The decision of the Court of Appeal in Budana v. The Leeds Teaching Hospitals NHS Trust  EWCA Civ 1980 will be of enormous importance to many firms undertaking personal injury claims for Claimants. The Court decided that a success fee could be recovered on a pre Legal Aid, Sentencing and Punishment of Offenders Act 2012 ("LASPO") basis, not withstanding that LASPO had come into effect (on 1 April 2013) before the Claimant signed documentation instructing a new firm of solicitors to whom the matter was transferred.
The case related to a “slip and trip” claim. The Claimant was injured on 6 November 2011 and instructed Baker Rees Solicitors on 2 December 2011 to pursue the claim under a CFA which provided for a 100% success fee (but capped with reference to the amount recovered from the Defendant). Liability was admitted by the Defendant on 17 May 2012.
Subsequently, as a result of the LASPO reforms, Baker Rees decided it was not viable for them to undertake personal injury work and informed the Claimant that, in the absence of any objections, her case would be transferred to another firm, Neil Hudgell Ltd, who would continue to act on the basis of the same no win no fee agreement. A transfer agreement took place between the two firms on 25 March 2013 and, on 10 April 2013, the Claimant signed and returned to Neil Hudgell Ltd a deed of assignment.
Subsequently, the Claimant sought to recover the success fee from the Defendant. The Defendant argued that the Claimant was not entitled to this success fee as the Claimant’s solicitors were not acting under a pre-LASPO retainer.
The Decision at First Instance
District Judge Besford held that the Baker Rees CFA had been terminated “without good reason” when they wrote to the Claimant to tell her that they would not be continuing with personal injury litigation and, as a result, they were not entitled to any payment under the terminated agreement. Consequently, there was, in the District Judge’s view, no agreement in place until the Claimant entered into an agreement with Neil Hudgell Ltd, which was after 1 April 2013. As there was not a pre-LASPO CFA in place, the Claimant was not entitled to recover the uplift from the Defendant. DJ Besford also stated that, if he had been wrong about termination, then there had been a novation of the existing contract and therefore a new agreement with Neil Hudgell Ltd was substituted in place of the Baker Rees retainer after 1 April 2013 with the same impact.
As a result of widespread interest in the case, the matter was “leap-frogged” to the Court of Appeal.
The Court of Appeal dealt with DJ Besford’s conclusion that the original CFA had been terminated by Baker Rees’ actions by, rather shortly and bluntly, pointing out that it was trite law that a repudiatory breach by one party could not unilaterally terminate the contract. The District Judge had clearly erred in reaching this conclusion.
Whilst all 3 Judges hearing the matter on appeal agreed that the success fee could be recovered from the Defendant under the pre-LAPSO rules, there was disagreement as to whether the CFA had been successfully assigned or whether there had been a novation. Lord Justice Davis was of the view that the CFA had been successfully assigned, as the parties had clearly intended, whereas Lady Justice Gloster and Lord Justice Beaton were of the view that there had been a novation when the new agreement with Neil Hudgell Ltd had been signed. In their view, however, the existence of a novation was not fatal to the Claimant’s position because the transitional provisions of LAPSO, which were intended to preserve vested rights and expectations of parties, should not be defeated by an “overtechnical” application of the doctrine of novation.
The Court of Appeal’s judgment clearly took into account the serious consequences that might follow for some personal injury firms if the original judgment was upheld and there was clearly an intention to deliver a fair result rather than a legally technical one. This is perhaps best demonstrated by the comments of Lord Justice Davis, who noted that to rule in favour of the Defendant would be to absolve them of payment of costs by virtue of a “adventitious technicality”.