THE ASSIGNMENT (OR NOVATION) OF CFAS: BOXING PROMOTER’S APPEAL SUFFERS KNOCKOUT BLOW BEFORE A PUNCH WAS THROWN

In Warren v Hill Dickinson LLP [2018] EWHC 3322 (QB) the proposed appellant did not get permission to appeal against a decision that an assigned (or novated) CFA remained valid.

THE CASE

The claimant argued that conditional fee agreements he had entered into with a firm of solicitors were unenforceable, inter alia, because they had not been validly assigned to a second firm of solicitors when the original firm ceased trading.  The Master found that there had been a valid assignment. The original decision was discussed in detail in an earlier post on this blog.

THE PROPOSED APPEAL

The claimant sought permission to appeal. This was listed to be heard immediately prior to the appeal if permission was given.

THE DECISION ON APPEAL

The respondent’s counsel was not called on. Mr Justice Pepperall regarded both of the claimant’s proposed points

CFA STILL VALID EVEN THOUGH PSB LAW CEASED TO TRADE

“In my judgment, there is no merit in the argument that the CFAs in this case were not capable of assignment or novation because  PSB Law was ceasing to trade:
18.1 First, a similar point arose in Budana upon Baker Rees’ deciding not to continue to act in personal injury cases. Gloster LJ dealt with point succinctly at [38]-[41]:

“38. As the claimant submitted, neither the 22 March letter nor any (purported or actual) transfer of the BR CFA could amount to a termination of the contact without the claimant having elected to treat the contract as terminated. It is trite law that a repudiatory breach by one party cannot unilaterally terminate the contract. Instead, the innocent part may elect between termination and affirmation of the contract. Unless and until the innocent party terminates the contract, it subsists. This basic proposition of contract law has been recently reaffirmed in Geys v Société Générale [2013] 1 AC 523.

39. Accordingly, in my judgment, the BR CFA undoubtedly subsisted after the 22 March 2013 letter, the Master Deed and the second deed – even assuming (without deciding) that these individually or collectively amounted to a repudiatory breach of contract. Even if BR had indeed wished to end the contract, or their obligations thereunder, they could not, in the particular circumstances of the case, do so unilaterally.

40. Moreover, in my judgment the claimant did not terminate the contract but instead affirmed it by the second deed and her conduct more generally. On the instant facts, which are not in dispute, the terms of the documentation clearly show that the claimant did not elect to terminate her contract with BR, but instead decided to preserve and, to use a neutral word, transfer it. Of course, that per se is not determinative of whether that transfer must be characterised as a novation, which would involve a discharge of the original contract. But, on these facts, it is sufficient to determine that the claimant did not terminate the contract in response to such repudiatory reach, if any, as there might have been by BR.

41. The BR CFA therefore survived, and BR remained entitled to payment, if it fulfilled its entire obligations under the contract. The defendant (rightly) did not submit that, even if the contract was affirmed and was fully performed, the breach would itself amount to a failure to fulfil BR’s entire obligations under the contract.”

In my judgment, the master was right, at paragraph 132 of his judgment, to regard there to be no material distinction between a law firm’s ceasing to carry out personal injury work (as in Budana) and a firm’s ceasing to practise (as in this case).
18.2 Secondly, the master was also right to hold that PSB Law was not in breach (let alone repudiatory breach) of the CFAs, but that – even if it had been – such agreements would not have been terminated unless Mr Warren had accepted the alleged repudiation. Here, he instead consented to the transfer of the CFAs to Hill Dickinson.
18.3 Thirdly, there is no sensible distinction to be made between the current appeal and the situation in Plevin. In that case, the CFA was assigned because the partners of Miller Gardiner reconstituted themselves as an LLP. The old partnership appointed administrators who then assigned Mrs Plevin’s CFA and other contracts to the new LLP. In my judgment, there is no valid distinction between PSB’s ceasing to practise altogether and the closure of the partnership in Plevin. In both cases, the firm with which the client entered into the CFA ceased to practise, and yet, in Plevin, the Supreme Court had no truck with the argument that there had not been a valid assignment.”

DISTINGUISHING BUDANA

The judge then rejected a ground of appeal based on an attempt to distinguish the decision in  Budana v Leeds Teaching Hospital NHS Trust [2017] EWCA Civ 1890, [2018] 1 WLR 1965.  The defendant solicitor had properly explained the reason for transferring the CFAs.

    1. In my judgment, far from containing an error of law, Ms Basha properly explained the consequences of Mr Warren’s terminating his CFAs with PSB Law and simply taking his work to Hill Dickinson. Had he done, he would indeed have faced a liability under clause 5 of the CFAs.
    2. Mr Lawrence is right that such liability might in theory have been avoided if:
28.1 first, Mr Warren had chosen not to agree to the novation;

28.2 secondly, PSB Law had then ceased to practise rather than hiring in a lawyer to conduct Mr Warren’s cases; and

28.3 thirdly, Mr Warren had then accepted such repudiatory breach.

That situation had not, however, arisen. The master dealt with the hypothesis at paragraph 134. That, in my judgment, is a finding of fact that plainly cannot be challenged on this appeal.

  1. Upon his findings, Master Leonard was clearly entitled to find that these CFAs had been transferred to Hill Dickinson with Mr Warren’s informed consent. Indeed, there were obvious advantages. Novation ensured that Mr Warren continued to be represented by Ms Basha in whom he had confidence and who knew his cases. Further, it ensured that he still had the benefit of the CFAs and, had matters turned out differently, he might still have been able to recover success fees from his opponents since the novated CFAs were pre-LASPO agreements.”