Law Society Intervenes in Portal Costs Recovery Appeal

In edition 120 of BC Disease News (here), we reported on the case of Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2015] EWCA Civ 1230. The decision taken at the Court of Appeal had the effect of preserving the right of solicitors to recover fixed ‘Portal costs’, where insurers attempt to broker settlements directly with claimants on claims which have already entered the MoJ Portal. This week, we report that the Law Society has been granted permission to intervene in the appeal trial, listed at the Supreme Court, on the basis that it has ‘important implications for solicitors’.

Low-value RTA claimants, involved in the practice of ‘third-party capture’, were clients of Gavin Edmondson Solicitors, with whom conditional fee agreements (CFA) had been entered into. Recorded telephone transcripts were indicative of the fact that the insurer’s intention was to settle matters with the claimants and escape liability for the solicitors’ costs, ordinarily due under the Portal. Settlements were reached during a period when the CFA’s were cancellable.

At the Court of Appeal, Jones LJ considered ‘that in the normal course of events Edmondson would have an entitlement to recover the fixed costs and other sums payable under the protocol scheme’. Accordingly, the judge found an ‘equitable intervention’, which enabled the recovery of ‘portal costs’ from the insurer. The relevant authority for doing so was the case of Khan Solicitors (a firm) v Chifuntwe [2013] EWCA Civ 481, where ‘equitable intervention’ requires:

  • Collusion between the insurer and the claimant to deprive the solicitors of their fees; or
  • Sufficient notice on the part of the insurer, that the solicitors had a claim on the funds for outstanding fees.

In his judgment, Jones LJ overturned the decision of HHJ Jarman QC, who found in favour of the insurer, when applying the ‘equitable intervention’ test, at first instance. In respect of the 2nd limb of Khan, Jones LJ found that implied notice was sufficient, but, in any event, there had been expressed notice. The insurer was a voluntary participant in the RTA Protocol and MoJ Portal process. Thus, they were fully aware of the solicitors’ claim for outstanding costs.

The Court of Appeal decision has since been appealed by Haven Insurance and the 2 day trial is scheduled to take place at the Supreme Court, from 5th to 6th February 2018, before Justices Hale, Kerr, Wilson, Sumption and Briggs.

However, in a statement released this week, the Law Society made its contribution by asking:

‘... the Supreme Court to confirm that the equitable lien can be applied to protect solicitors’ rights to their costs in modern litigation; particularly in fixed costs regimes where the indemnity principle does not apply’.

The Law Society went on to specify that the recovery of fees:

‘... is either an entitlement in Edmondson itself or, alternatively, in the light of the contractual arrangement between Edmondson and its clients [the CFA said the firm could recover its fees from the client in the event the defendant did not pay] an entitlement to bring proceedings in the name of the clients to recover these sums’.

In either case, Edmondson has an interest which equity can protect and which is deserving of protection. It is an interest of which Haven was aware by virtue’.

We will provide case analysis of the Supreme Court appeal in due course.