in respect of the estates of the various deceaseds belonged to the beneficiaries. The SRA’s letter concluded in these terms:

“The present position does not require either clients as beneficiaries or a trustee in bankruptcy to reconcile and distribute client account. The Principal, in this case Mr Birchall, remains under a duty to account to clients for money held on their behalf. If Mr. Birchall fails to do so, an alternative mechanism is provided by the SRA’s statutory powers, which can be exercised without cost to the identified beneficiary clients. It would not therefore be reasonable for you to expend costs and expect to recover them.”

The letter required confirmation by 22 October 2014 that an application would not be made and the money held on behalf of the estates could be forwarded to Gladstones. Freeths responded by letter dated 21 October 2014. That letter did not contain the assurance sought and in relation to the point made in the paragraph quoted above said:

“… you allude to an alternative mechanism provided by SRA statutory powers. Any alternative method of dealing with the issues at hand would be relevant to our client’s court application and accordingly we should be grateful if you could expand upon this issue”.

There was no further correspondence and on 24 February 2015 the Trustee issued his application. By a letter dated 9 March 2015, Russell-Cooke LLP, the solicitors acting for the SRA set out in some detail why they considered the Trustee’s application to be misconceived. In essence the point made was that if the client accounts had been maintained in accordance with the Solicitors Accounts Rules (“SARs”) then there would be no uncertainty about which clients were entitled to what amounts of money held on the client accounts. If the solicitor has failed to comply with the SARs then the SRA had statutory powers to intervene. The letter continued that it appeared to be necessary for the SRA to intervene on the basis that the obligation to account to clients would not now be discharged.

On 16 March 2015 an Adjudication Panel of the SRA decided to intervene and that the client account monies or the right to recover such monies should vest in the Law Society. The effect of this decision has been taken into account by the Trustee to the extent that he no longer seeks an Order that he is entitled to recover his prospective costs but maintains the application in relation to costs incurred to date. It is a feature of this case that despite a question from me about the issue, the Trustee is unable to identify what sums are claimed and in respect of which services. No attempt has been made to identify what time costs are claimed in respect of reconciliation activities or of visiting the storage facility to find documents sought by former clients of the practice or even invoices in respect of the alleged storage charges. Mr Tindall submits that this does not matter for present purposes because a District Judge could assess the costs properly recoverable by the Trustee in due course if the costs cannot be agreed.

The Trustee’s claim is founded exclusively on his contention that the court has jurisdiction to make the Order sought applying the principle set out in the judgment of Mr Edward Nugee QC in In Re Berkeley Applegate (Investment Consultants) Limited (In Liquidation), Harris v. Conway [1989] 1 Ch 32 (“the Berkeley Applegate Principle”). In that case the company had operated investment schemes on behalf of clients. Money supplied by clients to the company was held by the company on trust for the clients in client accounts or invested in property secured by mortgages in favour of the company that were held on trust by the company for the benefit of the clients. The expenses incurred by the liquidator were likely to exceed the company’s free assets and the liquidator sought determination of the question whether he was entitled to deduct any part of his costs from the trust assets, even though the liquidator was not in the position of a trustee and legal title to the client assets remained vested in the company. Mr Nugee held that he was. Following a review of the authorities he concluded at 50H that:

“The authorities establish in my judgment a general principle that where a person seeks to enforce a claim to an equitable interest in property, the Court has a discretion to require as a condition of giving effect to the equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property. It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest … or by a receiver appointed by the court whose fees would have been borne by the trust property ...; and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity…”

In my judgment this general principle must be read subject to the constraints implicit in the rationale leading to this conclusion set out at 50B-E of the judgment. Thus in my judgment it can apply only where the beneficiary needs the assistance of the court to secure his her or its rights – see 50B. I do not say that there will never be claims brought by clients claiming money from a bankrupt solicitor held in a client account – as Collins J as he then was noted at paragraph 28 of his judgment in Re Ahmed & Co [2006] EWHC 480 (Ch), clients have the right to apply to court in Part 8 proceedings issued pursuant to CPR r.67.2 for delivery of a cash account, a list of monies and securities held for the applying client and payment over of such monies - but simply that in this case the court’s assistance has not been sought by or on behalf of those beneficially interested in the sums held by the Practice on client account at any stage and there is no evidence that any such person would need such assistance in the future. Even if the court’s assistance is sought, any claim pursuant to CPR r.67.2 would be against the first respondent (or, possibly, following an intervention, against the SRA), not the Trustee. Any claim against the Trustee would be, or would be likely to be, brought either by the first respondent or the SRA rather than a client, but in any event any such claim would have been the result of the Trustee holding trust monies to which he had no entitlement.

Even if it could be said that the qualification noted above was not one that applied to the jurisdiction I am now considering, and that the sole consideration was whether the Trustee had done work that was necessary and which would have to be done by someone else, there is a clear difference of principle between a case such as Re Berkeley Applegate (Investment Consultants) Limited (ante), where the trustee was a company in liquidation and thus was not in a position to carry out the work and such work could be carried out only by the liquidator for reward or by a court appointed receiver, who would have charged for his services, and a case concerning the client accounts of a solicitor’s practice.

I accept the SRA’s submission that the effect of the SARs is that a solicitor who is made bankrupt generally remains under the same direct and personal obligations concerning client monies that he had prior to being made bankrupt and thus that the first respondent was under a continuing obligation to manage client monies as trustee in accordance with the SARs and without charge to those entitled to those funds notwithstanding his bankruptcy until a decision to intervene in the Practice was taken. I also accept the SRA’s submission that following a decision to intervene, the SRA came under a duty to perform that function, again at no cost to those entitled to the funds, other than to the extent permitted by Re Ahmed & Co [2006] EWHC 480 (Ch) to which I refer in more detail below. I reach that conclusion for the following reasons.

The SARs impose a direct and personal obligation on solicitor principals such as the first respondent to manage client money in accordance with the SARs – see r.6.1 and 7. The only exception to that principle is where the solicitor concerned falls within one of the categories set out in r.5.1 of the SARs, or where there is an intervention and monies held on client account vest in the Law Society on the statutory trusts that apply in such circumstances. None of the exceptions listed in r.5.1 of the SARs apply to the first respondent and the list does not include solicitors who have been made bankrupt. This last point is unsurprising – it is a consequence of money held in a client account being held on trust (Footnote: ¹) and thus not forming part of the estate of the bankrupt solicitor and not vesting in the trustee in bankruptcy of a solicitor who is made bankrupt – see s.283(3)(a) of the Insolvency Act 1986 and Re Berkeley Applegate (Investment Consultants) Limited (ante) at 44C-D. It follows that unless there is an intervention by the SRA, the funds held in a client account remain vested in the solicitor and the solicitor is under a continuing obligation to deal with the funds so held in accordance with the SARs.

The first respondent was discharged from those obligations only following the decision by the SRA to intervene in the Practice because that decision was combined with a decision to exercise the powers conferred by Part II of Schedule 1 to the Solicitors Act 1974 and that the monies referred to in paragraph 6(1) of Schedule 1 should vest in the Law Society. These last mentioned decisions had the effect of divesting the solicitor of legal ownership of the funds credited to the client account and vesting it in the Law Society as a statutory trustee – see Re Ahmed & Co (ante) per Collins J at [118] – [119]. As Collins J demonstrates the statutory trust has two forms, the first of which is for the purpose of determining who is beneficially entitled to the funds credited to the client account.

As to the availability of client monies to fund the administration of the client account, Rules 1.1 and 1.2(c) of SARs provide that the overarching objective of the SARs is to keep client money safe, which (subject to expressly identified exceptions) means using client’s money for that client’s matter only. The SRA maintain that the effect of r.20.1 of SARs is to limit withdrawals of sums held on client account strictly to the categories of expenditure identified in that rule. In so far as is material that rule provides:

“Client money may only be withdrawn from a client account when it is:

(a)

properly required for a payment to or on behalf of a client …

(b)

properly required for a payment in the execution of a particular trust …

(c)

properly required for payment of a disbursement on behalf of a client or trust;

(d)

properly required in full or partial reimbursement of money spent by you on behalf of the client or trust

…”

I accept the submission made on behalf of the SRA that there is nothing within r.20.1 of the SARs that permits a solicitor to use client money for the purpose of funding the administration or reconciliation of a client account.

It was submitted on behalf of the Trustee that Re Ahmed & Co (ante) establishes the applicability of the Berkeley Applegate Principle in relation to funds held by a solicitor on a client account because of what Collins J says at paragraph 145 of his judgment in that case. I reject this submission. The key distinction between that case and this one is that in Re Ahmed & Co (ante) the funds held on client account had vested in the Law Society on the statutory trusts. Re Ahmed & Co (ante) was a case concerned principally with an application by the Law Society for guidance as to whether its practices concerning reconciliation of client accounts, the identification of clients entitled to monies held on client account and allied matters were lawful. There were a total of thirteen issues before the court of which one was whether the Law Society was entitled to “… retain, from the undistributed surplus of funds, money as reimbursement for its costs … in determining entitlement to the funds and effecting a distribution of the funds to those entitled thereto” see paragraph 84(13) of Collins J’s judgment. As is apparent from paragraph 85(11) of the judgment, the money that the Law Society sought to retain was only that remaining after a distribution to beneficiaries – that is after all reasonable steps had been taken to identify those entitled to the funds that remained. That is a fundamental distinction from the facts of this case where (a) no distribution had been made (b) it has not yet been ascertained if there is a shortfall on the client account and (c) it is not alleged that any of those entitled to the sums held or that should be held on the client account cannot be identified. It is also the case that the Law Society was a trustee under the statutory trusts whereas the Trustee has never been a trustee of the Practice’s client monies other than by his unilateral action is taking control of and freezing the Practice’s client accounts. It was also the case that in Ahmed & Co (ante) the Law Society was offering a time limited undertaking to repay money retained to late-emerging beneficiaries – see paragraph 141 of the Judgment.

Collins J came to the conclusion that the Law Society was entitled to proceed as it proposed “with some hesitation …” – see paragraph 144. Although he said that the fact that the relevant funds were un-distributable was irrelevant– see paragraph 141 of his Judgment - the decision he arrived was that the Law Society was entitled to reimbursement “… out of money that will not otherwise be distributed …”. This conclusion was justified on the basis that it “… can [be] derived from the general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred in connection with the administration of the property: cf Re Berkeley Applegate …” – see paragraph 145 of his judgment.

This careful formulation emphasises what to my mind is obvious - that Collins J was not purporting to apply the Berkeley Applegate Principle (hence his use of the phrase “… can [be] derived …” and his reference to Re Berkeley Applegate (Investment Consultants) Limited (ante) being preceded by “cf”), or asserting any wider principle than was necessary to resolve the issue before him. There is certainly nothing within his judgment that justifies extending his reasoning, or applying the Berkeley Applegate Principle, to persons in the position of the Trustee who have embarked on the administration of client monies and files when that task was one reserved to the solicitor concerned or the Law Society following an intervention.

In my judgment the court does not have jurisdiction to make the Order sought by the Trustee in the circumstances of this case. I reach that conclusion because (a) the first respondent was under an unbroken and continuing duty to manage the client accounts and client monies in accordance with the SARs; (b) that obligation could not be and was not displaced by his bankruptcy and could be (and was) displaced only when the SRA decided to intervene in the Practice and to exercise the powers conferred by Part II of Schedule I to the Solicitors Act 1974 and that the monies referred to in paragraph 6(1) of Schedule 1 should vest in the Law Society; (c) in those circumstances those entitled to the monies held on the client accounts did not require the assistance of the court to secure their rights and (d) the work carried out by the Trustee even if it was necessary would have been carried out either by the first respondent at no cost to the clients or (in default of the first respondent carrying out the necessary work) the SRA. This case is different from Re Berkeley Applegate (Investment Consultants) Limited (ante) because in that case (a) the company was not in a position to carry out the necessary work and (b) anyone appointed by the court to carry out the work would have been willing to act only if paid.

The conclusion set out above is sufficient to dispose of this application. However, if I am wrong in what I have said so far concerning jurisdiction, I would not in any event have exercised my discretion by permitting the Trustee to recover his costs and expenses. My reasons for reaching that conclusion are as follows.

First, there was no need for the Trustee to incur any costs either in relation to the storage of client files or in relation to client monies for the reasons I have explained in detail above. If the Trustee considered that client money was at risk if control of the client accounts was returned to the first respondent then any duty he might have in relation to safeguarding client money would have been satisfied by him informing the SRA of that view in clear and unequivocal terms. It was then for the SRA to decide whether to continue to place its trust in the first respondent, or to intervene as in the end it did. Again, if the Trustee considered the files to be at risk then any duty that the Trustee owed in relation to their safekeeping would have been satisfied by reporting to the SRA that the files were at risk unless secured because the lease on the office accommodation was about to be disclaimed. It was then for the SRA to decide whether the solicitor could comply with his obligations or whether an intervention was necessary in order to make and keep the files safe. If the Trustee considered that it was necessary to retain some or all of the files in order to investigate whether there were sums due to the Practice that ought to be collected on behalf of creditors either from sums held in the client accounts or otherwise, then any costs attributable to the exercise ought to be met as an expense of the bankruptcy. There is no arguable basis on which in the exercise of discretion such costs could be required to fall on those entitled to the sums held in the client accounts using the Berkeley Applegate Principle.

Secondly, I do not accept that the scope of the Berkeley Applegate Principle is sufficiently wide to cover the costs of storing old files. However, if it is, it is not appropriate as an exercise of discretion to permit the cost of that exercise to be levied against the sums held on the client account in the circumstances of this case. I reach the first of these conclusions because the jurisdiction is concerned with the administration of trust property, and the files were not trust property. I reach the second of these conclusions because there is an almost complete mismatch in this case between the funds held on the client account (which were held for a limited number of current clients and predominantly represented assets held on behalf of the beneficiaries of estates being administered by the first respondent) and the files, which predominantly were in respect of matters that had long since been completed. I accept that it is likely that there were some small sums held on the client account in respect of at least some of these matters – see the letter from the first respondent’s accountant dated 17 January 2014 – but the numbers were very small in relation to the total volume of files. It would be clearly unfair on those who are principally entitled to the sums held on the client accounts to be charged with the costs of storing files that predominantly do not relate to their affairs. That is all the more the case given that the obligation to store the files was that of the first respondent (without cost) or the SRA following an intervention.

Although this application was initiated principally for the purpose of recovering an undefined sum for reconciling the client accounts, it was the Trustee’s case that in fact none of that work has yet been done. Given that the SRA have now intervened in the Practice, it is accepted by the Trustee that this claim cannot be maintained. However the claim is maintained in respect of the Trustee’s costs of “… considering the way forward …” and the costs of this application. No attempt has been made to further particularise what work falls within the first of these categories, how much time has been used in this activity, what sum is claimed in respect of it or how that sum has been calculated. While I accept that this hearing is not the time or place for a detailed assessment to be undertaken, knowing what work is being claimed for and what sum is being claimed for such work is highly material to an assessment of whether in the exercise of discretion an order in the terms sought should be made.

If and to the extent that any sum is claimed for work in connection with or preparatory to reconciliation of the client accounts it is inappropriate as a matter of discretion to permit the Trustee to recover any of his costs of this work from sums held on client account. That is so because, as already explained, this work should could and would have been carried out without charge by either the first respondent or the SRA following an intervention. To permit the Trustee to reimburse himself from client funds would be to inflict clearly avoidable financial harm on the beneficiaries. There is a further consideration in this case – most of the money held on the client accounts are the proceeds of a small number of estates. By definition the reconciliation work in relation to those files will take relatively little time. Most of the work is likely to be undertaken in relation to old files relating to long concluded matters in respect of which little or nothing will be held on client account. Assuming what is claimed were to be deducted pari passu that would still result in a disproportionately large part of the sums claimed falling on the estates in circumstances where the work done specifically in relation to those files will be minimal.

It is as I have said unclear what work is the subject of this claim. However, as I have set out earlier, in the course of the conference call on 15 July 2014, the solicitor acting for the Trustee said that the accounts had been frozen so as to protect the position of the Trustee but he did not further explain what he meant by that. If and to the extent that the purpose of carrying out work on the files was to ascertain if there were sums due to the first respondent, it is difficult to see how that could ever be a cost that could be recovered from clients entitled to sums held on the Practice’s client account.

In my judgment therefore, even if the court has jurisdiction to make an order in the terms sought by the Trustee, I would have declined to exercise my discretion to make an Order in the circumstances of this case for the reasons set out above.

This application fails and is dismissed.