Unicode problem again

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

ProgrammingError Error Value: ERRR: 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.subje ctid ,subjects.name, subjects.abbreviation,reports.academicyear,teacher s.firstname as first,teachers.surname as second,classes.classid from classes, reports,teachers,subjects where and and reports.studentid=4247 and 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