Pourghazi v Kamyab & Ors

An assignment of a cause of action does not automatically remove the assignor as a party to existing proceedings or discharge liabilities arising from participation in them. A settlement and Tomlin order must be construed objectively, by reference to their language, context and commercial purpose, but commercial common sense cannot justify rewriting clear terms. Where a settlement does not expressly resolve the position of a party who is not a contracting party, that party’s accrued or inchoate liability remains capable of determination. The court may dismiss a stale or substantially exhausted application under Civil Procedure Rules 1998, Part 24, and costs ordinarily follow the event where no sufficient reason for departing from that approach is shown.

The claimant had obtained judgment against the first defendant following fraudulent misrepresentations and had pursued charging and marshalling applications concerning properties charged to HSBC. Investec, another judgment creditor, brought a similar marshalling application. Investec assigned its debt and marshalling rights to the claimant on 12 January 2018, but remained a party to the proceedings and continued to act through its solicitors.

The claimant and the core defendants later settled their dispute and entered into a Tomlin order. Investec was not a party to either document. The core defendants applied under Civil Procedure Rules 1998, Part 24 to dismiss Investec’s application and sought its costs up to the assignment date. The central issue was whether the settlement and Tomlin order had resolved or limited Investec’s residual liability.

1. Application dismissed and costs. Investec’s marshalling application remained live after the assignment and was dismissed. Costs followed the event because Investec had pursued the claim after rejecting a substantially better offer, and no sufficient reason justified a different order.
2. Effect of assignment. An assignment cannot assign a liability. It transferred Investec’s cause of action and associated rights, but did not automatically remove Investec as a party. A party remains a party unless and until the court orders otherwise. Investec’s continued participation through its solicitors confirmed that it had not ceased to play a role in the claim.
3. Construction of the settlement. The settlement agreement and Tomlin order were construed objectively, taking account of their language, context and commercial setting. The approach in Sirius International Insurance Co v FAI General Insurance Limited [2004] UKHL 54 was considered alongside the more recent principles in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services Limited [2017] UKSC 24. Commercial common sense could not be used to disregard or rewrite clear language.
4. The agreement defined the dispute by reference to the claimant’s application and settled only the differences between the claimant and the core defendants. It contained no agreement by the core defendants not to pursue Investec, and Investec was not a party. Clear words would have been required to resolve Investec’s accrued inchoate obligation, but none were used.
5. The court could dismiss Investec’s substantially exhausted application under Civil Procedure Rules 1998, Part 24.2, whether by judgment or as a case-management decision. The precise procedural route did not affect the result.

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