Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Wilson,Lord Sumption,Lord Kerr,Lady Hale,Lord Briggs |
| Judgment Date | 18 April 2018 |
| Neutral Citation | [2018] UKSC 21 |
| Court | Supreme Court |
| Date | 18 April 2018 |
[2018] UKSC 21
Lady Hale, President
Lord Kerr
Lord Wilson
Lord Sumption
Lord Briggs
Easter Term
On appeal from: [2015] EWCA Civ 1230
Appellant/Cross-Respondent
Lord Marks QC
Jamie Carpenter
James Wibberley
(Instructed by Flint Bishop LLP)
Respondent/Cross-Appellant
Jonathan Crow QC
Lesley Anderson QC
Martin Budworth
(Instructed by Gavin Edmondson Solicitors Limited)
Intervener — Law Society (written submissions only)
David Holland QC
(Instructed by Law Society Legal Services Department)
Heard on 5 and 6 February 2018
( with whomLady Hale, Lord Kerr, Lord WilsonandLord Sumptionagree)
This appeal tests the limits, in a modern context, of the long-established remedy known as the solicitor's equitable lien. In its traditional form it is the means whereby equity provides a form of security for the recovery by solicitors of their agreed charges for the successful conduct of litigation, out of the fruits of that litigation. It is a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice. Specifically it enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit. It is called a solicitor's lien because solicitors used to have a virtual monopoly on the pursuit of litigation in the higher courts. Nothing in this judgment should be read as deciding whether the relaxation of that monopoly means that the lien is still limited only to solicitors.
Solicitors have, since time immemorial, been entitled to a common law retaining lien for payment of their costs and disbursements. That is an essentially defensive remedy, which merely enables them to hold on to their clients' papers and other property in their actual possession, pending payment. It affords no assistance where there is nothing of value in the solicitor's possession, and is powerless where, in a litigation context, the defendant to the claim pays the judgment debt or agreed settlement amount direct to the solicitor's client, the claimant. But equity deals with that deficiency in the common law by first recognising, and then enforcing, an equitable interest of the solicitor in the fruits of the litigation, against anyone who, with notice of it, deals with the fruits in a manner which would otherwise defeat that interest.
Originally the fruits of the litigation were first identified in the judgment debt. Later this was extended to the debt due under an arbitration award and, later still, to the debt due to the claimant under an agreement to settle the claim. Each of those types of debt was identified as a form of property, a chose in action, in which equity could recognise and enforce an equitable interest in favour of the solicitor. It was called a lien because the chose in action represented the fruits of the solicitor's work. But it is better analysed as a form of equitable charge. Traditionally, the solicitor's interest could not be identified as a beneficial share in the chose, because that would have offended the laws against maintenance and champerty. Rather it was, from the earliest times, recognised as a security interest, enforceable against the fruits of the litigation up to the amount contractually due to the solicitor, in priority to the interest of the successful client, or anyone claiming through him. It did not depend upon the fruits of the litigation including a specific amount for party and party costs, such as a judgment for costs, or an element in a settlement sum on account of costs.
In the ordinary course of traditional litigation, with solicitors acting on both sides, the amount due under a judgment, award or settlement agreement would be paid by the defendant's solicitor to the claimant's solicitor. Or the claimant's solicitor might recover the sum due to his client by processes of execution. In either case the equitable lien would entitle the solicitor not merely to hold on to the money received, but to deduct his charges from it before accounting to his client for the balance. But equity would also enforce the security where the defendant (or his agent or insurer) paid the debt direct to the claimant, if the payer had either colluded with the claimant to cheat the solicitor out of his charges, or dealt with the debt inconsistently with the solicitor's equitable interest in it, after having notice of that interest. In an appropriate case the court would require the payer to pay the solicitor's charges again, direct to the solicitor, leaving the payer to such remedy as he might have against the claimant. This form of remedy, or intervention as it is sometimes called, arose naturally from the application of equitable principles, in which equitable interests may be enforced in personam against anyone whose conscience is affected by having notice of them, either to prevent him dealing inconsistently with them, or by holding him to account if he does.
The modern context in which the extent of this remedy comes to be reviewed is that of the pursuit of modest claims for personal injuries arising out of road traffic accidents, by solicitors retained under a Conditional Fee Agreement (“CFA”) using the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (“the RTA Protocol”). In bare outline this highly effective scheme, hammered out by stakeholders under the auspices of the Civil Justice Council and approved by the Civil Procedure Rule Committee, enables modest claims for personal injuries to be notified by the claimant's solicitors to the defendant's insurer using a bespoke online platform (“The RTA Portal”) and, where liability is admitted, for a settlement to be negotiated, or quantum to be determined by the court, at a fraction of the cost and effort which would have to be deployed if the matter were to become the subject of ordinary proceedings in the County Court, and on terms which reward the claimant's solicitors with modest fixed costs for their work on the process. It is an express objective of the RTA Protocol, and its provisions are designed so to ensure, that the solicitors are paid their fixed costs and charges at each stage of the process, direct by the defendant's insurer.
The casus belli for this litigation was a decision by the appellant insurer (“Haven”) to respond to the notification of claims on the RTA Portal by offering to settle direct with claimants, on terms which included no amount for their solicitors' costs or disbursements (fixed or otherwise), with the twin inducements to claimants of a speedier and more generous payment than would be likely to be available from a settlement using the RTA Protocol and Portal. The motivation of the insurer was the opportunity to avoid having to add, to the settlement amount for the injury, the fixed costs and disbursements payable under the terms of the RTA Protocol to the claimants' solicitors.
Settlements thereby achieved included claims by clients of the respondent solicitors (“Edmondson”) arising from three motor accidents, all of whom retained the respondent firm on a particular type of identically worded CFA retainer, known in the trade as a “CFA Lite”, designed to ensure that in no circumstances would the client have to put his hands in his own pocket for payment of the firm's charges. Edmondson responded by a claim against Haven for wrongful inducement to the clients to breach their retainer contract, intentional causing of loss by unlawful means and, by amendment, seeking equitable enforcement of its solicitors' lien. Although the sums involved are individually modest, we were told that this practice by Haven had been repeated on a sufficiently large scale for the determination of the dispute to have financial consequences running to many millions of pounds.
The trial judge (HHJ Jarman QC) rejected the claims in tort and refused to grant permission to appeal in respect of those claims. An application for permission was made to the Court of Appeal, but not dealt with because of its disposal of the claim to enforce the solicitors' lien. That claim was rejected by the trial judge because, in his view, there had been no collusion between Haven and the claimants to cheat the solicitors, and because Haven was not on notice of the terms of the retainers.
In the Court of Appeal [2015] EWCA Civ 1230; [2016] 1 WLR 1385 the main submission of Haven was that the particular terms of the CFA Lite retainers created no contractual liability of the claimants for Edmondson's charges, so that there was nothing upon which an equitable security could be founded. The Court of Appeal agreed that there was no such contractual liability upon the true construction of the retainers. Nonetheless it decided that the equitable jurisdiction to intervene could be extended far enough to enable the court to recognise and then enforce an interest of Edmondson under the RTA Protocol in receiving its fixed costs and charges as therein provided or, alternatively, an interest under an express provision in the retainers to sue in its client's names for recovery of those charges from Haven, and that Haven knew of those interests. Accordingly the Court of Appeal ordered Haven to pay the charges allowable under the RTA Protocol to Edmondson, in addition to the settlement sums already paid to the claimants.
In this court Haven repeated its main submission that the retainers created no contractual liability to pay the charges upon which an equitable lien or charge could be founded, and submitted that the Court of Appeal had been wrong to extend the equity of intervention as it did, the extension...
To continue reading
Request your trial
-
Re Peak Hotels and Resorts Ltd
...decd (No 4), In the Estate of [1968] P 727; [1967] 3 WLR 314; [1967] 2 All ER 649Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052; [2018] 3 All ER 273; [2018] RTR 22, SC(E)Glasgow v ELS Law Ltd (Bar Council of England and Wales intervening) [2017] EW......
-
Bott & Company Solicitors Ltd v Ryanair Dac
...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: th......
-
Candey Ltd v Crumpler and another (as Joint Liquidators of Peak Hotels and Resorts Ltd ((in Liquidation)))
...of that litigation. 2 The nature of the solicitor's equitable lien was explored in the decision of this Court in Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052. As Lord Briggs explained, at paras 3 and 4, the solicitor's equitable lien is a secur......
-
Candey Ltd v Tonstate Group Ltd
...with prior authority and with the subsequent decision of the Supreme Court in Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21 (“ Haven 19 In Haven Insurance, multiple claimants with road traffic claims retained the solicitors on identical conditional fee agreements. ......
-
Why Can't We Have Both? Solicitors' Liens In Equity And The Taking Of New Security
...of the fruits of that litigation. As Lord Briggs explained in the recent case of Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21 at [3]-[4], the solicitor's equitable lien is a security interest and is enforceable against the proceeds of the litigation up to the amoun......
-
The Weekly Roundup: The Precedents Edition
...before the Court of Appeal, the law in this area was altered by the case of Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21 which decided that a solicitor's equitable lien could indeed arise where no proceedings had been commenced. Despite this, the Court of Appeal st......
-
Focus On' Professional Liability
...of the fruits of that litigation. As Lord Briggs explained in the recent case of Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21 at [3]-[4], the solicitor's equitable lien is a security interest and is enforceable against the proceeds of the litigation up to the amoun......
-
Insurer Must Compensate Solicitor After 'Settling Direct' With Its Clients
...been entitled on the basis of the actual settlement amounts. Useful Links Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2018] UKSC 21 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific...
-
THE CASE AGAINST THE EQUITABLE LIEN.
...Tappendun v Artus [1964] 2 QB 185, 194-5 (Diplock LJ for the Court). (66) See Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] 1 WLR 2052, 2064-6 [30]-[37] (Lord Briggs JSC, Baroness Hale PSC, Lords Kerr, Wilson and Sumption JJSC agreeing) ('Gavin Edmondson (67) Ibid 2056 [2] ......