James Thompson, partner, and Isabella Huckin, solicitor apprentice in our insurance disputes team consider the High Court's recent interim decision in Henderson & Jones Limited v Tysers Insurance Brokers Limited [2025] EWCH 3155 (Comm).
The claimant (Henderson & Jones Limited) is a litigation investment company that purchases and funds litigation and which had taken assignment of professional negligence claims against the defendant (Tysers Insurance Brokers Limited) from a number of assignors.
Background
Three of the assignors had an insurable interest in a number of serviced apartments in Liverpool, located close to the Liverpool Arena. The apartments became unusable due to damage which was indirectly caused by a nearby fire in December 2017. The assignors initially sought to claim against an insurance policy that Tysers had placed, underwritten by NIG. NIG refused to indemnify the assignors for loss of rent in respect of the serviced apartments. The assignors settled their loss of rent claim with NIG for £150,000 which was significantly less than the £2.6 million they had claimed. There’s dispute about whether the policy covered loss of rent and whether the 36 month indemnity period was sufficient. The claimant then brought a professional negligence claim against Tysers alleging that the NIG policy was inadequate to its needs. The claimant argued that Tysers had been instructed to seek a replacement policy on a “like for like basis”, yet the NIG policy indemnity period for rental losses was 36 months rather than the open ended indemnity period offered by its previous policy.
Application
Tysers applied to strike out the claim for a number of reasons, including that they didn’t accept that the claims against it had been validly assigned to the claimant and therefore did not consider that the claimant had standing to pursue the claim. The claimant counter applied to amend its particulars of claim and argued that the claims had been validly assigned to it.
Assignment of claims
Tysers challenged the assignment on four bases: the insolvency exception didn't apply; the claimant had no genuine or legitimate interest in the subject matter of the dispute and so the assignment was void due to champerty; the insurance brokerage contract with the Tysers was a contract for personal services and therefore rights that arise under it (including the right to sue for damages after breach) were not assignable; and there was no legal assignment.
Insolvency exception didn't apply
The first issue concerns statutory insolvency exceptions to the bar on champertous assignments. An administrator, liquidator, and administrative receiver each have the statutory power to sell or otherwise dispose of the property of the company. A Law of
Property Act receiver has no directly equivalent statutory power. The judge accepted that the insolvency exception doesn’t apply to Law of Property Act receivers. However, they stated that Artisan (one of the assignors) did have a right of action against Tysers in respect of the losses suffered and could see “no reason why those claims (properly classed as "property of the company") could not be assigned free of any argument that the assignment falls foul of the public policy”.
Champerty
A cause of action can only be assigned where the assignee has a legitimate interest in the claim. Champerty describes a situation in which a third party funds legal costs in return for a share of the proceeds of litigation and was traditionally prohibited. The claimant submitted that the court’s approach to the question of whether an assignment tends towards a corruption of justice has evolved over time. Applying the principles in Recovery Partners v Rukhadze (2018), the judge HHJ Bird was satisfied that the claimant had a sufficient interest in the assigned claims due to the fact that they had a clear and legitimate assigned right to deal with the claims of Artisan and the claims of other assignors were very similar.
Contract for personal services
While the judge accepted that a brokerage contract can be regarded as a contract of personal service, he wasn’t satisfied that this operated as a bar to the assignments. The judge explained that it isn’t possible to assign the rights to benefit from the performance of a personal contract but there's no prohibition of the assignment of rights that arise following that performance, namely the right to sue for damages - “the right to sue for damages is not a right that depends on the skill, judgment, or other qualities of a party.”
The judge also commented that the brokerage contract didn’t prevent the assignment:
“In the present case, the parties could easily have prevented the present assignment by including a term to that effect. …in cases of personal services (as on the facts of the case before me) there is a clear distinction between assigning performance rights and rights arising out of breach.”
No legal assignment
The judge considered section 136 of the Law of Property Act 1925 which deals with the legal requirements for an assignment to be effective and stated that the fact that the “fruits of the litigation will be shared” doesn’t prohibit this being a valid legal assignment.
Conclusions
The application by Tysers to strike out the claim or receive summary judgment was unsuccessful and assignment of the claim to Henderson & Jones was held to be valid. This is a good summary of the current state of the law on assignment and questions of champerty in the context of a claim against an insurance broker.
The trial of the claim is listed in March 2026 when the substantive questions of alleged broker negligence will be considered.
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