Ruttle Plant Hire v Secretary of State for the Environment & Rural Affairs (2007)
The claimant could not pursue claims in relation to a contract as an assignee where the terms of the contract prevented the assignment.
The applicant department (D) applied to strike out the claim of the respondent (R) and for summary judgment. During an outbreak of foot and mouth disease D had engaged a contractor (F) to carry out emergency work to contain and eradicate the disease. F had invoiced over £16 million pursuant to the agreement between D and F and over £8 million had been paid by D. F and D sought to negotiate a settlement. That led to mediation and a settlement agreement. F subsequently ran into financial difficulties. It asserted that the settlement agreement had been entered into under economic duress. F went into voluntary winding-up and the liquidator entered into a deed of assignment with R. R issued proceedings for a declaration that the mediated settlement had been entered into under economic duress, and seeking rescission of the settlement and an account of the sums due and owing to R as assignee of F's right to the taking of such an account. R also pleaded a collateral contract and breach of that contract. D sought to strike out the claim. D submitted that (1) any cause of action which F had when it went into winding-up remained the property of F and that proceedings would have to be commenced in the name and in the right of F; (2) the deed of assignment was only effective in relation to the claim for rescission of the settlement agreement on the grounds of economic duress; (3) clause 21.1 of the contract between D and F prohibited assignment except with the consent of the minister, which had not been obtained.
(1) Under the deed of assignment what had been assigned was "the rights of the liquidator to prosecute and carry on the Action". In those circumstances, it was the liquidator's rights to commence and enforce proceedings that had been assigned and the proper claimant was F not R because those proceedings had to be brought in the name and in the right of F, Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors of Navigator Holdings Plc (2006) UKPC 26, (2007) 1 AC 508 applied. (2) What was assigned were rights in relation to "The Action" which was not limited to the re-opening of the settlement but included possible proceedings "against various parties including the Secretary of State in contract and tort". The rights assigned were not limited to rescission of the settlement agreement for duress, together with damages for that tort. Rather they could include claims under the contract and any collateral contract, including sums due, damages or an account. (3) There was no reason to construe clause 21 as being limited in duration. On a true construction of clause 21.1 the prohibition on assignment did not come to an end on completion of the services, ANC Ltd v Clark Goldring & Page Ltd (2001) BCC 479 CA (Civ Div) distinguished. Clause 21.1 could not be construed so that the prohibition on assignment did not survive the liquidation of F, Circuit Systems Ltd (In Liquidation) v Zuken-Redac (UK) Ltd (1997) 1 WLR 721 CA (Civ Div) considered. There was nothing in the contact to show that, objectively construed, the parties intended clause 21.1 to terminate on liquidation. Indeed the indications were to the contrary. Under clause 18 on liquidation the contract did not automatically terminate but depended on a notice from the minister. Whilst, in principle, a prohibition on assignment could be contrary to public policy, the existence of a liquidator's rights under the Insolvency Act 1986 alone could not have that effect, Linden Gardens Trust Ltd v Lenesta Sludge Disposal Ltd (1994) 1 AC 85 HL considered. (4) R was entitled to plead the matters relied on by it in relation to the contract and collateral contract for the foundation of its claim for rescission and it was not necessary for a claim for sums due or damages to be pleaded in relation to the contract or the collateral contract. The remedy of rescission of the settlement agreement was a complete cause of action and did not require a remedy in damages to be pleaded. There was no principle or rule of practice that required a party to provide the security of full counter-rescission before it could proceed with a claim for rescission.