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Transferring CFA’s – not such plain sailing

A recent case has highlighted continuing difficulties in recovery of costs where a claim under a CFA has been transferred between firms of Solicitors. Many might have thought that following the decision by the Court of Appeal in Budana v Leeds Teaching Hospitals NHS Trust (Law Society intervening) [2018] 1 WLR 1965 (in which the transfer succeeded such that success fees remained payable) the many thousands of cases which have been subject to such transfers could proceed without difficulty. However, in the case of Roman v AXA Insurance PLC (unreported) before HHJ Wulwik in the County Court at Central London, it was found that the efficacy of the transfer depended very much upon the documentation involved.

The claim arose from a road traffic accident in 2012. The Claimant instructed Secure Law Solicitors on a 100% success fee CFA. Proceedings were issued in April 2014, but by late 2015, Secure Law intended to close their PI department and wrote to the Claimant confirming that arrangements had been made with Lime Personal Injury for the transfer of the matter to them. The Claimant signed an engagement letter from Lime but very shortly thereafter the matter settled as to damages. The costs were considered at a Provisional Assessment which was also the subject of a subsequent Oral Hearing. Deputy Master Campbell rejected the argument from the Defendant that Secure Law were not entitled to be paid.

The Judge put the issue thus:

“...whether Deputy Master Campbell was right to conclude that the claimant, Mrs Alicia Roman, elected to treat a conditional fee agreement with a firm of solicitors, Secure Law Limited, as continuing notwithstanding her instruction of new solicitors, Lime Personal Injury, so that when the new solicitors, Lime, went on to win the claim, costs were payable to Secure Law under their conditional fee agreement.”

The Defendant submitted that the CFA with Secure Law was an entire contract which was repudiated by the Solicitors, thus discharging the Claimant from liability under it. Further, simply by continuing the claim with other Solicitors on identical terms the Claimant could not be said to have affirmed the initial CFA – she continued with a new CFA and not the original document.

The Claimant submitted that she had waived any right to treat the CFA with Secure Law as terminated and remained liable under it if the claim succeeded. Further, by accepting the transfer of Solicitors, she had accepted partial performance by Secure Law. Finally, there was an implied term in the original CFA that the Solicitors could terminate for good reason.

The hearing of this case was delayed pending the outcome of the hearing before the Court of Appeal in Budana. In that case there had been a transfer to new Solicitors, but there had been a master deed of assignment between the Solicitors and the client had signed a new deed ratifying the master deed and agreeing to the transfer of the rights and obligations under the original CFA. The Court of Appeal found that the agreement had been novated and that this was not a hindrance to recovery of the success fee payable under the original CFA.

The Judge in Roman found that the conditional fee agreement with Secure Law was clearly on the authorities an entire contract. The reason for Secure Law seeking to terminate the conditional fee agreement (their relevant department ceasing to exist) was not a permitted circumstance for ending the conditional fee agreement under the Law Society document ‘What You Need to Know About a CFA’ so as to entitle Secure Law to payment.

There had been a repudiatory breach of the conditional fee agreement entered into by the claimant with Secure Law. Neither Solicitors’ letter suggested that the conditional fee agreement entered into by the claimant with Secure Law would continue if the claimant’s case was transferred to Lime; indeed the letter from Lime to the claimant made it clear that she would have to enter into a new conditional fee agreement with Lime before they could act for her.

The claimant had accepted the repudiatory breach of the conditional fee agreement entered into with Secure Law by proceeding to instruct Lime and entering into a new conditional fee agreement with Lime. Crucially, distinguishing the case from Budana, the parties did not take any steps with a view to the original CFA continuing to subsist. The claimant had not affirmed the conditional fee agreement - as happened in Budana by the second deed in that case and Ms Budana’s conduct more generally. The terms of the documentation in Budana clearly showed that Ms Budana did not elect to terminate her contract with the first firm of solicitors, but instead decided to preserve and transfer it. That was not the position here.

Thus it was found that the original conditional fee agreement with Secure Law did not continue to subsist. On the Respondent’s arguments, the Judge held there was no waiver by the claimant of the right to treat the conditional fee agreement with Secure Law as terminated. The claimant accepted the repudiatory breach of the conditional fee agreement with Secure Law by instructing Lime and entering into a new conditional fee agreement with Lime. Further the claimant had never accepted the partial performance by Secure Law – it remained an entire contract. There was no authority for finding an implied term permitting termination for good reason.

Disclaimer: The content of this blog is provided on a complimentary basis. The opinions expressed do not necessarily represent those of SPH Costing Services Ltd. The content of the blog is not intended to and does not constitute legal advice on any specific matter or generally. Individual Legal advice should be sought from a Lawyer in relation to any specific case or issue. SPH Costing Services Ltd does not accept any responsibility for the correctness of this blog or for any consequences of relying on it.


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