Solicitor’s lien reigns Supreme:Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited

Six individuals involved in road traffic accidents all pursued their claims under CFAs with the respondent solicitors, Gavin Edmondson Solicitors Limited (“Edmondson”). The drivers of the other vehicles involved in those accidents were all insured by Haven Insurance Company Limited (“Haven”). Edmondson submitted the claims via the online claims portal (“the Portal”), in accordance with the RTA protocol (“the Protocol”), with the expectation of recovering their fixed costs and charges upon liability being admitted and damages being negotiated as is standard Protocol procedure. In this case, however, following claim submission Haven made settlement offers direct to the claimants, excluding any amount for Edmondson’s costs. Haven informed the claimants that they could pay them more, and quicker, by doing this, rather than following the Portal process. Each of the claimants accepted these offers, and cancelled their CFAs with Edmondson. Edmondson therefore claimed against Haven for the fixed costs they otherwise would have been entitled to under the Protocol, by seeking to enforce their equitable lien.

Edmondson’s claim was dismissed at first instance; however, succeeded on appeal, with the Court of Appeal modernising the traditional equitable lien claim (which they said otherwise would have failed as the claimants did not have a contractual liability for Edmondson’s charges) to enable Edmondson to recover the fixed costs that should have been paid under the Protocol from Haven.

In dismissing Haven’s appeal from the Court of Appeal, the Supreme Court reviewed the principle of an equitable lien and listed three things that the same depends upon (at paras 35-37):

(i)the client having a liability to the solicitor for his charges; (ii)there being something in the nature of a fund in which equity can recognise that the solicitor has a claim (usually a debt owed by the defendant to the solicitor’s client which owes its existence to the solicitor’s services to the client); and (iii)something sufficiently affecting the conscience of the payer at the time of payment, either in the form of collusion with the client to cheat the solicitor or notice or knowledge of the solicitor’s claim against or interest in the fund.
Here, the client care letter accompanying each CFA explained that Edmondson would be able to recover its costs from the losing side if the claimants won. This did not mean that the claimants were not contractually liable for Edmondson’s fees, but merely limited the amount that was recoverable from the claimants to that which could be recovered from the defendant. There was a contractual liability to pay Edmondson’s charges. Therefore, as Haven had notice of Edmonson’s lien when supplied with the details of the claim, and knew that each of the claimants had retained Edmonson under a CFA and would be looking to recover its charges, the lien could be enforced against Haven, up to the amount in line with the agreed settlement payments.

With these findings the Supreme Court actually determined that Edmondson were entitled to enforce the traditional equitable lien against Haven, and that the equitable lien did not need to be, and should not have been, modernised in the manner undertaken by the Court of Appeal. The re-formulation of the equitable lien by the Court of Appeal was not an issue that was strictly necessary to address in view of the decision on the traditional principle, but the point was extensively argued,  with the Law Society even intervening. See the full judgment for further detail on this (paras 51-58) -

It was presented to the Supreme Court that the practice by Haven in this case has been repeated in many other cases. It is hoped that this judgment will put a stop to these back-door settlements, ensure that solicitors’ liens are honoured and ensure access to justice continues to be promoted.

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Sean Chaffe

Costs Lawyer & Senior Legal Costs Draftsman

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