Hoist Portfolio Holding 2 Ltd v Multiple Defendants

Section 136 of the Law of Property Act 1925 requires strict compliance for a legal assignment of debts, including an assignment in writing under the assignor’s hand and written notice referring to that assignment. Where an assignment is ineffective at law but operates in equity, an equitable assignee may proceed without joining the equitable assignor if the court waives joinder as a procedural requirement and the assignor confirms that it retains no interest or future claim. The court may confirm earlier substitution orders on that basis. It should not ratify unidentified steps taken under those orders. Global substitution applications require complete and accurate disclosure, and misleading representations may attract indemnity costs or jeopardise the procedure.

The claimant sought orders concerning seven Global Substitution Orders made between December 2015 and May 2017. The orders had proceeded on the basis that debts had been legally assigned to the claimant. Subsequent review disclosed that the original assignment had been oral, followed by a written agreement and a later confirmatory deed, and that doubts remained about compliance with section 136 of the Law of Property Act 1925, particularly the requirement that notice refer to the document effecting the assignment.

The claimant applied for confirmation of the orders on the alternative basis that it was an equitable assignee. The defendants did not appear. The issues were whether joinder of the equitable assignor could be waived, what safeguards were required, and what consequential orders should be made.

1. The court considered that section 136 of the Law of Property Act 1925 imposed strict requirements for a legal assignment of debts. These included an absolute assignment in writing under the assignor’s hand and express written notice to the debtor. There was a substantial concern that notice referring to an oral agreement did not satisfy the statutory requirement that notice relate to the document effecting the assignment.

2. An equitable assignee may maintain proceedings without joining the equitable assignor where the court dispenses with joinder as a procedural requirement. The court relied on Charnesh Kapoor v National Westminster Bank Plc & Anor [2011] EWCA Civ 1083. The waiver was appropriate only subject to formal confirmation by the assignor that, since the agreement to assign, it had retained no economic or other interest and would assert no future claim.

3. Subject to that confirmation and suitable terms in the order, the seven Global Substitution Orders could be approved and confirmed. The court considered this practically important because the debts were being enforced in different County Courts.

4. The court refused to ratify or affirm all steps taken in reliance on the orders because it could not know what steps would thereby be covered. Proper steps under the confirmed orders required no ratification; improper steps should not receive it.

5. Persons already served with a Global Substitution Order need not be re-served. Persons not yet served were to receive both the original order and the confirming order. The application was unopposed, so there was no order for costs. The court warned that inaccurate representations in future applications could result in indemnity costs and the withdrawal of this procedural facility.