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Much has been written on the issue of whether or not a Conditional Fee Agreement (CFA) may be the subject of a valid assignment. For a detailed insight into how the courts have dealt with the issue of assignment the reader is referred to the following articles by the author –
Only recently the Supreme Court in Plevin v Paragon Personal Finance Limited  UKSC 23 avoided dealing conclusively with the issue of assignment. In fairness to their Lordships the matter directly before them concerned the inter partes recoverability of post-LASPO “top-ups” on a pre-LASPO ATE premium and so it is, perhaps, unsurprising that the issue of assignment was not finally laid to rest in Plevin.
As things presently stand the law is well-settled in favour of assignment. And it is highly likely that it will remain such unless and until the Court of Appeal in Alina Budana v The Leeds Teaching Hospitals NHS Trust  WL 00826269 disturbs the waters.
However, in the interim we have witnessed one rather interesting development on the issue of assignment. In Grifffith v Paragon Personal Finance Limited (2016) the court was again asked to consider the issue of assignment – but on this occasion the assignment in question was purportedly by way of oral, as opposed written, assignment.
The facts themselves were fairly unusual. The Claimants’ action for damages in respect of PPI mis-selling was concluded by way of consent order, which provided that the Defendant would pay the Claimants’ costs on the standard basis in default of agreement.
The CFA in question was a pre-LASPO CFA having been entered into between the Claimants and firm 1 on 19 May 2010. The clients followed the fee earner to firm 2 (which, in reality, was merely an incorporation of firm 1) and the CFA was transferred between said firms by way of business transfer agreement dated 31 May 2013.
The fee earner incorporated a second firm – firm 3 – and the clients again determined to follow. Moreover, on 1 May 2014 it was agreed, orally, between representatives for firm 2 and firm 3 that the CFA dated 19 May 2010 (at that time assigned to firm 2) would be assigned to firm 3.
Some 14 months hence on 30 June 2015, firm 2 and firm 3 entered into a deed of assignment which ‘recited that [firm 2] orally assigned the Claimants’ CFA to [firm 3] on 1 May 2014’.
Notice of the assignment was duly provided to the Claimants.
In his judgment, District Judge Baddeley followed the decision in Jenkins on the issue of assignment as a matter of principle. Then, turning to the second assignment (viz. from firm 2 to firm 3) considered whether, firstly, the purported oral assignment, dated 1 May 2014, was effective; and secondly, if not, whether the CFA subject to the deed of assignment, dated 30 June 2015, had retrospective effect.
DJ Baddeley found the oral assignment to be valid. Said he: ‘There is no rule that the assignment of a contract in equity has to be in writing.’ In so finding, he relied upon the fee earner’s witness statement, which read that ‘[fee earner at firm 2] suggested that we assign [the CFAs] and [fee earner at firm 3] agreed.’
Turning to the issue of retrospectivity of the June 2015 deed of assignment, the judge held that it was clear ‘that CFAs can have retrospective effect. There can be no logical reason why assigned CFAs cannot also have retrospective effect.’
This is a first instance decision which, respectfully, appears more driven by commercial compassion for the three firms in question than grounded in legal principle. The rationale for upholding, firstly, the validity of the oral assignment; and secondly, the retrospectivity of the assigned CFA, appears to be based upon the absence of impeding authority rather than by reference to legal argument in support of the Claimants’ position. Nothing by way of direct authority is proffered by the court in support of either contention (see specifically paragraphs 68 and 69 of the judgment).
Of course, there is nothing untoward about an equitable assignment per se: one is created when an attempt to create a legal assignment falls short of the requirements stipulated by section 136 of the Law of Property Act 1925. The significant difference between legal and equitable assignments lies in the doctrine of locus standi, i.e. that an equitable assignee cannot bring a direct action against the third party (i.e. the client) but must do so by joining the assignor as a party to the proposed action.
ChristopherMcClure is our North West Regional Manager for John M Hayes. He is based at our Manchester Office and can be contacted on 0161 835 4087 or firstname.lastname@example.org Find out more about the challenging technical work Christopher regularly encounters here