Champerty, Public Policy, And The Winds Of Change Out Of Breath'

• Published date: 27 May 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Mr Martyn Griffiths and Amy Held

Farrar & Anor v Miller [2022] EWCA Civ 295

11 March 2022

Background

This appeal arose from the arrangements between the late Claimant ('Mr Farrar') and his former solicitors, the Appellant ('CANDEY'), in respect of proceedings between Mr Farrar and the Defendant Respondent ('Mr Miller'). In sum, Mr Farrar and CANDEY had entered into several agreements in respect of the funding of Mr Farrar's claim, starting with a damages-based agreement ('DBA') in October 2013. On 12 September 2019, this first DBA was replaced by a second DBA; and Mr Farrar and CANDEY further executed a deed by which Mr Farrar assigned all of his claims against Mr Miller to CANDEY ('the Assignment').

In October 2019, Mr Farrar unexpectedly died. Following a complex procedural history, no further steps had been taken since July 2018, when the Supreme Court refused Mr Miller permission to appeal against an order granting Mr Farrar permission to amend his claim. It was CANDEY's evidence in the present appeal that, if successful, the value of Mr Farrar's claim would be in excess of £1.6 million. Mr Farrar was also, at the time of his death, in financial difficulty and anticipating a bankruptcy petition to be presented against him.

By an application issued on 7 May 2020, CANDEY sought permission to be substituted as a claimant in place of Mr Farrar in these proceedings.

The Law

As noted in the present appeal, the case involved three common law rules rooted in public policy:

• Assignments of bare causes of action: a bare cause of action (i.e. not one ancillary to a property right or interest) can only be assigned where the assignee has a genuine commercial interest in enforcing the claim.
• Assignments of causes of action by clients to their solicitors: a solicitor who has the conduct of litigation may not take an assignment of their client's cause of action prior to judgment.
• Champerty (and Maintenance): a person is guilty of maintenance if they support litigation in which they have no legitimate concern without just cause or excuse. Champerty occurs when a person supports litigation and stipulates for a share of the proceeds of the action or suit. Although champerty was formerly regarded as an aggravated form of maintenance, it has been recognised that there can be champerty without maintenance.

Accordingly, it was formerly the position at common law that solicitors could not conduct litigation pursuant to agreements under which they only recovered their fees if their client was successful or under which they took a share of the proceeds. As set out by Lord Esher MR in Pittman v Prudential Deposit Bank Ltd (1896) 13 TLR 110, (cited at [26]): "In order to preserve the honour and honesty of the profession it was a rule of law which the court had laid down and would always insist upon that a solicitor could not make an arrangement of any kind with his client during the litigation he was conducting so as to give him any advantage in respect of the result of that litigation ... The responsibility of persons engaged in the profession of the law was very...