Bott & Company Solicitors Ltd v Ryanair Dac
| Jurisdiction | England & Wales |
| Judge | Lord Burrows,Lady Rose,Lord Leggatt,Lady Arden,Lord Briggs |
| Judgment Date | 16 March 2022 |
| Neutral Citation | [2022] UKSC 8 |
| Court | Supreme Court |
[2022] UKSC 8
Lord Briggs
Lady Arden
Lord Leggatt
Lord Burrows
Lady Rose
Appellant
Nicholas Bacon QC
Ben Smiley
(Instructed by Rosenblatt Ltd)
Respondent
Brian Kennelly QC
Tom Coates
(Instructed by Oracle Solicitors (Holborn))
Heard on 20 May 2021
Lord Leggatt AND (dissenting)
Expectations about how disputes should be resolved in the United Kingdom and the role of legal representatives in that process have changed significantly over recent years. In Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 (“ Gavin Edmondson”), this Court considered a small but important piece of the jigsaw of that litigation landscape: the solicitor's equitable lien for their costs. This remedy has been recognised by the courts for over two hundred years. In its traditional form, it entitles a solicitor who assists a client to recover money (or other property) through litigation to recoup the costs of doing so out of the money recovered. Any proceeds of a judgment or settlement will normally be paid to the solicitor's firm, which can then deduct its costs before accounting to the client for the balance. But if the opposing party pays the money directly to the solicitor's client despite knowing or being on notice of the solicitor's interest in the debt, and the client then fails to pay the solicitor's costs, the court may order the opposing party to pay those costs to the solicitor — in addition to the payment already made to the solicitor's client.
For many years the equitable lien was thought to arise only where there were court (or arbitration) proceedings in existence when the money was recovered. However, in Gavin Edmondson this Court held that the lien applied in cases where the claimant's solicitors had notified a claim under the pre-action protocol for low value personal injury claims in road traffic accidents (the “RTA Protocol”) and the claim was then settled without the need to issue proceedings. The result was that, in the three cases before the court in Gavin Edmondson where the defendant had paid the settlement sum directly to the claimant despite knowing of the solicitor's involvement and the claimant had not paid his or her solicitor's costs, the defendant was ordered to pay those costs directly to the solicitor.
Following the decision in Gavin Edmondson, there is no doubt that the solicitor's equitable lien can arise where no formal proceedings have been commenced. The question raised by this appeal is where the boundary of the equitable lien lies and, specifically, whether the lien covers costs charged to clients by the appellant solicitors, Bott & Co, for claiming compensation for flight delays from the respondent, Ryanair.
In our view, for the reasons given below, the rationale for the lien requires that, for a lien to arise, there must be a dispute, existing or reasonably anticipated, in connection with which the services of the solicitor are sought. In the vast majority of cases handled by Bott there is no such dispute: there is no doubt about the fact and amount of compensation payable and no reason to suppose that Ryanair will withhold or delay payment. Bott are simply collecting undisputed amounts of money for their clients. In these circumstances we consider that no lien arises and would therefore have dismissed the appeal. Lord Burrows, Lady Arden and Lord Briggs, however, all take a different view. For the reasons they give, they consider that no actual or prospective dispute is necessary and that is sufficient for a lien to arise that the solicitor is making a “legal claim” on behalf of their client. They conclude that this minimal requirement is satisfied on the facts of this case and so the appeal should be allowed. Accordingly, our judgment represents the minority view.
An air passenger whose flight is cancelled or delayed has rights to compensation and assistance under Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 (“Regulation 261”). Regulation 261 applies where the air passenger is departing from an EU member state or is travelling to an EU member state with an EU airline. Although Regulation 261 does not expressly provide for compensation for delay rather than cancellation, the Court of Justice of the European Union held in Sturgeon v Condor Flugdienst GmbH, Böck v Air France SA (Joined Cases C-402/07 and C-432/07) [2010] Bus LR 1206, para 69, that it must be interpreted as meaning that passengers whose flights are delayed have the same right to compensation as passengers whose flights are cancelled if they reach their final destination three hours or more after the arrival time originally scheduled by the air carrier. The air carrier is not obliged to pay compensation if it can prove that the cancellation or delay was caused by “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”. Examples of “extraordinary circumstances” are given in recitals (14) and (15) and include political instability and security risks as well as bad weather. Where compensation is payable under Regulation 261, the amount is fixed at €250, €400 or €600 depending on the flight distance.
Article 14 of Regulation 261 imposes obligations on an air carrier to inform passengers of their rights. The carrier must ensure that at check-in a clearly legible notice is displayed to passengers inviting them to ask at the check-in counter or boarding gate for a statement of their rights if their flight is cancelled or delayed. In addition, where a flight is cancelled or delayed for at least two hours, the carrier must provide each passenger affected with a written notice setting out the rules for compensation under the Regulation.
Since the withdrawal of the UK from the European Union, Regulation 261 has been retained as part of UK law and amended to ensure that it continues to apply to travel to and from the UK in the same circumstances as before.
Bott is a solicitors' firm which specialises in consumer claims conducted on a “no win, no fee” basis. Bott began handling flight delay compensation claims in February 2013. Its business model is premised on processing a large volume of claims, the vast majority of which are expected to be settled by the relevant airlines without dispute. By the time this action was begun in October 2016, Bott had handled approximately 125,000 claims and was claiming on its website a 99% success rate. Bott has developed an on-line tool, accessible on its website, which enables a prospective client to enter her flight details and then check whether her claim satisfies the basic eligibility conditions for compensation. The on-line tool operates without human intervention on the data entered and includes a check against a database of weather reports to gauge whether a problem with the weather might have caused the delay. This indicates whether the airline is likely to contest a claim for compensation by relying on “extraordinary circumstances”.
Bott's on-line tool tells the prospective client whether she has a claim that appears to be eligible for compensation under Regulation 261 and, if so, for how much. Where there is such a claim, she is then invited to provide other relevant information on-line, including contact details, and to confirm whether she wishes to instruct Bott on a “no win, no fee” basis. None of this involves manual intervention by anyone at Bott.
If a prospective client confirms through the on-line tool that she wishes to instruct Bott, Bott sends her an email to confirm receipt of the claim. One of Bott's paralegals working under the supervision of a solicitor then manually checks the information provided to verify whether the claim has more than a 50% prospect of success. That process is usually completed within 48 hours. If the claim passes this vetting process, Bott sends a further email to the client confirming that Bott is willing to accept the case and that, if the claim is successful, Bott's fees will be 25% of the total compensation amount awarded to the client plus VAT, plus an administration fee of £25 per passenger, to be deducted from the compensation before Bott pays the compensation to the client. The email also notifies the client that, as a result of the client having submitted her details through the website, Bott has started working on the claim and is in the process of drafting a first letter to the airline. The email also informs the client that Bott's Terms and Conditions will follow. In a separate email, Bott sends the client a link to its Terms and Conditions, requesting that the client read them and sign them electronically. A conditional fee agreement (“CFA”) is also sent by email in a form that the client can download. The Terms and Conditions make it clear that, if necessary, Bott has permission from the client to issue court proceedings.
Once Bott has been retained through this procedure, Bott sends a letter before action in a standard format to the airline. The letter refers to the Practice Direction on Pre-Action Conduct and sets out the claim details, asking for a response within 30 days and, if the claim is admitted, for payment within 21 days of the admission. Bott requests that payment be made by a cheque in its favour or by bank transfer to its client account. The same letter may cover a single claim or multiple claims relating to the same flight.
If the airline accepts the claim and makes payment to Bott without dispute, Bott simply checks that the right amount of compensation has been received, deducts its fees and pays the balance to the client. If the...
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