Company that aggregates small consumer claims fends off champerty challenge

High Court: strong public policy grounds in favour of upholding assignment

A company that takes assignments of small consumer claims not worth pursuing on their own to build group actions does not fall foul of the rules against champerty and maintenance, the High Court has ruled.

Rather, access for customers to justice was being “enhanced”, said Stuart Isaacs QC, sitting as a deputy High Court judge.

The company, CaseHub, promises to “turn your complaint into cash”.

Its website explains: “Let’s say someone has done you harm. Maybe they’ve overcharged you, misled you in some way, or did something particularly unfair. You have a complaint against them, but you don’t have the time to get involved.

“Lawyers in this case are no good: they’re too expensive for you to try and claim a few hundred quid, or even a grand.

“Well, that sucks. We can try and fix it though. We do all we can to resolve your complaint (going as far as court action against the other side, if needed). You never have to go to court: we do everything.”

The defendant in Casehub Ltd v Wolf Cola Ltd [2017] EWHC 1169 (Ch) – decided in May but only just published – operates a software-as-a-service business and the claim relates to a problem in August 2016 which meant that new users did not receive log-in information to enable them to access the service and so terminated their agreements within the first month.

This led to a cancellation fee of £196, in accordance with its terms and conditions. Casehub has taken assignments from customers of their claims against the defendant to be refunded the cancellation fees.

Mr Isaacs said there were two forms of the claim purchase agreements: one provided the assignor receives 60% of the recovered money, with the assignment given a nominal value of 1p, while the other was a straight payment of £40 for the assignment, with CaseHub retaining all of the proceeds if it succeeded.

He found that it was not a bare cause of action: “The charges paid to the defendant by the customers which are the subject of the claim purchase agreements are not a debt owed by the defendant to the customer. However, they do consist of a liquidated sum which is the subject of a claim in restitution.

“In my judgment, under the claim purchase agreements the claimant acquired the right to the sum in question and the assignment of the right to bring a restitutionary claim to recover the sum is incidental and subsidiary to that right properly and is not a bare cause of action. The fact that liability to repay the sum is disputed does not affect its assignability.”

He went on to find no or insufficient public policy grounds to determine the assignment as invalid. “On the contrary, there are in my judgment strong public policy grounds in favour of upholding the assignment.”

These included that the individual claims were too small to be cost or time-effective for the consumers to bring claims directly, while it was “fallacious of the defendant to suggest that there are adequate alternative means of enabling customers to pursue their claims, for example by third party financing or with ‘no win, no fee’ arrangements”.

The judge explained: “Assuming in the defendant’s favour that those means are available for the relatively small sums at stake in the present case, it does not follow that other alternative arrangements should be prevented.”

Further, access for customers to justice was being “enhanced”. Mr Isaacs said: “The courts recognise the need for innovative but responsible ways of increasing access to justice for the impecunious.”

He also found that, since the sums in dispute were quantified, “there is no risk of damages being inflated or the litigation process being abused in other ways; neither the ‘purity of justice’ nor the ‘interests of vulnerable litigants’ is threatened in the present case; there is no adverse impact on the administration of justice”.

Also, “the claimant has a legitimate and genuine commercial interest in being able to pursue the claims assigned to it in order to protect the liquidated sums it acquired under the claim purchase agreements”.

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