Crooks v Newdigate Properties Ltd & Ors

Where several parties are jointly liable for the same loss, a settlement with some of them may reserve rights against the others and so avoid releasing them. However, full satisfaction of the claimant’s loss prevents double recovery. Payments by one liable party reduce or extinguish the amount recoverable from another. An assignment of a judgment debt does not improve the assignee’s position. The debt retains its legal character and remains subject to equities and defences arising from the underlying liability, including credit for payments made towards it. A creditor and assignee cannot, without the debtor’s agreement, contract out of these principles. An assignment conditional on receipt of settlement money may be ineffective where the debt has already been extinguished.

Mr Crooks brought claims arising from an unpaid finder’s fee against a company and four individuals. A default judgment for £253,334.25 was entered against Mr Grogan. The other defendants later agreed to pay £293,000 in full and final settlement of the claims against them. The consent order also provided for assignment of the judgment against Mr Grogan to the second defendant, which later assigned it to Mr Mason.

Mr Grogan sought a declaration that the settlement payments discharged his liability. The High Court made that declaration. Mr Mason appealed, arguing that the assignment preserved the judgment debt and entitled him to enforce it without credit for the settlement payments. The central issue was whether the payments extinguished or reduced the judgment liability despite the reservation and assignment provisions.

1. Appeal dismissed. The settlement payments represented full recovery of Mr Crooks’ loss, so the judgment against Mr Grogan could not be enforced for any further sum.
2. The claims against the defendants, apart from certain claims specific to UPUK, concerned the same loss and arose from wrongful acts in furtherance of a common design. The defendants were therefore jointly liable in tort. An express or implied reservation of rights in a compromise with some jointly liable parties prevents the release of the others, consistently with Watts v Aldington (Times 16.12.93, CA) and Johnson v Davies [1999] Ch 117. It does not permit double recovery.
3. The basic full-satisfaction principle is that a claimant cannot recover in aggregate more than the loss suffered. Part satisfaction does not bar a claim against another liable party, but reduces the amount recoverable. Once the loss has been fully recouped, no further remedy remains: Tang Man Sit v Capacious Investments Ltd [1996] AC 514 (PC) at 522.
4. The assignment provision was conditional on receipt of the total settlement sum. By the time that condition was satisfied, the judgment debt had been extinguished, leaving nothing to assign. The fact that the deed was executed immediately before the final payment made no difference; it operated, in effect, as an escrow arrangement. Even if there had been a debt to assign, assignment would not have changed its character. The assignee took subject to the debtor’s equities and defences, including the right to credit for payments towards the underlying joint liability. This remained so even after assignment and notice.
5. The parties could not contract out of these principles by an agreement to which the debtor was not a party. The payment provision was expressly a full and final settlement provision, while the assignment provision was secondary. The court also doubted that differently drafted terms could avoid the principles or the statutory limitations applicable to contribution claims under the Civil Liability (Contribution) Act 1978, including the two-year limitation period under s.10 of the Limitation Act 1980.

Hooper LJ and Arden LJ agreed with the judgment of David Richards J.

1. Court of Appeal (Civil Division): In [2009] EWCA Civ 283, the court dismissed Mr Mason’s appeal.
2. High Court of Justice, Chancery Division, Birmingham District Registry: On 29 September 2008, HH Judge David Cooke declared that the payments made by the other defendants had discharged Mr Grogan’s judgment liability in full and that Mr Mason could not enforce the judgment.