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Alexander Halban successful in case on common law liens, to be published in Weekly Law Reports

04.06.20

‘A primitive remedy of ancient origin’ or a modern commercial right? The High Court defines the principles of the common law particular lien

An exhibition design company carried out work creating an exhibition around a collection of 27 Second World War motorcycles lent to it for that purpose, for a contract price of £1.75 million. One of its invoices, for over £500,000, is unpaid. The debtor company has no assets. Can the design company keep the motorcycles until its invoice is paid?

This was  the question discussed by Griffiths J in Sheianov v Sarner International Ltd [2020] EWHC 1214 (QB), in which Alexander Halban (instructed by Malcolm Robson of Bates Wells) acted for the successful claimants, the owners of the motorcycles.

The answer depends on whether the designer is entitled to exercise the common law right known as a particular lien. This is a right of skilled workers to retain goods on which they have worked until their charges are paid. It has been described as a ‘primitive’ remedy of ‘very ancient origin’ and many of the leading cases are 200 years old. Yet it remains an important feature of modern commercial law.

In his judgment, Griffiths J provides a detailed historical discussion of the development of the particular lien and, for the first time in the modern law, sets out the key principles underpinning it. The importance of the judgment is underscored by the fact that it has already been published in the All England Reports Digest ([2020] All ER (D) 100 (May)) and will be soon in the Weekly Law Reports.

The Claimants, both Russian, owned a collection of 27 Second World War military motorcycles. They leased them to a BVI company in common ownership with the Second Claimant. The BVI company entered into a contract with the Defendant, an international exhibition design company based in England, to create a temporary touring exhibition around the motorcycles. The exhibition, which was to be entitled ‘Two Wheeled War’, would feature life-size human figures of soldiers riding the motorcycles, placed against realistic backgrounds and with interactive displays. It was planned to mark the 75th anniversaries of D-Day in 2019 and VE Day in 2020.

However, a dispute arose between the Defendant and the BVI company over the scope of the work under the contract and the Defendant suspended its work, claiming an unpaid invoice of over £500,000. It asserted that it can retain the motorcycles as ‘security’ for the debt. The Claimants, as owners of the motorcycles, claimed delivery up from the Defendant. The Defendant argued that it had a particular lien over the motorcycles and did not have to release them until its invoice was paid. The Claimants applied for summary judgment.

Both sides referred the Judge to cases stretching from 1813 up to the present day, which considered goods ranging from horses, pigs, cars and toys, to engravings, title deeds, manuscripts and Medieval tapestries.

The Judge carried out a detailed historical analysis of the authorities and the development of the particular lien. He distilled the essential requirements for the exercise of the lien into five points, which he called ‘the Five Principles’:

‘i) A particular lien can only operate on something physical, a chattel. It cannot operate on something incorporeal, such as an idea, or intellectual property.

ii) Work must be done “on” the chattel being detained and not merely “with” it or “using” it or “in relation to” it.

iii) The work must improve or give additional value to the chattel in question. Whether it does so is a question of fact.

iv) The improvement need not be physical, but it must be inherent to the chattel itself.

v) If the agreed work is of a hybrid nature, some of which is apt to create a particular lien and some of which is not, and the work cannot be severed into those two constituent parts, no particular lien is created.’

The Judge granted the Claimants summary judgment, finding that that the Defendant did not have the right to exercise a particular lien over the motorcycles. He applied the Five Principles as follows:

On the first and second principles, the lien could not be exercised over an ‘story’ or concept for the exhibition, as the Defendant argued; it required something physical. The Judge agreed with the Claimants that the Defendant had not carried out any work on the motorcycles. Their own evidence and defence stated that they had done work ‘with respect to’ them. Its work involved creating the life-size and life-like human figures for the motorcycles to be placed on the motorcycles, but work on the figures was not work on the motorcycles themselves. The Defendant’s research into the historical context of the motorcycles was also not work done on the motorcycles.

On the third and fourth principles, the Defendant argued that its work had increased the value of the motorcycles as a temporary touring exhibition, but they did not provide any evidence of this; and the contract only covered creating the exhibition, not promoting it or generating a profit. Any increase in value was not inherent to the motorcycles – the model figures did not become part of the motorcycles and could be removed from them.

Finally, the Judge accepted the Claimants’ submission that the fifth principle was established by the authorities. He found that the Defendant’s invoice did not break down its work into anything done physically on the motorcycles (if there had been any such work) and other work. It was therefore ‘hybrid’ work and would not have created a lien in any case.

The Judge’s Five Principles are likely to be cited in future cases and the importance of the decision is confirmed by the fact that it has been reported in several major law reports. The judgment is relevant to commercial practitioners representing any skilled supplier of services, or their customers, as well as to art law practitioners, since the principles also apply to the retention of artworks and cultural artefacts.

Click here for a copy of the judgment.

Alexander Halban practises in commercial, civil fraud and insolvency litigation, with a focus on international and cross-border issues. He is a fluent Russian speaker and has particular expertise in Russian and CIS disputes.

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