Bott & Co Solicitors Ltd (Appellant) v Ryanair DAC (Respondent)

1. Expectations about how disputes should be resolved in the United Kingdom and the role of legal representatives in that process have changed significantly over recent years. In Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd[2018] UKSC 21; [2018] 1 WLR 2052 (“Gavin Edmondson”), this Court considered a small but important piece of the jigsaw of that litigation landscape: the solicitor’s equitable lien for their costs. This remedy has been recognised by the courts for over two hundred years. In its traditional form, it entitles a solicitor who assists a client to recover money (or other property) through litigation to recoup the costs of doing so out of the money recovered. Any proceeds of a judgment or settlement will normally be paid to the solicitor’s firm, which can then deduct its costs before accounting to the client for the balance. But if the opposing party pays the money directly to the solicitor’s client despite knowing or being on notice of the solicitor’s interest in the debt, and the client then fails to pay the solicitor’s costs, the court may order the opposing party to pay those costs to the solicitor - in addition to the payment already made to the solicitor’s client.

1. For many years the equitable lien was thought to arise only where there were court (or arbitration) proceedings in existence when the money was recovered. However, in Gavin Edmondson this Court held that the lien applied in cases where the claimant’s solicitors had notified a claim under the pre-action protocol for low value personal injury claims in road traffic accidents (the “RTA Protocol”) and the claim was then settled without the need to issue proceedings. The result was that, in the three cases before the court in Gavin Edmondson where the defendant had paid the settlement sum directly to the claimant despite knowing of the solicitor’s involvement and the claimant had not paid his or her solicitor’s costs, the defendant was ordered to pay those costs directly to the solicitor.

1. Following the decision in Gavin Edmondson, there is no doubt that the solicitor’s equitable lien can arise where no formal proceedings have been commenced. The question raised by this appeal is where the boundary of the equitable lien lies and, specifically, whether the lien covers costs charged to clients by the appellant solicitors, Bott & Co, for claiming compensation for flight delays from the respondent, Ryanair.

1. In our view, for the reasons given below, the rationale for the lien requires that, for a lien to arise, there must be a dispute, existing or reasonably anticipated, in connection 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. In these circumstances we consider that no lien arises and would therefore have dismissed the appeal. Lord Burrows, Lady Arden and Lord Briggs, however, all take a different view. For the reasons they give, they consider that no actual or prospective dispute is necessary and that is sufficient for a lien to arise that the solicitor is making a “legal claim” on behalf of their client. They conclude that this minimal requirement is satisfied on the facts of this case and so the appeal should be allowed. Accordingly, our judgment represents the minority view.

(1)The Flight Compensation Regulation

1. An air passenger whose flight is cancelled or delayed has rights to compensation and assistance under Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 (“Regulation 261”). Regulation 261 applies where the air passenger is departing from an EU member state or is travelling to an EU member state with an EU airline. Although Regulation 261 does not expressly provide for compensation for delay rather than cancellation, the Court of Justice of the European Union held in Sturgeon v Condor Flugdienst GmbH, Böck v Air France SA (Joined Cases C-402/07 and C-432/07) [2010] Bus LR 1206, para 69, that it must be interpreted as meaning that passengers whose flights are delayed have the same right to compensation as passengers whose flights are cancelled if they reach their final destination three hours or more after the arrival time originally scheduled by the air carrier. The air carrier is not obliged to pay compensation if it can prove that the cancellation or delay was caused by “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”. Examples of “extraordinary circumstances” are given in recitals (14) and (15) and include political instability and security risks as well as bad weather. Where compensation is payable under Regulation 261, the amount is fixed at €250, €400 or €600 depending on the flight distance.

1. Article 14 of Regulation 261 imposes obligations on an air carrier to inform passengers of their rights. The carrier must ensure that at check-in a clearly legible notice is displayed to passengers inviting them to ask at the check-in counter or boarding gate for a statement of their rights if their flight is cancelled or delayed. In addition, where a flight is cancelled or delayed for at least two hours, the carrier must provide each passenger affected with a written notice setting out the rules for compensation under the Regulation.

1. Since the withdrawal of the UK from the European Union, Regulation 261 has been retained as part of UK law and amended to ensure that it continues to apply to travel to and from the UK in the same circumstances as before.

(2)Bott’s business model

1. Bott is a solicitors’ firm which specialises in consumer claims conducted on a “no win, no fee” basis. Bott began handling flight delay compensation claims in February 2013. Its business model is premised on processing a large volume of claims, the vast majority of which are expected to be settled by the relevant airlines without dispute. By the time this action was begun in October 2016, Bott had handled approximately 125,000 claims and was claiming on its website a 99% success rate. Bott has developed an on-line tool, accessible on its website, which enables a prospective client to enter her flight details and then check whether her claim satisfies the basic eligibility conditions for compensation. The on-line tool operates without human intervention on the data entered and includes a check against a database of weather reports to gauge whether a problem with the weather might have caused the delay. This indicates whether the airline is likely to contest a claim for compensation by relying on “extraordinary circumstances”.

1. Bott’s on-line tool tells the prospective client whether she has a claim that appears to be eligible for compensation under Regulation 261 and, if so, for how much. Where there is such a claim, she is then invited to provide other relevant information on-line, including contact details, and to confirm whether she wishes to instruct Bott on a “no win, no fee” basis. None of this involves manual intervention by anyone at Bott.

1. If a prospective client confirms through the on-line tool that she wishes to instruct Bott, Bott sends her an email to confirm receipt of the claim. One of Bott’s paralegals working under the supervision of a solicitor then manually checks the information provided to verify whether the claim has more than a 50% prospect of success. That process is usually completed within 48 hours. If the claim passes this vetting process, Bott sends a further email to the client confirming that Bott is willing to accept the case and that, if the claim is successful, Bott’s fees will be 25% of the total compensation amount awarded to the client plus VAT, plus an administration fee of £25 per passenger, to be deducted from the compensation before Bott pays the compensation to the client. The email also notifies the client that, as a result of the client having submitted her details through the website, Bott has started working on the claim and is in the process of drafting a first letter to the airline. The email also informs the client that Bott’s Terms and Conditions will follow. In a separate email, Bott sends the client a link to its Terms and Conditions, requesting that the client read them and sign them electronically. A conditional fee agreement (“CFA”) is also sent by email in a form that the client can download. The Terms and Conditions make it clear that, if necessary, Bott has permission from the client to issue court proceedings.

1. Once Bott has been retained through this procedure, Bott sends a letter before action in a standard format to the airline. The letter refers to the Practice Direction on Pre-Action Conduct and sets out the claim details, asking for a response within 30 days and, if the claim is admitted, for payment within 21 days of the admission. Bott requests that payment be made by a cheque in its favour or by bank transfer to its client account. The same letter may cover a single claim or multiple claims relating to the same flight.

1. If the airline accepts the claim and makes payment to Bott without dispute, Bott simply checks that the right amount of compensation has been received, deducts its fees and pays the balance to the client. If the airline does not respond or disputes the claim, Bott considers the merits of issuing court proceedings. If it decides that a claim is merited, Bott issues a claim and conducts the litigation.

(3)How Ryanair deals with compensation claims

1. A high proportion of the flight delay claims handled by Bott are claims for compensation from Ryanair. When this action was begun, Bott was handling over a thousand such claims against Ryanair each month. Until early 2016, when it received a letter of claim from Bott, Ryanair dealt with Bott. When claims were admitted, Ryanair would pay the compensation into Bott’s client account. From early 2016, however, Ryanair changed its practice. It began to communicate directly with Bott’s clients and to pay compensation directly to them. In written evidence served in these proceedings, Ryanair has explained the background to this change.

1. According to this evidence, in March 2014 Ryanair introduced a new process enabling customers to claim flight disruption compensation using an on-line form available on Ryanair’s website. At the same time, Ryanair say they took steps to ensure that, when a flight is cancelled or delayed, passengers are notified automatically by text and e-mail of their right to receive compensation. Ryanair’s policy is to ensure that valid claims for compensation are paid within 28 days of submission of a claim using their on-line form, though they say that, in practice, claims are dealt with more quickly than that and are usually paid within six working days of submission of the claim.

1. Despite the introduction of the on-line form, Ryanair say that they noticed a sharp increase in late 2015 and early 2016 in the number of claims being submitted by claims’ management companies and solicitors. Ryanair considered this an unwelcome development and decided to adopt the practice of dealing directly with passengers. One reason is said to be that the involvement of third-party claim handlers introduces an adversarial element into the relationship between Ryanair and the passenger which is often unnecessary as there is no dispute that compensation is payable. Furthermore, Ryanair tends to be blamed if a dispute arises between the customer and the third-party, especially as many customers wrongly assume that there is some form of relationship between Ryanair and some of these third-party firms. Ryanair also say that third-party claim handlers increase Ryanair’s administrative burden and can complicate and delay the resolution of claims.

1. In July 2016, Ryanair amended their General Terms and Conditions of Carriage to reflect their policy of dealing directly with passengers in relation to flight disruption claims. Article 15 of those Conditions requires passengers, subject to some exceptions, to submit claims for delay compensation directly to Ryanair and allow Ryanair 28 days to respond before engaging a third party to claim on their behalf.

1. When Ryanair pays Bott’s client directly, Bott loses the opportunity to deduct its fees from the compensation paid by Ryanair before paying the balance to the client. Bott must therefore pursue the client directly for payment of its fees. Bott says that its experience has been that only about 70% of clients pay in response to a direct request and that, given the relatively small sum involved - an average of about £95 per claim, it is not administratively or financially feasible to take legal action to recover its fees from clients who do not pay them.

(4)Bott’s claim to a lien

1. In this action Bott claims an equitable lien over sums payable by Ryanair to Bott’s clients in compensation for flight delays. Bott seeks an injunction to restrain Ryanair from making any payment of such compensation when on notice that Bott has been retained other than to Bott’s nominated client account. In addition, where, since 22 September 2016, payments have been made by Ryanair directly to Bott’s clients in such cases, Bott claims an indemnity for the costs which it has not been able to recover from its clients. Ryanair denies that Bott has any such equitable lien.

(1)Rationale

1. As Lord Briggs explained in the first paragraph of the judgment in Gavin Edmondson, the solicitor’s equitable lien:

Lord Briggs cited, at paras 33 and 34, early cases showing that the aim of promoting access to justice underlay the development of the lien. That aim was facilitated by giving the solicitor a security interest in the fruits of litigation. As it was put by Sir John Romilly MR in Haymes v Cooper (1864) 33 Beav 431, 433, a solicitor has “an inherent equity to have his costs paid out of any fund recovered by his exertions”.

(2)Comparison with the common law possessory lien

1. The solicitor’s equitable lien exists alongside the right that a solicitor has at common law to retain possession of money, deeds or papers held on behalf of a client until the solicitor’s costs have been paid. Both forms of lien are “grounded on the principle that it is not just that the client should get the benefit of the solicitor’s labour without paying for it”: Guy v Churchill (1887) 35 Ch D 489, 491 (Cotton LJ). That principle has been relied on to support a claim that the equitable lien is an immediate right of security in the solicitor’s favour which survives the client’s insolvency: see for example Addleshaw Goddard LLP v Wood (Case No CC 1405269) (unreported), 8 April 2015, paras 83 onwards. The equitable lien is narrower than the common law lien in that it is particular to property which is recovered or preserved through the solicitor’s instrumentality, but wider in that it does not depend upon the property being in the possession of the solicitor.

(3)Arbitration

1. In Ormerod v Tate (1801) 1 East 464; 102 ER 179 the parties to a pending suit entered into bonds to refer the dispute to arbitration. The arbitrator made an award of damages to the claimant and the question arose whether the claimant’s solicitors had a lien over the sum awarded. The defendant argued that the lien was confined to cases of money recovered by judgment of the court and did not extend to money awarded by an arbitrator. Lord Kenyon CJ rejected that argument and held, at p 465:

1. The principle illustrated by Ormerod v Tate was subsequently applied in cases where no court proceedings had been brought and the only proceedings were by arbitration: see In re Meter Cabs [1911] 2 Ch 557.

(4)Charging orders

1. In Shaw v Neale (1858) 6 HL Cas 581 the House of Lords held that the solicitor’s equitable lien did not apply to real property which the solicitor was instrumental in recovering for the client. To address this lacuna, legislation was enacted. The current provision is section 73 of the Solicitors Act 1974. This states:

1. Section 75 of the Arbitration Act 1996 extended the powers of the court to make declarations and orders under section 73 of the Solicitors Act 1974 to arbitral proceedings “as if those proceedings were proceedings in the court”.

(5)The notice requirement and the “fund in sight”

1. In Khans Solicitors v Chifuntwe[2013] EWCA Civ 48; [2014] 1 WLR 1185 (“Khans”), the Court of Appeal considered whether, to recover their costs from an opposing party who had paid their client directly, the solicitors had to show that the opposing party had colluded with their client to deprive them of their fees. The Court of Appeal held that there was no requirement of collusion. It was sufficient that the opposing party was on notice that the solicitor had a claim for fees upon part or all of the sum due. If, having had such notice, the opposing party pays the solicitor’s client directly, he does so at his own risk; collusion is not necessary.

1. In the present appeal it is not in dispute that, when Ryanair pays compensation for delay directly to a passenger after receiving a letter of claim sent on behalf of the passenger by Bott, Ryanair is aware of the terms on which Bott has been retained, including the amount of Bott’s charges.

1. Similarly it is not disputed in this case that the compensation paid by Ryanair is a fund in sight as that concept is discussed in In the Estate of Fuld, decd (No 4) [1968] P 727.

(6)The requirement for proceedings

1. Before the end of the nineteenth century it was established that the lien could attach to a debt payable under an agreement to compromise a claim: see Ross v Buxton (1889) 42 Ch D 190. It was, however, held to be the law that an equitable lien could only arise once proceedings of some sort had been commenced. The authority for this proposition was Meguerditchian v Lightbound [1917] 1 KB 297; affirmed [1917] 2 KB 298. In that case an individual (Z) instructed solicitors to recover from a third party various valuable documents relating to mining concessions. Z became bankrupt and receivers were appointed over his estate. The receivers instructed the solicitors to pursue the recovery of the documents. After negotiations, a compromise was reached under which the solicitors obtained the documents. They then claimed a lien over the documents both for the fees owed to them by the receivers and for fees previously incurred by Z which remained unpaid.

1. The sole remaining receiver agreed to pay the fees incurred on the receivers’ instructions but disputed liability to pay the fees incurred on Z’s instructions (arguing that the solicitors must prove in the bankruptcy for those fees). At first instance, Rowlatt J held that the solicitors had no common law possessory lien over the documents for fees incurred by Z, as the receiver (for whom they held the documents) was not liable for those fees. Rowlatt J also rejected an alternative argument that the solicitors had an equitable lien over the documents as property recovered or preserved by their services in bringing about the settlement. He did so on the basis that he could find no authority for such a lien upon the fruits of a mere negotiation conducted by a solicitor, nor did he consider that it could be supported on principle outside the context of litigation in court. Rowlatt J gave as a further reason that in any case it had not been shown that the recovery of the documents was attributable to the earlier negotiations conducted on behalf of Z before the receivers took over Z’s interest.

1. This decision was upheld by the Court of Appeal: Meguerditchian v Lightbound. Swinfen Eady LJ observed (at p 306) that the claim that the documents were the fruits of the solicitors’ exertions was advanced:

He rejected any analogy between such cases and a case where there were no proceedings, but merely negotiations with regard to a matter and correspondence between the solicitors on either side. He noted that counsel for the solicitors had been unable to produce any authority in support of the wider proposition and said:

1. Bankes LJ agreed, saying (at p 308) that he could see very good reason why the principle of a lien in respect of property recovered should be applied “in cases where there are proceedings, whether they consist of an action or arbitration,” but also very good reasons why it should not be applied “when the solicitors are left free to take whatever course they chose to secure a compromise”. Bray J agreed with both judgments.

(7)Gavin Edmondson

1. In Gavin Edmondson, the decision of the Court of Appeal in Meguerditchian was cited in argument in the Supreme Court: see [2018] 1 WLR 2052, 2054. But no argument was advanced by the defendant that an equitable lien could not arise because there were no court proceedings in existence when the underlying claims were settled.

1. Under the RTA Protocol scheme, solicitors instructed by an eligible claimant are expected to notify the prospective defendant’s insurer of the claim electronically by submitting a claim notification form through a website referred to as the Portal. In each of the three cases considered in Gavin Edmondson, the solicitors entered the details of the claim into the Portal after they had concluded a CFA with the client. In each case the defendant’s insurer, when notified of the claim through the Portal, made contact with the claimant directly and agreed a settlement of the claim. In each case the insurer paid the settlement sum directly to the claimant and the claimant then failed to pay their solicitors’ charges. The solicitors claimed their costs from the insurer on various grounds. One was that the settlement sum was subject to an equitable lien.

1. The trial judge dismissed the solicitors’ claim: [2014] EWHC 3062 (QB); [2015] RTR 14. On the question whether there was a lien, he held that the insurer’s knowledge that solicitors had been instructed did not satisfy the requirement of notice of their entitlement to costs. The Court of Appeal (Lloyd Jones LJ, with whom Laws and Elias LJJ agreed) allowed the solicitors’ appeal: [2015] EWCA Civ 1230; [2016] 1 WLR 1385. They accepted an argument advanced by the insurer that, under the terms of the CFAs, the clients had no contractual liability to pay the solicitors’ costs on which a lien could be founded; but nevertheless held that the solicitors had a right to receive fixed costs under the RTA Protocol, either in their own right or as a subrogated claim on behalf of the client, to which an equitable lien could attach. The Court of Appeal further found that the requirement of notice was satisfied.

1. On the insurer’s appeal to the Supreme Court, Lord Briggs gave the sole judgment with which Baroness Hale of Richmond, Lord Kerr of Tonaghmore, Lord Wilson of Culworth and Lord Sumption agreed. Lord Briggs rejected the analysis which had found favour with the Court of Appeal, but held that on the proper interpretation of the CFAs the clients had a contractual liability to pay the solicitors’ charges. Lord Briggs then considered two further questions: first, whether the settlement debts owed their creation “to a significant extent” to the solicitors’ services under the CFAs (para 45); and second, whether the insurer had notice or knowledge of the solicitors’ interest in the settlement debts.

1. Lord Briggs answered both questions in the affirmative. In the one case where the sufficiency of the solicitors’ contribution to the settlement was disputed, he concluded that lodging the claim notification form in the Portal had encouraged the insurer to make a settlement offer and had made “a modest but still significant contribution” to obtaining the settlement which ensued: para 63. On the question of notice, Lord Briggs held that, once a defendant or his insurer was notified that a claimant had retained solicitors under a CFA, and that the solicitors were proceeding under the RTA Protocol, they had the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as an interference with the solicitor’s interest in the fruits of the litigation: para 50. Hence, the Supreme Court upheld the solicitors’ claim to an equitable lien over the settlement debts.

(1)The High Court

1. Bott’s claim, made under CPR Part 8, was heard at first instance by Mr Edward Murray sitting as a deputy judge of the Chancery Division: [2018] EWHC 534 (Ch); 2018 3 Costs LO 275. His judgment was handed down shortly before the Supreme Court decided Gavin Edmondson. The judge held that he was bound by authority to decide that the solicitors’ equitable lien arose only once proceedings had been commenced and so does not arise where compensation is paid by Ryanair without the need to issue proceedings.

1. The judge sought to reconcile the decisions of the Court of Appeal in Gavin Edmondson and Meguerditchian on the ground that the claims in Gavin Edmondson had not been settled as the result of a “mere negotiation” (para 109) but only after they had been entered into the Portal so as to participate in what the judge described (at para 110) as:

The judge held that, as there is no such scheme for resolving disputes under Regulation 261 in which Bott participates and not even in the vast majority of cases “what one could call a negotiation”, as “a client is either entitled to compensation under the Regulation or it is not”, no equitable lien can arise.

(2)The Court of Appeal

1. Bott’s appeal to the Court of Appeal was dismissed for reasons given by Lewison LJ, with whom Simon and Lindblom LJJ agreed: [2019] EWCA Civ 143; [2019] 1 WLR 3375. By the time of the Court of Appeal hearing, the Supreme Court had given judgment in Gavin Edmondson. In the light of that judgment, Lewison LJ accepted that it can no longer be said to be necessary for formal proceedings to have been issued before an equitable lien can arise. But he considered that the services that the solicitor provides “must still be recognisable as litigation services, promoting access to justice”: see para 53.

1. Lewison LJ referred to the definition of “litigation services” in section 119 of the Courts and Legal Services Act 1990 as “any services which it would be reasonable to expect a person who is exercising, or contemplating exercising, a right to conduct litigation in relation to any proceedings, or contemplated proceedings, to provide”. He referred also to the definition of “contentious business” in section 87 of the Solicitors Act 1974 as “business done … in or for the purposes of proceedings begun before a court or before an arbitrator”. Those definitions, Lewison LJ said, “capture the essence of the principle underpinning the right”: para 55. He considered that “litigation” for these purposes includes arbitration and would encompass proceeding under one of the many pre-action protocols that now exist, which he characterised as “part of an overall process under the supervision of the court”: para 56. He said that the equitable right may well arise in relation to costs incurred in alternative dispute resolution (“ADR”) but that:

1. Lewison LJ concluded that, on the facts of this case, an equitable lien does not arise unless and until Ryanair disputes a claim for compensation under Regulation 261. He described the making of a claim under Regulation 261 as “largely mechanical and formulaic”, noting that it requires little more information than the flight distance and the length of the delay, in addition to details of the ticket purchase, and that the amount of compensation that a delayed passenger is entitled to receive is fixed by the Regulation: see para 58. It is not a situation in which the quantum of damages has to be evaluated. Thus, where Bott simply writes a letter of claim or assists a client to complete the on-line form, the services provided by Bott do not amount to “litigation services” of the kind that equity will protect.

1. The Court of Appeal was undoubtedly right to hold that, although this Court did not expressly overrule Meguerditchian in Gavin Edmondson, the distinction between a case where no proceedings have been issued and a case in which they have cannot survive the latter decision. Lord Briggs expressly addressed this question when he said at, [2018] 1 WLR 2052, para 35:

In none of the three cases before the court in Gavin Edmondson had proceedings been issued when the claim was settled; yet in each case it was held that the settlement debt was subject to a lien.

(1)Is there any limit on the work that can found the lien?

1. Bott contends on this appeal that the decision in Gavin Edmondson had an even more radical effect. Not only did it impliedly overrule what was decided in Meguerditchian and extend the scope of the solicitor’s equitable lien to work done when formal proceedings have not yet been issued, but it removed any limit at all on the work to which the lien can apply. On Bott’s case, all that is necessary for the creation of an equitable lien is: (a) a contractual liability on the part of the client to pay the solicitor’s fees; (b) the recovery of a fund which owes its creation to a significant extent to the solicitor’s services; and (c) that the defendant has notice or knowledge of the solicitor’s interest in the debt. Counsel for Bott submit that the Court of Appeal was wrong to consider that there is any further requirement and, in particular, to suggest that the work done by the solicitor must constitute “litigation services” or “contentious business”. They submit that such a requirement is unprincipled and that there is no distinction to be drawn in terms of the basis for an equitable lien between a solicitor who obtains a settlement of a potential road traffic accident dispute and, for example, a solicitor who preserves property in the context of the administration of a complexestate.

1. We do not accept that the decision of this Court in Gavin Edmondson is properly understood as transforming the law in this way. To hold, for example, that a solicitor advising on the acquisition of a company would be entitled to apply to the court for a charge over the shares and, if necessary, an order for sale of those shares, or that a conveyancing solicitor might be entitled to an equitable interest in a property following a transaction in which she advised, would have significant commercial consequences that none of the cases, including Gavin Edmondson, have addressed. Such a decision would have brought about a fundamental change with minimal discussion in circumstances where the Court itself had recognised (at [2018] 1 WLR 2052, para 57 of the judgment) that the remedy should work in accordance with established principles in order to promote predictability.

1. To remove any limit on the work to which the lien can apply would sever the equitable lien from its historical roots and from its rationale of facilitating access to justice through litigation - or, in a modern context, other means of resolving disputed claims. It would not, in our opinion, be a legitimate extension of the law.

(2)Reliance on statutory definitions

1. What then is the boundary of the equitable lien? In answering this question, we do not consider that the statutory definitions of “litigation services” and “contentious business”, quoted at para 40 above, assist. The statutory contexts in which those terms are used and the purposes for which they are defined are different from, and have no real connection with, the equitable lien. To the extent that the Court of Appeal relied on these definitions, we therefore agree with the submission made by counsel for Bott that such reliance was misplaced.

1. The purpose for which the term “litigation services” is defined in section 119 of the Courts and Legal Services Act 1990 is that of specifying when a CFA is enforceable. A “conditional fee agreement” is defined for this purpose in section 58(2)(a) of the Act as “an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances”. Such an agreement is enforceable only if it satisfies conditions set out in section 58 and in statutory instruments made under that section by the Lord Chancellor. The terms “litigation services” (and “advocacy services”) are given an expanded definition in this context by section 58A(4), inserted by the Access to Justice Act 1999. The effect of this amendment is that advocacy or litigation services include any services which it would be reasonable to expect a person to provide in relation to “any sort of proceedings for resolving disputes (and not just proceedings in a court), whether commenced or contemplated”. In several cases courts have been called upon to determine whether work that a solicitor had agreed to carry out amounted to “litigation services” because, if it did, the relevant agreement was a CFA which did not satisfy one or more of the conditions applicable to it by virtue of section 58 and was therefore unenforceable.

1. This was the issue in Gaynor v Central West London Buses Ltd[2006] EWCA Civ 1120; [2007] 1 WLR 1045, which Bott invited us to overrule as wrongly decided. In that case the terms on which solicitors agreed to act for a person injured in a road traffic accident were set out in a standard letter of retainer. The letter provided for fees to be charged at a normal hourly rate but stated that, if the claim was disputed and the client decided not to pursue the claim, the solicitors would not charge for the work they had done. The defendant admitted liability and, after proceedings had been issued, made an offer to settle the claim which the claimant accepted. The settlement was embodied in a consent order, which included provision for the defendant to pay the claimant’s costs. When the costs came to be assessed, the defendant argued that it had no liability to indemnify the claimant for any costs because the claimant had no liability to pay any costs to her solicitors. It was said that the agreement contained in the retainer letter was unenforceable because it was a CFA within the meaning of section 58 of the 1990 Act but did not comply with the conditions applicable to CFAs under that section.

1. The Court of Appeal (Dyson LJ, with whom Auld LJ and Sir Martin Nourse agreed) construed the definition of a CFA in section 58(2)(a) as meaning an agreement with a person providing advocacy or litigation services which provides for his fees and expenses for those services, or any part of them, to be payable only in specified circumstances. Dyson LJ construed the statement in the solicitors’ retainer letter as meaning that, if the client decided before proceedings were issued not to pursue the claim, the solicitors would waive their fees for work done up to that point. The critical question then became whether work done by the solicitors before any proceedings were issued constituted “litigation services” as defined in section 119: if it did, then, as the fees for those services were conditional on the client deciding to pursue the claim, the agreement was a CFA and hence unenforceable.

1. Dyson LJ held (at para 17) that advising a client whether he or she had a good prima facie claim and writing a letter of claim (which were the services which it would be reasonable to expect the solicitors to provide before any proceedings were issued) did not come within the definition of “litigation services”. This was because it could not be said that there were any “contemplated proceedings” until the potential defendant disputed the claim. This conclusion was consistent with the purpose of the legislation, since “[a] client who, having received limited pre-litigation services, decides not to pursue a claim by litigation has no need for the panoply of protection afforded by the conditions stated in section 58(3) of the 1990 Act”: see para 18. It followed that the retainer was not a CFA as defined in section 58 and so was enforceable.

1. We agree with counsel for Bott that this decision does not assist in determining which services provided by a solicitor are within the scope of the equitable lien. There is no reason (and none has been suggested) why the scope of the equitable lien should be defined by reference to statutory rules for determining when an agreement to do work on a conditional fee basis is enforceable. The interpretation of the statutory definition of “litigation services” adopted by the Court of Appeal in Gaynor may or may not be the right one; but neither the reasoning nor the result in that case can be transposed to the question with which we are concerned.

1. There is similarly no basis for using the concept of “contentious business” to define the boundary of the lien. Whether business done by a solicitor is classified as “contentious” or “non-contentious” affects which statutory rules regulate the remuneration of solicitors by their clients - although, according to Cook on Costs (2021), para 8.1, recent developments in the law have reduced the relevance of the distinction to the point where there is little practical difference between the two in most circumstances. Under the definitions of these terms in section 87 of the Solicitors Act 1974, whether business done by a solicitor is “contentious” or “non-contentious” depends on whether it was done “in or for the purposes of proceedings begun before a court or before an arbitrator” (emphasis added). This ties the distinction to whether formal court or arbitration proceedings are commenced. As stated in Cook on Costs (2021), para 8.2:

1. We can see no reason why fees charged for work done by a solicitor in anticipation of court (or arbitration) proceedings should be covered by the equitable lien if proceedings are subsequently begun but not if the claim is settled without commencing proceedings. Indeed, such an approach is inconsistent with this Court’s decision in Gavin Edmondson.

(3)Promoting access to justice

1. Although its reliance on the statutory definitions of “litigation services” and “contentious business” was misplaced, the Court of Appeal was, in our view, right to identify (at para 53 of Lewison LJ’s judgment) the underlying purpose of promoting access to justice as “the key to fixing the boundary” of the solicitor’s equitable lien. It is also the key to fixing the boundary between the kind of work that can be covered by the lien and the kind of transactional work that is not. It is from the purpose of the lien that the scope of the work covered by the lien should be deduced. As explained in Gavin Edmondson,in its traditional form the lien was designed to promote access to justice by enabling solicitors to conduct litigation on credit for clients who lacked the financial resources to pay their solicitor’s costs up front. It did so by giving solicitors an equitable interest in the fruits of the litigation for the amount of their agreed charges. As methods of resolving disputes other than by obtaining a judgment from a court have come to be recognised as desirable alternative ways of achieving access to justice, so has the compass of the lien been extended: first, to include sums recovered through arbitration or through a compromise of proceedings; and then, in Gavin Edmondson,to include sums recovered through a compromise of a claim before formal proceedings had been issued.

1. In the important passage of his judgment quoted at para 42 above, Lord Briggs based the latter development on the policy of encouraging parties and their solicitors to attempt to resolve disputes “by suitable forms of ADR”.

(4)“Alternative” dispute resolution

1. The evolution of this policy represents a sea change in modern times in how access to justice is conceived. A major impetus was the review of the civil justice system carried out by Lord Woolf in the mid-1990s and the consequent introduction in 1998 of a new set of Civil Procedure Rules. In his Access to Justice - Final Report (1996) Section 1, ch 1, para 9, Lord Woolf identified as the first feature of the “new landscape” envisaged by his proposals that “litigation will be avoided wherever possible”. Hence:

1. As Lord Briggs also pointed out in the passage quoted at para 42 above, an important aspect of this policy has been the introduction of pre-action protocols “of widely differing kinds”. The purposes of these protocols were described in the Access to Justice - Final Report (1996) ch 10, para 1, as being:

1. The first pre-action protocols were introduced in April 1999 for personal injury claims and clinical negligence claims. Other protocols have followed that apply to many different kinds of dispute, from disputes about housing conditions to media and communications claims. The Pre-Action Conduct Practice Direction expressly provides in paras 1 and 13 that the court expects parties to conduct themselves in accordance with, and to take the steps set out in, the Practice Direction and the pre-action protocols before proceedings are begun. Para 8 of the Practice Direction states that:

Para 13 of the Practice Direction also draws attention to the provisions of CPR rule 3.1(4)-(6) and (what is now) CPR rule 44.2(5)(a), which provide that the court will take into account whether or not a party has complied with the Practice Direction and any relevant pre-action protocol when giving directions in the proceedings and in deciding what order (if any) to make about costs.

1. Other rule changes have been introduced to encourage early settlement. For example:

1. The court’s duty under CPR rule 3.1 of actively managing cases includes encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure;

1. CPR rule 36.7 provides that an offer to settle under Part 36 can be made at any time including before the commencement of proceedings;

1. CPR rule 46.14 allows a party to apply to the court for a costs order where there are no substantive proceedings but where the parties have reached an agreement on all issues, including which party is to pay the costs but have failed to agree the amount of the costs.

1. “Alternative dispute resolution” is defined in the CPR glossary as a “collective description of methods of resolving disputes otherwise than through the normal trial process”. As para 8 of the Practice Direction (quoted above) indicates, such methods include negotiation as well as more formal processes such as mediation and early neutral evaluation. Such is the emphasis today on encouraging the use of such methods of dispute resolution as the primary resort that the description of them as “alternative” is no longer apt. We referred earlier to the expanded definition of “advocacy services” and “litigation services” introduced in 1999 in the definition of conditional fee agreements, a recognition by the legislature of the growing importance of other proceedings for dispute resolution outside court in the work of legal representatives.

1. It would be inconsistent with the policy of encouraging dispute resolution without resort to litigation to confine the solicitor’s equitable lien to cases where formal proceedings have been commenced before a claim is settled. Such a restriction would give solicitors a financial incentive, in direct conflict with this policy, to issue a claim form at an early stage to make sure that they get paid. It also would deter solicitors from offering services on credit to clients who lack financial resources to help them obtain an appropriate settlement without having to bring proceedings. This would undermine the aim of facilitating access to justice that underlies the imposition of the lien.

1. This is so whether a claim is settled following participation in a formalised and judicially approved scheme, such as the scheme established by the RTA Protocol; or after engaging in a process such as a mediation without participating in such a scheme; or simply through a negotiation without engaging in any formal process. In each case the policy of encouraging the resolution of disputes without resort to litigation is promoted. Nor is there any reason to deter solicitors from negotiating settlements for clients, where they can, without invoking a formal system for dispute resolution or where no scheme comparable to the RTA Protocol scheme is available. The principle underlying the equitable lien of facilitating access to justice is equally applicable in all these cases.

1. We therefore think it clear that the primary ground on which Meguerditchian was decided - that an equitable lien cannot arise where a dispute is settled through negotiation without proceedings of any kind - can no longer be supported. The decision in that case can be justified only on the alternative ground given by Rowlatt J that there was no evidence to suggest that the success of the solicitors in obtaining the valuable documents sought by the receivers owed anything to the work previously done for Z before his bankruptcy.

1. In our judgment, the ratio of Gavin Edmondson on this question and the relevant test is, accordingly, that services provided by a solicitor to a client fall within the scope of the lien if they are provided for the purposes of resolving a dispute - whether by means of litigation or negotiation or any other suitable method. In stating the principle in this way, we do not intend to express any view about whether the lien is still limited to solicitors, which is not a question raised by this appeal.

(5)The scope of dispute resolution

1. This test is clearly satisfied where a potential defendant has refused a claim and a dispute has therefore arisen. But it does not appear that a claim had been refused before the solicitors were retained and a claim notified through the Portal in any of the cases decided in Gavin Edmondson: if there had been such a refusal, it is not mentioned in the judgment and cannot therefore have been considered necessary for the existence of a lien. This accords with principle. The need for the assistance of a solicitor to achieve the successful resolution of a dispute may arise before a claim has yet been asserted, if there is a real likelihood that the potential defendant will not provide the remedy claimed. That may be the case not only where the potential defendant denies liability or disputes the quantum of the claim. It includes the many cases where potential defendants simply refuse or fail (for whatever reason) to respond to the claim, either by payment or by providing the non-monetary remedy sought. It is sufficient to engage the lien that a dispute, in this broad sense, is reasonably anticipated.

1. That is generally the situation in cases of the kind considered in Gavin Edmondson, where a claim is made for damages for personal injuries suffered in a road traffic accident. Even if liability for the accident is admitted, determining the amount of damages payable depends upon, first of all, establishing the nature and extent of the injuries suffered and, secondly, assessing an appropriate monetary sum of compensation for those injuries. In addition to any expenses reasonably incurred - for example for medical treatment - this sum will include an amount to compensate for pain and suffering and any loss of amenity. Although there are guidelines published by the Judicial College which assist in assessing the appropriate amount of such general damages, an evaluative judgment is required. (Exceptionally, there is now a fixed tariff for whiplash injuries, but the amount payable still depends upon assessing “the duration, or likely duration, of the whiplash injury … if the person were to take, or had taken, reasonable steps to mitigate [its] effect”: see The Whiplash Injury Regulations 2021 (SI 2021/642), regulation 2.) In settling a claim, other indeterminate factors, such as the costs that would be incurred if the amount had to be decided by a court, also enter into the parties’ calculations. In these circumstances there is inevitably an element of uncertainty and potential for dispute about what amount of damages, if any, a court would award and for negotiation of a sum which the defendant is willing to pay and the claimant to accept in settlement of the claim. The complexity and potential for contention in claims covered by the RTA Protocol is reflected in the costs regime incorporated in the process, entitling the legal representative acting for the claimant to their fixed costs at the different stages of the procedure to be paid by the potential defendant in addition to the compensation for injury.

(6)The majority view

1. We can see no principled basis, on the other hand, for extending the lien beyond this to circumstances where there is no dispute (actual or reasonably anticipated) between the parties and we foresee difficulties in doing so. If one abandons any requirement for a dispute, as the majority judgments do, one then needs to find a different boundary between the solicitor’s work which gives rise to the lien and work which the majority describe as “transactional” and which they accept should not be covered by the lien. There is no explanation of where that boundary might lie or how it might be drawn. As formulated by Lord Burrows, the majority’s alternative test is based on whether or not the client is making a “claim asserting a legal entitlement”. This, so far as we can see, amounts to an acceptance of Bott’s case summarised at para 43 above. As stated at paras 44-45, we do not regard such an open-ended expansion of the solicitor’s lien beyond the field of dispute resolution as justified.

1. The majority do not maintain that the claim capable of supporting a lien need be seeking a remedy for an alleged breach of duty or other cause of action. If such a qualification were made to their test, it would not cover Bott’s claims. Bott did not base its case on an assertion that a delay to a flight amounts to an actionable breach of duty or other wrong by the airline, and this does not appear to be the effect of Regulation 261. Such a test would also not cover many cases where the lien has been held to exist, for example, In the Estate of Fuld, decd (No 4) where the fund to which the lien was held to attach was the result of litigation in which the client was a defendant in an action brought by executors seeking to prove a will. It would likewise exclude every case where a defendant is ultimately successful in litigation and is awarded costs against the claimant. On the present state of the law a payment of those costs by the claimant directly to the defendant is a fund to which the lien can attach: see eg Campbell v Campbell and Lewis [1941] 1 All ER 274. The defendant’s entitlement to costs at the end of the proceedings is not based on any cause of action.

1. Widening the scope of the lien to encompass any claim asserting a legal entitlement would appear to bring within it situations commonly occurring in transactional work: for example, where a solicitor writes on behalf of a client to remind a contractual counterparty that a payment instalment under the contract will shortly fall due or where a solicitor at the end of a contract negotiation writes to the counterparty asking them to pay the consideration just agreed. On our view, there is no lien attaching to that money if it is then paid directly to the client because there is no dispute or anticipated dispute. It is not clear to us whether the majority consider that either or both of these situations is within the scope of the lien and, if not, what the difference is between that situation and the work that Bott does.

1. For as long as Meguerditchian v Lightbound prevailed, the subject matter of the proceedings, the role of the client in those proceedings and the precise juridical nature of that subject matter or role did not matter; it was the commencement of the proceedings that marked the boundary between work falling within the ambit of the lien and transactional work. Similarly if, as we conclude, in the light of the modern developments we have described, the boundary of the lien should today be drawn more broadly by reference to the resolution of disputes, the nature and genesis of the dispute remain irrelevant. We recognise that there could under this test be uncertainty as to whether, on the facts of a particular case, there is any real prospect that a request for payment will be disputed. But we think it unlikely that this will cause a significant problem in practice. To the extent that there may be the occasional case where the application of the test to the facts is unclear, the difficulty is no greater than that involved in applying the definition of “litigation services” in the Courts and Legal Services Act 1990 or determining whether a communication is covered by litigation privilege. Any definition of litigation or dispute resolution for any purpose will be capable of generating borderline cases. That is not a reason to abandon the concept and to extend a privilege or protection inherently linked to securing access to justice beyond its proper scope.

1. By contrast, if one removes any requirement of an actual or prospective dispute, one breaks the link with even a broad principle of access to justice in the sense used in the case law. There is then no or no discernible limit on the services to which the solicitor’s lien applies and nothing to distinguish work falling within its scope from transactional work done by a solicitor (or for that matter work which any debt collector does). Although we are heartened by the statements in the majority judgments that transactional work is excluded and that their approach draws the boundary line in only a marginally different place from ours, we find their definition of the line elusive.

1. It is also important to bear in mind that the solicitor’s lien operates in equity on the conscience of the paying party. If the payer, when aware or on notice of the solicitor’s involvement, pays a sum in settlement of a claim directly to the solicitor’s client to whom the sum is owed, the effect of the lien is to render the payer liable to pay part of this sum again if the claimant fails to pay her own solicitor’s fees. Imposing this burden on the payer is equitable where it is reasonable to expect that the claim may be disputed and that negotiation or some more formal process in which the solicitor would represent the claimant may therefore be required to resolve the dispute. In such circumstances bypassing the solicitor and agreeing a settlement directly with the client which has the result of depriving the solicitor of his fees can be regarded as unconscionable. But it is hard to see how the payer’s conscience can be said to be sufficiently affected if all that he does is to pay directly to the claimant a debt which the payer has never contested and which there was never any reason to expect that he would refuse or fail to pay. If in such a situation the person to whom the money is payable chooses for whatever reason to retain a solicitor (or any other agent) to claim it on her behalf, paying the solicitor’s charges should be her sole responsibility in the ordinary way. There is no equitable justification for imposing on the payer responsibility for ensuring that the claimant’s solicitor is paid.

(7)The work done by Bott

1. The proper limit of the solicitor’s equitable lien is well illustrated by the facts of this case. The services provided by Bott involve claiming compensation on behalf of clients; but, as the judge put it (at para 114), Bott are, “in effect, simply a claims handling agent in relation to the vast majority of flight delay compensation claims they make”. It cannot, on an objective consideration, be said that the services provided by Bott before Ryanair responds to a claim are provided for the purpose of resolving a dispute or prospective dispute. In the typical case, when Bott sends a letter of claim, not only is there no existing dispute which needs to be resolved - by negotiation or otherwise - but there is no real prospect that there will be any such dispute. The reason for this is that, as both the judge and the Court of Appeal observed, the liability to pay compensation for flight delay is almost entirely automatic. Except in rare cases where the air carrier might be able to invoke “extraordinary circumstances”, both the existence of the obligation to pay compensation and the amount of compensation payable under Regulation 261 are determined solely by the length of the delay in reaching the destination and the flight distance. There is therefore no room for argument. Nor is there any evidence to suggest that - at least since Ryanair introduced its own online claims process in 2014 - Ryanair has sought to avoid its obligations to inform passengers of their rights to claim flight delay compensation and to pay valid claims promptly. There is therefore no basis in an ordinary case for anticipating any difficulty in obtaining payment of the amount of compensation owed.