Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited

A solicitor’s equitable lien is an equitable charge securing the client’s contractual liability for the solicitor’s charges against the fruits of litigation. It requires an identifiable fund, ordinarily a judgment or settlement debt to which the solicitor’s services made a significant contribution. Equity may require a payer with notice or knowledge of the solicitor’s interest to pay the solicitor, even after paying the client directly.

A conditional fee retainer remains capable of supporting the lien where it preserves the client’s liability but limits the solicitor’s recourse to sums recovered from the opponent. A voluntary pre-action protocol does not itself give a solicitor a direct legal or equitable right to costs.

Gavin Edmondson Solicitors Limited acted for road-traffic-accident claimants under conditional fee agreements. After their claims were entered on the RTA Portal, Haven Insurance Company Limited settled directly with the claimants on terms excluding the solicitors’ costs.

The trial judge rejected Edmondson’s tort claims and its claim to enforce an equitable lien. The Court of Appeal, in [2015] EWCA Civ 1230, held that the retainers imposed no personal liability on the clients but nevertheless upheld the lien claim on an extended basis. Haven appealed. The central issues were whether the retainers supported a conventional equitable lien, whether Haven had notice of it, and whether the lien could be extended solely by reference to the RTA Protocol.

1. Appeal dismissed, with a variation of the monetary relief. The Court upheld Edmondson’s entitlement to enforce a solicitor’s equitable lien against Haven, but held that recovery was capped by the settlement debt in each claim.

2. The lien is an equitable charge, not a free-standing remedy for every interference with a solicitor’s expectation of payment. It requires a claim by the solicitor against the client for charges, a fund representing the fruits of the litigation, and conduct affecting the payer’s conscience, namely collusion or notice or knowledge of the solicitor’s interest. The Court approved the statement of those principles in Khans Solicitors v Chifuntwe [2014] 1 WLR 1185.

3. The CFA Lite retainers preserved the clients’ contractual liability for Edmondson’s charges. The Client Care Letter limited Edmondson’s recourse to amounts recovered from the defendant, rather than eliminating that liability. The arrangement was analogous to a limited-recourse secured loan, in which a limit on recovery does not destroy the security.

4. Haven had sufficient notice and knowledge. The claim notification forms told it that Edmondson had been retained under CFAs and was using the RTA Protocol. Haven also knew that Edmondson looked to the proceeds of the claims for payment and deliberately sought to avoid those charges by settling directly with the claimants. Direct payment was therefore unconscionable as an interference with Edmondson’s interest.

5. The Court rejected the Court of Appeal’s proposed extension of the lien. This discussion was strictly unnecessary to the outcome. The voluntary RTA Protocol did not itself confer a contractual or other legal right on the solicitor against the insurer. Nor could contractual subrogation improve the solicitor’s position after the clients had settled their claims.

6. Edmondson’s lodging of Mr Tonkin’s claim on the Portal made a significant contribution to the settlement. It supplied essential claim information and demonstrated that the claimant was seriously pursuing the claim with legal representation. The lien was therefore available in his case as well.

7. The Court of Appeal’s order required adjustment where the protocol-based recovery exceeded the settlement sum. Counsel were invited to agree the precise order.

• United Kingdom Supreme Court: Dismissed Haven’s appeal from [2015] EWCA Civ 1230, but rejected the Court of Appeal’s extended rationale and limited recovery to the settlement debt.
• Court of Appeal: In [2015] EWCA Civ 1230, upheld enforcement of Edmondson’s claim by extending the equitable jurisdiction despite finding no contractual liability under the retainers.
• Trial: HHJ Jarman QC rejected the tort claims and refused to enforce the lien, finding neither collusion nor sufficient notice of the retainer terms.