Batey v Jewson Ltd & Anor

The meaning of an assignment is determined objectively, by asking what it conveyed to a reasonable person with the background knowledge reasonably available to the parties. The document must be read in its commercial setting and purpose. No particular form is required; a sufficient expression of an intention to assign is enough. Wording referring to money recoverable from a dispute can assign the underlying right of action where the context shows that this was intended. It is not confined to the fruits of litigation merely because it refers to recoverable sums. Where a lower court has not decided an issue involving mixed law and fact, the appellate court should ordinarily remit it rather than determine it at first instance.

Starlcroft Ltd claimed damages from Jewson Ltd concerning defective roof trusses. In 2002 it assigned to Barry Batey any money recoverable from the dispute in lieu of wages. After Starlcroft was dissolved, Jewson sued Mr Batey for an unrelated trading debt. He relied on the assignment in support of a set-off and counterclaim.

The Newcastle upon Tyne County Court construed the document as assigning only the proceeds of a claim, not the right of action, and dismissed the counterclaim. The appeal concerned the proper construction of the assignment. Jewson also relied on a contractual prohibition against assignment, but that issue had not been decided below.

1. Appeal and construction. The appeal was allowed. The Recorder’s orders were set aside, the counterclaim was restored and the matter was remitted to the county court for trial. The court applied the objective approach to construction stated in Investors Compensation Scheme Ltd v West Bromwich BS [1998] 1 WLR 896 at 912–913. The document had to be understood by reference to the meaning conveyed to a reasonable person with the relevant background knowledge and in the context of its commercial purpose.
2. Form and scope of assignment. No particular form was required. A sufficient expression of an intention to assign was enough, and the language used was immaterial if the meaning was plain. Although the words referring to money recoverable from the dispute could, in isolation, suggest an assignment of proceeds only, the surrounding circumstances showed a practical purpose of transferring the benefit of Starlcroft’s right of action. Starlcroft was preparing to wind up, and retaining the right of action while transferring only its proceeds made no commercial sense.
3. The distinction between an assignment of a cause of action and an assignment of its fruits, discussed in Glegg v Bromley [1912] KB 474, provided only limited assistance. That case concerned particular words in a formal deed and did not require the present assignment to be confined to proceeds.
4. Restriction on assignment. Jewson relied on printed condition 10.5, which purported to prohibit assignment without consent. The court referred to Linden Gardens Trust v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 for the consequence that an assignment made in breach of such a prohibition is ineffective. However, the Recorder had not decided whether the printed terms were incorporated into the contract. The Court of Appeal was not a court of first instance for deciding that mixed question of fact and law, so the issue was remitted with the counterclaim.

• Court of Appeal (Civil Division) — [2008] EWCA Civ 18, 29 January 2008: allowed the appeal, set aside the Recorder’s orders, restored the counterclaim and remitted the matter for trial.
• Newcastle upon Tyne County Court — Mr Recorder Atherton, 7 September 2006: construed the assignment as relating only to the fruits of an action, dismissed the counterclaim and entered judgment for Jewson.