A Key Decision Regarding the Assignment of Conditional Fee Agreements and the Recoverability of Post LASPO ‘Top Up’ Insurance
Heard before a full panel of five judges sitting in the Supreme Court, this matter concerned two important points of principle. Firstly the recovery of a success fee following the assignment and variation of a pre LASPO conditional fee agreement and secondly the recoverability of after the event insurance ‘top ups’ entered into post LASPO.
With regard to the assignment of the CFA, the judges allowed the success fee despite the CFA having been assigned and varied on numerous occasions including variations post LASPO. Stress was placed on the importance of the ‘intent’ of the parties and whether the original CFA was discharged and replaced or simply ‘varied’:
‘An amendment of the existing CFA is a natural way of dealing with further proceedings in the same action’.
With a four to one majority (Lord Hodge dissenting) The ATE premium ‘top ups’ were deemed to be recoverable despite having been taken out post LASPO. The key question being whether the ‘top ups’ related to part of the same proceedings as the initial policy.
The decision will be welcomed by Claimant solicitors who have been subject to considerable scrutiny in respect of assigned CFAs prior to this authoritative case.
“The decision will be welcomed by Claimant solicitors who have been subject to considerable scrutiny in respect of assigned CFAs prior to this authoritative case.”
The ability to assign the CFA in principle was not in dispute, however the paying party argued that the assignments in this case only entitled the receiving party to recover the work already done at the date of the assignment, not the work done following the assignment. The court determined that the argument was flawed. An assignment of WIP does not exclusively relate to work already done, but also included ongoing and future work. As Lord Sumption put it:
‘The point about work in progress is that it is in progress’
The Court highlighted more than once that the important factor to consider when determining whether the benefits of a CFA have been assigned is the intent of the parties. If the intention of the parties is clearly that the conduct of the matter be carried on under the same agreement/terms either from the assignment itself or indeed surrounding correspondence then that is sufficient.
“The Court highlighted more than once that the important factor to consider when determining whether the benefits of a CFA have been assigned is the intent of the parties”
Recoverability of the success fee
In the case, the original CFA (entered pre LASPO) was varied first to accommodate work relating to the Appeal and then to accommodate work relating to the further Appeal to the Supreme Court. Both of these variations took place post LASPO.
The paying party argued that the variations amounted to new agreements entered after the 1st April 2013 and that as such they were not covered by the transitional provisions of section 44(6) LASPO and the success fee could therefore not be recovered.
The court’s decision came down to their definition of the word ‘proceedings’ within section 44(6). The judges determined that the Appeals, while separate in some ways were contextually the same proceedings for the purposes of LASPO as the proceedings in the original CFA. On that basis the judges explained:
‘Unless the effect of the deeds was to discharge the original CFA and replace it with new agreements made at the date of the deeds, the success fee may properly be included in the costs order.’
Taking this a step further, to establish the discharge of the original CFA, the intention to do so must be manifestly clear. As such, if a CFA is not clearly discharged the amends should be considered a variation of the original CFA and therefore the success fee on the same remains recoverable.
“If a CFA is not clearly discharged the amends should be considered a variation of the original CFA and therefore the success fee on the same remains recoverable.”
Recoverability of the ATE
As with the two varied CFAs referred above, the ATE ‘top ups’ were a result of the matter proceeding to the Appeal and then the further Appeal to the Supreme Court. Again the argument revolved around whether the ‘top ups’ related to the same proceedings as the initial ATE and as such whether the transitional provisions of LASPO would apply.
By four to one (with Lord Hodge dissenting) the ‘top ups’ were determined to be part of the same proceedings to which the original ATE premium applied and the additional premiums were therefore deemed recoverable under the LASPO transitional rules.
The most important word in the Supreme Court’s judgement seems to be *intent*. If the intent of the parties at the time of assignment is that the Claimant would be represented under the same terms and conditions as before, the consequence of those terms and conditions (including any success fee) should pass as well.
“If the intent of the parties at the time of assignment is that the Claimant would be represented under the same terms and conditions as before, the consequence of those terms and conditions (including any success fee) should pass as well.”
Were this a competition, *proceedings* would come in a close second place for word of the day. Knowing the Supreme Court has confirmed (for purposes of the LASPO transitional provisions) that Appeals are part of the same proceedings as the main action, should be a relief to practitioners in any matter still benefitting from additional liabilities.
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