Supreme Court supports assignment of CFAs

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15 May, 2017

In the case of Plevin v Paragon Personal Finance Limited [2017] the Supreme Court has upheld the recoverability of the Claimant's success fee and a 'top up' ATE premium where the CFA had been assigned between solicitors and extended post 1 April 2013 to cover appeals

The Defendant argued that the CFA and ATE premium were not recoverable. It was contended that the CFA had not been validly assigned to the new firm of solicitors and secondly, the ATE and CFA were not recoverable because they were payable under arrangements made post LASPO and therefore additional liabilities were not recoverable between the parties.

The Supreme Court held that the deeds of variation provided for litigation services in relation to the same underlying dispute as the original CFA, albeit at the appellate stages. Unless the effect of the deeds was to discharge the original CFA and replace it with new agreements made at the dates of the deeds, the success fee could properly be included in the costs order. When the deeds of variation were executed, the CFA still subsisted. Both deeds were expressly agreed to be a variation of the CFA, leaving all of its terms unchanged except for the addition to the coverage of a further stage of the litigation and a change to the success fee. The deeds of variation did not discharge and replace the CFA.

Furthermore, the Supreme Court found that an insured claimant who succeeded at trial and became the respondent to an appeal was locked into the litigation. The topping-up of his ATE policy to cover the appeal was in reality part of the cost of defending what he had won by virtue of being funded under the original policy. The effect, if the top-up premium was not recoverable, would be retrospectively to alter the balance of risks on the basis of which the litigation was begun. The fact of having had an ATE policy relating to the costs of the trial before the commencement date of LASPO was enough to entitle the insured to continue to use the pre-LASPO costs regime for subsequent stages of the proceedings under "top-up" amendments made after that date.

Forbes comment

This Supreme Court judgment represents a significant victory for Claimants. However, all is not lost. This decision provides some much needed guidance on the issue, it is clear that there must be a clear intention to vary the terms of the CFA and not to end it. Undoubtedly, there is still plenty of scope for Defendants to raise arguments regarding the assignment of CFA's and the recoverability of ATE premiums.

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