COURT REFUSES TO GRANT SOLICITOR LIEN FOR COSTS

In Bott & Co Solicitors Ltd v Ryanair DAC [2018] EWHC 534 (Ch)

the High Court refused to grant Bott & Co Solicitors equitable relief to protect its lien for costs in relation to flight delay compensation obtained from Ryanair.

The judgment helpfully distils numerous authorities considering the circumstances in which the court will intervene on equitable grounds to protect a solicitor’s lien.

Notably, the court distinguished this case from

Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2015] EWCA Civ 1230

  which is under appeal to the Supreme Court.

Ryanair had started to settle pre-action flight delay compensation claims directly with Bott & Co’s clients.

Bott & Co therefore lost the opportunity to deduct its fees from the clients’ compensation.

Bott & Co requested that Ryanair undertake to preserve Bott & Co’s lien over any claim proceeds in accordance with

Khans Solicitors v Chifuntwe [2013] EWCA Civ 481

which held that equity will intervene to protect a solicitor’s claim on funds recovered or due to be recovered by a client or former client, where the paying party has notice of the receiving party’s solicitor’s claim.

When Ryanair refused to do so, the claimant issued proceedings for relief, including an indemnity in respect of fees where Bott & Co S had submitted a compensation claim to Ryanair on behalf of a client, and where Ryanair had paid the client directly, and the client had not settled Bott & Co’s fees.

Having reviewed the authorities pre-dating Gavin Edmondson, the court held that, in order for a solicitor to have an equitable lien in relation to property recovered or preserved, the following criteria must be fulfilled:

“(i) There must be a fund in sight;

(ii) recovered, preserved or established by the solicitor’s efforts or activity;

(iii) as a result of litigation or arbitration, including a compromise resulting from the pressure of litigation or arbitration between the solicitor’s client and the other party,

(iv) in which the solicitor has an interest that equity can protect and which is deserving of protection.”

A question arose as to the extent to which Gavin Edmondson had extended the third criterion.

The court observed that the justification for extending the Khans principle to Gavin Edmondson appeared to be that Edmondson’s clients, through its efforts, had participated in a voluntary but formalised scheme under the RTA Protocol, sanctioned by the judiciary, for the early resolution of claims involving personal injury, which, once the defendant insurers engaged with the relevant claims, gave rise to an entitlement to fixed costs under CPR 45.

The present case was “quite different” as there was no such scheme for the early resolution of flight delay compensation claims, much less one giving Bott & Co Solicitors an entitlement to costs under the CPR.

Consequently, there was “no principled basis” for extending to this case the protective principle exemplified in Khans and Gavin Edmondson.

Comment

This case has major implications for those solicitors faced with correspondence from the likes of JG and Checkmylegalfees.

If solicitors feel that there may potentially be small sums due to the lay client, then they can send that small sum to the lay client without any lien based liability for the new solicitors’ cost.

Any such costs would then be a matter between those new solicitors and the lay client.

Such cases clearly fall on the Bott & Co side of the line, and not the Gavin Edmondson side of the line.