Ruttle Plant Ltd v Secretary of State for Environment Food & Rural Affairs No. 2

A liquidator may assign the fruits of proceedings as company property, but cannot assign personal statutory powers to prosecute or control those proceedings. An assignment which deprives the liquidator of all control is objectionable and may be champertous. Funding of an otherwise valid assignment of litigation proceeds is not, by itself, objectionable. A contractual prohibition on assignment may prevent assignment of both an accrued contractual right of action and the right to enforce it, while permitting assignment of the fruits of that action. A proper claimant may be joined where this enables the court to resolve the dispute justly and efficiently.

Following an earlier judgment on DEFRA’s strike-out and summary-judgment application, Ruttle sought permission to amend its pleading and to remain as claimant. The proposed amendments relied on a deed by which the liquidator of Farm Assist Limited had assigned to Ruttle rights connected with proceedings against DEFRA.

The court considered whether the deed validly assigned the fruits of the proceedings, the liquidator’s rights to prosecute and control them, and rights affected by a contractual non-assignment clause. It also considered whether Farm Assist Limited should be joined as claimant, whether damages required further particularisation, and the consequential costs orders.

1. Assignment and liquidator’s powers. The fruits of a cause of action are assignable separately from the bare cause of action. A liquidator may realise those fruits under the statutory power of sale in the Insolvency Act 1986. However, the liquidator’s statutory power to prosecute and conduct proceedings is personal to the office-holder. It is not company property capable of assignment.
2. The deed purported to transfer the liquidator’s rights so that Ruttle could prosecute the action free from the liquidator’s control. That deprived the liquidator of statutory control and was objectionable. The court adopted the relevant reasoning in Grovewood v James Capel & Co Ltd and the Court of Appeal’s reasoning in Re Oasis Merchandising Services Ltd.
3. The assignment of the fruits alone would not be champertous. Although funding will ordinarily form part of the consideration for such a sale, funding does not necessarily invalidate the transaction. The absolute transfer of the liquidator’s power and control supplied the objectionable element.
4. Clause 21.1 prevented assignment of FAL’s accrued right of action against DEFRA and the ability to enforce it, although it did not prevent assignment of the fruits of an action. The court applied the distinction discussed in Linden Gardens v Lenesta Ltd.
5. Ruttle could not amend its pleading so as to remain a claimant. The claim advanced by Ruttle was struck out and summary judgment was entered against it. Damages had to be particularised rather than postponed entirely.
6. FAL’s application to be joined was granted under CPR rule 19.2(2). FAL was the proper claimant, and joinder enabled the court to resolve the underlying dispute without unnecessary fresh proceedings. The application by Ruttle to join FAL was not allowed. DEFRA received the costs of its application, including £114,600 on account. Its claim for costs of the proceedings to date was adjourned with liberty to apply.

The judgment records an earlier judgment dated 4 December 2007 concerning DEFRA’s application to strike out the proceedings and obtain summary judgment. The present judgment determined the consequential amendment, joinder and costs issues.