Michael Langton v (1) Energy & Marine (Wearside) Ltd, (2) Hawthorn Leslie (Shipbuilders) Ltd, (3) Secretary of State for Business, Innovation and Skills and (4) Sorbo Ten Ltd

Clyde & Co. acted for the Third Defendant in the successful defence of the Claimant's appeal of the order made disallowing his costs claim in this asbestosis case.

The facts

The Claimant had originally entered into a Conditional Fee Agreement (CFA) in 2005 with Marrons Solicitors in relation to his pleural plaques claim.

Following the House of Lords decision of Rothwell, which held pleural plaques do not constitute a compensatable injury, the claim was abandoned.

The retainer was purportedly assigned to Slater and Gordon, who acted for the Claimant in their subsequent asbestosis claim in 2013.

First instance

At first instance, District Judge Howard at Morpeth County Court found that the initial CFA with a 100% success fee was taken out only in contemplation of the pleural plaques claim.

The later asbestosis claim could not have been anticipated when this retainer was signed, as it was unknown at the time whether the Claimant would develop the disease. As the CFA was invalid, the court accepted there could be no costs recovery whatsoever.

The point was reinforced by the court finding that the assignment of the retainer between Marrons and Slater and Gordon was also invalid. The Claimant's solicitors had been given notice the assignment was disputed, but failed to bring the Deed of Assignment to Court for the Judge to inspect. The Court took a dim view of this omission.

The Appeal

The Claimant appealed. His Honour Judge Freedman heard the appeal at Newcastle County Court.

The Judge refused to grant permission for the appeal, finding there were insufficient prospects of success.

He was satisfied the original CFA for the pleural plaques claim was invalid following the House of Lords ruling this was not an actionable injury in Rothwell. The Defendants were awarded £7,500 for the costs of the appeal.

The Judge also rejected the alternative argument advanced by the Claimant, that there was an implied retainer between him and Slater and Gordon. This amounted to the Claimant trying to 'have it both ways'. This was also contrary to the terms of a letter from Marrons to the Claimant confirming their retainer continued in the terms of the original CFA.

Retainer assignment

Disappointingly, the Court did not go on to hear submissions on the wider question of the assignment of the retainer. Large numbers of CFAs entered into before the Jackson reforms, were subsequently sold to larger firms as the market has consolidated. This issue has wide implications for the market given the high number of applicable cases waiting in the wings. This is of particular concern to defendants, as a valid CFA assignment will mean a success fee is recoverable.

The question of when a CFA can be assigned from one law firm to another is set to be heard by the Court of Appeal in 2017 in Budana v Leeds Teaching Hospitals NHS Trust, and it is hoped they take the opportunity to provide some much needed guidance on this issue.