In Tactus Holdings Ltd v Jordan [2025] EWHC 133 (Comm), Peter MacDonald Eggers KC, sitting as a Deputy Judge of the High Court, under the heading 'The law relating to champerty' said, at paragraphs 66 to 85:

'66. Champerty occurs where there is an agreement by which one person undertakes to maintain or support litigation by another person, whether by an assignment or other means, in exchange for a share of the proceeds of that litigation where the maintainer has no legitimate interest in the claim being litigated and where the maintenance occurs without just cause or excuse (Farrar v Miller [2021] EWHC 1950 (Ch), para. 14). Such an agreement in the absence of such an interest is treated as "wanton and officious intermeddling with the disputes of others" (Giles v Thompson [1994] 1 AC 142, 161, 164).

67. Originally, champerty and maintenance were criminal and civil wrongs, but the crime and the tort have been abolished by sections 13(1) and 14(1) of the Criminal Law Act 1967. However, this legislation did not affect the rule that the law will not recognise the assignment of a "bare right of action" on the ground that such a transaction savours of champerty or maintenance.

68. Champerty is a doctrine whose object is to protect the "purity of justice and the interests of vulnerable litigants"; its application requires consideration whether the intervention of the assignee is harmful to the administration of justice or to the interests of the parties directly affected by the assignment, in particular the defendants to the assigned claim (Giles v Thompson [1994] 1 AC 142, 164; Massai Aviation Services v The Attorney General [2007] UKPC 12, para. 13).

69. The law of champerty has altered over its history to reflect the changing nature of public policy and must accommodate itself to changing times (Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 702; Giles v Thompson [1994] 1 AC 142, 164). At its heart, however, the law is concerned to prohibit a claim being maintained by a person who has no genuine or legitimate interest in the claim, meaning that the party is a "stranger" to it. The existence of a legitimate interest lies at the centre of the doctrine in that the law does not allow the transfer of a "bare right to litigate" from a person who has allegedly suffered a wrong to an uninterested person. The legitimate interest is generally considered to be a commercial interest, especially if the relevant right of action arises in respect of a commercial transaction. However, the legitimate interest need not be of a commercial nature. In the present case, it is the existence of a legitimate commercial interest which is in issue.

70. The assignment should be commensurate with the relevant legitimate commercial interest, but that is not to say that the assignee could not profit from the assignment, but if the profit were excessive, that might properly be a factor in deciding whether the relevant agreement exceeded the assignee's otherwise genuine commercial interest (Brownton Ltd v Edward Moore Inbucon Ltd [1985] 3 All ER 499; Massai Aviation Services v The Attorney General [2007] UKPC 12, para. 17).

71. In Farrar v Miller [2022] EWCA Civ 295, Arnold, LJ stated at para. 22:

"The first rule is that a bare cause of action (i.e. not one ancillary to a property right or interest) can only be assigned where the assignee has a genuine commercial interest in enforcing the claim. At one time, it was thought that a bare cause of action could never be assigned because that amounted to trafficking in litigation, but that is no longer the law. In Trendtex Trading Corp v Credit Suisse [1982] AC 679, the House of Lords held that, as Lord Roskill put it at 703:

"… 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 is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty … if the assignee had a genuine commercial interest in taking the assignment and enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance."

72. How then to determine whether such the transferee or maintainer has a legitimate interest in the claim? This requires the Court to consider the totality of the relevant transaction and its surrounding circumstances and consider whether it tends towards the corruption of public justice (Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 703; Giles v Thompson [1993] 3 All ER 321, 333; [1994] 1 AC 142, 164). A number of factors will bear on this inquiry.

73. An important question is whether the interest exists apart from the assignment itself. Of course, upon the taking of an assignment of a right of action, the assignee will by reason of the assignment, if valid, have an interest in the claim, but that of itself is not sufficient to enable the assignment to take effect. The legitimate interest must therefore exist independently of the assignment being challenged (Giles v Thompson [1993] 3 All ER 321, 333, 347). The legitimate interest may precede the assignment (for example, if an insurer takes an assignment of a right of action belonging to an insured it is insuring or it has indemnified (Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 703) or the interest may be created in other contemporaneous transactions to which the assignment relates and is subordinate (for example, where a mortgagee has an interest in property by reason of the mortgage and takes an assignment of certain rights of action by way of additional security for any loan advanced).

74. Where the assignee has acquired a property interest or right and the right of action assigned is an incident of that interest or right of property, the assignee is thereby likely to have a sufficient interest in the claim (Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 703; Farrar v Miller [2021] EWHC 1950 (Ch), para. 54 (1)(b); aff'd [2022] EWCA Civ 295). The acquisition by the assignee of a property interest or right together with a related but incidental right of action is said to be a separate justification for upholding an assignment from the assignee having a legitimate commercial interest, because it is the property interest or right which is being purchased, not the right of action (Trendtex Trading Corporation v Credit Suisse [1982] AC 679, 703). The interest or right of property in this context must be distinguished from the treatment of the right of action itself as property of an incorporeal nature. In any case, the existence of such a property interest or right would of itself create a legitimate interest.

75. In Trendtex Trading Corporation v Credit Suisse [1982] AC 679, Trendtex contracted to sell consignments of cement and a letter of credit was issued by the Central Bank of Nigeria (CBN) in respect of the purchase price. Trendtex had a claim against CBN for some US$14 million on the grounds of a repudiatory breach of the letter of credit because CBN refused to accept documents tendered under the letter of credit. Credit Suisse had financed Trendtex's purchase of cement from German suppliers and had anticipated that its loans to Trendtex would be recouped by means of the CBN letter of credit. Credit Suisse funded the costs of the action against CBN and then Trendtex agreed, on 4th January 1978, to assign its claim against CBN to Credit Suisse. In that agreement, reference was made to the fact that Credit Suisse had received an offer from an anonymous third party for the acquisition of this claim against CBN and Trendtex consented to the onward sale of the claim. Five days later, on 9th January 1978, Credit Suisse entered into agreement to assign that claim to that third party. The question arose whether the agreement between Trendtex and Credit Suisse was champertous.

76. The House of Lords held that, although Credit Suisse had a genuine interest in the claim against CBN, the agreement of 4th January 1978 was champertous because its purpose was to enable the claim against CBN to be sold to the anonymous third party and for that anonymous third party to obtain what profit it could apart from the purchase price of US$1,100,000 paid to Credit Suisse. Lord Roskill said at page 704: "… the "spoils," whatever they might be, to be got from C.B.N. were in effect being divided, the first U.S. $1,100,000 going to Credit Suisse and the balance, whatever it might ultimately prove to be, to the anonymous third party. Such an agreement, in my opinion, offends for it was a step towards the sale of a bare cause of action to a third party who had no genuine commercial interest in the claim in return for a division of the spoils …".

77. It is not necessarily sufficient for the existence of a legitimate interest that the assignee is or had been a creditor or shareholder of the assignor, but there may be circumstances where the assignee's interest in the assigned right of action may be legitimate by reason of such relationships (Massai Aviation Services v The Attorney General [2007] UKPC 12, para. 17).

78. In Turner v Schindler & Co, unreported, 28th June 1991, the appellant took an assignment from a company (Kingstat) of various debts and rights of action which belonged to Kingstat recoverable from specified companies, in consideration of the payment of £1. It was conceded by the defendants that the assignment of the debts, as opposed to the causes of action in tort, were valid, but the trial judge held that there were in fact no debts owing at the relevant date.

79. The Court of Appeal held that, in order for the assignment to be treated as effective, the appellant had to demonstrate a genuine commercial interest in taking the assignment and in enforcing the relevant rights of action for his own benefit. The appellant argued that he had a legitimate interest as he was a natural brother of Kingstat's shareholders or other directors. Parker, LJ held that consanguinity did not give the appellant a common interest with the company. The appellant also submitted that such a commercial interest existed because, first, he was a creditor of Kingstat in the sum of £5,000 and, second, if Kingstat were to become insolvent, as a director he was at risk of disqualification.

80. Nourse, LJ dealt with these submissions as follows:

"The second of these could not possibly give the appellant a genuine commercial interest in enforcing the rights of action. It can therefore be ignored.

Superficially, the first ground might have something to it. A creditor of a company does have a genuine commercial interest in enforcing a right of action belonging to the company. But it is not as simple as that. He does not stand alone. His interest is only as one amongst all the creditors. If the appellant had taken the assignments of the causes of action as trustee for Kingstat, ie for the benefit of the creditors and the contributories as a whole, it would no doubt have been valid; cf Guy v Churchill (1889) 40 Ch D 481. But he did not take it as a trustee. He took it for his own exclusive benefit and in that capacity he did not have a genuine commercial interest in enforcing the assignment.

On this short ground it can be held that the assignments amounted to or savoured of maintenance and were therefore void. But I do not suggest that that is the only ground on which they can be so held. Thus at page 26H the judge said:

"If these claims were in truth open to Kingstat, as a director at the date of the assignment and indeed one of the signatories of the assignment his duty must have been to have the claims pursued either by or at the very least for the benefit of the company and not to purchase them as he did for his own benefit for the sum of £1.

In my judgment, the plaintiff has not even begun to show that he had such a commercial interest as can properly be accepted as being appropriate to justify an assignment of these alleged claims."

What the judge was there saying, correctly as I respectfully think, was that you cannot have a genuine commercial interest in enforcing for your own benefit a right of action which you have a duty to enforce for the benefit of others. That is the simpler and more satisfactory ground for affirming the judge's decision. However we may look at it, it is impossible for us to take a different view."

81. In Massai Aviation Services v The Attorney General [2007] UKPC 12, the plaintiff (CAASL) commenced proceedings in respect of a claim for damages against the government of The Bahamas and the national carrier of The Bahamas. After the commencement of proceedings, CAASL sold its business but retained this claim, which it later assigned to its sole shareholder (Aerostar) for the price of $10. The Privy Council held that this assignment was not champertous and explained at para. 21:

"This was not wanton and officious intermeddling in another person's litigation for no good reason. It was simply the original owners retaining part of what they owned while disposing of the rest.

There is nothing contrary to public policy in allowing Aerostar to pursue the claim against these defendants and no good reason why these defendants should be permitted to escape any liability that they may have. This is not, of course, to say that a shareholder will always have a genuine and substantial commercial interest in taking an assignment of the company's claims. To take an extreme example, for a minority shareholder to buy a substantial claim for a nominal sum in the hope of making a substantial profit may well be contrary to public policy. But that is not this case. Aerostar owned all the shares in CAASL and taken as a whole the transaction was a perfectly sensible business arrangement."

82. If the assignment has the potential of improving the financial position of an assignee, for example in altering the relative priorities of the assignees and creditors of the assignor in respect of the assigned right of action, that may be a cause for concern having regard to public policy and may speak against a sufficient legitimate interest belonging to the assignee (Farrar v Miller [2021] EWHC 1950 (Ch), para. 54 (2)(c)). This raises the question whether the circumstances of the relevant assignment might tempt the allegedly champertous maintainer for its personal gain to inflame the damages, to suppress evidence, to suborn witnesses or otherwise to undermine the ends of justice (R (Factortame) v Secretary of State for Transport [2002] EWCA Civ 932; [2003] QB 381, para. 36).

83. It is not sufficient to create a legitimate interest that the assignee is aware of or familiar with the circumstances surrounding the claim (Farrar v Miller [2021] EWHC 1950 (Ch), para. 54 (1)(a)). Indeed, there have traditionally been concerns about lawyers acting for a claimant assuming the benefit of a claim. There are today statutory provisions which regulate such matters (see Farrar v Miller [2021] EWHC 1950 (Ch)).

84. Notwithstanding the assignment of a right of action - a right to litigate - may be champertous, the sale of a debt owed to the assignor will not normally be treated as champertous. In Massai Aviation Services v The Attorney General [2007] UKPC 12, at para. 18, the Privy Council said:

"The buying and selling of choses in action is, of course, commonplace. Debts are regularly traded at a discount so that the creditor can obtain some of what he is entitled to while passing on the risks of litigation to others. Businesses are regularly sold with the benefit of their claims as well as their liabilities. Had CAASL sold all its business, including this claim, to Executive, no-one could have objected. What raised eyebrows was the sale of the business to Executive while Aerostar retained the claim. Eyebrows were raised even higher when it emerged that Aerostar had paid only $10 for the claim. This began to look like a very substantial profit, or "trafficking" in litigation."

85. The assignment of a debt is expressly authorised by section 136 of the Law of Property Act 1925, but so is the assignment of a "legal thing in action". The difference between a debt and a "legal thing in action" (or a right of action or a cause of action) is that a debt is generally - although not always - an acknowledged liquidated sum owing by one party to another and is treated as the equivalent of a property right, whereas a right of action (for example, a claim for damages) is generally by its nature a matter intended to be litigated (see Camdex International Ltd v Bank of Zambia [1998] QB 22, 32, 35, 39).'

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