Farrar & Anor v Miller [2021] EWHC 1950
This case goes back to 2014, and the claimant died unexpectedly in 2019. The application concerned the efforts of the claimant’s solicitors to be substituted as claimant, pursuant to an assignment that the claimant made before he died. The defendant objected to the assignment on the grounds of champerty. The case is of interest to litigation funders as to how the Court addressed the issue of champerty. The assignment provided that the solicitors would take the title, interest and benefits in and to the assigned claims, and then make payments pursuant to a priority agreement if the claims were successful. At the time of entering into the assignment, the solicitors were owed considerable profit costs and Mr Farrar had explored all funding options and had considered that the assignment represented his best hope of keeping the litigation going and his head above water.
The Court held that there were no defects to the assignment which was valid, subject to the issue of whether the assignment was void for champerty. The Court reviewed the law on this issue, noting that if the assignment was of a property right, and the cause of action was ancillary to it, or the assignee had a genuine commercial interest in taking the assignment, then the assignment may not be objectionable. The difficulty for the solicitors was that the law was reasonably clear that “when it comes to agreements involving those who conduct litigation or provide advocacy services, the common law of champerty remains substantially as it was”. The justification for this is that otherwise the legislation in respect of CFAs and DBAs would have been unnecessary. Such transactions were therefore sanctioned by statute or they were not. In this case, the assignment fell outside the statutory framework. However, the solicitors argued that they had a genuine commercial interest in the claim by virtue of the fee agreements that they had entered into with Mr Farrar, and the risk that they had taken. The Court took the view that allowing control to go to a party that has - apart from its interest in fee recovery - no legitimate interest in prosecuting the Proceedings was not consistent with the purity of justice. The Court was clearly influenced by the fact that the assignee was the firm of solicitors that had been initially instructed, and who appeared to benefit as a result of the assignment. Any improved access to justice was only marginal, and was trumped by the fact that the solicitors were, irrespective of their prior knowledge and involvement, strangers to the litigation.
The interesting aspect to the case would be whether the Court would have sanctioned an assignment of the cause of action to a litigation funder who had also a pre-existing financial interest in the claim because it had advanced funds. It would not be the solicitor on the case, but it would also be a stranger to the litigation and would only have had a commercial interest because of its monetary exposure. As with the solicitor, its motivation to take the assignment was to get a financial benefit. If the client had gone bankrupt and a trustee in bankruptcy had been appointed, then the trustee could have assigned the claim. On that basis, there seems some illogicality to the fact that the same outcome could not have been achieved after the claimant’s death. As with some other aspects of litigation funding, it can not be predicted with any degree of certainty that a funder’s attempt to uphold the assignment would have met with any better chance of success – the only issue meaningfully to distinguish the funder’s position was that there was not a statutory scheme in place that was being circumvented via the proposed assignment.