Ryanair liens case goes to Supreme Court
Bott & Co Solicitors Ltd have been granted permission to appeal to the Supreme Court by the Supreme Court itself in relation to the issue of solicitors’ liens where a third party (Ryanair) deliberately sent damages to the client, and not the solicitor acting for the client. The Supreme Court will hear this matter on Tuesday, 27 October 2020. Very obviously, that acts as a major disincentive to solicitors to take the risk of working on a no-win, no-fee basis where there will be no fund from which to take the costs.
It was thought that this issue had been put to bed by the Supreme Court itself in Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd, where it held that Haven Insurance must pay to the solicitors the costs that were due to the solicitors from their own client in circumstances where the insurance company had paid damages directly to the solicitor’s client.
Any other decision would effectively render the Courts and Legal Services Act 1990, with its introduction of conditional fee agreements, useless. It would also remove the major current method of providing access to justice, following the removal of legal aid. Here, in Bott & Co Solicitors Ltd v Ryanair DAC, the Court of Appeal, in a decision bizarre even by its own recent anti-access to justice stance (see Herbert v HH Law), declined to follow the Supreme Court’s decision in Edmondson, technically distinguishing it on grounds that would cause a first day trainee at my firm to get a rollicking.
Had Ryanair’s conduct been that of a solicitor, it would be in clear, repeated and serious breach of the Solicitors Code of Conduct, specifically indicative behaviour 11.4, which provides that you must ensure that you do not communicate with another party when you are aware that the other party has retained a lawyer in a matter, except:
- To request the name and address of the other party’s lawyer.
- The other party’s lawyer consents to you communicating with the client.
- Where there are exceptional circumstances.
See my blog, Solicitors denied lien; the Ryanair case. After the Unison decision, where again the Supreme Court had to overturn an anti-access to justice Court of Appeal decision, this is the most important access to justice matter to go to the Supreme Court in recent years.
I understand that the Law Society declined to intervene in relation to the permission to appeal stage. It is to be hoped that the Law Society now takes a different view and intervenes in this matter of great importance to all solicitors (and, most importantly, their clients), whatever type of work is involved.
As I commented on the Court of Appeal in my earlier blog, the senior judiciary needs to think through rather more carefully the whole issue of access to justice and litigation, and how it may be delivered. At one level, lawyers are being encouraged to use portals and follow protocols and do everything to avoid litigation, and yet Bott & Co Solicitors Limited appears to be being punished for using such a scheme, and for making significant profits from it.
What on earth is the relevance to the legal principles of the fact that Bott’s income from claims against Ryanair was over £100,000 a month? (See paragraph 16 of the judgment.) What is the relevance of the number of claims that Bott was handling, except to show the success of the scheme and the attraction to members of the public?
At one level, we are consistently urged to be efficient and be a business, with the provision of legal services opened up to every Tom Dick and Harry. However, when a firm does exactly that, they are punished by the courts by being refused a lien. I can see no logical difference between the pre-action road traffic portal, where 99% of cases are settled, and the scheme operated by Bott & Co Solicitors Limited. This decision should be overturned by the Supreme Court.
I deal with the decision of the High Court and the Supreme Court in my blogs, Court refuses to grant solicitor lien for costs and Solicitors’ liens, retainers, CFA lite and unconscionable conduct – the Haven Insurance Company case.
Avoiding waiving a lien
In Candey Ltd v Crumpler and another, the Court of Appeal has clarified what a solicitor must do when they enter into a new security arrangement with a client, the terms of which are inconsistent with the terms of their equitable lien, to minimise the risk of having waived their lien.
The appellant acted as solicitors for a company incorporated in the British Virgin Islands in extensive litigation conducted in England and several other jurisdictions. The company incorporated was now being wound up in insolvency proceedings in the British Virgin Islands court, and the respondent liquidators were appointed by that court as the company incorporated’s liquidators.
In a dispute between the appellant and the respondent liquidators about the appellant’s claim to unpaid fees owed to it by the company incorporated, the respondent liquidators were ordered to pay some of the appellant’s legal costs, and the High Court determined two issues in relation to the costs order.
The court held that a success fee was not recoverable from the respondent liquidators, and that the appellant had waived its equitable lien over settlement monies that had been paid to by the company incorporated during the litigation when it entered into a deed of charge with the company, which was inconsistent, in some respects, with its rights under the lien.
The Court of Appeal dismissed the appellant’s appeal on both issues, upholding the judge’s findings. In so doing, it confirmed that waiver of a solicitor’s equitable lien will arise when a solicitor enters into a new security arrangement with the client, the terms of which are inconsistent with the equitable lien, unless both parties agree that the solicitor’s existing rights will be unaffected. Such agreement will not be found unless the solicitor fully explains the position to the client.
To satisfy this requirement, the solicitor must explain the combined effect of the new security and the pre-existing lien on the prospects of the client recovering anything of value from success in the litigation in which the solicitor is instructed. It will not be sufficient for the solicitor to advise only on the effect of the new security.
The judgment also clarifies that a foreign representative is not entitled to benefit from the exemption in article 4(c)(i) of Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No.5 and Saving Provision) Order (SI 2013/77) in the same way as English liquidators.
QOCS continues to apply in Court of Appeal
In Wickes Building Supplies Ltd v Blair (No.2 : Costs) (I am grateful to Sarah Robson of counsel for sending me details of this case), the Court of Appeal held that qualified one-way costs shifting (QOCS) protection continues to apply to any appeal at any level which concerns the outcome of the claim for damages for personal injuries, or the procedure by which such claim is to be determined.
This is on the basis that these were all part of the “proceedings” under CPR 44.13 dealing with QOCS. This interpretation applied on a second appeal, as here, where the appeal was brought by the defendant to the original claim, and where the court had declined to exercise its discretionary powers under CPR 52.19 to limit recoverable costs. Thus, although here the court found that the first appeal by the claimant was unmeritorious and justified awarding the defendant the costs of their subsequent further appeal to the Court of Appeal, it would nevertheless not order those costs to be enforced, as QOCS continue to apply.
A correct and sensible decision for the very reasons set out by the Court of Appeal here:
“The purpose of the QOCS regime is to facilitate access to justice for those of limited means… if a claimant’s access to justice is dependent on the availability of the QOCS regime, that access will be significantly reduced if he is exposed to a risk as to the costs of any unsuccessful appeal which he may bring or any successful appeal a defendant may bring against him.”
Fixed recoverable costs
The Wickes case also held that fixed recoverable costs do not apply to appeal proceedings. This aspect of the decision has significant potential ramifications for all civil work once the fixed recoverable costs scheme is extended to all civil claims of £100,000 or less, probably in 2021.
I am not sure that the Court of Appeal has thought this through. Here, the QOCS system protected the losing claimant against open, unfixed costs, as this was a personal injury claim. However, QOCS does not apply outside the field of personal injury.
If costs are to be unfixed on appeal, then that causes the very access to justice problem identified here by the Court of Appeal in relation to QOCS. The answer is to have a separate fixed costs regime for all appeals of all kinds, whatever the value, and whether or not covered by fixed costs at first instance.
Legal Services and the UK Economy
On 23 January 2020, the Law Society published its 2019 report, Contribution of the UK legal services sector to the UK economy, and found that dispute resolution services generated 32% of the turnover of law firms in England and Wales. The report shows that UK legal services are now worth over £60 billion a year.
The 2007 Lugano Convention governs jurisdiction and the enforcement of judgments between members of the European Union and the non-EU countries of Norway, Iceland and Switzerland. Due to the United Kingdom’s exit from the European Union, it will cease to apply to the UK at the end of the transition period on 31 December 2020.
Norway and Iceland have said that if matters cannot be resolved with the European Union then they will withdraw from the Lugano Convention as they regard their relationship with the United Kingdom as more important than their relationship with the 27 countries of the European Union.