SOLICITORS, AIRLINES AND LIENS: SUPREME COURT DECISION

In Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8 the Supreme Court allowed an appeal from the Court of Appeal. The Court of Appeal had held that the solicitors were not providing a litigation service in the promotion of access to justice.

The press summary can be read here.  

The judgment can be read here. 

THE CASE

The claimant firm of solicitors handled a large volume of claims for flight cancellation claims. A large percentage of these were against Ryanair.  The airline had, in the past, paid damages into Bott’s client account and the solicitors had accounted to their clients after deducting fees.

Ryanair changed that practice.  The solicitors issued proceedings claiming an equitable lien over the compensation in respect of its costs and an injunction preventing this practice occurring in the future.

The solicitors action failed in the High Court and Court of Appeal but succeeded in the Supreme Court.

THE SUPREME COURT DECISION

The Supreme Court was split on the issue with the minority, who gave the first judgment, finding in favour of Ryanair. However the majority view favoured the solicitors.

• A solicitors lien does not turn on whether a dispute has arisen.

Lady Arden set out the importance of encouraging non-judicial settlement of disputes.

123. Times have moved on since cases such as Welsh v Hole (see para 111 above) were decided. There is today an enormous pressure on court resources, human and physical. Accordingly, the courts in certain circumstances encourage parties to seek to resolve their disputes in other ways, if that is appropriate, before pursuing court proceedings. So, for example, in a dispute about financial services, the client may be encouraged to use some mediation service, or process involving an ombudsperson, before bringing any court proceedings.

124. A reference to arbitration has long been recognised as in the public interest. It follows that other forms of dispute resolution out of court which have been developed since should be regarded in the same way. Lord Kenyon CJ recognised that there was a public interest in arbitration when he held in Ormerod v Tate (1801) 1 East 464; 102 ER 179 that the solicitor’s equitable lien was available where, after proceedings had been commenced, the parties agreed to go to arbitration. He added (immediately after the passage cited by Lord Leggatt and Lady Rose at para 21 of their judgment):

“The public have an interest that it should be so; for otherwise no attorney will be forward to advise a reference.” (p 465)

The relevant area of law may be sufficiently clear to a person who is legally trained, but in reality a layperson may well be unfamiliar with it, or unwilling to act without some advice. Compensation for delayed or cancelled flights may not be straightforward in every case (see for example Gahan v Emirates [2018] 1 WLR 2287) but I accept that it will be relatively so in many cases.

Recovery must be through the instrumentality of the solicitor

125. Clearly, for the equitable lien to arise, the sum recovered must have been obtained through the instrumentality of the solicitor’s services. It has been held to extend to collateral benefits obtained on losing the litigation (Hyde v White [1933] P 105). But it is not necessary to discuss the meaning of instrumentality further on this appeal.

LORD BRIGG: WHAT IS “LITIGATION”

1. 151. This scheme was probably not the first, and is unlikely to be the last, attempt by solicitors to devise ways of providing their professional services to clients in the profitable pursuit of modest claims at proportionate cost, by undertaking a large number of claims of particular types based on narrow profit margins per case. In general terms access to justice is well served by such activities, where the perceived obstacles to small claim recovery are such as to deter people from vindicating their rights by other means. Since, as Lady Arden emphasises and Edmondson establishes, access to justice for persons of modest means is the animating principle underlying the solicitors’ equitable lien, that objective will be served by as clear as possible a definition of the work which constitutes “litigation” for the purpose of attracting the lien, in a form which enables those working out the economics of a proposed scheme to know in advance whether the lien will or will not be available.

1. 152. Potential defendants need similar certainty. The equitable lien operates against a defendant who pays the claimant direct only if the defendant has notice of the lien, or colludes with the claimant to defeat the solicitors’ entitlement to their fees. In that context “notice” means notice of the facts which, as a matter of law, give rise to the lien. Those conditions reflect the underlying notion that it is only where the defendant has acted in some way unconscionably in paying the claimant direct that it incurs the liability to make an additional payment of the solicitors’ fees. There may be perfectly proper reasons why a defendant would prefer to pay the claimant direct. The inhibition from paying direct constituted by having notice of the solicitors’ equitable lien assumes knowledge of whether or not the relevant facts of which the defendant has notice do give rise to a lien. But if there is real uncertainty whether those facts do in law give rise to an equitable lien, then the notice condition may fail to serve its proper purpose.

153. Most people, lawyers especially, probably think they have a reasonably clear general idea about what constitutes litigation. In relation to solicitors, the work ordinarily done in a litigation department may superficially easily be distinguished from work done, for example, in a conveyancing department, or from other transactional or regulatory work. Many firms of solicitors and other commentators tend now to use the phrase “dispute resolution” in place of litigation, but with much the same intended meaning. There are also some statutory definitions of litigation, but they exist for specific purposes which have nothing to do with triggering the solicitors’ equitable lien. Similarly most people have reasonably clear views about the types of activity which promote access to justice, and the types of work that fall within the legal services ordinarily undertaken by solicitors. But this case has demonstrated that none of these familiar distinctions yields a definition of litigation sufficient to set metes and bounds to the scope of work for which payment is protected by the solicitors’ equitable lien. After lengthy written and oral submissions, and extended deliberation, the other members of this court remain equally divided about which side of this elusive line Bott’s scheme should be held to fall.

154. We are however all agreed about the main principles, most of which derive from Edmondson. First, as already noted, the animating principle behind this equitable lien is that it promotes access to justice for potential claimants with insufficient means to pay lawyers up front, by enabling solicitors to act for them in the pursuit of their claims on credit, with reasonable security for their fees, against recoveries. Secondly, the requirement that the recovery be made through the instrumentality of the solicitors’ work sets a low threshold. The work does not have to pass any test of skill or sophistication, nor need it be the sole or effective cause of the client’s recovery. It is no objection that the carrying out of the “work” may be largely automated, with minimal human intervention. Thirdly, payment for transactional work is wholly excluded from protection. Fourthly, the lien provides security for the earliest stages of work done in the pursuit of the client’s claim (such as the preparation and sending of a pre-action letter of claim, or the notification of the claim on a pre-action portal), and regardless whether the recovery eventually made is the result of court proceedings, arbitration, mediation, negotiation or any other method of dispute resolution. It is in principle sufficient if the intended defendant agrees to pay in full simply in response to the solicitors’ pre-action letter of claim. Fifthly, none of the various statutory definitions of litigation or contentious business assist. Finally, the question whether the lien arises must in principle be able to be decided at the time when the solicitors agree to act for the client, provided of course that some recovery ensues, to which the lien can attach. All this sufficiently appears from paras 5-63 of the joint judgment of Lord Leggatt and Lady Rose, with the substance of which Lady Arden and Lord Burrows agree. I also agree, although Lord Leggatt and Lady Rose use the word “litigation” in a narrower sense than I do, as confined to proceedings in court, using the phrase “dispute resolution” to include litigation, arbitration and all other methods of ADR (alternative dispute resolution) including mediation and negotiation by which a claim may be pursued to the making of a recovery.