Simpson v Norfolk & Norwich University Hospital NHS Trust

This appeal raises two important questions relating to the assignment of choses in action. The first, which is of general significance, is whether it is possible to assign a cause of action in tort for damages for personal injury. The second, which arises only if the first question is answered in the affirmative, concerns the circumstances in which such an assignment will be held void for reasons of public policy.

The facts giving rise to the appeal can be described quite shortly. In the latter part of 2005 and the early part of 2006 Mr. Alan Catchpole underwent treatment as a patient at the Norfolk & Norwich University Hospital. He maintains that in the course of that treatment he developed an infection caused by methicillin resistant staphylococcus aureus (“MRSA”) as a result of the hospital’s negligent failure to exercise proper infection control. In January 2009 he started proceedings against the hospital in the Bury St Edmunds County Court claiming damages for personal injury in the sum of £5,000.

Mrs. Jennifer Simpson is the widow of Mr. John Simpson, who contracted an infection due to MRSA on an earlier occasion while a patient at the same hospital. Mr. Simpson unfortunately died of cancer. That had nothing to do with MRSA, but in the view of Mrs. Simpson the infection rendered his last days more difficult than would otherwise have been the case. After his death Mrs Simpson as his personal representative brought an action against the hospital claiming damages for personal injury. On his behalf she alleged that the infection had been caused by the hospital’s failure to take all reasonable care to prevent the infection. In due course the claim was settled without any admission of liability on the part of the hospital. Nonetheless, Mrs. Simpson continues to feel strongly that the hospital has failed to implement what she considers to be proper infection control procedures and wishes to force it to confront its shortcomings.

On 26^th May 2009 Mr. Catchpole and Mrs. Simpson entered into a deed of assignment under which Mr. Catchpole purported to assign his claim against the hospital to Mrs. Simpson in consideration of the payment of £1. Although the statements of case do not yet properly reflect the capacity in which she sues, Mrs. Simpson has since been pursuing the proceedings in her own name and for her own benefit and the claim form has been amended to increase the amount claimed to £15,000.

On 21^st July 2009 the hospital applied to strike out the claim under CPR rule 3.4 on the grounds that Mrs. Simpson had no legitimate interest in the claim and that the assignment was therefore void as being contrary to public policy. District Judge Kirby allowed the application and struck out the claim. He held that a claim of this kind is incapable of assignment, applying the decision of the House of Lords in Trendtex Trading Corp. v Credit Suisse [1982] A.C. 679.

Mrs. Simpson appealed against that decision and as a result the matter came before His Honour Judge Moloney Q.C. The judge identified two points for consideration: whether a claim of this kind is inherently incapable of assignment, and if not, whether in this case Mrs. Simpson had a sufficient interest in Mr. Catchpole’s claim to enable a valid assignment to her to be made. He held that the assignment was void because the claim was of a personal nature and incapable of assignment, but he also held that even if the claim was capable of assignment, Mrs. Simpson did not have an interest in it of a kind necessary to support a valid assignment. In reaching that conclusion the judge drew attention to various practical difficulties that he could foresee arising in relation to the conduct of the proceedings, as well as to concerns about allowing litigants to sell claims to unscrupulous purchasers or those who wished to pursue them for ulterior motives. He therefore dismissed the appeal, but gave Mr. Catchpole an opportunity to apply within a limited time to proceed with the action in his own name rather than have it struck out altogether.

Although most of the argument on the appeal was directed to the scope of the modern law relating to maintenance and champerty, the judge was right in my view to identify as the first question for decision whether Mr. Catchpole’s claim against the hospital was capable of assignment at all. At one time it might have been doubtful whether a claim of this kind was properly to be regarded as a “legal thing in action” within the meaning of section 136 of the Law of Property Act 1925, since the expression “chose in action” was used principally to denote property of a kind that could be obtained only by legal proceedings. A right to receive maintenance under an order of the court is not, for example, a legal thing in action and for that reason is incapable of assignment: see Taylor (formerly Kraupl) v National Assistance Board [1956] P. 470. Whether a right to recover compensation for personal injury caused by negligence can properly be regarded as a form of property might at one time have been open to argument, but in my view the expression “legal thing in action” is wide enough to encompass such a claim and support for that conclusion can be found in the decision in Ord v Upton [2000] Ch. 352, to which I shall return in a moment. It is difficult to see why a claim for damage to property caused by negligence should not be regarded as a chose in action and capable of assignment and if that is so, I can see no reason in principle why a claim for damages for personal injury should not be regarded in the same way. Indeed, the reasons given in the authorities for not permitting the assignment of a bare cause of action, namely, that to do so would undermine the law on maintenance and champerty, tends to support the conclusion that a claim of that kind is to be regarded as a chose in action and inherently capable of assignment.

Section 136 of the Law of Property Act re-enacted with minor changes section 25(6) of the Judicature Act 1873. Despite the unrestricted terms of the earlier legislation, the Divisional Court (Lord Alverstone C.J., Darling and Channell JJ.) held in Torkington v Magee [1902] 2 K.B. 427 that the effect of the legislation was essentially procedural and that it did not render choses in action that had not previously been assignable in equity capable of assignment. It is clear that some choses in action are not capable of assignment: see Chitty on Contracts, 30^th ed, ch. 19 and Halsbury’s Laws of England, 5^th ed. vol. 13, paragraphs 92 and following. These include choses in action that are considered to be essentially personal in nature: see Chitty paragraph 19-054 and Halsbury paragraph 100. The judge considered that a claim for damages for personal injury falls into that class and given the nature of such a claim I can well understand why he should have reached that conclusion. However, I am not persuaded that he was right to do so. The critical question for these purposes is whether the identity of the person to whom the obligation is owed is an essential aspect of it: see Tolhurst v Associated Portland Cement Manufacturers Ltd [1902] 2 K.B. 660 676-677. Thus in Peters v General Accident Fire & Life Assurance Corporation Ltd [1938] 2 All E.R. 267 a policy of motor insurance was held, not surprisingly, to be personal to the original policyholder and incapable of being assigned to a purchaser of the vehicle in respect of which it had been issued, since the identity of the insured was material to the risk undertaken by the insurer.

Although the right to recover damages for personal injury depends on proof of a wrongful act or omission causing harm to the person of the claimant, the obligation to pay compensation, which arises by operation of law, is not one that is personal in the sense that it depends upon the identity of the claimant. It is difficult to see, therefore, that the nature of the obligation itself can be affected by an assignment to a third party. It is true that various practical consequences and even inconveniences of the kind identified by the judge may result from the claim’s being pursued by an assignee, but they are consequences of a kind that are inherent in any procedure under which an assignee can sue in his own name without joining the assignor. Complications relating to the provision of statements of truth, disclosure, set-off and counterclaim and other procedural matters to which the judge referred may arise whenever an assignee takes advantage of section 136 of the Law of Property Act 1925 to sue in his own name and do not of themselves provide grounds for holding that a chose in action of this kind is incapable of being assigned.

In Ord v Upton [2000] Ch. 352 the court had to consider whether a claim for damages for personal injury caused by negligence was transferred by operation of law to the claimant’s trustee in bankruptcy. The claimant, Mr. Ord, had been treated by a Dr. Wadehra for back pain. On 14^th September 1995 he was adjudged bankrupt and Mr. Upton was appointed his trustee in bankruptcy. On 17^th February 1997 Mr. Ord brought proceedings against Dr. Wadehra claiming damages for personal injury on the grounds that he had been negligent in prescribing certain treatment. The claim was potentially very substantial, since Mr. Ord claimed special damages of about £1 million in addition to damages for pain and suffering and loss of amenity. Mr. Ord was discharged from bankruptcy on 15^th September 1997. Mr Upton as his trustee claimed to be entitled to the damages for financial loss up to that date. Mr. Ord brought proceedings under section 303 of the Insolvency Act 1986 seeking the decision of the court on whether all or any part of his claim against Dr. Wadehra vested in Mr. Upton as his trustee.

Section 306(1) of the Insolvency Act 1986 provides that the bankrupt’s estate vests in the trustee immediately on his appointment without the need for any conveyance, assignment or transfer. “Estate” for these purposes includes all forms of property and “property” is defined in section 436 as including things in action. The first question for decision, therefore, was whether the claim against Dr. Wadehra represented a “thing in action”. Aldous L.J. (with whom Mantell and Kennedy LJJ. agreed) accepted without elaboration that it was, but he also recognised on the basis of a well-established line of authority that not all rights to compensation are to be regarded as “property” within the terms of section 436. In particular, he noted that:

“ . . . actions which relate to a bankrupt’s personal reputation or body have not been considered to be property and therefore they do not vest in anybody other than the bankrupt. They relate solely to his body, mind and character and any damages recovered are compensation for damage to his body, mind and character as opposed to other causes of action which have been considered to be a right of property. Thus causes of action to recover damages for pain and suffering have been held not to vest in the trustee. ”

He held that although there was only one cause of action the claim was of a hybrid nature, comprising both a right to compensation in respect of bodily injury and a right to compensation in respect of loss of earnings, and that it vested in the trustee, who would be obliged to hold any damages recovered in respect of pain and suffering and loss of amenity on trust for the bankrupt, since it remained his property.

As I indicated earlier, the decision supports the conclusion that a right to recover damages for personal injury, even where no compensation for loss of earnings is claimed, is a legal thing in action and a species of property, but it does not support the conclusion that it is property of a kind that is inherently incapable of assignment. The court held that for the purposes of the law relating to bankruptcy a right to compensation for pain and suffering and loss of amenity is not property of a kind that vests in the trustee. It leaves open the question whether it is property of a kind that is inherently capable of being assigned by the bankrupt himself. For the reasons I have given I think it is. Moreover, the claim in the present case is also of a hybrid nature and the right to compensation is not purely of a personal nature. For that reason also I do not think that the judge was right to strike out the claim by Mrs. Simpson on the grounds that the claim was personal and therefore incapable of being assigned to her.

Nonetheless, there is plenty of authority to support the conclusion that before 1873 an assignment of a bare right of action would not be enforced in equity because it would undermine the law relating to maintenance and champerty. In that sense, therefore, a bare right of action in tort for personal injury was incapable of assignment. In Trendtex Trading Corpn v Credit Suisse [1982] A.C. 679 a trading company, Trendtex, had assigned to a bank, Credit Suisse, from which it had obtained financial support, the whole of its residual interest in a claim for US$14 million against a Nigerian bank, C.B.N., for damages for breach of contract in failing to honour a letter of credit, having previously granted it a security interest in the claim and its proceeds. The agreement by which that assignment was effected expressly contemplated that Credit Suisse might sell the claim to a third party for US$800,000. The claim was subsequently settled for US$8 million. Trendtex then sought to set aside the agreement and the assignment to Credit Suisse on the grounds that it was contrary to public policy and void as “savouring of champerty”, inasmuch as it contemplated the possibility, to put it no higher, that a third party would make a profit out of the litigation. The House of Lords held that the assignment was void as savouring of champerty. Lord Wilberforce (with whom Lord Edmund-Davies, Lord Fraser and Lord Keith agreed) explained the position as follows at page 694F-H:

“The vice, if any, of the agreement lies in the introduction of the third party. It appears from the face of the agreement not as an obligation, but as a contemplated possibility, that the cause of action against C.B.N. might be sold by Credit Suisse to a third party, for a sum of U.S. $800,000. This manifestly involved the possibility, and indeed the likelihood, of a profit being made, either by the third party or possibly also by Credit Suisse, out of the cause of action. In my opinion this manifestly "savours of champerty," since it involves trafficking in litigation - a type of transaction which, under English law, is contrary to public policy.”

Lord Roskill (with whom Lord Edmund-Davies, Lord Fraser and Lord Keith also agreed), having observed at page 702F-G that one of the reasons why equity would not permit the assignment of a bare cause of action in tort was because it savoured of maintenance, noted that the law had since become more liberal in its approach and said at page 703A-D:

“Where the assignee has by the assignment acquired a property right and the cause of action was incidental to that right, the assignment was held effective. Ellis v. Torrington [1920] 1 K.B. 399 is an example of such a case. Scrutton L.J. stated, at pp. 412-413, that the assignee was not guilty of maintenance or champerty by reason of the assignment he took because he was buying not in order to obtain a cause of action but in order to protect the property which he had bought. But, my Lords, as I read the cases it was not necessary for the assignee always to show a property right to support his assignment. He could take an assignment to support and enlarge that which he had already acquired as, for example, an underwriter by subrogation: see Compania Colombiana de Seguros v. Pacific Steam Navigation Co. [1965] 1 Q.B. 101. My Lords, I am afraid that, with respect, I cannot agree with the learned Master of the Rolls [1980] Q.B. 629, 657 when he said in the instant case that “The old saying that you cannot assign a ‘bare right to litigate’ is gone.” I venture to think that that still remains a fundamental principle of our law. But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty . . . ”

He held that the agreement under which the assignment was made savoured of champerty because it was a step towards the sale of a bare cause of action to a third party who had no genuine commercial interest in it in return for a division of the spoils.

I think it is clear from what was said both by Lord Wilberforce and Lord Roskill that the law will not recognise on the grounds of public policy an assignment of a bare right to litigate, that is, a right to litigate unsupported by an interest of a kind sufficient to justify the assignee’s pursuit of proceedings for his own benefit. Moreover, as the decision in Trendtex itself demonstrates, the assignment of a cause of action for the purposes of enabling the assignee or a third party to make a profit out of the litigation will generally be void as savouring of champerty.

Giles v Thompson and Devlin v Baslington [1994] 1 A.C. 142 concerned two cases in which plaintiffs had been involved in a road traffic accidents, as a result of which they had suffered personal injuries and damage to their cars. In neither case had the plaintiff been responsible for the accident. While their own cars were being repaired they hired replacement vehicles under agreements which authorised the hire company to pursue proceedings against the defendants in their names. The hire companies brought proceedings in the names of the plaintiffs claiming as part of their loss the hire charges. The defendants contended that the agreements were champertous, but the House of Lords rejected that argument on the grounds that the agreements did not give the hire companies any interest in the claim or the proceeds of the litigation and that the plaintiffs, who remained liable for the hire charges throughout, had suffered a loss in respect of which they were entitled to recover.

Lord Mustill, with whom the other members of the Appellate Committee agreed, considered (at page 164B-D) that

“ . . . the law on maintenance and champerty can best be kept in forward motion by looking to its origins as a principle of public policy designed to protect the purity of justice and the interests of vulnerable litigants. For this purpose the issue should not be broken down into steps. Rather, all the aspects of the transaction should be taken together for the purpose of considering the single question whether, in the terms expressed by Fletcher Moulton L.J. in the passage already quoted from in British Cash and Parcel Conveyors Ltd. v. Lamson Store Service Co. Ltd. [1908] 1 K.B. 1006, 1014, there is wanton and officious intermeddling with the disputes of others in which the meddler has no interest whatever, and where the assistance he renders to one or the other party is without justification or excuse.”

It must be borne in mind, however that at that point in his speech Lord Mustill was dealing with an agreement of the kind then before the House and that he had earlier (at page 163G) approved the observation of Steyn L.J. below that a policy had already crystallised in relation to the assignment of bare rights of action for tortious wrongs. Lord Mustill accepted that in such cases it is necessary first to consider whether the transaction bears the marks of unlawful champerty and then to inquire whether it is validated by the existence of a legitimate interest in the person supporting the action distinct from the benefit which he seeks to derive from it. He considered that Trendtex v Credit Suisse continued to represent the law in relation to cases of that kind.

Lord Mustill did not consider that there was anything officious or wanton about the intervention of the hire companies in the litigation in that case, nor did he consider that their involvement was liable to harm either the interests of the plaintiffs or the administration of justice more generally; nor did he think that agreements of such a kind should be outlawed on wider public policy grounds. Since the hire companies did not take an assignment of the right to litigate and did not obtain any interest in the proceeds of the litigation, the only ground on which the agreements might have been challenged was that, since they gave the hire companies the right to pursue proceedings in the names of the plaintiffs, they savoured of maintenance. However, in his view the hire companies had an interest in the success of the litigation in as much as it could be expected to put the plaintiffs in a better position to pay their charges. In my view nothing in Lord Mustill’s speech undermines the need in a case of this kind for the assignee to be able to point to the existence of an interest of some legitimate kind in the litigation in order to prevent his involvement from amounting to “wanton and officious intermeddling with the disputes of others”.

The law relating to champerty took another step forward in R (Factortame) v Secretary of State for Transport, Local Government and the Regions (No.8) [2003] Q.B. 381, in which the court considered the lawfulness of a contingency fee agreement entered into between the claimants and a firm of accountants who had undertaken the preparation of their case on damages. This court held that section 58 of the Courts and Legal Services Act 1990, which provided for the introduction of conditional fee agreements, evidenced a shift in the attitude of public policy towards the conduct of litigation on terms that the obligation to pay fees is to be contingent on success. That change in public policy enabled the court to hold that the agreement was not unlawful, since it was satisfied that there was little risk on the facts of that case that the accountants (who of course were not conducting the litigation) would be tempted to inflate the damages or otherwise undermine the administration of justice.

In Sibthorpe v London Borough of Southwark [2011] EWCA Civ 25, [2011] 1 W.L.R. 2111 the court was concerned with the validity of a conditional fee agreement under which the solicitors acting for the claimant agreed to indemnify her against any costs awarded in favour of the defendant. The court held that the decision in Factortame (No.8) supported the conclusion that an agreement between a party to litigation and a person other than someone who is conducting that litigation or providing advocacy services in connection with it will not offend against public policy, even if it is of a kind that would formerly have been regarded as champertous, if it is unlikely to undermine the administration of justice having regard to the nature of the agreement itself and the circumstances in which it was made. Stricter rules, however, continue to apply to agreements entered into by those conducting the litigation or providing advocacy services in connection with it.

The present case concerns the straightforward assignment of a cause of action in tort for personal injury. As such it raises questions of the kind considered in Trendtex v Credit Suisse rather than those considered in Giles v Thompson, Factortame (No.8) and Sibthorpe v Southwark. Access to justice is not a consideration, since there is no reason to think that Mr. Catchpole could not have pursued his claim as easily as Mrs. Simpson, if he wished to do so; nor did Mrs. Simpson have an interest in Mr. Catchpole’s treatment by the hospital of a kind that is recognised in law. Mrs. Simpson understandably says that she has a very real interest in the outcome of the proceedings and that the assignment does not involve “wanton and officious intermeddling with the disputes of others” because she has a legitimate interest in forcing the hospital to confront its failure to implement adequate procedures to control infection. In this context I think that the expression “wanton and officious intermeddling” is liable to be a little misleading. It can easily be taken to suggest that the person concerned is acting in an arbitrary and capricious manner, but I doubt whether in this context it should be understood to mean anything more than that he or she does not have a sufficient interest in the subject matter of the claim to justify taking an assignment. The expression is taken from the judgment of Fletcher Moulton L.J. in British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006, in which he defined the tort of maintenance as being:

“ . . . directed against wanton and officious intermeddling with the disputes of others in which the (maintainer) has no interest whatsoever and where the assistance he renders to the one or the other party is without justification or excuse.”

In my view, despite her honourable motives, Mrs. Simpson does not have an interest in Mr. Catchpole’s claim of a kind that the law should or does recognise as sufficient to support an assignment of what would otherwise be a bare right of action and is therefore guilty of wanton and officious intermeddling with the disputes of others. In seeking to draw attention to the range of interests that may be sufficient for this purpose Mr. Redmayne drew our attention to the case of Holden v Thompson [1902] 2 K.B. 489, a case in which an interest of a religious, rather than commercial, nature was held to be sufficient to justify maintenance of the relevant proceedings. However, the case is in my view quite different from the present because it involved the provision of financial support by way of charity to poor persons who were seeking to uphold religious convictions which the defendants shared. The decision is expressly based on an exception to the general law of maintenance in respect of charitable support and is not in my view authority for any broader proposition.

It is unlikely that a person would take an assignment of a cause of action if he or she did not have an interest of some kind (using the word broadly) in the outcome, but it is clear from the decision on Trendtex v Credit Suisse and from subsequent statements of judicial opinion to which I have referred that an assignment of a bare cause of action in tort for personal injury remains unlawful and void. Since the law on maintenance and champerty is open to further development as perceptions of the public interest change, I do not think that it is possible to state in definitive terms what does and does not constitute a sufficient interest to support the assignment of a cause of action in tort for personal injury. However, I do not think that it is in the public interest to encourage litigation whose principal object is not to obtain a remedy for a legal wrong, but to pursue an object of a different kind altogether. If Mrs. Simpson’s real concern had been to ensure that Mr. Catchpole was able to obtain compensation, she could have taken steps to enable him to pursue the litigation in his own name, but in truth her only interest in the litigation is to pursue a campaign against the hospital. In my view it would be damaging to the administration of justice and unfair to defendants for the law to recognise an interest of that kind as sufficient to support the assignment of a cause of action for personal injury, because the conduct of the proceedings, including aspects such as a willingness to resort to mediation and a readiness to compromise, where appropriate, is entirely in the hands of the assignee and is liable to be distorted by considerations that have little if anything to do with the merits of the claim itself. There is a real risk that to regard a collateral interest of this kind as sufficient to support the assignment of a cause of action for personal injury would encourage the purchase of such claims by those who wished to make use of them to pursue their own ends.

Finally, Mr. Redmayne submitted that for the law to refuse to recognise the assignment by Mr. Catchpole of his claim against the hospital would involve unlawful interference with Mrs. Simpson’s property contrary to Article 1, Protocol I of the European Convention on Human Rights. However, I am unable to accept that submission. When determining whether a claimant has possessions or property within the meaning of Article I the court may have regard to national law and will generally do so unless the national law is incompatible with the object and purpose of Article 1: see Pressos Compania Naviera S.A. v Belgium [1995] 21 EHHR 301. Mr. Catchpole’s claim and any right that he has to obtain compensation constitute both a possession and property for these purposes and for the reasons given earlier it is not one that in my view is inherently incapable of being assigned to a person who has a sufficient interest (for example, an insurer who had indemnified him against his loss). The real question, therefore, is whether a rule of law which renders void a disposition by Mr. Catchpole of his property is incompatible with Article 1.

In my view it is not. The second paragraph of Article 1 expressly preserves the right of the state

“ . . . to enforce such laws as it deems necessary to control the use of property in accordance with the general interest . . . ”

Interference with the enjoyment of property must be justifiable as being in the public interest, proportionate to the objective sought to be achieved and represent a fair balance between the interests of the community and the protection of the individual’s rights: see Pressos v Belgium, paragraphs 35-44. However, states enjoy a margin of appreciation in determining where the public interest lies because it is recognised that they are best placed to assess the nature of the problem that needs to be addressed and the most suitable method of resolving it.

In the present case there is no question of Mr. Catchpole’s being deprived of his property; all that the law seeks to do is to restrict his ability to dispose of it. In my view the restriction that prevents him from disposing of it to a person who has no legitimate interest in it is in the public interest and is proportionate to the objective of preventing trafficking in litigation of a kind that would undermine the administration of justice. Since Mr. Catchpole is free to pursue his claim on his own behalf, it represents a fair balance between the use of his property and the interests of the community at large. To adopt the language of Lord Nicholls in Wilson v First County Trust Ltd (No.2) [2003] UKHL 40, [2003] 1 A.C. 816 and of Arden L.J. in Pennycook v Shaws (EAL) Ltd [2004] EWCA Civ 100, [2004] Ch. 296, it represents a delimitation rather than a deprivation of the right in question. If the assignment of Mr. Catchpole’s claim is void on the grounds of public policy, as in my view it is, it follows that Mrs. Simpson herself has not obtained any property to which Article 1 applies.

The assignment in this case plainly savours of champerty, given that it involves the outright purchase by Mrs. Simpson of a claim which, if it is successful, would lead to her recovering damages in respect of an injury that she has not suffered. Whether in those circumstances she chose to transfer all or part of the money to Mr. Catchpole would be entirely a matter for her, but nothing in the agreement obliges her to do so. She would not be required to hold any damages recovered in respect of pain and suffering and loss of amenity on trust for Mr. Catchpole since, if the assignment were effective, it would operate to transfer the whole of his interest in the property represented by his cause of action to her. In my view this is a case of an assignment of a bare right of action, in the sense that it is an assignment of a claim in which the assignee has no legitimate interest, and is therefore void. For these reasons I would dismiss the appeal.

I agree.

I also agree.