The Supreme Court has backed the assignment of pre-Jackson conditional fee agreements in a key ruling today.

In Plevin v Paragon Personal Finance Limited [2017] UKSC 23, the court upheld the recoverability of both the claimant solicitors’ success fee and the ‘top up’ after-the-event insurance premium in a relatively modest claim predating Lord Justice Jackson's civil litigation reforms.  Claimant Mrs Plevin was awarded damages of £4,500, with costs assessed at £751,464, including £31,379 for the solicitors’ success fee and £531,235 for the ATE premium.

Paragon argued that the CFA, signed with claimant firm Miller Gardner in 2008, had not been validly assigned when the firm became an LLP in 2009, or when it transferred its business to Miller Gardner Ltd in 2012.

Giving judgment for the four to one majority, Lord Sumption rejected Paragon’s argument that the transfer of ‘work in progress’ meant only work already done at the transfer date.

He said: ‘If this were correct, it would mean that the only right of the successor firm was to bill the clients for work done before the transfer date, leaving them with no solicitor to act for them other than the defunct shell of the old firm. This plainly cannot have been intended.

‘The point about work in progress is that it is in progress, and clause 2.1 [of the transfer agreement] expressly transfers the work in progress “to the intent that the buyer shall from the transfer date carry on the business as a going concern."'

The judge added: ‘It is right to add that even if [Paragon’s] argument were sound, it would lead nowhere.

‘Shortly after each transfer, on 30 July 2009 and 30 April 2012, the new firm wrote to Mrs Plevin informing her about the change, referring to the CFA and saying that they would “continue to represent you on the same terms and conditions as previously.” Mrs Plevin plainly assented to that by continuing to instruct them’.

The Supreme Court also rejected Paragon’s arguments that variations to the CFA in August 2013 and January 2014, relating to proceedings in the Court of Appeal and SC, amounted to ‘new agreements’, and so fell under the post-LASPO rules.

Describing this as a ‘bad point’, Lord Sumption said the deeds of variation related to the ‘same underlying dispute… albeit at the appellate stages.’

He said amending an existing CFA was a ‘natural way’ of dealing with further proceedings in the same action – and rejected the ‘faint suggestion’ that the variations were ‘a sham’.

Lord Sumption added: ‘It follows that unless the effect of the deeds [of variation] was to discharge the original CFA and replace it with new agreements made at the dates of the deeds, the success fee may properly be included in the costs order.

‘Whether a variation amends the principal agreement or discharges and replaces it depends on the intention of the parties.

‘To establish a discharge and replacement, “there should have been made manifest the intention in any event of a complete extinction of the first and formal contract, and not merely the desire of an alteration, however sweeping, in terms which are still subsisting”: Morris v Baron & Co [1918] AC 1, 19 (Viscount Haldane).

‘At the time when the two deeds of variation were executed, the CFA still subsisted (there were outstanding proceedings relating to the costs, for example).’

The Supreme Court also upheld the recoverability of the ‘top up’ ATE premiums which were provided for the appellate stages of the claim.

Sumption said: ‘The purpose of the transitional provisions of [the Legal Aid, Sentencing and Punishment of Offenders Act], in relation to both success fees and ATE premiums, is to preserve vested rights and expectations arising from the previous law. That purpose would be defeated by a rigid distinction between different stages of the same litigation.

‘It may or may not be reasonable to expect an insured party who fails at trial to abandon the fight for want of funding. That will depend mainly on the merits of the appeal. But an insured claimant who succeeds at trial and becomes the respondent to an appeal is locked into the litigation,' Sumption said. 

‘Unless he is prepared to forego the fruits of his judgment, which by definition represents his rights unless and until it is set aside, he has no option but to defend the appeal. The topping-up of his ATE policy to cover the appeal is in reality part of the cost of defending what he has won by virtue of being funded under the original policy. The effect, if the top-up premium is not recoverable, would be retrospectively to alter the balance of risks on the basis of which the litigation was begun.’

Lady Hale, Lord Clarke and Lord Carnwath agreed with the judgment of Lord Sumption. Lord Hodge agreed with the majority’s conclusions on the assignment of CFAs, but did not agree that ATE premiums topped up to cover appellate proceedings should be recoverable.

Costs expert Dominic Regan told the Gazette that the ruling would come as 'a massive relief for claimant solicitors - and a judgment that does not descend to any case law on the point'.