Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd

Equity may protect a solicitor’s interest in fixed costs and other sums payable under a claims scheme even where the solicitor has no personal lien against the client. Notice need not be express; implied notice can suffice. An insurer participating in a claims portal has notice of the representative’s interest where it knows that the claim is within the scheme and deliberately settles directly with the claimant to avoid scheme costs. A claim does not leave the scheme merely because the parties make an inconsistent direct compromise, unless it has formally or automatically exited. An offer made while the retainer remains cancellable does not remove liability where it is unconditional as to termination and is accepted later. Equity may therefore require payment of the scheme sums to the solicitor.

Edmondson acted under conditional fee agreements for six road-traffic personal injury claimants. Their claims had entered the Pre-action Protocol process through the Portal. Haven, the relevant insurer, made direct inclusive settlements with the claimants, thereby avoiding payment of Edmondson’s fixed costs and related sums.

The Mercantile Court dismissed Edmondson’s claims for equitable intervention, inducing breach of contract and causing loss by unlawful means. Permission to appeal was granted on equitable intervention. Permission on the other grounds was renewed before the Court of Appeal. The central issues were whether Haven had notice of Edmondson’s interest, whether implied notice was sufficient, and whether the direct settlements removed the claims from the Protocol scheme.

Appeal allowed. Lord Justice Lloyd Jones gave the judgment, with Lord Justice Elias and Lord Justice Laws agreeing. The court ordered Haven to pay Edmondson the sums payable on settlement under paragraphs 7.37 and 7.40 of the Protocol.

1. The principle in Khans Solicitors (a firm) v Chifuntwe [2013] EWCA Civ 481 permits equitable intervention where the paying party colludes with the client to defeat the solicitor’s claim or is on notice of that claim. The court held that notice need not be express. The circumstances may provide implied notice. The court also regarded the present circumstances as amounting to notice in the relevant sense.
2. The retainers created no personal liability on the claimants to pay Edmondson’s fees. The client-care letter prevailed over the inconsistent general CFA wording. Edmondson therefore had no traditional lien dependent on client liability. It nevertheless had an interest in recovering the fixed costs and related sums payable under the Protocol, either in its own right or through proceedings brought in the clients’ names. That interest was capable of equitable protection.
3. The Protocol was voluntary, but each claim had entered the process when Edmondson posted the CNF and Haven acknowledged it through the Portal. A claim could leave the process formally or through specified default. None of the claims had done so before settlement. An inconsistent direct compromise did not itself remove a claim from the Protocol. Haven acted with knowledge of Edmondson’s interest and with the intention of defeating it.
4. The court proceeded on the assumption that the purported waiver of the cancellation period was ineffective under the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008. A valid cancellation would have prevented recovery from third parties of fees for work done during the cancellation period. However, the offers were not conditional on cancellation or termination of Edmondson’s retainers. Haven assumed the risk that they would be accepted after the cancellation period, and none of the retainers was cancelled.
5. It was unnecessary to hear argument on the remaining grounds of appeal.

• Court of Appeal (Civil Division) allowed Edmondson’s appeal on equitable intervention and ordered payment of the Protocol sums.
• Wrexham District Registry, Mercantile Court His Honour Judge Jarman QC dismissed Edmondson’s claims by order dated 20 August 2014.