American Leisure Group Ltd v Walker & Anor

An assignment of causes of action must be construed as a whole. Broad words do not necessarily transfer every claim connected with a fact mentioned in related pleadings. A bare background reference will not capture a cause of action depending on additional facts that are not set forth. Objective background may show that contribution claims were not intended to be assigned. On strike out, a claim proceeds if it has a realistic prospect of success at trial.

American Leisure Group Ltd sued Rupert Faure Walker and David Mace for alleged breaches of directors’ duties connected with an initial public offering and subsequent events. The appellants applied to strike out the whole claim, arguing that an assignment dated 1 June 2013 had transferred ALG’s causes of action to ALG Recovery Trust Ltd.

The Deputy High Court Judge held that the claims were not generally assigned, but struck out claims concerning post-offering mismanagement pleaded in paragraph 31.8. ALG cross-appealed concerning Mr Faure Walker. The central issues were the proper construction of the assignment and whether the alternative procedural basis for striking out paragraph 31.8 independently required the cross-appeal to fail.

Mr Justice Morgan delivered the judgment, with Lord Justice Tomlinson agreeing. Both the appeal and the cross-appeal were dismissed.

1. Construction of the assignment. The assignment had to be read as a whole. The reference to certain claims, choses-in-action and lawsuit rights meant causes of action, but did not transfer every cause of action vested in ALG. Although the words concerning claims arising from, relating to or otherwise involving facts, circumstances and occurrences were broad, the words set forth could limit their scope. The stated purpose of enabling the assignee to continue the Pratt proceedings permitted amendments arising from facts set forth in those proceedings, but did not indicate an intention to assign unrelated causes of action.
2. Effect of the IPO reference. The reference to the IPO in the Pratt pleadings was general background. ALG’s claims in the present proceedings depended on the manner in which the IPO was conducted and on specific statements made to investors. Those additional matters were not set forth in the Pratt proceedings. The relevant causes of action were therefore not assigned.
3. Objective background. ALG was already facing the Florida Action when the assignment was made. Objectively, it would have been natural for ALG to preserve possible contribution claims. It would therefore be surprising to construe the assignment as transferring them. Subjective evidence from ALG’s representatives was unnecessary to that assessment.
4. Strike out. No application for summary judgment under Civil Procedure Rules 1998 Part 24 had been made. The question was whether ALG had a realistic prospect of success at trial. Detailed issues concerning damages, overlap and double recovery were appropriately left for trial.
5. Cross-appeal. Even assuming that ALG had a realistic prospect of showing that the paragraph 31.8 claims against Mr Faure Walker were not assigned, the Deputy Judge had made an alternative finding based on failure to comply with a court order requiring particulars. ALG identified no error of principle in that case-management decision. The alternative finding was therefore given full effect.

• Court of Appeal (Civil Division). The appeal and cross-appeal were both dismissed.
• Chancery Division of the High Court. Mr David Halpern QC, sitting as a Deputy High Court Judge, dismissed the appellants’ application to strike out the claim except for the paragraph 31.8 claims, which he ordered to be struck out.