Background
Mr. Gregory McLellan, a family law solicitor trading as Guardian Family Law, represented Ms. Anamika Rastogi in property settlement proceedings against her former husband from January 2023 to November 2025. The parties entered into a costs agreement in January 2023 granting Mr. McLellan an equitable lien over any funds recovered. Although Mr. McLellan paid certain invoices, Ms. Rastogi did not pay invoices totaling $38,149.47. In September 2025, the Federal Circuit and Family Court ordered the former husband to pay Ms. Rastogi $65,000 from the sale proceeds of a property.
When settlement of the property sale approached in April 2026, Mr. McLellan demanded the funds be paid to his trust account to secure his unpaid fees and obtain an equitable lien. Ms. Rastogi, who had become reliant on the funds for accommodation and child support in India, objected and terminated Mr. McLellan’s retainer. Mr. McLellan urgently commenced proceedings on 15 April 2026 in the Equity Duty Judge list, seeking orders requiring the $65,000 be paid into court. The Duty Judge made such an order on 17 April 2026 in Ms. Rastogi’s absence. Ms. Rastogi then filed applications to set aside the summons, set aside service, and set aside the orders.
The Court’s Holding
Justice Williams dismissed Ms. Rastogi’s applications to set aside the summons and service of it, finding the summons was properly served by substituted service under the UCPR and presented a reasonably arguable case. The court affirmed that a solicitor holds an equitable lien over the fruits of litigation (whether judgment or settlement) where those funds were recovered through the solicitor’s exertions, even if the solicitor no longer holds the funds and the costs amount remains disputed. The lien arises immediately upon recovery of the funds, independent of whether final costs assessment has occurred.
However, Williams J found that the order requiring payment into court was made irregularly because Mr. McLellan obtained it without first obtaining leave to proceed against Ms. Rastogi under UCPR r 11.8AA. The court treated this as proceeding against Ms. Rastogi by directly affecting her right to receive funds ordered by the Family Court. The court therefore set aside the irregular order under UCPR r 36.15. Nevertheless, the court granted an interim injunction restraining Ms. Rastogi from claiming or demanding payment of the $65,000 (up to $38,149.47) pending final determination of the lien claim. The court found Mr. McLellan established a strong prima facie case for his equitable lien and that the balance of convenience favored preserving the status quo while the costs dispute is resolved through the costs assessment scheme.
Key Takeaways
- A solicitor’s equitable lien over litigation proceeds applies even when the solicitor no longer holds the funds and the costs amount is disputed, provided the funds were recovered through the solicitor’s exertions.
- Procedural irregularity in obtaining orders (here, failing to seek leave to proceed against an absent defendant) will result in those orders being set aside, even where the underlying claim has merit.
- Courts will grant interim injunctions to preserve funds pending resolution of disputes over solicitor fees when the solicitor demonstrates a strong prima facie case, despite the defendant’s material need for the funds.
- Costs disputes involving substantial amounts must be resolved through the formal costs assessment scheme, not decided incidentally during interlocutory applications.
Why It Matters
This decision clarifies the scope and operation of solicitors’ equitable liens in the context of family law settlements, where the recovered funds often represent the recovering party’s sole financial resource. It establishes that such liens apply to settlement proceeds even when those funds never pass through the solicitor’s hands. The decision is significant for its procedural holding: courts strictly enforce procedural requirements (such as obtaining leave to proceed against an absent defendant) and will set aside orders made in breach of those requirements, regardless of the substantive merits. This protects absent parties’ procedural fairness even when the court is sympathetic to the proceeding party’s substantive claim.
The case also reflects the tension between solicitors’ rights to recover unpaid fees and vulnerable clients’ need for settlement funds for basic living expenses and child support. By requiring the costs dispute to proceed through formal costs assessment rather than being resolved on interlocutory applications, the court ensured that both the amount and timing of fees owed would be determined through an independent, transparent process before the solicitor’s lien would be fully enforced.