Stopjoin Projects Ltd v Balfour Beatty Engineering Services (HY) Ltd

A claim should be struck out or summarily determined only where it has no real prospect of success. An assignment made in breach of an anti-assignment clause is ineffective to transfer contractual rights, unless the clause also clearly prohibits the creation of a trust. Whether an ineffective assignment gives rise to an implied trust depends on the parties’ intention assessed in all the circumstances. That intention cannot ordinarily be inferred solely from the failed assignment. A beneficiary may use the Vandepitte procedure where the facts support a trust and the assignor or trustee will not pursue the claim. A commercial context does not automatically prevent that procedure.

Stopjoin Projects Limited, a factoring company, claimed sums allegedly due under two construction subcontracts between Brunel Control Systems Limited and Haden Young Limited, now Balfour Beatty Engineering Services (HY) Limited. Stopjoin relied on assignments of Brunel’s book debts and, alternatively, an implied trust.

Balfour Beatty applied under CPR 3.4 to strike out the claim or obtain summary judgment. The central issues were whether the contractual anti-assignment clause defeated Stopjoin’s assigned claim, whether it had been varied or waived, and whether the assignments nevertheless supported an implied trust enabling Stopjoin to sue.

1. Application and threshold. The real basis of the application was CPR 3.4(2)(a). For present purposes, the court assumed that sums were due under the subcontracts and considered whether each pleaded basis had a real prospect of success.
2. Assignment. The claimant had a real, though thin, prospect of showing that no contract incorporating Haden Young’s Standard Conditions existed before August 2007. Disclosure might clarify the parties’ contractual intentions. That issue therefore could not justify striking out the assignment claim at the threshold stage.
3. However, the August correspondence did not provide a viable route to recovery by assignment. Brunel’s letter was a counter-offer. Haden Young’s reply was a further counter-offer which insisted on the anti-assignment clause and requested information before any consent would be given. Brunel’s subsequent completion of the works did not amount to an unequivocal representation that the clause would not be enforced. Nor did the correspondence establish a variation deleting or disapplying the clause. By proceeding without obtaining clarification, Brunel had accepted Haden Young’s position.
4. Implied trust. A sufficiently clear anti-assignment clause may invalidate the creation of a trust, but clause 7 was not expressed in terms which prohibited a trust interest. The question was therefore whether Brunel intended to confer a beneficial interest on Stopjoin if the assignments failed. The wording of the assignments and the parties’ apparent belief that the debts were assignable created difficulties, but did not make the argument hopeless.
5. The existing business relationship, the financial support provided by Stopjoin, Brunel’s receipt of consideration, the liquidator’s lack of interest in suing, and the factual similarities with Explora Group plc v Hesco Bastion meant that an implied trust was fairly arguable. The commercial setting did not itself prevent use of the Vandepitte procedure.
6. The assigned claim concerning the Portwall Lane contract was struck out or summarily determined in Balfour Beatty’s favour. The application was dismissed insofar as it concerned claims based on an implied declaration of trust. Consequential pleading and costs matters were left for a further hearing.