Alphier Capital LLP v Blyvoor Gold Capital (Pty) Ltd

The claimant sued in debt as assignee of a fee said to be due under earlier agreements (the Exotix Engagement and the Tripartite Agreement). The defendant applied to strike out on the basis that Clause 17.6 of the Exotix Engagement prohibited assignment without the client's consent, so the chain of assignments to the claimant was ineffective.

The judge held that Clause 17.6, properly construed, did prohibit transfers of rights or obligations except to another member of the defined "Exotix Group" and therefore the deed transferring Exotix's business to Tellimer fell foul of that restriction unless Tellimer was within that group. The court found the deed of transfer was ineffective as a legal assignment but operated to make Exotix a trustee of the Putative Debt for Tellimer. The May 2020 assignment from Tellimer to Alphier was on its face an assignment of creditor status to Alphier, but the judge proceeded on the basis that Alphier had a realistic prospect of establishing that the May 2020 document assigned the benefit of the trust.

Given these findings, the court refused to strike out the claim and allowed (subject to procedural conditions and undertakings on limitation) Exotix to be joined as a co-claimant so that all connected issues can be resolved in the same proceedings.

Background and parties. The claimant, asserting it had been assigned a fee of US$2,625,000 said to be payable by Blyvoor as a result of Exotix's role under the Exotix Engagement and a subsequent Tripartite Agreement, brought a claim in debt (or alternatively damages). The defendant denied liability and argued the claimant lacked title because Clause 17.6 of the Exotix Engagement prohibited assignment without Blyvoor's consent.

Nature of the application and relief sought. The defendant applied to strike out or for summary judgment and, alternatively, for security for costs. The claimant applied to add Tellimer and Exotix as additional claimants.

Issues framed by the court. (i) Whether Clause 17.6 barred the purported transfers so as to defeat the claimant's standing (the "Entitlement Issue"); (ii) whether the purported Deed of Transfer created a trust and, if so, whether the May 2020 assignment operated to assign the benefit of any such trust; (iii) whether it was desirable and permissible to add Exotix (and/or Tellimer) as claimants; and (iv) limitation and whether substitution or joinder would prejudice any limitation defence.

Court's reasoning. The court applied established principles on strike-out/summary judgment and contractual interpretation (Wood v Capita; Lamesa). Clause 17.6 was read in its natural and commercial context and found to prohibit transfers of rights or obligations except to members of the defined "Exotix Group". The Deed of Transfer of 7 January 2020 purported to transfer the whole Tellimer-branded mandate, not merely an accrued debt, and so fell within Clause 17.6; accordingly the legal assignment was ineffective. However, because the deed contemplated assets not being formally novated and in light of authority on declarations of trust (Don King; Barbados Trust), the judge concluded that the deed operated to make Exotix a trustee of the Putative Debt for Tellimer. The May 2020 Assignment on its face assumed Tellimer was a direct creditor; the court did not finally determine whether that document assigned the trust but concluded Alphier had a realistic prospect of establishing that it assigned the benefit of the trust.

Joinder and limitation. The court exercised its wide CPR 19.2 powers to join Exotix as a claimant because Exotix's interests would be affected and adding it promoted procedural efficiency. The judge addressed the limitation risk under the Limitation Act 1980 and CPR 19.6 and, noting factual disputes about the dates on which Orion funding was received, accepted undertakings (offered by the claimant/existing/new claimants) not to pursue any part of the debt that would be statute-barred if Exotix were substituted. Having received that undertaking the court was willing to join Exotix, with further procedural matters (including Tellimer's formal consent and security for costs) to be addressed following this judgment.

Other points. The court made subsidiary findings on interpretation of "Exotix Group" (concluding the ordinary contractual definition applied) and rejected the claimant's arguments that the parties intended a broader or different meaning. The judge reserved certain matters for further argument including whether Alphier should remain a claimant, the position of Tellimer (Part 20 party or joinder), amendments to pleadings, security for costs and costs of the hearing.

This was a first-instance disposal of interlocutory applications. The court held that Clause 17.6 of the Exotix Engagement, properly construed, prohibited assignment of rights or obligations except to members of the defined Exotix Group; the January 2020 Deed of Transfer therefore did not effect a legal assignment of the Putative Debt and breached Clause 17.6. However the deed operated to impose a trust in favour of Tellimer in respect of the assets (including the Putative Debt). The court proceeded on the basis that Alphier has a realistic prospect of showing the May 2020 assignment transferred the benefit of that trust to Alphier. The court refused to strike out the claim on that basis and granted the claimant's application to join Exotix as a co-claimant (subject to procedural conditions and undertakings concerning limitation). Further procedural issues were reserved for subsequent argument.