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Updates, Insight & Analysis

 
     

Assignment of CFAs following appeal in Denise Jones v Spire Healthcare

May 31 2016

The issue of assignment of CFAs has been in the spotlight recently, largely due to the judgment in the matter of Jones v Spire Healthcare. This case carries a vast amount of significance considering the volume of cases which rely on the outcome. Numerous claimant solicitors have acquired cases from other firms, usually as a result of the old firm’s closure and the claimant’s need for continuing representation. These cases have pre-1st April 2013 CFAs, along with the benefits and additional liabilities associated with this.


Jenkinson, Jenkins & Jones

The principle that CFAs were capable of valid assignment was a serious concern for those practitioners who were relying on the CFAs being validly assigned. Up until the decision in Jones the case of Jenkins v Young Brothers Transport Ltd [2006] 1 WLR 3189 had provided some level of protection, although this had long been a controversial decision which was considered to be limited to the facts of the instant case. This decision revolved largely around there being a “relationship of trust and confidence” that existed throughout the potential assignment. However, it initially appeared that District Judge Jenkinson in Jones had put an end to hopes that valid assignment could take place.


DJ Jenkinson stated that Jenkins could not apply and the transfer of the CFA was a novation (a new agreement) rather than a failed attempt to assign the CFA. As the novation had occurred following the introduction of the Jackson reforms on 1st April 2013, but the CFA did not contain the necessary wording brought in by the reforms (namely the inclusion of the specific wording of the success fee), no costs could be recovered from the date of the novation. This effectively meant the previous solicitors could claim their costs though the new solicitors who had won the case could not. Many were critical of the decision, with commentators finding it contradictory in nature and unclear on exactly what costs the solicitors seeking assignment could claim.


Wood Chips In

Upon the recent appeal, His Honour Judge Graham Wood overturned the original decision and held that the CFA was validly assigned. The judgment set out that both the burden and the benefit of the CFA were assigned from the original solicitors to their successors, allowing the recovery of costs both before the assignment and after. It was found that Jenkins was not restricted to its own facts and it could be applied in this matter. Whilst the judgment in Jenkins was in fact binding, it was also found that a relationship of trust and confidence was not essential to assignment.


The Judge also pointed out the apparent inequity of the original decision. He stated that if he found that CFAs were incapable of assignment then: “A solicitor who had a number of CFA agreements in progress but who wished to cease to practise, could not transfer or assign those agreements unless he or they continued to exist as a legal entity. They would have no value for assignment if the solicitor taking over the conduct of the case could not recover the benefit of the work undertaken.


Assignment of CFAs - clarity in sight?

There is still some doubt however on the validity of the decision in Jenkins and this decision does not provide a definitive answer either way. Hopefully further clarification will be provided by the Court on this - perhaps from the ongoing appeal in the matter of Budana v Leeds Teaching Hospitals NHS Trust for example, which originally held that Jenkins did apply, despite the facts of the case being markedly different. The Judge on this matter did however comment that there was a convincing argument that Jenkins was incorrectly decided.


While the outcome of the appeal is without a doubt a blessing for practitioners who have acquired CFAs, the matter of the assignment of CFAs is highly unlikely to be concluded. A Court of Appeal decision would provide some much needed clarity at a time when a number of cases appear to be further muddying the waters in this key area.


Patrick Toal - Costs Draftsman, Civil & Commercial


If you would like to speak to Patrick or the rest of our experienced team about this or any other Costs issue, give us a call on 020 7842 5950 or send us your enquiry online.