Bott & Co Solicitors Ltd v Ryanair DAC

Factual and Procedural Background

Under EU law, airline passengers are entitled to compensation if a booked flight is cancelled at short notice or delayed for a substantial period. Company A is a law firm specialising in handling such claims on behalf of passengers, operating on a high-volume, low-value claim model. Company B, a major European airline, processes many such claims, nearly all resulting in compensation payments.

Company A claims an equitable lien over compensation payments made directly by Company B to passengers who have instructed Company A, asserting entitlement to fees deducted from such payments or to receive the full compensation payment directly.

Company A initiated a claim under Part 8 of the Civil Procedure Rules (CPR), a procedure for cases without substantial factual dispute. The judge of the Chancery Division rejected Company A's claim to an equitable lien and also rejected Company A's argument that a clause introduced by Company B in its standard terms and conditions (clause 15) was invalid under EU law.

This appeal challenges both decisions.

Legal Issues Presented

1. Whether the judge erred in rejecting Company A's claim to an equitable lien over compensation payments made by Company B to passengers.
2. Whether the judge erred in upholding clause 15 of Company B's standard terms and conditions as valid under EU law, despite Company A's contention that it was invalid.

Arguments of the Parties

Appellant's Arguments

• Company A argued it was entitled to an equitable lien over compensation payments made by Company B to passengers who had instructed Company A, to secure payment of its fees.
• Company A contended that clause 15 of Company B's terms, which requires passengers to submit claims directly to Company B and allows a 28-day response period before third-party involvement, was invalid under EU law as it limited or waived passengers' rights to compensation.
• Following the Supreme Court decision in a related case, Company A argued that the decision supported its entitlement to an equitable lien.

Respondent's Arguments

• Company B maintained that Company A was not entitled to an equitable lien because the compensation claims were largely mechanical and formulaic, with no litigation or arbitration proceedings initiated in most cases.
• Company B argued that clause 15 was a valid procedural requirement that did not place a material obstacle in the way of passengers obtaining their substantive rights under EU Regulation 261/2004.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Meguerditchian v Lightbound [1917] 2 KB 298	Equitable lien requires proceedings (litigation or arbitration); mere negotiation does not create a lien.	The court held it was bound by this authority to reject Company A's claim to an equitable lien absent proceedings.
Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2015] EWCA Civ 1230; [2016] 1 WLR 1385 ("Gavin Edmondson CA")	Extension of equitable lien principles to claims under a formalised Pre-Action Protocol with fixed costs and court supervision.	The court found this did not justify extending equitable lien to cases not regulated by a formal judicial scheme.
Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21; [2018] 1 WLR 2052 ("Gavin Edmondson SC")	Confirmed existence of equitable lien where solicitor has contractual entitlement to fees and client has legal liability to pay, even absent formal proceedings.	The court analysed the effect of conditional fee agreements and contractual entitlement, concluding the boundary for equitable lien had shifted but still required litigation-type services.
Khans Solicitors v Chifuntwe [2013] EWCA Civ 481; [2014] 1 WLR 1185	Equity protects solicitor's claim on funds recovered through proceedings to prevent collusion or to protect solicitor's interest.	The court applied these principles in assessing the equitable lien claim in the context of judicial review proceedings.
Gaynor v Central West London Buses Ltd [2006] EWCA Civ 1120; [2007] 1 WLR 1045	"Contemplated proceedings" require a real likelihood of issuing proceedings; mere advice or letters of claim do not suffice for litigation services.	The court used this to define the scope of litigation services relevant to equitable lien claims.
Goel v Ryanair Ltd (6 August 2015)	Contractual clauses limiting statutory compensation rights may constitute unlawful limitations under EU law.	Referenced by Company A to argue clause 15 was invalid; the court distinguished the present case on the facts.

Court's Reasoning and Analysis

The court distinguished between two types of liens: the common law retaining lien (possession-based) and the equitable lien (a discretionary court remedy protecting solicitor's entitlement to fees). The equitable lien historically requires the existence of litigation or arbitration proceedings.

Applying Meguerditchian v Lightbound, the court held that mere negotiation or correspondence without formal proceedings does not give rise to an equitable lien. Although the Supreme Court in Gavin Edmondson SC relaxed the strict requirement for formal proceedings, it maintained that the services must be recognisable as litigation services promoting access to justice.

Company A's services mainly involve processing straightforward claims under EU Regulation 261, which are largely mechanical and formulaic, with a very high success rate and rarely involve litigation. The court found these services do not constitute litigation services or promote access to justice in the sense required for an equitable lien to arise.

Regarding clause 15 of Company B's terms and conditions, the court considered that the clause does not limit or waive passengers' substantive rights under the Regulation. It merely prescribes a procedural step requiring passengers to submit claims directly to Company B and allows a 28-day response period before third-party involvement.

The court found no material obstacle imposed by clause 15 on passengers' ability to claim compensation and noted that the procedure aligns with guidance from regulatory bodies encouraging direct claims to airlines. The clause also permits passengers to consult advisors before submitting claims.

Consequently, the court upheld the validity of clause 15 under EU law.

Holding and Implications

The court DISMISSED the appeal.

It held that Company A is not entitled to an equitable lien over compensation payments made by Company B to passengers absent litigation or arbitration proceedings, as the services provided are not recognisable as litigation services promoting access to justice.

It also upheld the validity of clause 15 of Company B's standard terms and conditions under EU law, finding it does not constitute an unlawful limitation or waiver of passengers' rights to compensation, but rather a permissible procedural requirement.

The decision directly affects the parties by confirming Company A's lack of equitable lien rights in this context and validating Company B's claims procedure. The court did not establish new precedent beyond clarifying the boundaries of equitable liens in relation to claims under EU Regulation 261.