The High Court refused a Dublin law firm’s applications to freeze funds held by former client Gharion and to declare that the firm had a charge over those funds for unpaid legal fees.
Mr Justice Birmingham gave judgment on 9 July 2013. The firm claimed €253,047.77 remained due. Gharion accepted it owed professional fees, but said it had agreed to pay €335,000 in total and had paid that amount. The judge said the alleged fee agreement was likely to be a key issue at trial and did not decide the dispute.
The firm sought an injunction preventing Gharion from reducing its bank balance below the amount claimed. It also sought a declaration under the Legal Practitioners (Ireland) Act 1876 and the Arbitration Act 2010 that it was entitled to a charge over Gharion’s funds.
Gharion intended to transfer the funds to College Protein, an unlimited company. The judgment records that Gharion had been set up to hold a shareholding in Carton Group Holding, which it sold under a settlement for €5.35 million. College Protein was owed €4,695,379 by Gharion in loans repayable on demand. The proposed transfer was said to support College Protein’s €1.5 million purchase of evaporators for a waste-energy recycling project.
On the injunction application, the judge found that the firm had a strong arguable claim and that Gharion held assets. But he was not satisfied the proposed transfer was intended to evade the firm’s claim or frustrate future court orders. He said the transfer appeared consistent with what would have happened in the ordinary course of events and would not leave Gharion or its members unable to meet a judgment. He also noted the proposed use of the funds as further support for his view that the transfer was not designed to defeat the claim.
The judge criticised Gharion’s delay in paying €210,880.12, which it paid only after the motion was issued and served, and its late delivery of a defence. He said those matters did not justify a freezing injunction.
The judge also refused the requested charging declaration at this interlocutory stage. Although the amount of fees need not already have been quantified for such an order, he said it had to be established that some fees were due. The parties’ fundamental dispute over whether anything remained outstanding made a declaration inappropriate, particularly given its potential effect on third parties. Both applications were refused; the judgment did not resolve the fee dispute at trial.