Blog - Thursday 12 May 2016

 

Denise Jones v Spire Healthcare Ltd - CFA Is Successfully Assigned

 

Just Costs Solicitors acted as solicitor agents in the eagerly awaited appeal judgment of HHJ Wood QC, handed down yesterday, in Denise Jones v Spire Healthcare Ltd (11.5.16) where he found that the Claimant’s CFA could be successfully assigned.

The Central Issue

The central issue in this appeal was whether or not an insolvent firm of solicitors could properly assign its rights and responsibilities under a Conditional Fee Agreement (CFA) with a client to another firm of solicitors.

Background

The Claimant had instructed Barnetts Solicitors to pursue a claim for personal injury arising out of an accident at work. A CFA was entered into between them on 1 February 2012 which included a provision that there would be no deductions from her damages. Unfortunately, Barnetts went into administration. SGI LLP agreed with the administrators to acquire Barnetts’ book of work and the Claimant was happy to move her case to SGI as part of that acquisition. A generic deed of assignment was entered into between Barnetts and SGI and a separate deed of assignment was signed by the Claimant approximately a week later.

The Claimant’s claim subsequently settled for £17,500 with costs to be assessed if not agreed. However, the Defendant paying party argued the Claimant had no entitlement to costs as there was no valid retainer.

The Defendant argued this on the basis 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 [206] EWHC 151. In that case an assignment was found to be valid where the individual solicitor had retained conduct with the passage of the case between different firms of solicitors. Accordingly, the Defendant argued there was no entitlement to costs following the transfer of the case to SGI.

The Decision Below

This issue came before District Judge Jenkinson in September 2015.

There is a general principle that a contract involving personal skill and confidence is incapable of being assigned as such a contract is a contract of personal service. Whilst Jenkins v Young Brothers provided for an exception where there was specific trust and confidence in a particular fee earner, the District Judge found that the facts of the instant case did not engage that exception. Accordingly, the general principle applied and the CFA could not, and had not, been validly assigned.

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

The Claimant appealed that decision.

The Findings 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.

Conclusion

The Appellant’s success is going to impact greatly on the large backlog of cases awaiting this important decision. However, it is unlikely that this decision will be the end of the matter. Not only will this case now be remitted back to the regional costs judge to determine the quantum of the Claimant’s costs, there is a very real possibility that the assignment issue could be appealed to the Court of Appeal.

We will wait and see!

 

By Nick McDonnell - Director & Costs Lawyer