Estate Management and Business Development Company Ltd v Junior Sammy Contractors Ltd (Trinidad and Tobago)

An absolute assignment transfers the legal right to a debt and the right to sue. Whether an assignment is absolute or by way of charge is determined by construing the relevant documents as a whole. Wording such as “absolute” is not conclusive. Reservation of the right to sue is at least a very strong indicator of a charge, although the Board left open whether it is independently decisive. For specific disclosure, documents must be directly relevant and disclosure must be necessary for fair disposal or saving costs. A potential defence must be more than fanciful or speculative. Disclosure cannot be ordered as a fishing expedition to discover a defence.

A contractor sued an employer for unpaid sums certified under interim payment certificates and for release of retention. The employer alleged that the contractor had absolutely assigned the certified debt to a merchant bank, and sought specific disclosure of documents to investigate possible defences of abatement and fraud.

The High Court refused specific disclosure and entered summary judgment for the contractor. The Court of Appeal of the Republic of Trinidad and Tobago dismissed the employer’s appeal on 20 July 2022. The employer appealed to the Privy Council on standing, specific disclosure, and whether summary judgment was premature pending disclosure.

The appeal was dismissed unanimously and the order of the judge was affirmed. Lord Stephens delivered the single judgment of the Board.

1. Assignment. Under section 23(7) of the Supreme Court of Judicature Act, an absolute assignment transfers the legal right to the debt and the legal remedies, including the right to sue. The distinction between an absolute assignment and an assignment by way of charge is a matter of construction of the relevant instrument or instruments as a whole. The use of the word “absolute” is supportive but not determinative. The Board applied the approach in Read v Brown (1888) 22 QBD 128, Bexhill UK Ltd v Razzaq [2012] EWCA Civ 1376 and Hughes v Pump House Hotel Co Ltd (No 1) [1902] 2 KB 190.
2. Construction of the documents. Although the Factoring Agreement, Assignment of Receivables and Notice of Assignment used language of sale and absolute assignment, their overall effect was a loan secured by an equitable assignment. The facility was capped below the debt, facility fees were payable, the contractor bore the risk of disputed receivables, and clause 4.1.5 left the contractor with discretion to enforce the debt. The contractor therefore retained standing to sue the employer.
3. Right to sue. The Board explained that Ardila Investments NV v ENRC NV [2015] EWHC 1667 (Comm) and Mercantile Bank of London v Evans [1899] 2 QB 613 did not decide that failure to assign the right to sue, standing alone, necessarily makes an assignment charge-only. The Board left that question open, but held that retaining the right to sue is at least a very strong indicator of a charge.
4. Specific disclosure. Under the Consolidated Civil Proceedings Rules 2016, documents must be directly relevant to a matter in issue, and disclosure must be necessary to dispose fairly of the claim or save costs. The potential defence must be more than fanciful or speculative. The employer’s evidence was wholly insufficient, and its four reasons for suspecting over-certification had no substance. The application was therefore a fishing expedition.
5. Final order. The defences of abatement and fraud had not been pleaded, and there was insufficient evidence on which to amend the defence. Summary judgment for TT$82,804,219.19 was accordingly upheld. The appeal was dismissed.

1. Privy Council: Appeal dismissed and the High Court order affirmed: [2024] UKPC 33.
2. Court of Appeal of the Republic of Trinidad and Tobago: Appeal from the High Court dismissed on 20 July 2022; no citation stated in the judgment.
3. High Court: Specific disclosure refused and summary judgment entered for the contractor; written judgment handed down on 11 March 2020, with no citation stated in the judgment.