Ruttle Plant Hire v Secretary of State for the Environment & Rural Affairs

A liquidator’s statutory power to sell company property does not authorise the sale of rights subject to a valid contractual prohibition on assignment. Such a prohibition may continue after performance of the contract and after liquidation unless the contract indicates otherwise. A claim for rescission of an agreement for economic duress is a complete cause of action and need not include a claim for damages. Counter-rescission or counter-restitution is ordinarily considered when relief is granted, rather than imposed as a condition of pursuing the claim.

Ruttle acquired rights from the liquidator of Farm Assist Ltd, concerning emergency foot-and-mouth disease work and a mediated settlement with the Secretary of State. It sought rescission of the settlement for economic duress and consequential contractual relief.

The Secretary of State applied to strike out the claim or obtain summary judgment. The issues included the proper claimant, the scope of the assignment, the effect of a contractual non-assignment clause, the adequacy of the pleaded contractual and duress claims, and whether counter-restitution had to be offered before the claim could proceed.

1. The assignment transferred the liquidator’s rights to commence and enforce proceedings and the fruits of any action, but did not transfer the company’s underlying cause of action. Proceedings therefore had to be brought in the name and right of Farm Assist Ltd, not Ruttle.

2. The assignment was not confined to rescission of the mediated settlement. The reference to proceedings in contract and tort, and the commercial purpose of the deed, extended the assigned rights to possible contractual and collateral-contract claims, including sums due, damages and an account.

3. Clause 21.1 prohibited assignment of the contract and rights arising under it. The prohibition was not limited to the period of performance. It survived completion because no clear contractual indication imposed a time limit, and it also survived liquidation. The liquidator’s powers under the Insolvency Act 1986 did not permit sale of property on terms different from those on which the company owned it.

4. The non-assignment clause was not unenforceable on public-policy grounds. The reasoning in Linden Gardens Ltd v Lenesta Sludge Ltd supported the conclusion that there was no public need for a market in contractual rights sufficient to invalidate the clause.

5. The contractual and collateral-contract allegations could be relied on as the factual foundation for rescission. A claim for rescission of the settlement was complete without a claim for damages for economic duress.

6. There was no rule requiring security for full counter-rescission or counter-restitution before a rescission claim could proceed. The issue was to be considered when deciding whether to grant rescission and what relief was appropriate.

7. The court deferred final determination of the relief on the applications under CPR rules 3.4(2) and 24.2(a)(i), pending further submissions and any proposed amendment.