Andrew John Crooks v Newdigate Properties Ltd (Formerly UPUK Ltd) (2009)
The liability of a judgment debtor under a judgment had been discharged in full by a payment made to the claimant by the other defendants pursuant to a consent order so that the judgment could not be enforced by another defendant as assignee.
The appellant (M) appealed against a declaration that the liability of the respondent (G) under a judgment had been discharged in full by a payment made to the claimant by the other defendants pursuant to a consent order so that the judgment could not be enforced by M as assignee. The claimant (C) had brought proceedings against two companies and three individuals including M and G. The claim arose out of an agreement by one of the companies to pay C a finders' fee on the acquisition and sale of a property. That company had acquired an option to purchase the property and then assigned it to the second company (N). C alleged that assigning the option was a breach of contract done with a view to defeating his entitlement to the finders' fee. C alleged that the individual defendants, who controlled both companies, had procured the assignment. There were claims against all five defendants for the same loss and based on the same cause of action. G did not defend the claim and a default judgment was entered against him. The other defendants settled C's claim on terms embodied in a consent order. The order provided for C's judgment against G to be assigned to N, and that was done. The benefit of the judgment against G was later assigned to M. G contended that his liability under the judgment had been discharged by the payments under the consent order; the other defendants could have sought contribution from him under the Civil Liability (Contribution) Act 1978 but failed to do so within the period of two years allowed under the Limitation Act 1980 s.10. M submitted that the payments made under the consent order were not in satisfaction of the claim against the defendants, but were payments made for the benefit of the assignment of the judgment debt to N. The judge rejected that submission and held that the payments made under the consent order had the effect of satisfying the judgment debt against G. G submitted that although there was no release of the judgment against him by virtue of the terms of the consent order, the payments made pursuant to it in fact at least equalled the full amount of C's claim and therefore extinguished G's liability under the judgment; C could not have sought enforcement of the judgment without giving credit for the sums paid by the other defendants and M, as assignee of the judgment, was in no better position. M submitted that, as assignee, he was not required to give credit for sums received by C in or toward satisfaction of the joint liability; even though the payments under the consent order represented a full recovery for C, the court should give effect to the assignment provision in the consent order which amounted to a reservation of C's rights against G.
M's case that he was not required to give credit for sums received by C in or toward satisfaction of the defendants' joint liability foundered on basic principles. First, the provision in the consent order for assignment of the judgment debt against G was expressed to be conditional on C receiving the total settlement sum and, by the time agreed for the assignment, the debt would already have been extinguished by the payments under the order. Secondly, even if there was a debt to assign, the assignment of a debt did not change the character of the debt. G remained liable after the assignment, as he was before, under a judgment in respect of a joint liability in tort. Payments by the other joint tortfeasors necessarily reduced or extinguished G's liability. The assignee could be in no better position than the assignor. An assignment of a debt, including a judgment debt, was subject to equities, including the right to require credit to be given for sums paid in or towards satisfaction of the underlying liability. The submission that the payments under the consent order should be construed as consideration for the assignment of the judgment debt was inconsistent with the express terms of the consent order and, for the reasons given by the judge, was not sustainable.
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02 Apr 2009
Court of Appeal
Arden LJ, Hooper LJ, David Richards J