In what circumstances can a CFA be assigned? Mat Knight considers

This question arose during the recent case of Mohammed Azim –v- Tradewise Insurance Services Ltd [2016] EWHC B20 (Costs) where Master Leonard was asked to consider 3 key issues.

Three firms of solicitors represented the Claimant in pursing his personal injury claim following an RTA and the matter eventually settled following acceptance of a Part 36 offer in the sum of £3,500.00.

The first firm was Minster Law, who acted between 17 October 2011 and 14 November 2012 under the terms of a CFA dated 19 October 2011. The second firm was TLW Solicitors (“TLW”), who acted for the Claimant between 16 November 2012 and 23 July 2014. TLW acted under a CFA dated 17 January 2013 (“the TLW CFA”), the terms of which provided for it to have retrospective effect to the date of initial instructions.

The third and final firm was Russell Worth Ltd, to which firm the TLW CFA was assigned on 23 July 2014. The CFA was assigned as TLW were unable to provide the Claimant with the same quality of service as before due to key staff being on maternity leave and securing a new contract; therefore, TLW advised the Claimant to transfer his case to Russell Worth Ltd who specialise in these types of cases.

The Defendant took issue with the validity of the July 2014 assignment and, in consequence, with the Claimant’s right to recover any costs under the TLW CFA.

The first key issue was whether the Claimant’s retainer with his solicitors had been terminated by them at the time of the assignment arrangement entered into on 23 July 2014. The second was whether it was possible lawfully to assign the TLW CFA in the manner attempted by the Claimant. The third was whether (assuming that lawful assignment was possible) such assignment was effective.

Whether the CFA was terminated by TLW

Master Leonard considered the cases of Budana and Webb and reached a conclusion that if the assessment arrangement of 23 July 2014 was in itself valid then there was no sound basis for concluding that the TLW CFA was, at any stage, terminated by TLW.

Whether it was possible lawfully to assign the TLW CFA

It was not in issue that a CFA can, in given circumstances, validly be assigned. The question was whether those circumstances could be applied to this case. Master Leonard considered the cases of Jenkins and Jones –v- Spire Healthcare Ltd and reached a conclusion that he could identify no obstacle, in the principles governing assignment of the benefit and burden of contracts, to the validity of a bona fide, arms-length CFA assignment in the circumstances of this case.

Whether the assignment was effective

Master Leonard felt that the documents disclosed by the Claimant were perfectly sufficient and he could find no sound basis for concluding that the assignment of the TLW CFA on 23 July 2014 in any way failed to comply with the provisions of Section 136 of the Law of Property Act 1925.

The question on whether there was a novation was also considered and Master Leonard concluded that a novation did not take place as the Claimant was, after the event, given notice of assignment and his consent was sought to the transfer of money, papers and information, in accordance with professional obligations, not for the purposes of a novation.

Summary of conclusions

  • The TLW CFA of 17 January 2013 was not terminated by TLW;
  • The assignment of the TLW CFA on 23 July 2014 was valid;
  • There was an assignment of the TLW CFA not a novation; and
  • It followed that the indemnity principle did not operate to prevent the recovery of the costs incurred by the Claimant and payable both to TLW and Russell Worth Ltd under the terms of the TLW CFA.