Case No: A13YJ811
IN THE COUNTY COURT AT LIVERPOOL
Liverpool Civil and Family Court
35 Vernon Street
Liverpool
L2 2BX
Date: 11/09/2015
Before :
DISTRICT JUDGE JENKINSON
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Between :
DENISE JONES / Claimant- and -
SPIRE HEALTHCARE LIMITED / Defendant
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Mr Robert Marvin (instructed by SGI Legal LLP) for the Claimant
Mr Andrew Hogan (instructed by DAC Beachcroft Claims Ltd) for the Defendant
Hearing date: 9 September 2015
JUDGMENT
District Judge Jenkinson:
1. This matter, which would normally have been dealt with within the provisional assessment regime, was listed before me for a detailed assessment hearing on 9 September 2015, pursuant to an order made by District Judge Peake on 23 March 2015. The reason for this was that there was a particularly contentious issue to be resolved, namely whether or not the conditional fee agreement that the Claimant entered with one firm of solicitors had been validly assigned to a second firm of solicitors, and if not, what the consequences were. Both counsel agreed at the outset of the hearing this week that there was only sufficient time to deal with this specific issue, and not to deal, if it was then necessary, with the balance of the detailed assessment. This proved to be correct, in that those submissions took a full day.
2. The relevant facts are straightforward and largely uncontroversial. Ms Jones sustained an accident at work on 27 August 2011. She briefly instructed a firm of solicitors whose involvement need not feature further for these purposes as no claim for costs is made in respect of any work undertaken by them. On 3 February 2012 Ms Jones entered into a conditional fee agreement with Barnetts solicitors. It is not disputed that this CFA was a valid one in the light of the CFA regulations as they then were. It is largely based on the Law Society model CFA, although amended in parts. It imputes the usual obligations on both solicitor and client. It records that the person primarily responsible for the conduct of the claim would be John Killen, a partner at Barnetts, although it clearly envisages (at paragraph 9) that other fee earners may also be involved.
3. In fact it appears that the majority of the work undertaken at Barnetts was undertaken by a different fee earner to Mr Killen, Christopher Eccles.
4. At some point prior to 17 January 2014, Barnetts became insolvent, and administrators were appointed. They decided to sell Barnetts’ personal injury work to another firm of solicitors, SGI Legal LLP. On 21 January 2014, a document entitled "Deed of Assignment" was executed between the administrators of Barnetts and SGI Legal LLP which sought to assign (inter alia) the benefits and obligations of 228 retainers between Barnetts and various clients, including Ms Jones, to SGI Legal LLP.
5. On the same day (21 January 2014) SGI Legal LLP wrote to Ms Jones in entirely proper terms, explaining that her claim had been transferred to them, that they were prepared to act for her on the basis of the conditional fee agreement that she had already entered with Barnetts, but that it was entirely a matter for Ms Jones as to whether or not she wished to instruct them or to instruct another firm of her choice. It is relevant to point out at this stage that this letter was written by a fee earner at SGI Legal LLP, June Harrison, who therein invites Ms Jones, in the event of any queries, to contact either her, or a named Client Relationship Partner. No reference is made within the letter of the fact that fee earners from Barnetts, including for these purposes Christopher Eccles, were transferring to SGI Legal LLP.
6. Receipt of this letter by Ms Jones apparently precipitated a telephone call to SGI Legal LLP on 27 January 2014. The telephone attendance note appears at page 238 of the hearing bundles. Ms Jones expressed shock at the position, but went on to confirm that she would complete the appropriate documentation to allow SGI Legal LLP to proceed with her representation, and then went on to discuss a particular aspect of her claim. It does not appear that the transfer of Christopher Eccles from Barnetts to SGI Legal LLP was raised, either by the Claimant or by the fee earner at SGI Legal LLP. I am driven to the conclusion that the Claimant was probably unaware of Mr Eccles’ transfer, or at least was uninterested as to whether her claim was to be handled at SGI Legal LLP by him, or by another competent fee earner.
7. True to her promise, on the same day (27 January 2014) the Claimant executed another document (again entitled "Deed of Assignment”) whereby she sought to assign both the benefit and obligations of her retainer with Barnetts, to SGI Legal LLP.
8. SGI Legal LLP progressed the claim on Ms Jones’ behalf, through the conduct of their fee earner James Devenney. In a witness statement dated 27 September 2015, Mr Devenney explains that Mr Eccles (the previous fee earner who had himself transferred to SGI Legal LLP from Barnetts) had conduct of the claim up to 10 February 2014, and sporadically assisted Mr Devenney thereafter. Mr Devenney contends (at paragraph 23 of that statement) that it was because of the ongoing relationship of trust and confidence that the Claimant had in Mr Eccles that he continued his involvement. However, the few documents exhibited suggest that Mr Eccles had very limited involvement in the claim after it was transferred to SGI Legal LLP. In that regard, I find as a fact, and on a balance of probabilities, that any decision by the Claimant to transfer her instructions to SGI Legal LLP was motivated by the unexpected insolvency of her former solicitors, and the ease of continuing her claim through an equally competent personal injury firm, who already had the file, and who were prepared to continue to act on the same basis. I find that the decision was in no way influenced by the transfer of Mr Eccles to SGI Legal LLP, even if Ms Jones knew about this, which on the evidence available I consider it unlikely that she did.
9. The substantive claim was ultimately settled on 3 October 2014 by the acceptance of a Part 36 offer by the Claimant. That acceptance imputes an entitlement to costs. However, the paying party contends that the is no entitlement to costs in this case on the basis that:-
a) The purported assignment of the conditional fee agreement from Barnetts to SGI Legal LLP was not valid. Notwithstanding that the documents purporting to transfer the CFA to SGI Legal LLP are referred to as assignments, they in fact represent a novation. Effectively SGI Legal LLP has thereby entered a new agreement with Ms Jones, based upon the terms of the original CFA between her and Barnetts.
b) Whilst the CFA with Barnetts was valid at the time it was entered, the effect of subsequent changes to the rules meant that the CFA, as re-entered by way of such novation with SGI Legal LLP, is unenforceable;
c) There are no costs payable to Barnetts under the terms of the CFA either because:-
i. Barnetts did not "win" the case within the meaning of the CFA (because SGI Legal LLP did);
ii. When the case was "won” Barnetts were in liquidation and therefore were not in existence to receive any costs under the original CFA that the paying party contends remained with them.
10. Turning firstly to the validity of the assignment of the CFA to SGI Legal LLP, the general principle is that a contract involving personal skill or qualifications is incapable of assignment. Such a contract falls within the category of contracts described as personal contracts. The position is explained at paragraphs 19-054 and 19-055 of the 31st edition of Chitty on Contract. For example, neither an author nor his publisher may assign the right to performance of the other's obligations under a publishing agreement (Griffith v Tower Publishing Company (1897) 1 Ch 21). Similarly, the right to employ a person under a contract of employment is a personal contract that is not assignable (Noakes v Doncaster Amalgamated Collieries Limited (1940) AC 104).
11. The receiving party, however, relies upon an exception to this general rule which it is said applies following the judgment of Rafferty J (as she then was) in the case of Jenkins v Young Bros Transport Limited (2006) 1 WLR 3189. In that case, the solicitor acting for Mr Jenkins changed firms, and the CFA was assigned from the first firm to the second. It was assigned for a second time when the solicitor changed firms again. Following settlement of the case, the Defendant challenged the recoverability of costs on the basis that the CFA could not be assigned on the above principles.
12. Rafferty J found that it could. She held that the benefit (the right to be paid in a successful case) and the burden (the obligation upon the solicitor to ensure success of the claim to their best of their ability) of a conditional fee agreement were inextricably linked and that “upon the facts of this case” (my emphasis) both the benefit and the burden of the CFA could be assigned as an exception to the general rule. I identify at this stage, however, that the factual situation in the case of Jenkins was different to the present case. It is clear that the Claimant in Jenkins was effectively loyally following an individual solicitor, in whom he had considerable trust and confidence, from one firm to another. In those circumstances, Rafferty J (as is apparent from paragraph 28 of the judgment) was reluctant to interfere with a professional relationship whose propriety and worth was unchallenged. However, the fact specific nature of her finding in that case is very clearly spelled out at paragraph 31 the judgment in following terms:-
“ the relationship between client and solicitor involves personal confidence. As we have already rehearsed, what drove these events was the trust and confidence Mr Jenkins had in (the named solicitor) based upon her uninterrupted conduct of his case. Whether, absent that trust and confidence, a CFA could validly be assigned is not a matter upon which it has been necessary for us to reach a conclusion.”
13. In the present case, the paying party submits that this decision is wrong. They point out that the author of the White Book 2015 Costs and Funding supplement questions the weight of this case (at paragraph 2-09) in the following terms:-
"… the weight of that authority (Jenkins) is open to question, particularly since Rafferty J expressly stated that she was not laying down any issue of general principle, but was merely deciding the case on its particular facts, but also because it is open to argument whether the analysis of the principle of conditional benefit and burden was properly analysed in that case, particularly in light of the Court of Appeal’s comments in Davies v Jones (2009) EWCA Civ 1164 and as to whether all issues in relation to the law of assignment were fully raised or argued."
14. Of course, to the extent that it is applicable to the facts of the instant case, the decision in Jenkins is binding upon me. It is plainly not for me to find that it was wrong, aside from which I note that whilst perhaps making passing criticism of the decision in Jenkins at paragraph 25 of Davies in these terms
“.. I have some doubts whether the relevant benefit and burden were correctly described."
The Chancellor did not go so far as to say that the case was wrongly decided.
15. However, I am satisfied that the instant case is distinguishable from that of Jenkins. Rafferty J specifically stated, at paragraph 31 of her judgment (extracted at paragraph 12 (above)) that she was leaving open the issue of whether or not a CFA could be assigned absent the particular relationship of trust and confidence that Mr Jenkins and his solicitor enjoyed.
16. For the reasons addressed above, I do not consider that Ms Jones’ decision to seek to assign the CFA to SGI Legal LLP was motivated in any way by particular trust and confidence in a particular fee earner, even if she knew that Mr Eccles employment had been transferred to SGI Legal LLP, which, on a balance of probabilities, as above, I do not consider that she even did.
17. For that reason, I do not consider that the narrow exception to the general rule against the assignment of personal contracts, to the extent that such exception is imputed by Jenkins, applies here. Rather, in my judgment, the existing well established common law applies, and such an assignment is not possible.
18. It is, however, possible to assign the benefit as opposed to the burden of such a contract. Taking the examples summarised at paragraph 10 (above), as is made clear from the cases cited at paragraph 19-055 of the 31st Edition of Chitty on Contract, if the author has actually transferred the copyright in the work to the publisher, he can assign that as an item of property, and that wages or salary due to the employee are normally assignable.
19. The paying party, whilst contending that the assignment is actually a novation, does not contend that to the extent that it represents a valid assignment, it is technically deficient in any way. For that reason I am of the view that the benefit of the conditional fee agreement (the right to be paid in the event of the claim being successful) has been validly assigned to SGI Legal LLP and that the Claimant is entitled to recover the costs that would otherwise have been payable to Barnetts as a consequence of the subsequent settlement of this case. To the extent that it is necessary to consider these issues:-