The issue of the definition of “win” and the assignment of CFA’s was recently considered by Master Leonard in Warren v Hill Dickinson LLP [2018] EWHC B6 (Costs).
The Facts:
- Over a period of years, and in respect of a variety of matters, Mr Warren was represented by Ms Basha, a Solicitor, who moved Firms on a number of occasions. The first was at Carter-Ruck, subsequently PSB Law LLP and, until the end of January 2016, at Hill Dickinson LLP.
- Two of the matters in which Ms Basha acted for Mr Warren were proceedings against Mr Burns, a boxer, for breach of contract and against Mr Burns’ manager, Mr Morrison, for defamation. Both started when Ms Basha was with PSB.
- In March 2013, Mr Warren signed two CFA with PSB, one relating to the proceedings against Mr Burns and the other to the proceedings against Mr Morrison. Both agreements were dated 27 March 2013 and provided for success fees.
- On the face of the documents, Mr Warren signed both CFAs and an accompanying copy of PSB’s terms of business on 25 March 2013. On the evidence it seemed more likely that he signed them on 26/27 March 2013, and that Ms Basha countersigned the CFAs on 27 March.
- Mr Warren was awarded damages and obtained default cost certificates in both cases. However, he had not recovered anything from either Defendant, as both had been made bankrupt.
The issue before Master Leonard was whether the Client (the Claimant in this action) had a liability to pay his former Solicitors.
The Decision – was the claim “won”?
Master Leonard found that there was a “win” as defined by the CFAs.
Though the outcomes met the definition of “win” in the CFAs, Mr Warren claimed that there was an agreement that Ms Basha would only recover fees from Mr Warren in the event there was a ‘net gain’ to him.
Mr Warren argued that, not having recovered any money, he had not made a net gain, meaning therefore that he should not have to pay anything. Master Leonard found no evidence to support this. The contractual documentation was “littered with clear references to and warnings to Mr Warren about his liability to pay his solicitors’ costs, whether recovered from an opponent or not”.
Aside from admitting that he did not read the documents he was asked to sign, Mr Warren said he was not troubled by these warnings because he knew that what Ms Basha was saying did not reflect their agreement. Master Leonard added that, even if he accepted the net gain argument, “it seems to me that it would not furnish him with any sound basis in law for escaping the terms of either the Burns or the Morrison CFAs”.
“The Defendant relies on the wording of each of the Burns and Morrison CFAs. Given that Mr Warren has, as against both Mr Burns and Mr Morrison, obtained judgment for a sum of money, an order for payment of his costs and a Default Costs Certificate, it might be thought that the obvious answer to the question of whether Mr Warren has achieved a “win” under the terms of each CFA is “yes”. The Points of Dispute appear to advance an argument to the effect that on the wording of the CFAs, the definition of a “win” is not met, but I can find no substance in that, nor in submissions to the effect that I ought to have regard to the outcome of the Burns and Morrison claims beyond the extent to which definitions of “win” provided for in each CFA have been met.”
The Decision – was the CFA validly assigned?
Master Leonard also rejected the Claimant’s argument that the CFA had not been validly assigned to the successor firms. The Claimant argued that the fact that the previous firms had ceased practising meant there could not be a valid assignment.
“It seems to me that it cannot be correct to say that the Burns and Morrison CFAs were terminated on PSB’s ceasing to practise on 30 September 2013. First, that proposition relies upon Mr Nicol’s attempt to distinguish between (in Budana) BR’s being unable or unwilling to continue representing its client, and (here) PSB’s ceasing to practise as a firm of solicitors. To my mind there cannot be any material distinction. The effect, as regards performance of the relevant contract, would be precisely the same. As in Budana, even if PSB’s decision to cease practising could be treated as a repudiatory breach of the Burns and Morrison CFAs it would then have been for Mr Warren to accept that breach and to treat each CFA as terminated, and he did not.”
Master Leonard was therefore unable to accept that there was any material distinction between the facts of this case and the facts of Budana.
“Under cross-examination Mr Warren admitted that at the time it took place, the transfer of the Burns and Morrison CFAs to the Defendant was in his (and WP Ltd.’s) best interests, but at the same time he attempted to say that it turned out not to be. I can only conclude that he was attempting to say that he wishes, with hindsight, that he had acted differently. That offers no proper basis for avoiding his contractual liabilities or for criticising Ms Basha, PSB or the Defendant.”
Summary of Master Leonard’s conclusions
“I have concluded that Mr Warren has achieved a “win” under the terms of the Burns and Morrison CFAs. The transfer of those CFAs from PSB Ltd to the Defendant was valid and the Defendant is entitled to enforce their terms against Mr Warren.”
Conclusions
Since the parties made their opening submissions, the Court of Appeal had, in Budana v The Leeds Teaching Hospital NHS Trust [2017] EWCA Civ 1980, offered authoritative guidance on the validity of the assignment of CFAs; before the Court of Appeal, the Parties in Budana identified four issues to be determined, three of which were pertinent for the purposes of this judgment. They were whether the Solicitors in that case had terminated its CFA by its letter of 22 March 2013; if not, whether the transfer of the CFA was effective as an assignment or as a novation; and if it took effect as a novation after 1 April 2013, whether the success fee payable under the CFA was recoverable. Master Leonard could not distinguish the 2 cases and therefore, Mr Warren was not in a position to walk away from either CFA, which he ultimately did not do.
This case highlights the SCCO’s stance on the ruling of Budana in allowing the assignment of CFAs to successor Firms. The judgment now provides clarity and certainty in this area, and the factors to be considered as to whether a CFA has been validly assigned.