The High Court has found that a company was able to bring a claim in its own name to recover allegedly unlawful charges paid by third party consumers, where the company had taken an assignment of those claims in return for either an upfront fee or a share of any recoveries: Casehub Ltd v Wolf Cola Ltd  EWHC 1169 (Ch).
The court found that the assignments did not fall foul of the principles of champerty and maintenance (the ancient rules against “trafficking” in litigation). In recent years, it has become clear that those rules will not invalidate an agreement whereby a third party funds litigation in return for a share of the proceeds – unless there is some other feature of the agreement that is contrary to public policy. It had appeared, however, that the rules might be applied more strictly where claims are assigned to a third party to pursue in its own name (as for example in the case of Simpson v Norfolk & Norwich University Hospital NHS Trust  EWCA Civ 1149, outlined here).
But the present decision, together with the decision in JEB Recoveries LLP v Binstock  EWHC 1063 (Ch) (outlined here), suggest that the courts may be increasingly flexible in this context also. Interestingly, the business model pursued by the claimant in this case, which the court described as “a company which builds consumer group actions online”, appears similar to a practice common in some other EU jurisdictions, such as Germany, where claims can be “bundled” in an SPV to be pursued together.
It is not clear, however, that such claims will always be allowed to proceed in this jurisdiction. Each case will turn on its facts, including such factors as whether the claimant is considered to have a legitimate interest in pursuit of the claims and whether there are other elements that render the assignments contrary to public policy. Continue reading
The High Court has refused to strike out a claim as champertous where it had been assigned to an LLP in which the assignor had a one-third interest and which had been formed to pursue the assigned claim (and other similar claims): JEB Recoveries LLP v Binstock  EWHC 1063 (Ch).
In recent years the courts have taken an increasingly liberal approach to the principles of champerty and maintenance (the ancient rules against “trafficking” in litigation) in the context of third party litigation funding. It had appeared that the principles would be applied more strictly where claims are assigned to, rather than merely funded by, a third party (as for example in the case of Simpson v Norfolk & Norwich University Hospital NHS Trust  EWCA Civ 1149, outlined here). The present decision may indicate a softening of the court’s approach in that context also.
However, the assignment of claims remains a high risk strategy, as each case will turn on its facts and the effect of a finding of champerty is that the assignment will be void and the assignee will be unable to pursue the claim. It is also worth noting that the present decision may be appealed; the court said it was prepared to grant permission, if requested, given the importance of the issue. Continue reading
In the context of litigation funded by third parties the courts have taken an increasingly liberal approach to the principles of champerty and maintenance (the ancient rules against "trafficking" in litigation). However, a recent Court of Appeal judgment illustrates that these principles still have teeth, particularly where claims are assigned: Jennifer Simpson (as assignee of Alan Catchpole) v Norfolk & Norwich University Hospital NHS Trust  EWCA Civ 1149.
The court followed the House of Lords decision in Trendtex Trading Corp v Credit Suisse (1982) AC 679 HL which established that the assignment of a cause of action will be void as against public policy where the assignee does not have a "sufficient interest" to justify pursuit of the proceedings for his own benefit. That principle applies whether, as in Trendtex, the assignee is aiming to profit from the litigation or, as in this case, the assignee wishes to pursue the litigation as part of a personal campaign, however honourably motivated. Continue reading
The recent case of Mansell v Robinson  EWHC 101 (QB) has demonstrated the court’s modern, more flexible approach to the rules against champerty. The court will not apply a mechanistic rule but will consider each case on its facts, in particular as to whether the facts suggest that the person assisting in litigation for a share of the proceeds might be tempted to abuse the litigation process for personal gain (for example, by seeking to influence witnesses). The court’s approach to this issue is important in light of growing instances of litigation being supported by third party funders in return for a share of any recovery. Continue reading