Transferred CFAs validly assigned, appeal judge rules
An appeal at Liverpool County Court has overturned a decision that a conditional fee agreement transferred from defunct north-west firm Barnetts to SGI Legal had not been validly assigned.
The decision will be welcomed by a claimant sector that has seen tens of thousands of pre-Jackson CFAs bought up by larger practices on the basis that the recoverable success fees and after-the-event (ATE) premiums would be preserved.
In Jones v Spire Healthcare (case no. A13YJ811), His Honour Judge Graham Wood QC held that ‘both the benefit and the burden’ of the CFA were successfully assigned, and ‘there was a valid retainer allowing recovery of both pre- and post-assignment costs’. He added that ‘the indemnity principle is satisfied’.
Wood held that he was bound to follow the earlier High Court decision of Jenkins, which allows for the transfer of personal contracts between solicitor and client. However, he expressed no view on whether the Jenkins decision is in fact correct; a question that is ultimately likely to be addressed by the Court of Appeal.
Last October, DJ Jenkinson had held that the CFA between a personal injury client and Barnetts had not been validly assigned, and was in fact a ‘novation’.
However, Jenkinson found that the ‘benefit’ of the retainer with Barnetts had been validly assigned, entitling the claimant to recover the earlier costs incurred by Barnetts, but not those incurred by SGI. The decision was criticised as illogical by practitioners.
In a case on a similar issue in Kingston upon Hull County Court in February, DJ Beresford held that a pre-Jackson retainer transferred from Baker Rees to Neil Hudgell had been ‘terminated’ when Baker Rees wrote to the client saying that it would no longer perform personal injury work.
Permission has been given for both an appeal and cross-appeal in that case. The defendants have applied for the cross-appeal to be heard by the Court of Appeal, and are still awaiting a decision.
Roger Mallalieu, barrister at 4 New Square, who acted for the defendants in February’s Budanacase, said: ‘Given that the main basis for judgment [in the Jones v Spire Healthcare appeal] is that HHJ Wood QC accepts that he is bound by Jenkins, it is a little disappointing that the appeal was only to circuit judge level.
‘The real issue is whether Jenkins is right or wrong, which – assuming Jenkins is binding – can only be decided at a higher appellate level. The sooner we get on with those arguments the better.’
Robert Marven of 4 New Square acted for the claimant Jones, and Andrew Hogan of Nottingham’s Ropewalk Chambers acted for defendant Spire Healthcare.
(Courtesy: The Law Society Gazette)