Supreme Court rules “no win no fee” firm entitled to equitable lien from airline that directly compensated its clients 

Lord Burrows

About this case:

• Citation:
  [2022] UKSC 8
• Judgment:
  External link
• Court:
  UK Supreme Court
• Judge:
  Lord Burrows

It had been argued by Ryanair that, where it paid clients of Bott & Co Solicitors directly without the need for court proceedings, no equitable lien arose. Bott raised an appeal on the ground that an equitable lien could still arise where court proceedings had not started. 

The appeal was heard by Lord Briggs, Lady Arden, Lord Leggatt, Lord Burrows, and Lady Rose. Nicholas Bacon QC and Ben Smiley appeared for the appellant and Brian Kennelly QC and Tom Coates for the respondent. 

Administrative burden 

Under EU law made in 2004 (Regulation No 261/2004), since integrated into UK law following Brexit, an air passenger whose flight was cancelled or delayed has rights to compensation. The appellant’s business model was based on processing a large volume of these claims, the vast majority of which were settled with the airline without dispute, and taking 25 per cent of the total compensation amount as a fee. 

In 2014, the respondent introduced a new process allowing passengers to claim compensation using a form on its website. As a result of an increase in claims by companies like the appellant, it began to pay passengers directly to reduce its administrative burden, thus requiring the appellant to seek its fee from the client rather than from Ryanair. 

The appellant claimed an equitable lien over sums payable to the respondent, as well as an indemnity for the costs that it had not been able to recover from its client. In the High Court, the judge held that he was bound by previous authority to find that an equitable lien only arose where proceedings had actually been started. Bott subsequently sought to appeal. 

By the time the case reached the Court of Appeal, the Supreme Court had ruled in Gavin Edmondson Solicitors v Haven Insurance Co (2018) that a solicitor who assisted a client in recovering money was entitled to costs even where the opposing party paid money directly to the client so long as a claim had been notified. However, the Court of Appeal ruled that unless Ryanair disputed a claim, the appellant was not providing a litigation service in the promotion of access to justice. Bott challenged this finding in the Supreme Court. 

Significantly contribute 

In his opinion, Lord Burrows observed: “I do not think it is possible to rationalise, so as to produce coherence, all the situations in which non-contractual liens are imposed by law. Equitable liens have been described as ‘something of a themeless rag-bag’. But it is clear from long-established authority that a solicitor is entitled to an equitable lien over the fruits of litigation in order to give the solicitor security for the recovery of the costs legally owed to the solicitor by his or her client.” 

Addressing whether the present case could be distinguished from Gavin Edmondson, he said: “Assuming that the solicitor is acting for a potential claimant rather than a potential defendant, the best interpretation of Gavin Edmondson is that, for there to be an equitable lien, the solicitor must provide services in relation to the making of a client’s claim which significantly contribute to the successful recovery of a fund by the client.” 

He continued: “In this case, the solicitors have provided such services in relation to the making of claims for compensation for flight cancellations and delays payable under Regulation 261. Provided their services have significantly contributed to the successful recovery of compensation, they are, in my view, entitled to an equitable lien over that compensation. Although I have had some doubts whether, on these facts, one can say that their contribution has been sufficiently significant, I am ultimately satisfied that that requirement is met not least because, as I have said, the threshold is a low one.” 

In her own opinion, Lady Arden added: “The question is: to which of the costs incurred by the client with his solicitor does the solicitor’s equitable lien apply? My answer is the claim-based test as defined above. The mere negotiation rule has gone and has not been replaced. It is now a matter of demonstrating that the costs were properly incurred in pursuit of the claim.” 

Lord Briggs noted the obstacles for potential flight compensation claimants, saying: “The disproportionate cost of having to engage solicitors professionals for the pursuit of small or moderate claims is, if anything, the biggest single impediment to access to civil justice in England and Wales, now reflected in the Civil Procedure Rules and the growing use of fixed costs. It follows that any methods by which solicitors can assist in reducing that disproportionality, so as to make the pursuit of small and moderate claims a realistic choice for ordinary people, are in principle likely to serve the cause of access to justice.” 

For these reasons, the appeal was allowed by a 3-2 majority. A joint dissenting opinion was provided by Lord Leggatt and Lady Rose, who were of the opinion that the case could be distinguished from Gavin Edmondson.