ANC Limited v Goldring & Ors

A contractual prohibition on assignment must be construed according to the language of the particular contract and its commercial context. Linden Gardens Trust v Lenesta Sludge Disposals establishes no inflexible rule that such a prohibition always invalidates assignments of accrued rights or the fruits of performance. Where an agreement provides that its terms continue after termination only expressly or by implication, an assignment restriction will not necessarily survive termination. The court must ask whether continuation is expressed or necessarily implied, having regard to the contractual scheme and commercial purpose.

ANC Limited appealed from an order of the Chancery Division, made by Mr Ian Hunter QC sitting as a deputy High Court judge, holding valid assignments by two former franchisees of causes of action against ANC. The franchise agreements contained standard terms restricting assignment without ANC’s consent. The agreements had been terminated before the assignments were made.

The appeal concerned the construction and survival of the restriction, the assignability of a claim under the Misrepresentation Act 1967, and alleged champerty. The first issue was decisive.

1. Appeal dismissed. The Court of Appeal, in the judgment of Lord Justice Robert Walker, with Sir Roy Beldam and Lord Justice Chadwick agreeing, upheld the deputy judge’s conclusion that the assignments were valid.
2. Clause 16.2 had to be construed in the context of the agreement as a whole and its commercial setting. Clause 15.4 provided that provisions continued after termination only where that was expressed or arose by implication.
3. There was no express provision continuing clause 16.2 after termination. The arguments against implying such continuation were stronger. In particular, the consent machinery and protections concerning proposed assignees were directed to a continuing franchise business and had no useful commercial function after termination.
4. Linden Gardens Trust v Lenesta Sludge Disposals was not authority for an inflexible rule. Lord Browne-Wilkinson’s speech, with which the other Law Lords agreed on the relevant point, stated that the effect of an assignment restriction depended on the terms of the contract in question. The present clause, construed in its own context, did not prevent assignment of accrued rights after termination.
5. The court declined to decide the assignability of the misrepresentation claim. It also made only limited obiter observations on champerty. The distinction between a legal assignment of a cause of action and an equitable assignment of its future fruits was described as a valuable aid to clarification, but the court expressed no view on whether a separate agreement giving the equitable assignee conduct of the action would be champertous.

Costs were agreed at £7,800 in relation to Goldring and £5,500 in relation to Griffiths, payable by 2 June 2000.

• Court of Appeal (Civil Division): appeal from the Chancery Division dismissed; the assignments were held valid.
• Chancery Division: Mr Ian Hunter QC, sitting as a deputy judge of the High Court, held that the assignments were valid.