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On appeal from [2019] EWCA Civ 143

 

A passenger whose flight is cancelled or delayed has rights to compensation under Regulation (EC) No 261/2004 (which is retained law in the UK following Brexit).

The Appellant handles a large volume of passenger compensation claims for flight cancellation and delays, primarily on a “no win, no fee” basis. Prior to 2016, the Defendant dealt with the Appellant in respect of the claims it handled, and when claims were admitted, would pay compensation directly into the Appellant’s client account. In early 2016, the Defendant changed its practice and began communicating directly with Bott’s clients, and paying compensation directly to them. As a result, instead of deducting its fees from the compensation paid into its client account, the Appellant now has to pursue its clients for payment.

Following this change, The Appellant brought proceedings claiming an equitable lien over the compensation in respect of its costs, and an injunction restraining the Defendant from paying compensation directly to customers when Ryanair is on notice that Bott has been retained by them.

In the High Court, the judge held that he was bound by previous authority to find that a solicitor’s equitable lien arose only once proceedings had actually been started. As a result, there could be no equitable lien in circumstances where compensation is paid out without passengers having commenced legal proceedings.

By the time the Court of Appeal heard the appeal, the Supreme Court had given judgment in Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21, which decided that a solicitor’s equitable lien can arise where no proceedings have been started. The Court of Appeal dismissed the appeal on the basis that unless and until Ryanair disputes a claim for compensation, Bott is not providing a litigation service in the promotion of access to justice.

 

Held – Appeal allowed by a 3–2 majority. The majority judges, Lord Burrows, Lady Arden and Lord Briggs, give three separate judgments but all agree with the test for an equitable lien adopted by Lord Burrows. Lord Leggatt and Lady Rose jointly dissent.

 

Lord Burrows considers that Gavin Edmondson supports a clear, principled and easy–to–apply test for recognising a solicitor’s equitable lien that does not turn on whether or not a dispute has arisen. In Gavin Edmondson, no proceedings had been issued, no real dispute had yet arisen, and the solicitors who claimed the lien had done little in the way of progressing the legal claim beyond entering it in an online portal. On this basis, Lord Burrows sets out the relevant test for a solicitor’s equitable lien as whether a solicitor provides services in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client. On the facts of this case, the Appellant has provided services to its clients in relation to the making of claims for compensation for flight cancellation and delay provided for by Regulation 261, which have significantly contributed to the recovery of compensation. Lord Burrows therefore holds that the Appellant is entitled to a lien over that compensation for its costs and allows the appeal.

Lady Arden holds that any extension of equitable liens must be principled. Effective access to justice includes ensuring that a person can get advice and is now a foremost animating principle of the lien. Lady Arden agrees with the claim-based test set out by Lord Burrows in para 88.

Lord Briggs highlights his primary considerations when analysing this difficult question. First, the disproportionate cost of engaging solicitors for relatively low–value claims is a significant obstacle to access to justice in England and Wales. The Appellant’s scheme allows consumers to benefit from professional assistance to recover compensation at a low cost, with no cost at all in the absence of recovery. Second, there is a need for reasonable certainty as to the existence and scope of a solicitor’s lien, given that an equitable lien is a property right that does not depend upon the court’s exercise of discretion. Lord Briggs finds that the minority’s approach introduces an unacceptable level of uncertainty. Lord Briggs therefore agrees with the test set out by Lord Burrows, and regards his reasoning and that of Lord Burrows to be closely aligned. He also indicates his agreement with the central thrust of Lady Arden’s reasoning.

Lord Leggatt and Lady Rose, dissenting, disagree with the majority view that solicitors’ equitable liens ought to be extended beyond circumstances involving an actual or reasonably anticipated dispute. A test based on whether the client is ‘making a claim’ is uncertain. It would appear to extend the lien to some transactional work carried out by a solicitor, work which the majority accepts should not be covered. Lord Leggatt and Lady Rose therefore would dismiss Bott’s appeal.

Watch hearing
20 May 2021 Morning session Afternoon session