Report on the Case of: Bott & Co Solicitors Ltd v Ryanair DAC [2018] EWHC 534 (Ch)

On 16 March 2018, The High Court handed down judgment dismissing a claim bought by Bott & Co Solicitors Ltd against Ryanair DAC arising out of the latter’s handling of claims for flight disruption compensation under Regulation (EC) 261/2004.

This action arose as a result of the Defendant opting to settle the pre-action flight delay compensation claims directly with the Claimant’s clients, clearly with a view limit their liability for costs. This therefore resulted in the Claimant losing the opportunity to deduct their fees from the Client’s compensation.

As a result, the Claimant proceeded to request that the Defendant provide an undertaking to preserve the Claimant’s lien over any claim proceeds. The Defendant however refused, resulting in the Claimant issuing proceedings for relief as well as an indemnity in respect of fees.

In the High Court, the Claimant was refused equitable relief to protect its lien for costs

When making this decision, the high Court considered a number of authorities and applied the following criteria in order for a Solicitor to have an equitable lien in relation to property recovered preserved:

“(i) There must be a fund in sight;

(ii) recovered, preserved or established by the solicitor’s efforts or activity;

(iii) as a result of litigation or arbitration, including a compromise resulting from the pressure of litigation or arbitration between the solicitor’s client and the other party,

(iv) in which the solicitor has an interest that equity can protect and which is deserving of protection.”

Having considered the above criteria, it was concluded that no lien arose in the case given that the compromises which were the subject of the claim occurred without litigation or arbitration, and there was no basis for extending a protective equitable principle to cover them.

Two key cases that were also borne in mind in this matter were as follows:

Khans Solicitors v Chifuntwe [2013] EWCA Civ 481

Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2015] EWCA Civ 1230

The High Court however distinguished this case from Khans and Gavin Edmondson.

It was found that there was a ‘key difference’ in the nature of the work undertaken by the Claimant to that of Gavin Edmondson,

in that “in this case, Bott is not engaging with a formalised scheme, sanctioned by the judiciary, for the resolution of claims that gives rise an entitlement to fixed costs under the CPR”.

The Defendant also argued that no equitable lien arises in favour of the Claimant by reason of the fact that the Claimant’s business model meant that little or no legal work is actually undertaken in relation to the vast majority of the flight delay compensation claims submitted to the Defendant.

Accordingly, it was found that the Defendant was not obliged to pay compensation directly to the Claimant in relation to claims submitted by the Claimant on behalf of its clients to the Defendant. It therefore followed, in relation to the Indemnity Issue, that the Defendant was not obliged to indemnify the Claimant in respect of fees where it has paid compensation directly to the Claimant’s client while on notice of the claim and where the Claimant has not recovered its fees in respect of the claim from the client.

The High Court therefore refused to grant the Claimant any lien for costs and dismissed the claim.

This judgment could therefore have a significant impact on the market for handling flight disruption compensation claims.

As highlighted recently by Kerry Underwood, “this is a case that has major implications for those solicitors faced with correspondence from the likes of JG and Checkmylegalfees.”

“If solicitors feel that there may potentially be small sums due to the lay client, then they can send that small sum to the lay client without any lien based liability for the new solicitors’ cost.”

“Any such costs would then be a matter between those new solicitors and the lay client.”

 

Danielle Phillipson