ROUND ONE: WHAT IS A”WIN” UNDER A CFA? ROUND TWO: THE ASSIGNMENT OF CFAS: FORMER CLIENT DOES NOT SCORE A KNOCKOUT BLOW

In Warren v Hill Dickinson LLP [2018] EWHC B6 (Costs) Master Leonard considered what was meant by the term “win” in a conditional fee agreement.  He also considered whether a CFA was properly assigned.  The former client (the claimant in this action) failed on both its arguments. The Master found there was a “win” and that the CFA had been validly assigned to successor firms.

THE CASE

An individual solicitor had acted on behalf of the claimant , a boxing promoter, in a number of cases, under the terms of conditional fee agreements. The solicitor had moved firms on several occasions. One case, against a boxer, Mr Burns, lead to a judgment.  Another case led to a judgment being entered following breach of an unless order.  However both defendants had been made bankrupt and costs were not recovered from them.  The issue arose as to whether the client (the claimant in this action) had a liability to pay his former solicitors.

WAS THERE A WIN?

The Master found that there was a “win” as defined by the CFAs.  The claimant’s argument that there was an agreement that the litigation had to lead to a “net gain” to him.  This evidence was not accepted by the Master.

1. 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.

ASSIGNMENT OF THE CFA

The Master also rejected the claimant’s argument that the CFA had not been validly assigned to successor firms. The claimant argued that the fact that the previous firms had ceased practising meant there could not be a valid assignment.

Conclusions on the Validity of the Transfer of the Burns and Morrison CFAs

1. 1. I am unable to accept that there is any material distinction between the facts of this case and the facts of Budana.

   2. 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.

   3. In any event, on the facts of this case it does not seem to me to be open to Mr Warren to argue that PSB’s ceasing to practise on 30 September 2013 constituted a repudiatory breach of contract. To my mind, Mr Nicol equates ceasing to practise with dissolution. PSB must, on the evidence, have been advised by Ms Basha, before her departure on 14 September 2013, of the fact that Mr Warren had elected to take his business with her. PSB’s ceasing to practise post-dated her departure, and may well have been (at least in part) a consequence of it.

   4. I have seen no evidence to suggest that, if PSB had been told that Mr Warren wished PSB to continue to represent him, it could or would not have done so. On the evidence, PSB at all times performed its obligations under the Burns and Morrison CFAs to the extent that Mr Warren required it to do so. It was never in breach.

   5. Similarly, the proposition that the Burns CFA was terminated on WP Ltd’s going into administration, does not seem to me to stand up to any degree of analysis. Administration in itself does not terminate a contract. Mr Nicol argues that there was an implied term in the Burns CFA to the effect that it would be terminated in the event of administration, but I can see no basis for implying any such term, nor for any such term to extend to the termination of the CFA as against Mr Warren himself.

   6. The suggestion that Ms Basha’s move to the Defendant from PSB materially changed the terms of the Burns and Morrison CFAs, so as to render them incapable of assignment, seems to me to have no basis in law. If the argument is based upon the proposition that following her transfer from a relatively small firm (PSB) to a large firm (the Defendant) Ms Basha lost a degree of autonomy and could no longer honour her “net gain” agreement with Mr Warren, then the answer is that there was no such agreement. I have in any event accepted Ms Basha’s evidence, which includes a clear statement to the effect that she had just as much effective decision-making freedom when with the Defendant as she had had with PSB.

   7. On the issue of consent, having accepted Ms Basha’s evidence the only conclusion I can draw is that Mr Warren gave full and informed consent to the transfer of the Burns and Morrison CFAs to the Defendant, subsequently ratifying that by continuing to instruct the Defendant and signing the safeguard CFAs.

   8. As for the claim that the transfer of the Burns and Morrison CFAs to the Defendant was not in Mr Warren’s interests, Mr Bacon points out, rightly in my view, that the suggestion that the transfer of the Burns and Morrison CFAs was not in Mr Warren’s interests does not in itself offer any clear basis for concluding that he is therefore released from his contractual obligations.

   9. That aside, I can find no substance in the suggestion that the assignment of the Burns and Morrison CFAs was not, at the time, in Mr Warren’s best interests, or that he should have been advised to that effect.

   10. That submission rests on the proposition that, as at the date of transfer, Mr Warren could have avoided both CFAs, and should have been advised to do so. Ms Basha evidently thought that Mr Warren continued to be bound by both CFAs, and for the reasons I have given I believe that she was correct.

   11. Nor do I accept that Mr Warren would have wished to walk away from either CFA. I have already accepted Ms Basha’s evidence to the effect that Mr Warren saw the transfer of the Burns and Morrison CFAs to the Defendant as the best way of maintaining claims against Mr Burns and Mr Morrison that Mr Warren wished to pursue for reasons other than simple financial return.

   12. The account given in Mr Warren’s witness statement of the circumstances of his transferring his business to the Defendant is evidently inaccurate. It seems to me to be part of a body of evidence intended to give the impression that Mr Warren was discouraged by Ms Basha from reading the agreements he signed, that he was not advised or was left with no choice about making crucial decisions, and that Ms Basha acted against his interests.

   13. I do not accept any of that. In my view Mr Warren was at all times aware, at least to the extent that he chose to be aware, of the import of the decisions that he was making and of the agreements into which he entered. He knew his own mind and he acted as he saw fit. When he needed advice, he asked for it and he got it. I find no substance in his criticisms of that advice.

   14. 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.

   15. In short Mr Warren was not in a position to walk away from either the Burns or the Morrison CFAs; he did not want to do so; and there was no reason to advise him to try to do so.

Summary of Conclusions

1. For the reasons I have given, 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.