Court of Appeal rules on transfer of CFA in matter of Budana v Leeds Teaching Hospitals NHS Trust

The Court of Appeal has ruled that a CFA was validly assigned from one law firm to another in a case that has wider implications for the recovery of success fees for many firms around the country. 

​The CFA had been assigned from Baker Rees Solicitors to Hudgell Solicitors shortly before the introduction of the Jackson reforms on 1 April 2013 but the Claimant did not consent to the assignment until after the introduction of the reforms. 

On first instance, District Judge Besford found that the CFA had not been validly assigned as it had been terminated when Baker Rees closed their personal injury department. 

​On appeal, Lady Justice Gloster found that DJ Besford had misdirected himself on the basis that the Claimant had not treated the CFA as terminated. 

​It was found that there had been a novation rather than an assignment with LJ Gloster commenting:

​"it is clear that, objectively construed, the intention of the parties was that Hudgell should simply be substituted in Baker Rees' place under and subject to the same terms of the existing and continuing retainer. It would be an over-technical application of the doctrine of novation so as to prevent any litigant, who had begun a claim under a CFA prior to 1 April 2013, from recovering costs in respect of a success fee, simply because a novation had occurred as a result of a change in the constitution of the firm of solicitors acting for her or as a result of the conduct of her claim being transferred for whatever reason to a new firm of Solicitors."

​Reference was made to the previous lead authority relating to assignment of a CFA, Jenkins v Young Brothers Transport Ltd, which had confirmed that a CFA could be validly assigned between firms of Solicitors on the basis that the Solicitor with conduct had changed firms and had taken the case to the new firm. 

​LJ Gloster confirmed that the Solicitor with conduct was not relevant:

​"the CFA between a client and his client in such a case lacks the features of a personal contract. What the client wants is representation by a competent practitioner and not necessarily representation by a specific individual."

​Comment: This is described by Neil Hudgell of Hudgell Solicitors as "an eminently sensible decision". The alternative would have left thousands of clients without a valid retainer and without a right of recovery of their costs against the paying party. Against that backdrop, it is hardly a surprise that the Court of Appeal worked hard to find a resolution that favoured the Claimant. 

​Whether the decision is correct in law is open to debate, but there can be no doubt that the alternative would have led to many paying parties receiving an unmerited windfall.