INSURERS MUST PAY SOLICITORS: GAVIN EDMONDSON SOLICITORS ON APPEAL

In November last year I posted a copy of the decision at first instance in Gavin Edmondson Solicitors -v- Haven Insurance [2014] EWHC 3062.  In a judgment given today the Court of Appeal have allowed the claimant solicitors appeal and stated that solicitor’s costs are payable.

KEY POINTS

  • When an insurer is notified of a claim under the Portal and subsequently resolves the matter directly with the claimant the insurer remained liable to pay the claimant’s solicitors standard costs under the portal.

PRACTICE POINTS

  • This makes the value  of insurers contacting claimants directly very doubtful.
  • It may be that retainers, and client care letters, have to be written with some care.

THE ISSUE

The defendant insurer had developed a practice of contacting injured parties directly after they had been notified of a claim on the portal. They offered to pay the claimant more if he did not use solicitors.

THE APPEAL

The appeal was allowed on the grounds of equitable intervention following the principles in Khans Solicitors (a firm) v Chifuntwe [2013] EWCA Civ 481; [2014] 1WLR 1185.

  • That principle could operate when there was implied notice of the lien.
  • Both involve a similar degree of moral culpability on the part of the paying party.
  • The claimant solicitors had, in the normal course of events, an entitlement to recover the fixed costs and other sums payable under the Protocol scheme.
  • The solicitors had an interest which equity can protect and which is worthy of protection.
  • Haven had knowledge of that interest by reason of its knowledge of, and participation in, the Protocol scheme.
“I accept that this may involve an extension of the principle enunciated in Khans, but I can see no reason why it should not apply in the particular circumstance of this case.”
  • The cases had not exited the Portal.
  • The fact that the compromise agreements were inconsistent with the Portal did not have the effect of removing the claims from that scheme
  • “In each case Haven acted with the intention of defeating Edmondson’s entitlement under the scheme, of which Haven had notice at a time when the claim remained within the scheme.”
  • The fact that the offer was made at a time when the contract was still cancellable did not relieve Haven of liability.
“In each case, Haven, with knowledge of the existence of a CFA and that the claim was proceeding within the Protocol scheme, made an offer of settlement with no express limitation as to the period within which it could be accepted. It would have been open to Haven to make the offer conditional on cancellation of Edmondson’s retainer within the permitted period but it did not do so. In each case Haven assumed the risk that its offer might be accepted after the expiry of the cancellation period. In the event, in none of the underlying cases was the retainer cancelled or otherwise terminated.”

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One comment

  1. Haven Insurance · · Reply

    The Company is aware of the decision of the Court of Appeal in this case, but cannot comment further. Haven will be seeking permission to appeal to the Supreme Court, as knowing the facts of this case, it does not accept the decision made is the correct one.

    Joseph O’Connell – Claims Manager. Haven Insurance Company – Gibraltar.

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