Assignment of CFA's

Following the ban on recoverability of success fees and ATE premiums on 1 April 2013, the issue of assignment of CFA’s has been firmly back in the spotlight.

Many firms have sought to assign a CFA from one to another in order to protect the recoverability of the additional liabilities from the losing party. But this has given rise to Defendant’s challenging the validity of such an assignment.

One recent case that dealt with this issue was Jones v Spire Healthcare Limited.
 
In Jones, the Claimant had instructed Barnetts Solicitors to pursue a claim for personal injury arising out of an accident at work. Barnetts went into administration and SGI LLP agreed with the administrators to acquire Barnetts’ book of work. The Claimant agreed for her case to be transferred to SGI and a deed of assignment was entered into between Barnetts and SGI and a separate deed of assignment was signed by the Claimant.

The claim settled for £17,500 with costs to be assessed if not agreed. The Defendant argued that there was no valid retainer and the Claimant had no entitlement to costs.

The Defendant's contention was that the CFA was not capable of assignment, as it amounted to a contract of personal service and did not come within the exception of trust and confidence which could be inferred from the decision in Jenkins v Young Brothers Transport Ltd [2006] EWHC 151. In Jenkins, an assignment was found to be valid where the Claimant had followed a Solicitor to a new firm on the basis of trust and confidence in that Solicitor. Accordingly, the Defendant argued there was no entitlement to costs following the transfer of the case to SGI as no such trust and confidence existed.

This issue came before District Judge Jenkinson in September 2015.

The judge found that there was no reason to depart from the general rule that a contract for personal services could not be assigned as the facts did not fit with the Jenkins exception. There had been no relationship of trust and confidence with one fee earner an the retainer was therefore unenforceable.

The effect of this was that the costs incurred following the transfer of the case to SGI were irrecoverable.

The Claimant appealed that decision.

On appeal, HHJ Wood QC found the District Judge was wrong to find Jenkins was not binding upon him, even if the facts were distinguishable. It would be unduly restrictive and overly legalistic to deny the parties the effect of what they had intended. This was particularly the case where there was tripartite involvement and where the assignee (SGI) and the assignor (Barnetts) together with the recipient of the benefit (the Claimant) agreed to the shifting of the burdens and the benefits.

Accordingly, the appeal was allowed.

This decision will be welcomed by the Claimant arm of the profession, but it may not be the end of the matter as the Defendant may decide to refer the case to the Court of Appeal.

There are also other cases that may be referred to the Court of Appeal. Webb v Bromley London Borough Council and Budana v Leeds Teaching Hospitals NHS Trust are due to be heard shortly. The Defendant in Budana has sought that the matter be leapfrogged to the Court of Appeal.

It seems that a definitive answer is not far away on this issue.