A (conditional) free for all?

Budana v Leeds Hospital is about Conditional Fee Agreements and how they may be transferred.

Ms Budana’s original solicitors, Baker Rees, represented her in a personal injury claim under a CFA with a 100% success fee, entered into under the pre-Jackson reform regime. Baker Rees purported to assign its book of personal injury claims, and CFAs, to a new firm, Neil Hudgell. As part of this arrangement, Ms Budana signed a new CFA with Neil Hudgell but at a point in time when the new, post-Jackson reforms, regime was in place. The relevant new law says that success fees are generally no longer recoverable.

Ms Budana’s claim was settled and she claimed she was entitled to recover her costs, including the 100% success fee, under the original CFA, from Leeds Hospital. However, the NHS Trust argued that the original CFA had been terminated or, alternatively, that it could only have been novated, thereby discharging the original contract.

The Court of Appeal found that the original CFA could not have been terminated without Ms Budana’s agreement. When faced with a repudiatory breach, the innocent party can choose either to terminate or to affirm the contract, but the contract survives unless and until terminated (Geys v Societe Generale followed).

The Court found that the original CFA had survived the purported assignment to the new firm and that Ms Budana had affirmed it. The fact that there might technically have been a novation of the original CFA after the new law came into force, creating a new contract, did not mean that the success fee did not qualify as a success fee under the old regime.