CFA : ASSIGNMENT : SOLICITOR AND CLIENT
Key Points and Authorities
- Where a party has performed only part of an entire obligation it can normally recover nothing, neither the agreed price, since it is not due under the terms of the contract, nor any smaller sum for the value of its partial performance, since the court has no power to apportion the consideration: ; Cutter v Powell (1795) 6 T.R. 320; Chitty on Contracts (33rd Ed.) at para. 21-031
- However, a CFA is at least capable in principle of being transferred between law firms: ; Plevin v Paragon Finance Ltd (No. 2)  UKSC 23,  1 WLR 1249, at ; Budana v Leeds Teaching Hospital NHS Trust  EWCA Civ 1890,  1 WLR 1965
- There is 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): [18.1]
- Nor is there any valid distinction between PSB’s ceasing to practise altogether and the closure of a partnership (as in Plevin): [18.3]
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.
- PSB Law was not in breach (let alone repudiatory breach) of the CFAs, but – 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: [18.2]
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. 
This was an attempted appeal by the well-known licensed boxing promoter and manager, Frank Warren.
By a claim issued on 19 May 2016, Mr Warren sought a detailed assessment of four bills rendered by his former solicitors, Hill Dickinson LLP, totalling £922,890.03. The bills were rendered pursuant to the purported assignment of two conditional fee agreements (“CFAs”) that Mr Warren had entered into on 27 March 2013 with his former solicitors, PSB Law LLP.
By his claim, Mr Warren took four points, including that:
- he was not liable under the CFAs because he had not been successful in the underlying litigation against the boxer, Ricky Burns, and a defamation claim against Mr Morrison; and
- the CFAs had not been validly assigned to Hill Dickinson.
These issues were tried as preliminary issues by Master Leonard in the SCCO between 13 and 16 November 2017.
The master handed down his judgment on 26 March 2018, finding that:
- the CFAs were validly assigned to Hill Dickinson; and that
- both sets of proceedings had been successfully concluded such that the solicitors were entitled to payment of both their base fees and success fees pursuant to the terms of the two agreements.
Mr Warren sought to appeal against the master’s judgment on the assignment point.
The matter came before The Honourable Mr Justice Pepperall for a permission hearing on 30 November 2018.
Grounds of Appeal
Mr Warren sought to argue two grounds, namely that:
- having found that PSB Law ceased to practise on 30 September 2013, the judge was wrong to conclude that the CFAs remained capable of valid assignment; and that
- the master was wrong to treat himself as bound by Budana v Leeds Teaching Hospital NHS Trust  EWCA Civ 1890,  1 WLR 1965.
Mr Warren argued that Budana should have been distinguished such that the master should have held that the CFAs could not be validly assigned at all. Further, the CFAs could not be assigned without Mr Warren’s informed consent, which, he argued, was not properly obtained.
THE HONOURABLE MR JUSTICE PEPPERALL:
6. Before considering these grounds further, it is appropriate to explain the Court of Appeal’s recent decision in Budana in respect of the assignment of CFAs between law firms. Ms Budana signed a CFA with Baker Rees in 2011 in respect of her intended personal injury claim against the NHS Trust. Before her case could be concluded, Baker Rees withdrew from personal injury work in view of the reforms made by the Legal Aid, Sentencing & Punishment of Offenders Act 2012 [“LASPO”]. Accordingly, on 25 March 2013, the law firm purported to assign its CFA with Ms Budana and a number of other clients to Neil Hudgell Limited. Subsequently, on 10 April 2013, Ms Budana signed a formal letter instructing Neil Hudgell to act for her and an assignment of the original CFA in favour of her new solicitors. Lest such assignment was ineffective, on 17 May 2013, Ms Budana signed a further CFA with Neil Hudgell that was expressed to be effective only in the event that the assignment was not.
7. Ms Budana’s claim was settled but the defendant trust argued that she was only entitled to recover her base costs under the new CFA with Neil Hudgell and that the purported assignment had been ineffective. In the alternative, the hospital argued that the assignment took effect as a novation made after 1 April 2013 with the consequence that it was caught by the LASPO reforms and there was no entitlement to recover a success fee.
8. Budana therefore raised an issue of some importance. The Court of Appeal held that the 2011 CFA had not been terminated in March 2013 when Baker Rees gave notice that it was withdrawing from personal injury work. The CFA was, however, novated in April 2013, albeit the appeal court held that such novation did not prevent the recovery of the success fee under the pre-LASPO regime.
9. The decision in Budana was handed down after the trial before Master Leonard in this case but before he handed down his reserved judgment. Accordingly, the oral argument before the master had addressed the case in terms of assignment; that being the prevailing orthodoxy following the judgment of Rafferty J in Jenkins v Young Bros Transport Ltd  EWHC 151 (QB),  1 W.L.R. 3189.
10. In his impressive and well-structured submissions, Mr Lawrence fairly and properly conceded that nothing directly turns on the master’s characterisation of the transfer as an assignment save for one matter that I address below in respect of informed consent. I agree with Mr Lawrence. While, following Budana, I consider that the proper analysis of this case is to consider it in terms of novation rather than assignment, permission should not be granted simply because of the master’s finding of an assignment unless it is properly arguable that there was no novation.
GROUND 1: CESSATION OF PRACTICE
11. By this ground, Mr Warren seeks to argue that the CFAs were not capable of assignment by a law firm that had ceased to practise and which was thereby incapable of performing its obligations under the agreements. In any event, he argues that PSB Law had terminated the CFAs.
12. The master dealt with the termination point at paragraphs 132-134:
“132. 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.
133. 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.
134. 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.”
13. Mr Lawrence argues that the CFAs were entire contracts. He cites the classic authority of Cutter v Powell (1795) 6 T.R. 320 in which a sailor was to be paid a fixed sum for a voyage from Jamaica to Liverpool but died before the ship reached England. Dismissing his estate’s claim for the agreed fee or some other payment for the sailor’s services, the court held that there was no entitlement to payment for the partial performance of an entire obligation. The applicable principles are set out in Chitty on Contracts (33rd Ed.) at para. 21-031:
“Where a party has performed only part of an entire obligation it can normally recover nothing, neither the agreed price, since it is not due under the terms of the contract, nor any smaller sum for the value of its partial performance, since the court has no power to apportion the consideration.
The refusal of pro rata payment is based on the inability of the court, as a matter of construction, to add such a provision to the contract, and also upon the rule that the mere acceptance of acts of part performance under an express contract cannot, taken alone, justify the imposition of a restitutionary obligation to pay on a quantum meruit basis.”
14. The first footnote to this passage adds:
“The failure to complete need not be a breach of contract: Cutter v Powell … The contract in effect provides that the risk of non-completion is to be borne by the party undertaking the relevant obligation.”
15. Here, Mr Lawrence argues, the risk of non-completion of the CFAs was borne by PSB Law. Since, he argues, the firm had ceased to be able to complete the CFAs by pursuing the underlying litigation to a conclusion, it could no more assign the CFAs than the estate of Mr Cutter could have assigned his contract with the master of the ship following his death.
16. Mr Lawrence’s analogy with the unfortunate Mr Cutter breaks down. Mr Cutter was dead whereas the law firm remained in existence and capable of hiring a lawyer to conduct Mr Warren’s case. Mr Lawrence might well be right that, even if his estate had been able to effect an immediate assignment of Mr Cutter’s contract with the master mid-Atlantic and parachute an alternate sailor on board the ship for the remainder of the voyage, his estate could not have assigned Mr Cutter’s contract. That, in my judgment, is because Mr Cutter’s contract was one for personal services. Novation would, at least as a matter of legal theory, have been equally open whether on the facts of Cutter before his death or in this case before the dissolution of PSB Law.
17. Indeed, Mr Lawrence rightly does not dispute that
a CFA is at least capable in principle of being transferred between law firms: see Plevin v Paragon Finance Ltd (No. 2)  UKSC 23,  1 WLR 1249, at ; Budana (supra), at -.
18. 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. 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  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 [b]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).
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.
19. By his second ground, Mr Warren seeks to argue that Master Leonard was wrong to fail to distinguish his case from Budana.
20. Three distinctions are urged on this appeal court:
20.1 The legal representative in Budana had agreed to act on the same terms as subsisted prior to the transfer but had not agreed to account to its predecessor for earlier work.
20.2 In Budana, the previous solicitor was still capable of carrying out the client’s instructions (although it did not wish to) whereas, in this case, PSB Law could not continue to act.
20.3 In Budana, the client’s informed consent to the transfer could be presumed because there were no material differences in terms of the retainers. Here, it is said, informed consent was not obtained but was necessary to validate the transfer.
21. I have already dealt with the second of these points. There is plainly nothing in the first. Mr Lawrence focused his oral submissions on the question of informed consent. He rightly submitted by reference to Budana that consent is at the heart of the novation of CFAs and that, by reference to Surrey v Barnet & Chase Farm Hospitals NHS Trust  EWCA Civ 451, such consent must be fully informed consent. He therefore submitted that there remains an issue to be determined by the higher Courts as to the scope of a solicitor’s duty in advising a client upon the novation of a CFA.
22. It was in connection with this ground that Mr Lawrence observed that the master’s reference to assignment might conceal a failure to grapple properly with the need for informed consent. That submission is, in my judgment, hopeless when one considers the master’s judgment at paragraphs 137-145.
23. The starting point is Ms Basha’s e-mail of 9 September 2013 which, after explaining her intention to leave PSB Law to join Hill Dickinson, set out Mr Warren’s options:
“I am writing to seek your consent to transfer your files to my new firm. Alternatively, you are entitled to remain with PSB Law LLP or instruct a new firm completely. If you do wish to transfer your files or instruct a new firm, then there will be aspects of your retainer with PSB Law with which we need to deal.”
24. Mr Lawrence took me to paragraphs 14-15 of Ms Basha’s statement:
“14. When I informed Mr Warren that I was moving to Hill Dickinson from PSB, he told me that he wanted all of his matters to move with me. As explained later in this statement, we briefly discussed the options open to him, including an assignment of the CFAs from PSB to Hill Dickinson. Mr Warren wanted the CFAs to be assigned as, if they were not assigned, he would have had to pay PSB’s legal costs at that point and then sign up to new conditional fee agreements with Hill Dickinson or pay Hill Dickinson on a private non-conditional-fee paying basis.
15. Mr Warren was keen to avoid paying PSB’s fees, which I understand would have been over £100,000 at this stage of the litigation. He also took the view that I was the solicitor who had conduct of these matters and did not want the cases to remain at PSB when I moved to Hill Dickinson. An assignment of the CFAs would effect a transfer of the claims to Hill Dickinson and relieve Mr Warren of having to pay PSB its fees and expenses at that point which would otherwise arise pursuant to the termination provisions of the CFAs.”
25. Mr Lawrence submitted that Ms Basha’s advice to Mr Warren contained an error of law, namely the assertion that if he did not assign the CFAs he might have an immediate liability to PSB Law.
26. The parties’ evidence was recited by the master. He accepted Ms Basha’s evidence and continued:
“137. 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.
139. 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.
140. 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.
141. 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.
142. 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.
143. 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.
144. 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 … 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.”
27. 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.
28. 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.
29. 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.
30. For these reasons, I conclude that the proposed appeal has no real prospect of success and that there is no other compelling reason why it should be heard. Accordingly, permission to appeal is refused.
31. Finally, I am grateful to Mr Lawrence QC and Mr Nicol for their attractive and focused submissions in advancing Mr Warren’s application for permission to appeal. Although I did not call on him, I am equally grateful to Mr Bacon QC for his very helpful and concise written submissions.