Solicitors handling flight compensation claims had a right to their costs despite the airline trying to deal directly with their clients, the Supreme Court has ruled.
The court allowed the appeal from north west practice Bott & Co by a 3-2 majority, finding that the firm was entitled to a lien over clients’ compensation for its costs.
In the lead judgment, Lord Burrows said Bott & Co had provided legal services to its clients for the making of compensation claims for flights cancellations and delays, and Ryanair was not able to avoid paying costs by simply bypassing the solicitors.
The outcome is likely to have a wider impact on small claims, where insurers and other paying parties may have been minded to deal directly with law firm clients and deny them costs.
Lord Burrows said: ‘The vindication of a client’s legal rights, through the making of claims, is more likely to be effective if solicitors know that they have the security of a lien to recover their costs.’
Bott & Co handles thousands of flight delay claims every year on a no win, no fee basis, with a high proportion of them involving Ryanair. Prior to 2016, the airline would pay compensation into Bott’s client account for the firm to deduct its fees and distribute the remainder to passengers. Then Ryanair changed its practice and began communicating directly with Bott’s clients and paying compensation to them, forcing the firm to pursue its clients for payment.
Bott brought proceedings against Ryanair claiming an equitable lien over the compensation for costs and asking for an injunction restraining Ryanair from paying compensation directly. The High Court and Court of Appeal backed the airline, but those rulings have now been overturned by the Supreme Court.
Lord Burrows said the court’s decision in Edmondson v Haven had confirmed that access to justice underpins solicitors’ equitable liens and supported a clear, principled and easy-to-apply test for recognising that the right to costs did not depend on whether or not a dispute had arisen.
He added: ‘The appropriate test for a solicitor’s equitable lien is whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client.’
Giving separate judgments, Lady Arden and Lord Briggs also supported Bott’s appeal. Lady Arden noted that effective access to justice included ensuring that a person can get advice and was a ‘foremost animating principle’ of the equitable lien.
Lord Briggs, the author of a 2015 report on the civil courts structure, said that Bott had devised and marketed a largely automated online scheme designed to enable clients to recover compensation, although he noted the disproportionate cost of having to engage solicitors for such small compensation amounts. He spoke of the need for ‘reasonable certainty’ about the existence of the lien and said it was too narrow to impose a requirement that there be an actual dispute at the time of the retainer.
Lord Leggatt and Lady Rose dissented, suggesting that Bott was asking the court to extend the lien to some transactional work carried out by a solicitor. Lady Rose added: ‘The rationale for the lien requires that, for a lien to arise, there must be a dispute, existing or reasonable anticipated, in connections 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.’
Professor Dominic Regan, columnist and costs expert in the Gazette sister publication Litigation Funding, commented on Twitter:
Bott & Co win 3-2 against Ryanair which has been ordered to make good any failure to recover costs as a result of sending payment to the passenger direct. Lord Briggs spot on in his excellent judgment. Claimants in lower value claims need advice ; an access to justice issue.
— Professor Dominic Regan (@krug79)March 16, 2022
