Unicode problem again

I have the following error:
Postgres 8.3 via psycopg 1.1.21 and zope 2.10.

ProgrammingError Error Value: ERROR: character 0xe28099 of encoding "UTF8" has no equivalent in "LATIN1" select distinct teachers.teacherid,teachers.teacherid as thisteacherid,teachers.initials, reports.reporttext,reports.reportid,subjects.subjectid ,subjects.name, subjects.abbreviation,reports.academicyear,teachers.firstname as first,teachers.surname as second,classes.classid from classes, reports,teachers,subjects where reports.classid=classes.classid and reports.teacherid=teachers.teacherid and reports.studentid=4247 and classes.subjectid=subjects.subjectid and reports.classid=5626 and reports.teacherid=30

I have changed client_encoding to Latin1 to get over errors caused by having the database in UTF8 and users trying to enter special characters like £ signs.
Unfortunately, it seems there are already UTF8 encodings in the DB that have no equivalent in Latin1 from before the change.
How can I get over this problem, and still allow special characters, ie have no error reports.
Regards
Garry