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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2018] UKSC 21 (18 April 2018) URL: https://www.bailii.org/uk/cases/UKSC/2018/21.html Cite as: [2018] UKSC 21, [2018] PNLR 24, [2018] RTR 22, [2018] 2 Costs LR 347, [2018] 3 All ER 273, [2018] WLR 2052, [2018] WLR(D) 241, [2018] 1 WLR 2052 |
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[2018] UKSC 21
On appeal from: [2015] EWCA Civ 1230
JUDGMENT
Gavin
Edmondson
Solicitors Limited (Respondent/Cross-Appellant) v Haven
Insurance Company Limited (Appellant/Cross-Respondent)
before
Lady Hale, President
Lord Kerr
Lord Wilson
Lord Sumption
Lord Briggs
JUDGMENT GIVEN ON
18 April 2018
Heard on 5 and 6 February 2018
Appellant/Cross-Respondent |
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Respondent/Cross-Appellant |
Lord Marks QC |
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Jonathan Crow QC |
Jamie Carpenter |
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Lesley Anderson QC |
James Wibberley |
|
Martin Budworth |
(Instructed by Flint Bishop LLP) |
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|
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Intervener - Law Society (written submissions only) |
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David Holland QC |
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(Instructed by Law Society Legal Services Department) |
LORD BRIGGS: (with whom Lady Hale, Lord Kerr, Lord Wilson and Lord Sumption agree)
7.
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.
9.
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.
10.
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 being
contrary to settled principle. Edmondson
countered first by asserting that the
retainers did contain a sufficient contractual liability of the clients for
their charges to support their equitable lien on conventional grounds.
Secondly, and in the alternative,
Edmondson
vigorously supported the extended
power of equitable intervention in the absence of such a contractual liability,
as devised by the Court of Appeal. This court permitted The Law Society of
England and Wales to intervene in writing, broadly in support of the solution
devised by the Court of Appeal, and to submit written evidence about the
widespread use of the CFA Lite, and the use of the RTA Protocol. The court is
grateful for the submissions both of the parties and of the Law Society.
The Facts
Ainsley Tonkin
13.
Mr Ainsley Tonkin was involved in a road traffic collision on 10 April
2012. Haven’s insured was also involved in the collision and on the 12 April
2012. Haven, having obtained Mr Tonkin’s contact details from its insured’s
accident report form, contacted Mr Tonkin concerning a hire vehicle. On 16
April 2012 Mr Tonkin entered into a CFA with Edmondson
and on 17 April 2012 the
case entered the Portal. On 20 April 2012 Mr Tonkin telephoned Haven asking “where
they go from here”. He was told by Louise Richardson of Haven:
“... What we can do is offer you a scheme to compensate you for your injury. We can work out a sum of money and you can put it into your account as soon as you agree on that figure.”
“So the offer stands at the moment at two thousand two hundred pounds and obviously [indecipherable] think about it but if you do ask your solicitors they will tell you that they can get you more ... but at the end of the day that offer will come from myself and we through solicitors we have to pay solicitor costs as well.”
Michael Wheater, Dale Makey, Saul Mohsin and Rose Lunt
16.
On 23 June 2012, Mr Michael Wheater, Mr Dale Makey, Mr Saul Mohsin and
Ms Rose Lunt were all travelling in the same vehicle when it was involved in a
road traffic accident. On 20 July 2012 all four entered into CFAs with
Edmondson
and on 23 July 2012 their cases entered the Portal. On 24 July 2012
Haven sent to each of them a letter containing an offer of settlement. On 7
August 2012 Mr Mohsin telephoned Mr O’Connell of Haven who told him that “we
offer services if you want to come to us to avoid going to the solicitors”. Mr
Mohsin explained that he had actually gone to some solicitors but he was
concerned that it was going to take a long time to get everything settled.
Later that day Mr Mohsin telephoned Haven again with the news that he had
spoken to Mr Wheater, Mr Makey and Ms Lunt and that they were all going to
accept the offer. On the same day Mr Mohsin sent an email enclosing mandates of
acceptance completed by all four claimants.
Daniel Grannell
17.
Mr Daniel Grannell was involved in a road traffic accident on 30 August
2012. On the following day he entered into a CFA with Edmondson
and his case
entered the Portal that day. On 10 September 2012 Haven sent Mr Grannell a
letter offering to settle the claim for £1,900. On 14 September 2012 Haven
received a completed mandate of acceptance signed by Mr Grannell on 13
September 2012.
18.
Thereafter an impostor claiming to be Mr Grannell spoke by telephone
with Haven and the compensation was paid to an account on his directions. When
Mr Grannell subsequently contacted Haven, Haven became aware that it had been
defrauded. In a telephone conversation on 6 November 2012 Mr Grannell stated
that the mandate of acceptance dated 13 September 2012 was genuine. Mr Ralph
McClaren of Haven told him that the offer of £1,900 was still on the table and
that he could arrange for that to be paid at once. Mr Grannell replied that he
would love that. Mr McClaren then said that he would contact Edmondson
and tell
Edmondson
what they had done. He then added:
“As I say they’ll probably when you speak to them they’ll probably will tell you not to ya know or you shouldn’t do that but for the to be honest with you if when they call you probably a bit less the reason we offer you a bit more is because of the fact the solicitors get kept out of it so we don't have to pay their fees that’s basically it.”
Mr Grannell said he was absolutely happy with that.
19.
The facts relevant to the issue about notice were the same in all three
cases. As will shortly appear, the RTA Protocol prescribes a simple online form
of notification of a claim (a Claim Notification Form or “CNF”) which contains
a tick box opposite a statement that the solicitors had been retained under a
CFA which provided for a success fee. In each case Edmondson
ticked the box and
filled in the date of the retainer. Thus Haven knew that information via the
Portal before it began negotiating with the claimants. Haven did not know the
detailed terms of the retainers, which I shall now describe.
The CFA Lite Retainers
20.
Each of the claimants retained Edmondson
on identical terms. They were
each sent, on the same day, the following documents. First, a document headed
(under the firm’s logo) “CFA”, containing these relevant provisions:
“This agreement is a binding legal contract between you and your solicitor/s. Before you sign, please read everything carefully.
This agreement must be read in conjunction with the Law Society document ‘What you need to know about a CFA’.
Paying us
If you win your claim, you pay our basic charges, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium as set out in the document ‘What you need to know about a CFA.’
The Success Fee
The success fee is set at 100% of basic charges, where the claim concludes at trial; or 12.5% where the claim concludes before a trial has commenced. In addition 5% relates to the postponement of payment of our fees and expenses and cannot be recovered from your opponent. The Success fee inclusive of any additional percentage relating to postponement cannot be more than 100% of the basic charges in total.”
“What do I pay if I win?
If you win your claim, you pay our basic charges, our disbursements and a success fee. The amount of these is not based on or limited by the damages. You can claim from your opponent part or all of our basic charges, our disbursements, a success fee and insurance premium.
Basic charges
These are for work done from now until this agreement ends. These are subject to review.”
Under the heading “How we calculate our basic charges” the document sets out a table of hourly rates.
“Road Traffic Accidents
If your claim is settled before proceedings are issued, for less than £10,000, our basic costs will be £800; plus 20% of the damages agreed up to £5,000; and 15% of the damages agreed between £5,000 and £10,000. [If you live in London, these costs will be increased by 12.5%]. These costs are fixed by the Civil Procedure Rules.”
Provision is then made for charging VAT.
“Dealing with costs if you win
• You are liable to pay all our basic charges, our disbursements and success fee.
• Normally, you can claim part or all of our basic charges, our disbursements success fee and insurance premium from your opponent.
• If we and your opponent cannot agree the amount, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges and our disbursements, then you pay the difference.
• You will not be entitled to recover from your opponent the part of the success fee that relates to the cost to us of postponing receipt of our charges and our disbursements. This remains payable by you.”
As with the costs in general, you remain ultimately responsible for paying our success fee.
You agree to pay into a designated account any cheque received by you or by us from your opponent and made payable to you. Out of the money, you agree to let us take the balance of the basic charges; success fee; insurance premium; our remaining disbursements; and VAT.
You take the rest.
We are allowed to keep any interest your opponent pays on the charges.
If your opponent fails to pay
If your opponent does not pay any damages or charges owed to you, we have the right to take recovery action in your name to enforce a judgment, order or agreement. The charges of this action become part of the basic charges.”
In a lengthy definitions section there is this definition of “win”:
“Win
Your claim for damages is finally decided in your favour, whether by a court decision or an agreement to pay you damages or in any way that you derive benefit from pursuing the claim.”
“Costs:
In this case we have advised and you have elected to enter into a conditional fee agreement. Full details of the terms of the agreement and our charging rates are set out within the conditional fee agreement and the accompanying schedules.
For the avoidance of any doubt if you win your case I will be able to recover our disbursements, basic costs and the success fee from your opponent. You are responsible for our fees and expenses only to the extent that these are recovered from the losing side. This means that if you win, you pay nothing.”
It is this last quoted passage that is said to make the retainer a CFA Lite, because of its evident intent to assure the client that he will not in any circumstances have to put his hand in his own pocket to pay his solicitors.
The RTA Protocol
25. The preamble to the RTA Protocol states:
“2.1 This Protocol describes the behaviour the court will normally expect of the parties prior to the start of proceedings where a claimant claims damages valued at no more than £10,000 as a result of a personal injury sustained by that person in a road traffic accident.”
The aims of the Protocol are set out in paragraph 3.1.
“3.1 The aim of this Protocol is to ensure that
(1) the defendant pays damages and costs using the process set out in the Protocol without the need for the claimant to start proceedings;
(2) damages are paid within a reasonable time; and
(3) the claimant’s legal representative receives the fixed costs at the end of each stage in this Protocol.”
Claims which no longer continue under the Protocol cannot subsequently re-enter the process. (Paragraph 5.11)
“6.1 The claimant must complete and send -
(1) the CNF to the defendant’s insurers; ...”
The RTA Protocol makes provision for response by the insurer as follows:
“6.10 The defendant must send to the claimant an electronic acknowledgment the next day after receipt of the CNF;
6.11 The defendant must complete the ‘Insurer Response’ section of the CNF (‘the CNF response’) and send it to the claimant within 15 days;
6.15 The claim will no longer continue under this Protocol where the defendant, within the period in paragraph 6.11 or 6.13 -
(1) makes an admission of liability but alleges contributory negligence (other than in relation to the claimant’s admitted failure to wear a seat belt);
(2) does not complete and send the CNF response;
(3) does not admit liability; or
(4) notifies the claimant that the defendant considers that (a) there is inadequate mandatory information in the CNF; or (b) if proceedings were issued, the small claims track would be the normal track for that claim.”
“6.18 Except where the claimant is a child, the defendant must pay the Stage 1 fixed costs in rule 45.29 where
(1) liability is admitted; or
(2) liability is admitted and contributory negligence is alleged only in relation to the claimant’s admitted failure to wear a seat belt,
within ten days after sending the CNF response to the claimant as provided in paragraph 6.11 or 6.13.”
“7.37 Any offer to settle made at any stage by either party will automatically include, and cannot exclude -
(1) the Stage 2 fixed costs in rule 45.29;
(2) an agreement in principle to pay disbursements;
(3) a success fee in accordance with rule 45.31(1).”
Paragraph 7.40 provides in respect of Settlement:
“7.40 Except where the claimant is a child or paragraphs 7.41 and 7.42 apply, the defendant must pay -
(1) the agreed damages less any
(a) deductible amount which is payable to the CRU; and
(b) previous interim payment;
(2) any unpaid Stage 1 fixed costs in rule 45.29;
(3) the Stage 2 fixed costs in rule 45.29;
(4) the relevant disbursements allowed in accordance with rule 45.30; and
(5) a success fee in accordance with rule 45.31 for Stage 1 and Stage 2 fixed costs, within ten days of the end of the relevant period in paragraphs 7.28 to 7.30 during which the parties agreed a settlement.”
The Solicitors’ Equitable Lien: the Existing Law
“An attorney has a lien on the money recovered by his client, for his bill of costs; if the money come to his hands, he may retain to the amount of his bill. He may stop it in transit if he can lay hold of it. If he apply to the Court, they will prevent its being paid over till his demand is satisfied. I am inclined to go still farther, and to hold that, if the attorney give notice to the defendant not to pay till his bill should be discharged, a payment by the defendant after such notice would be in his own wrong, and like paying a debt which has been assigned, after notice. But I think we cannot go beyond those limits.”
There having been no notice in that case, the solicitor’s claim against the defendant failed. It is implicit in Lord Mansfield’s reasoning that, if there had been notice to the defendant, he would have had to pay a second time, up to the amount of the solicitor’s bill. The typically terse judgment may be said to have dealt with legal and equitable lien without clearly distinguishing between the two, but the analogy of an assigned debt shows that Lord Mansfield recognised that the solicitor had an interest in the judgment debt which the court would protect, provided that notice of that interest had been given to the debtor before payment to the judgment creditor. An interest dependent upon notice is typical of an equitable interest.
31. Confirmation that payment of the judgment debt to the claimant after notice of the solicitor’s interest exposed the payer to having to pay again was provided in Read v Dupper 101 ER 595 (1795) 6 Term Rep 361. In that case the defendant’s solicitor paid the plaintiff direct, after notice of the plaintiff’s solicitor’s interest, and had to pay again. Lord Kenyon began:
“The principle by which this application is to be decided was settled long ago, namely that the party should not run away with the fruits of the cause without satisfying the legal demands of his attorney, by whose industry, and in many instances at whose expense, those fruits are obtained.”
Lord Kenyon explained Lord Mansfield’s reference to assignment in Welsh v Hole in terms of equitable principle. He said:
“… according to the rules of equity and honest dealing if the assignee give notice to the debtor of such assignment, he shall not afterwards be suffered to avail himself of a payment to the principal in fraud of such notice.”
32. In Ormerod v Tate (1801) 1 East 464, 102 ER 179 the fruits consisted of the debt arising from an arbitration award. That appears to have been a case of collusion, because Lord Kenyon described the arrangement to pay the claimant direct as:
“no other than a mere shuffle between the plaintiff and defendant to cheat the attorney of his lien.”
He described the extension of the principle to accommodate arbitration awards as justified by “convenience, good sense and justice” and recognised a public interest in the extension, to encourage litigants to use arbitration.
33. Two early cases demonstrate that access to justice lay behind the development of the principle. The first is Ex p Bryant (1815) 1 Madd 49. Vice Chancellor Plumer said:
“I do not wish to relax the doctrine as to lien, for it is to the advantage of clients, as well as solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their costs under the doctrine as to lien.”
The Vice Chancellor also said, obiter, that knowledge of the solicitor’s lien on the part of the payer would be as effective as notice. To the same effect is Gould v Davis (1831) 1 Cr & J 415.
34. The second case is In re Moss (1866) LR 2 Eq 345, although it was about a legal rather than equitable lien. Lord Romilly MR said:
“I think it of great importance to preserve the lien of solicitors. That is the real security for solicitors engaged in business. It is also beneficial to the suitors. It would frequently happen, but for the lien which solicitors have upon papers and deeds, that a client who is not able to advance money to enable them to carry on business would be deprived of justice, through inability to prosecute his claims in the suit.”
35. Barker v St Quintin (1844) 12 M & W 441, 152 ER 1270 shows, better than any other, that the equitable lien operates by way of security or charge. Baron Parke said:
“The lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the Court to have that judgment held as a security for his debt.”
A similar analysis is provided by Lord Hanworth MR in Mason v Mason and Cottrell [1933] P 199, at 214. The use of the concepts security and charge imply that there must be identified some fund over which it can operate. This was described as a necessary condition of equitable interference under this principle in In re Fuld dec’d (No 4) [1968] P 727, per Scarman J at 736. The requirement for a fund may be satisfied not just by a judgment debt or arbitration award, but also by a debt arising from a settlement agreement. Provided that the debt has arisen in part from the activities of the solicitor there is no reason in principle (and none has been suggested) why formal proceedings must first have been issued, all the more so in modern times when parties and their solicitors are encouraged as a matter of policy to attempt to resolve disputes by suitable forms of ADR, and when pre-action protocols of widely differing kinds have been developed precisely for that purpose.
36. The authorities on the solicitors’ equitable lien (including many of those summarised above) were recently reviewed by the Court of Appeal in Khans Solicitors v Chifuntwe [2014] 1 WLR 1185. The fund in question consisted of a debt arising from the agreement of the Home Secretary to settle pending judicial review proceedings by a payment of a specific sum on account of the claimant’s costs. The payment was made direct by the Treasury Solicitor to the claimant (by then acting in person) after express notice from the claimant’s former solicitors that they claimed a lien. The Home Secretary was ordered to pay the settlement sum a second time to the solicitors, less an amount already paid by the client on account. Sir Stephen Sedley provided this summary, at para 33:
“In our judgment, the law is today (and, in our view, has been for fully two centuries) that the court will intervene to protect a solicitor’s claim on funds recovered or due to be recovered by a client or former client if (a) the paying party is colluding with the client to cheat the solicitor of his fees, or (b) the paying party is on notice that the other party’s solicitor has a claim on the funds for outstanding fees. The form of protection ought to be preventative but may in a proper case take the form of dual payment.”
38.
It remains to consider whether the decision of the Court of Appeal in
the present case is either an application of that settled principle, or a legitimate
extension of it, in the context of its finding that Edmondson
had no
contractual entitlement to its charges from any of the claimants, but only the
expectation of receiving fixed costs, disbursements and a success fee under the
terms of the RTA Protocol. But it is first necessary to determine whether or
not
Edmondson
did have a contractual entitlement to its charges under the CFA.
Construction of the CFA - Does the client have any contractual liability to pay the solicitor’s charges?
“The solicitor has no recourse against his client for the fees and is limited to what he can recover from the losing side.”
Later, at para 30, he continued:
“I consider that the effect of the
client care letter is to override the general provisions in each CFA with the
result that the underlying claimants were not under any personal liability to
pay the fees of Edmondson.
Rather,
Edmondson
has limited its fees to what may
be recovered from the defendants in the underlying proceedings. In these
circumstances,
Edmondson
would not have a lien over assets received on its
clients’ account because there is no underlying liability of the clients to
Edmondson
for the lien to protect.”
40.
I respectfully disagree. In my judgment, for the reasons which follow,
the Client Care Letter did not destroy the basic liability of the client for
Edmondson’s
charges expressly declared in the CFA and Law Society’s standard terms.
It merely limited the recourse from which
Edmondson
could satisfy that
liability to the amount of its recoveries from the defendant. It both preserved
and in my view affirmed that basic contractual liability, to the full extent
necessary to form the basis of a claim to an equitable charge as security.
42.
I consider that the language of that passage does three things. First,
it asserts a right for Edmondson
to recover its fees and charges from the
defendant. That affirms the equitable lien, since there would otherwise be no
basis upon which
Edmondson
could do so. Secondly it states in clear terms that
such a recovery is the means by which
Edmondson
can give effect to a continuing
responsibility of the client for those fees. Thirdly it limits
Edmondson’s
recourse for the fees to the amount recovered from the defendant.
Did Haven have Notice
of Edmondson’s
Lien?
45.
The result of the above analysis is that there did exist, in each of the
six cases, a sufficient contractual entitlement of Edmondson
against its
claimant clients to form the basis of a claim to an equitable lien over the
agreed settlement debts payable by Haven on behalf of its insured drivers. The
conventional analysis therefore requires the following questions to be
answered: (1) did those settlement debts owe their creation, to a significant
extent, to
Edmondson’s
services provided to the claimants under the CFAs? and
(2) in the absence of collusion did Haven have notice (or knowledge) of
Edmondson’s
interest in the settlement debts?
46.
There has been no challenge to an affirmative answer to the first
question, save in the case of Mr Tonkin, to which I shall return below. Edmondson
completed and lodged the CNFs onto the RTA Portal as the first step in its
discharge of its duties under its retainers. Each CNF contained a sufficient
description of the clients’ claims and an indication that, unless settled, they
would in due course lead to litigation. Even though it did not involve
Edmondson
in much work, it was enough to trigger
Edmondson’s
entitlement to its
basic charge, disbursements and success fee under the CFA terms if there ensued
a successful outcome to the claim, and enough to galvanise Haven into making a
direct settlement offer to each of the claimants.
47.
The question of knowledge or notice is in dispute. Absence of notice was
the main reason why the claims failed before the judge. In his view it was a
fatal objection that Haven did not know the detailed terms of the CFAs. In the
Court of Appeal it was held that Haven had both express notice, implied notice
and the requisite knowledge in any event. The claim under the traditional
principles of equitable lien failed, not because of absence of notice, but
because there was no underlying responsibility of the clients to pay
Edmondson’s
charges.
48.
It is common ground that, by the time that Haven paid the settlement
sums direct to the claimants, it knew that each of them had retained Edmondson
under a CFA, but not its detailed terms. This much was apparent from the CNFs
which
Edmondson
placed on the Portal. Haven also knew, from the fact that
Edmondson
chose to initiate each claim by using the RTA Portal, that
Edmondson
was most unlikely to have been paid its charges up front, but rather that it
expected, if successful, to obtain payment of its charges from monies paid by
Haven under the terms of the RTA Protocol, if the case settled while in the
Portal, or by way of a costs order if it went to court. Either way, Haven knew
that
Edmondson
was looking to the fruits of the claim for recovery of its
charges.
49.
Haven’s knowledge that, if the claim could not be settled direct, it
would have to fund Edmondson’s
recoverable charges is also apparent from the
recorded telephone conversations with Mr Tonkin and Mr Grannell set out above. The
judge found that Haven had this knowledge, and intended by settling direct to
avoid having to pay
Edmondson’s
charges. The claim of collusion failed, not
because Haven lacked the requisite intent, but because each of the claimants
did.
The re-formulation of the Equitable Lien by the Court of Appeal
51.
This court’s conclusion that the CFAs made between Edmondson
and its
clients did contain a sufficient contractual entitlement to charges to support
the equitable lien on traditional grounds makes it strictly unnecessary to
address this further question, because the sub-stratum upon which it is based
is missing. There is simply no need, on these facts, to do more than apply the
principles summarised in the Khans case, to reach the conclusion that
Edmondson
are entitled to have Haven pay them the charges identified in the
CFAs as recoverable in the event of a win, to the extent that those charges did
not exceed the settlement sums actually agreed to be paid to the claimants.
52.
But the correctness or otherwise of the Court of Appeal’s reformulation
of the principle has been extensively argued, and supported by the Law Society
as intervener. The Court of Appeal rested its conclusion on two alternative
grounds, both of which assumed that Edmondson’s
clients had no contractual
responsibility of any kind for its charges. The first was that
Edmondson
had
its own entitlement to recover its charges from Haven under the RTA Protocol. The
second was that the clients had such an entitlement, and
Edmondson
had a right
to sue Haven for its enforcement using the client’s name for that purpose.
55.
As for suing in the name of the client, this is (as counsel agreed) a form
of contractual subrogation. The solicitor can be in no better position than the
client, as against the insurer. In the present case, all the clients contracted
with Haven to receive settlement sums which did not include a costs element,
and were paid in full. Any attempt by Edmondson
to stand in their shoes by way
of subrogation would be met by an unanswerable defence from Haven, based upon
the settlement agreements.
56.
Counsel for Edmondson
presented a detailed and vigorous submission to
the effect that the flexibility of the equitable remedy for the protection of
solicitors was apt to respond to any instance of unconscionable conduct by the
insurer, including breach of the RTA Protocol, all the more so because of the
strong public policy in enforcing the scheme, designed as it was to balance the
competing interests of its stakeholders while ensuring access to justice for
the victims of road accidents at proportionate cost. He sought to show, by
reference to the cases which I have summarised, that this remedy had that
flexibility from the outset.
Mr Tonkin
59.
It was submitted for Haven that the particular facts about Mr Tonkin’s
case did not entitle Edmondson
to an equitable lien because, it was said,
Edmondson’s
work pursuant to its retainer made no significant contribution to
the settlement. The submission was that Haven offered Mr Tonkin a settlement
before, and without regard to,
Edmondson
logging Mr Tonkin’s claim onto the
Portal.
60.
I disagree. The relevant chronology is as follows. On 12 April 2012,
shortly after the accident, Haven contacted Mr Tonkin to discuss the provision
of a hire car for him. This had nothing to do with a personal injury claim,
although of course it arose from the same accident. Mr Tonkin and Edmondson
entered into a CFA for the purpose of pursuing his personal injury claim on 16
April and, on the following day,
Edmondson
logged the details of that claim
onto the Portal. Three days later, on 20 April, and after Haven had
acknowledged the claim on the Portal, Mr Tonkin telephoned Haven. The
transcript of the conversation shows that he was ringing about the provision of
a hire car. Haven took that opportunity to make him an oral settlement offer
for his personal injuries, initially of £2,200, later revised after negotiation
to £2,350. This was repeated in writing by Haven on 23 April, and accepted by
Mr Tonkin on the following day.
62.
In Mr Tonkin’s case the evidence does not show that Haven had, before
Edmondson
logged the claim onto the Portal, already obtained any, let alone any
sufficient, information about the personal injuries claim. The earlier
discussion with Mr Tonkin was about the provision of a hire car. Moreover the
chronology shows that Haven had already received and acknowledged Mr Tonkin’s
personal injury claim via the Portal before it made him a settlement offer. Nor
did Mr Tonkin telephone Haven on 20 April to seek such a settlement. The
inference is plain that Haven was encouraged by the logging of the claim onto
the Portal to make an early offer of settlement, and nothing in the judge’s
findings of fact displaces it.
63.
Mr Tonkin’s claim is not therefore an exception to the others, so far as
concerns the application of the established principles about the solicitor’s
equitable lien. Edmondson
made a modest but still significant contribution to
the obtaining of the settlement which ensued, and that was sufficient to
trigger the lien.
Conclusion
65.
The Court of Appeal proceeded upon the basis that the equitable remedy
could be deployed to provide a means for Edmondson to recover from Haven
precisely those fixed costs, disbursements and success fee provided for under
the RTA Protocol, regardless of the amount agreed to be paid in settlement. By
contrast the remedy exists to provide security for the solicitor’s charges
under his retainer, limited to the amount of the debt created by the settlement
agreement. In the present cases, one effect of the retainer was to limit those
recoveries to the amount recoverable from the defendants or their insurers. To
the extent that the fixed costs regime limits those recoveries below that
recoverable under the tables in the CFAs, that limitation would have to be
taken into account, as it has been by the Court of Appeal’s order.