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How far can a solicitor lien?

26/04/2018 | Charlotte Woodward
Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited UKSC 21 Solicitors have long been entitled to a lien for payment of their costs and disbursements. A lien provides an equitable

Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited [2018] UKSC 21

Solicitors have long been entitled to a lien for payment of their costs and disbursements. A lien provides an equitable form of security for solicitors agreed charges overs the fruits of the litigation. The solicitors’ equitable lien was developed to promote access to justice by allowing client’s with meritorious claims but without the financial resource to pay up front to pursue litigation on “credit”. This appeal, heard in February 2018, tested the limits, in the modern context, of the long established remedy.

The Facts

Several claimants were pursuing road traffic accident claims under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the “Protocol”) against drivers who were insured by the Haven. The claimants entered into CFAs with their solicitors (“Edmondson”) and their claims were entered online in to the Road Traffic Accident Portal (the “Portal”) in line with the Protocol by Edmondson. Haven knew that the claims had been notified under the Portal but it then settled the claims directly with the claimants (offering to pay the claimants more and more quickly, if they did not use solicitors), thereby depriving the claimants’ solicitors of their costs. Edmondson claim against Haven was for the fixed costs which it should have been paid under the Protocol. Specifically Edmondson sought enforcement of a solicitor’s equitable lien.

Decision

The Supreme Court has now unanimously dismissed the appeal and upheld Edmondson’s claim. They found Edmondson was entitled to the enforcement of the traditional equitable lien against Haven, as the client owed a contractual duty to pay the solicitors’ charges.

The law in relation to lien traditionally depends upon:

  1. The client having liability to the solicitors for his charges;
  2. There being something in the nature of a fund in which equity can recognise that the solicitor has a claim; and
  3. Something sufficiently affecting the conscience of the payer at the time of payment, either in the form of collusion with the client to cheat to the solicitor or notice or knowledge of the solicitor’s claim against or interest in the fund.

Overriding the Court of Appeal, the Supreme Court found that there was a contractual liability between the claimants and Edmondson. The client care letter explained that Edmondson would be able to recover it costs from the losing side if the claimants won, so that the claimants would not need to put their hands in their own pockets. This did not mean that the claimants were not contractually liable, it merely limited the recourse, and provides for sufficient foundation for a lien to operate.

The settlement fund must have in some way been created by the Edmondson. The Supreme Court found that Edmondson’s actions in logging the claim on the portal contributed to the settlement in two ways. First, it supplied the details of the claim to the insurers, and second, it demonstrated   the claimant’s serious intention to purse the claim, and ability to do with the benefit of a CFA.

Provided that the debt has arisen in part from the activities of the solicitor there is no reason in principle why formal proceedings must first have been issued. This was emphasised as a matter of policy as all courts encourage parties to attempt to resolve disputes by suitable forms of ADR.

Once notified that the claimant in a road traffic accident has retained solicitors under a CFA, and that the solicitors are proceedings under the Protocol, they have the requisite notice and knowledge that sums cannot be paid to directly to the claimant or would result in interference with the solicitors’ interest with the fruits of the litigation. The court ordered Haven to pay Edmondson’s costs under the CFAs.

For more information on the case please click on the below link:

https://www.supremecourt.uk/cases/docs/uksc-2016-0010-judgment.pdf

 

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