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Assignments Revisited: Good News for Solicitors, Your Client No Longer Needs to Love You

View profile for Marc Harris
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Mohammed Azim –v- Tradewise Insurance Services Limited [2016] EWHC B20 (Costs)

Before Master Leonard

Background

This matter related to a Detailed Assessment of the Claimant's costs. A number of issues were raised by the Defendant one of which was whether it was possible to lawfully assign the CFA.

By way of brief chronology in relation to funding, there were three firms of solicitors which represented the Claimant. The first was Minster Law who acted under a CFA dated 19 October 2012. The second was TLW Solicitors who acted under a CFA dated 17 January 2013. The third was Russell Worth Limited to which firm the TLW CFA was assigned on 23 July 2014.

Can You Lawfully Assign A CFA?

The Defendant relied upon the principle that the burden of a personal contract for services may not be assigned, subject the exception established in Jenkins concerning the element of trust and confidence between the client and their solicitor. Neither party in this case suggested that such was the position here.

Judgment

In determining whether you could lawfully assign the CFA from TLW the Master considered all the relevant case law in the area of assignments, those being:

  • Jenkins v Young Brothers Transport Ltd [2006] EWHC 151 (QB)
  • Jones v Spire Healthcare Ltd (H.H. Judge Graham Wood QC, the County Court at Liverpool)
  • Webb v London Borough of Bromley (SCCO 18 February 2016, Master Rowley)
  • Budana v Leads Teaching Hospitals NHS Trust (District Judge Besford, the County Court at Kingston-Upon-Hull, 4 February 2016)

The Master followed the approach in Jones:

The Court in Jones concluded that the ratio in Jenkins was not seeking to qualify the exception to the general rule against the assignment of the burden of a contract to specific situations where personal trust and confidence could be established. It would be wrong to qualify this particular exception to the general rule based upon an inextricable link between burden and benefit by making a finding of trust and confidence a pre-requisite.

If the validity of an assignment depended upon a qualitative assessment of the degree of trust and confidence, this would generate considerable uncertainty, leading to potential satellite costs litigation whenever a retainer is challenged on the basis of purported CFA assignment.

While a finding of a relationship of personal trust and confidence between a solicitor and their client was not a pre-requisite, it could still be used as evidence to demonstrate that a valid assignment existed, such as when looking at the intention of the parties.

The Court also concluded that it was impossible to ignore the intention of the parties. Where there is a tripartite involvement and the assignor, assignee and recipient (Claimant) all agree to the shifting of the burden and a separate deed of assignment is entered into in relation to their own CFA, it would be an unduly restrictive and overly legalistic approach to deny the parties the effect of what they intended.

In the Master's Judgment he agreed with the reasoning in Jones and was unable to identify any obstacle in the principles governing assignment of the benefit and burden of contracts. The Master found that the assignment in this case was valid.

If You Can Lawfully Assign A CFA Was The Assignment Effective?

The Master then went on to consider whether the assignment was effective. In doing so focus was drawn to the provisions under section 136 of the Law of Property Act 1925. In considering the provisions the Master found that while notice must be provided, this notice could be in advance of, at the same time as, or after the assignment; any delay however in providing notice could delay the impact of the assignment.

What About Full Disclosure Of All The Contractual Documentation?

The Defendant also argued that the Claimant failed to provide full disclosure of all the contractual documentation which raised sufficient doubt about the statutory compliance. The Defendant further added that any doubt should fall in favour of the paying party in accordance with CPR 44.3(2)(b). The Master rejected the Defendant's argument by firstly finding that CPR 44.3(2)(b) is only in relation to reasonableness and proportionality of costs and does not create a general exception to the established rules of evidence. The Master held that it is incumbent upon the Claimant to demonstrate that the assignment relied on by him was valid in complying both with the statutory requirements and with the principles the Master summarised. The Master was satisfied that the documents the Claimant did disclose were sufficient for this purpose. The absence of certain documents did not therefore mean that the Court could infer that the assignment was not valid.

Conclusion

The case itself demonstrates that CFAs can be assigned between solicitors. The Master in following Jones has arguably sought to broaden the test for establishing a lawful assignment. Furthermore the validity of an assignment should not be dependent on there being an ongoing relationship of trust and confidence.

In considering whether there was valid assignment the following factors are considered:

1. Whether there is an inextricable link between the burden and benefit

2. The intention of the parties

3. Compliance with section 136 of the Law of Property Act 1925

While all cases will fall on there facts, if you can establish an inextricable link between the burden and benefit, demonstrate that the intention of the parties was to create an assignment and can show that have complied with the provisions under section 136, it appears likely following the rationale of Master Leonard that you will be able to prove that an assignment existed and was indeed effective. During Detailed Assessment proceedings it would appear that it is necessary to provide the Paying Party with the necessary documentation to evidence that a valid assignment exists and complies with the statutory requirements.

Final Comments

The Judgment provided by Master Leonard is helpful in illustrating how he reached his conclusion. The step away from the contentious Jenkins exception and the step forwards towards giving consideration to the intention of the parties certainly appears logical, after all it doesn’t make sense that if all parties were intending for the CFA to be assigned that this should be denied by what is a legal technicality.

Is the end of issues regarding assignments? Until a Court of Appeal decision is obtained it is doubtful that this will be the end of it. It is certainly a welcomed decision for receiving parties who have sought to assign CFA's under the old rules into the post-LASPO regime and while the case is not binding it will certainly be a helpful source of persuasive authority.

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