Chapman (t/a Chapman & Co. Solicitors) v Wilson & Ors

A commercial loan agreement is not a bill of sale merely because it requires future delivery of papers relating to funded claims. A personal obligation to deliver documents does not itself create an assignment, charge or power to take possession of chattels.

An assignment of after-acquired property can fall within the Bills of Sale Acts, but may be void for non-compliance with statutory form, scheduling, attestation or registration requirements. Where an instrument combines security over personal chattels with security over choses in action, the invalid chattel security may be severed from the valid income-stream security.

The claimant, a solicitor, obtained revolving funding from LawFinance Limited for personal injury litigation conducted under conditional fee agreements. Security documentation included a loan agreement, mortgage and assignments of cases and associated rights.

After default, LawFinance appointed receivers over income and arranged for case files to be transferred to another firm. The claimant challenged the validity of the loan and April 2009 assignment under the Bills of Sale Acts 1878-1882 and claimed damages for unlawful interference with his files. LawFinance counterclaimed for the sums due and declarations concerning its security.

The principal issues were whether the loan agreement and assignment were validly executed, whether they were bills of sale, whether the assignment complied with statutory form requirements, and whether the defendants were entitled to the files and related income.

1. Loan agreement. The claimant validly executed the loan agreement. By signing the signature page and agreeing completion, he unequivocally accepted the latest versions of the agreement, schedules and appendices exchanged between the parties. The agreement was therefore valid and enforceable.
2. Loan agreement not a bill of sale. Clauses requiring delivery of papers and items relating to funded claims created a personal future obligation. They did not assign or charge the papers, confer a present equitable right, or give LawFinance a power to take possession within section 4 of the Bills of Sale Act 1878. The agreement was therefore not itself a bill of sale.
3. After-acquired property. An assignment of after-acquired property can be a bill of sale. Thomas v Kelly established that inclusion of after-acquired property could make a bill of sale void for failure to comply with the statutory form. It did not establish that such an instrument could never be a bill of sale.
4. April 2009 assignment. The assignment was duly executed and registered. Its assignment of the whole right, title and interest in the scheduled cases included documents owned by the claimant in connection with those cases, so it was registrable as a bill of sale. It failed, however, to comply with section 9 of the Bills of Sale Act (1878) Amendment Act 1882, including requirements concerning consideration, specific description, security terms and reference to section 7. The chattel security was consequently void.
5. The invalid assignment of the case files was severable from the assignment of the income stream from the cases. The latter comprised choses in action and remained effective.
6. Consent and interference. The claimant had a contractual obligation under the loan agreement to deliver up papers relating to claims for which sums were due. He consented to the transfer, and his consent was not vitiated by duress or misrepresentation. LawFinance therefore committed no tort in taking possession of the files. The receivers acted as agents for LawFinance, or in any event as statutory agents of the mortgagor under section 109(2) of the Law of Property Act 1925.
7. The claimant’s claim under the Torts (Unlawful Interference with Goods) Act 1977 was dismissed. LawFinance was entitled to the sums due under the loan agreement and to the income stream secured by the assignments and mortgage. The parties were to make further submissions on the precise form of declaration and costs.

First instance decision. No prior appellate decision is stated in the judgment.