By Colin Richmond
The Court of Appeal has handed down its long-awaited judgment in the case of Alina Budana (Appellant) v Leeds Teaching Hospitals NHS Trust (Respondent) & Law Society (Intervener) [2017] EWCA Civ 1980.
Briefly, the Court held that a Conditional Fee Agreement (“CFA”) can be validly assigned from one firm of solicitors to another. That being the case, the Claimant was entitled to recover a pre-LASPO success fee, provided for by the original CFA, from the Defendant.
Facts
On 2nd December 2011 the Claimant instructed a firm of solicitors (“Sol 1”) to pursue a personal injury claim against the Defendant arising out of a tripping accident at their premises on 6th November 2011.
The Claimant entered into a CFA which provided for a 100% success fee.
Sol 1 subsequently decided that it was no longer economically viable for it to continue handling personal injury claims and entered into a collective agreement with a second firm (“Sol 2”) to transfer its book of personal injury cases to them. That collective agreement was subject to a “master deed” of assignment between the two firms.
On 22nd March 2013 Sol 1 told the Claimant that it would no longer be dealing with personal injury claims and that her claim was being passed to Sol 2. On 10th April 2013 the Claimant signed letters of instruction for Sol 2, along with a deed of assignment assigning, among other things, the original CFA.
The Claimant also signed a new, alternative, CFA with Sol 2, which was due to come into effect only if the deed of assignment was held not to allow Sol 2 to recover costs.
The Claimant’s claim was settled and the Defendant was ordered to pay her costs. The Claimant sought recovery of those costs, including the success fee, under the original CFA. She argued that she had assigned the CFA to Sol 2 and that the transitional provisions set out as s.44(6) Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) applied.
The Defendant argued that the original CFA was terminated by Sol 1’s letter of 22nd March. Alternatively, if the CFA had survived then it could only have been novated, rather than assigned, after 1st April 2013.
At first instance the court held that the CFA had been terminated by the letter of 22nd March. The judge further held that neither firm was entitled to be paid for any work done under the original CFA. If the CFA had survived, there would have been a valid assignment.
The Claimant appealed, with the Defendant cross-appealing the judgment regarding the valid assignment had the CFA survived.
Appeal
The Court of Appeal held that the original CFA was not terminated by the letter of 22nd March. Nothing contained within the letter itself, or the transfer of the CFA, could render the contract terminated without the agreement of the Claimant.
Although there may have been a novation, that did not preclude the recovery by Sol 2 of the success fee set out in the original CFA. The master deed and second deed made clear that the intention was simply to substitute Sol 2 for Sol 1 under the terms of the existing retainer.
The original CFA remained binding and enforceable between the Claimant and Sol 2. There was no reason in principle why a CFA should not be capable of assignment.
Further, the Defendant’s position would “mean the worst of both worlds” for the Claimant, who would “forfeit the rights which they had prior to 1st April 2013 whilst potentially also not obtaining the mitigating benefits available to those entering into their arrangements after 1st April 2013. That would be perverse.”
The Claimant’s appeal was allowed, with the Defendant’s cross-appeal dismissed.
The full judgment can be found here:
http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2017/1980.html&query=(budana)
Zenith PI: PERSONAL INJURY LITIGATION IN PRACTICE 