JEB Recoveries LLP v Binstock

A bare assignment of a cause of action for nominal consideration will generally offend the public policy against maintenance and champerty. The question is fact-sensitive. The court must consider whether the arrangement threatens the integrity of the legal process, including equality before the law, and must focus on the protection of the defendant confronted with the litigation.

An assignment may be permissible where it includes an underlying debt, the assignee has a genuine connection with the assignor and the claim, the assignment is not litigation trafficking, and procedural safeguards such as security for costs protect the defendant. An assignment made by connected parties to recover their own debts and claims was therefore not champertous on the facts.

JEB Recoveries LLP sought to recover sums allegedly due to Peter Frederick Wilson under an alleged contract for business services provided to Judah Eleazar Binstock. Wilson had assigned to JEB, for £1, debts and causes of action against Binstock and related persons. Wilson, JEB’s partners and their families had connected interests in the assigned rights.

Binstock applied to strike out the surviving claim as an abuse of process on the ground that the assignment was champertous. The application raised whether the assignment was a bare assignment of a cause of action, whether JEB was trafficking in litigation or shielding Wilson from adverse costs, and whether the arrangement threatened the integrity of the legal process.

1. Application dismissed. The assignment did not offend the public policy against maintenance and champerty, although the pleaded claim for aggravated damages appeared unsustainable and the judge was provisionally minded to strike that part out under CPR 3.3 and CPR 3.4(2)(a).
2. A bare assignment of a cause of action for a nominal sum, without more, is likely to be champertous. The relevant policy protects the integrity of the legal process and equality before the law. The focus is on protecting the party confronted with the maintained litigation.
3. The assignment here was materially different from the assignment in Simpson v Norfolk and Norwich University Hospital NHS Trust [2012] QB 640. It included debts as well as causes of action. JEB was formed by persons connected with the assigned rights, and its objective was to recover their own debts and claims. The claim was not being used as a platform for an unrelated campaign.
4. The arrangement did not amount to trafficking in litigation as described in Trendtex Trading Corpn v Credit Suisse [1982] AC 679. The rights were not being traded as commodities between unconnected third parties.
5. The assignment did not improperly shield Wilson from costs. The defendant could seek security for costs against Wilson under CPR 25.14, and against JEB under CPR 25.13(1)(a) and (2)(c). Those provisions could protect the defendant and might place him in a better position than if Wilson had remained the claimant.
6. On the evidence, there was no serious prospect that the arrangement would suppress or exaggerate evidence or damages. The claim could therefore proceed without undermining the ends of justice.

The judgment itself states that the application raised a point of law of some importance and that permission to appeal would be granted if requested. No appeal decision is stated.