Poole v Hinton & Anor

A court may examine the validity of a debt admitted in bankruptcy under a default judgment where the debtor raises bona fide issues of substance and may establish that no debt is due. Contractual construction is a unitary exercise focused on the objective meaning of the agreement, read as a whole and in its relevant context. An assignment referring to defined classes of claims may be limited to those classes, despite introductory language such as “including”. A director is not necessarily an agent for every purpose. A settlement prohibition against representing or assisting others in claims against directors does not, without clearer language, prevent a claims manager from pursuing a claim in his own capacity, including as assignee. An implied term will not be added merely to cure an unsatisfactory commercial outcome.

Mr Carroll obtained a default judgment against Mr Poole for more than £21 million, arising from alleged fraud, breach of trust and fiduciary duty concerning the sale of a vetting business to Claims Direct plc. Mr Poole was later made bankrupt, and his trustee in bankruptcy admitted Mr Carroll’s claim.

On Mr Poole’s appeal, the High Court directed trial of three preliminary issues: whether it should examine the validity of the default judgment debt, whether the claim had been validly assigned to Mr Carroll, and whether a June 2008 Settlement Agreement barred the claim. The central issues were the construction and effect of the Deed of Assignment and clause 10 of the Settlement Agreement.

1. The court was entitled to go behind the default judgment. Mr Poole had raised bona fide issues of substance and had prepared a defence which, if correct, meant that no debt was due. It would therefore be wrong not to review the merits in the bankruptcy appeal.

2. The Deed of Assignment was not an assignment of all potential claims. Although recital (2) began with general words and used “including”, the closing reference to “these claims”, read with the structure and context of the deed, referred to the three defined classes in sub-paragraphs (a)–(c). The canon illustrated by Ambatielos v Anton Jurgens Margarine Works [1923] AC 175 was not in point.

3. The claim was not within class 2(a). The expression “Agent” did not necessarily include a director for all purposes. The relevant claim had to be against an agent for something done or omitted in that capacity. Mr Poole’s alleged conduct was pleaded as fraud, breach of trust, breach of fiduciary duty and unjust enrichment, and agency was not relied upon. The claim was therefore not validly assigned.

4. Clause 10 of the Settlement Agreement prohibited Mr Carroll from representing or assisting others in claims against the directors. Read in its factual and contractual context, it was directed to his previous role as a claims manager. It did not prohibit him from bringing a claim of his own as assignee. The court declined to imply a term preventing that result because such a term was neither necessary for business efficacy nor obvious.

5. Mr Poole succeeded on the assignment issue, which was sufficient to determine the appeal in his favour.

The trustee in bankruptcy admitted Mr Carroll’s claim. Mr Poole appealed that decision to the High Court. District Judge Shorthose ordered trial of three preliminary issues on 11 February 2019. The High Court determined the assignment issue in Mr Poole’s favour and held that the appeal succeeded.