Jarrett v Tesco - assignment of a CFA ruled ineffective
HHJ Yelton has recently delivered judgment in Jarrett v Tesco Stores Ltd (2015) unrep. 23/02/2013 in which it was held that a CFA in a personal injury case had not been validly assigned. However, the peculiar circumstances of the case means it is unlikely that arguments based on Jarrett will be successful in the majority of cases.
- A CFA cannot be assigned to a solicitor who is not authorised to practise as such.
- Jenkins v Young Brothers Transport Ltd has not been immune from criticism, but remains a binding authority in cases involving similar facts.
- A Claimant (C) instructed firm of solicitors (S1) pursuant to a CFA in relation to a personal injury claim.
- A Partner (P) had conduct of the case at S1.
- S1 ceased trading.
- P set up on his own account, and subsequently (but not immediately) obtained authorisation to act as a Sole Practitioner, from which time he traded as a second firm of solicitors (S2).
- C transferred instructions to P during the period P did not have authorisation to act as a Sole Practitioner. Upon transferring instructions, the CFA was assigned personally to P.
- P secured employment with a further firm of solicitors (S3), and C transferred instructions to S3. The CFA was assigned to S3.
- C won her case and was awarded costs.
The Defendant sought to challenge the validity of the assignments on two bases:
- That P was undertaking a reserved legal activity by conducting litigation between the period when he left S1 and when S2 was formed. Because he was not entitled to do so, he was committing a criminal offence.
- That P was acting as a sole practitioner during the same period without authorisation from the SRA, having failed to follow the SRA Rules which allow emergency recognition in the event of a Partnership breakup.
The Court was quick to dismiss the first argument. It was concluded that the work done by P during the period in question did not amount to ‘conducting litigation’ and, accordingly, there was no illegality.
However, the second argument did find favour. It was concluded that a CFA can only be assigned to a solicitor if that solicitor is authorised to practise as such. The Court found that there had been a clear breach of the Rules regarding practising as a Sole Practitioner. As such, the assignment from S1 to P was not valid, which had the effect of rendering the subsequent assignment ineffective.
The facts in Jarrett will arise very rarely, and it certainly cannot be said that Jarrett operates as authority that the assignment of a CFA will be ineffective in all circumstances. Although the Court was clearly unimpressed by the decision in Jenkins, it considered itself bound by the same.
However, the Court was able to distinguish Jenkins from Jarrett it on its facts and this led to the conclusion that the assignment was invalid.
The outlawing of recoverable success fees means that more and more Claimant firms of solicitors are dealing with assignments of CFAs in a bid to ensure that success fees which were recoverable under pre-Jackson CFAs remain recoverable when instructions are transferred to a new firm. In turn, many Defendants are raising arguments against the validity of such assignments. This issue looks set to be one of the key battlegrounds in the latest Costs Wars.
Just Costs has a wealth of experience in dealing with assignments of CFAs. We can provide comprehensive advice wherever a challenge to the validity of an assignment is raised in relation to both the prospects of the challenge proving successful and on any strategy moving forward. Contact us today to find out more about our services.