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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bexhill UK Ltd v Razzaq [2012] EWCA Civ 1376 (24 October 2012) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2012/1376.html Cite as: [2012] EWCA Civ 1376 |
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ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
QUEEN'S BENCH DIVISION
HHJ SIMON BROWN QC
IBM40039
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE AIKENS
and
LADY JUSTICE BLACK
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Bexhill UK Limited |
Respondent |
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- and - |
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Abdul Razzaq |
Appellant |
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Mr Robert Leonard (instructed by Bolt Burdon Solicitors) for the Appellant
Hearing dates : 23rd of July 2012
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Crown Copyright ©
Lord Justice Aikens :
The Background to the appeal.
"…ensure that Bexhill is clearly stated to be acting as principal and not agent, in respect of each Bexhill Facility on all documentation and correspondence relating thereto, and shall ensure that no reference to [Barclays] or any subsidiary or holding company of [Barclays] is made in such documentation and correspondence".
"3.1.1 As a continuing security for the payment of the Secured Obligations…[Bexhill] assigns and agrees to assign absolutely in favour of [Barclays] all of [Bexhill's] rights, title, interest and benefit in the Receivables.
3.1.2 As a continuing security for the payment of the Secured Obligations, [Bexhill] hereby with full title and guarantee assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, title, interest and benefit in and to each Relevant Contract[4] and all collateral and rights thereunder."
"Receivables means:
(i) all present and future book and other debts, rentals, royalties, fees, VAT and monetary claims and all other amounts recoverable or receivable by [Bexhill] from other persons or due or owing to [Bexhill] (including, but not limited to, the Qualifying RF Receivables and all other amounts payable to [Bexhill] under the [Bexhill FA] and the Retail Financier Assignments) whether actual or contingent and whether arising under contract or in any other manner whatsoever;
(ii) the benefit of all rights and remedies relating to any of the foregoing including, without limitation, claims for damages and other remedies for non-payment of the same, all entitlements to interest, negotiable instruments, guarantees, indemnities, Encumbrances, reservations of property rights, rights of tracing and unpaid vendor's liens and similar associated rights; and
(iii) all proceeds of any of the foregoing."
"Immediately upon execution of this Deed (and immediately upon the obtaining of any Insurance or the execution of any Relevant Contract after the date of this Deed) [Bexhill] shall:
3.3.1 in respect of each Relevant Contract, deliver a duly completed notice of assignment to each other party to that Relevant Contract (with a copy to [Barclays]), and use its best endeavours to procure that each such executes and delivers to [Barclays] an acknowledgement, in each case in the respective forms set out in schedule 2 (Forms of notice to and acknowledgement by party to Relevant Contract) (or in such other form as [Barclays shall agree); and…
3.3.2 relates to insurances and is not relevant. "
"Pursuant to terms of [the Amendment Agreement] Bexhill UK Limited hereby notifies [Barclays] that it [viz. Barclays] has reassigned to [Bexhill] any equitable interest [Barclays] may have in the Bexhill Receivables related to Bexhill Facilities to [RSA] and Abdul Razzaq T/A Razzaq Insurance Brokers dated 23 June 2006".
The facts
What did the Judge decide?
"So, in my judgment, the assignment point ….is a bad one. Here [Bexhill] are acting as agents for [Barclays] in the process of enforcing and collecting all the Receivables which are due to be accounted for to [Barclays]…".
The arguments of the parties and the issues on appeal
Issue One: Is Bexhill's right to sue on the Charge a "Receivable" within the definition set out on the Bexhill-Barclays Debenture.
Issue Two: what is the nature of the "assignments" created by clause 3 of the Bexhill-Barclays Debenture?
"In every case of this kind, all the terms of the instrument must be considered; and, whatever may be the phraseology adopted in some particular part of it, if, on consideration of the whole instrument it is clear that the intention was to give a charge only, then the action must be in the name of the assignor; while on the other hand, if it is clear from the instrument as a whole that the intention was to pass all the rights of the assignor in the debt or chose in action to the assignee, then the case will come within section 25[12] and the action must be brought in the name of the assignee".
Mathew LJ concluded that, upon the correct construction of that instrument, the intention of the parties was to pass to the assignees "complete control of all monies payable under the building contract" and that notice of the instrument had been given to the debtor client, so that there was an "absolute assignment" within the statute. Cozens-Hardy LJ gave a concurring judgment. The same approach on how to determine the legal effect of a security document was adopted by Millet LJ in the more recent case of Orion Finance Ltd v Crown Financial Management.[13] He emphasised the need to look at the "substance of the parties' agreement" as found in the language that they have used in the document, in order to determine what the parties intended would be the legal effect of the document. In a subsequent case, Rimer J emphasised the need to prefer a construction which "makes commercial sense".[14]
Issue Three: Nature of the "absolute assignment" of the rights connected with the Charge including the right to sue Mr Razzaq on the Charge
Issue Four: Was Bexhill authorised by Barclays to act as its agent to sue Mr Razzaq for possession of the Property pursuant to the Charge,
Conclusion and Disposal
Lady Justice Black
Lord Justice Ward
Note 1 A “Qualifying Retail Financier” (“QRF”) is defined as a “wholly owned subsidiary of an insurance broker” that entered into a facility with Bexhill. A “Qualifying RF Loan” is defined as a properly documented loan made by a QRF to an “End Customer” (a) in accordance with the terms of the Qualifying RF Loan Criteria and (b) for the purposes of funding the premium of an insurance policy”. Mr Leonard submitted that RSA was not within the definition of QRF and that the Bexhill FA was not a “Bexhill Facility” within that definition. But those matters were not explored in detail before us. [Back] Note 2 As Mr Leonard pointed out, the Bexhill FA is not, in the traditional sense, a “factoring facility”, whereby A sells to B, the “factor,” the account receivables of A, in return for a lump sum, which will be a discounted amount of A’s total account receivables sold. [Back] Note 3 The definition of Receivables in the BBFA is: “…on any relevant date, the gross amount which is legally recoverable in respect of Qualifying Retail Financier Receivables pursuant to a Bexhill Facility [net of sums due to the QRF] on the assumption that such Bexhill Facility is voluntarily terminated by the QRF on such date…”. [Back] Note 4 “Relevant Contract” is defined as meaning “each of the Retail Financier Assignments and the Bexhill Facility Agreements as may be in existence from time to time”. [Back] Note 5 Notice of this “assignment” is given by Bexhill to RSA in clause 48 of the Bexhill FA and the letter in Schedule 2 of that agreement. There is a similar standard wording of a notice of assignment in Sch 2 of the Bexhill-Barclays Debenture. There is no separate “assignment” document between Bexhill and Barclays.
[Back] Note 6 This has the same definition as in the BBFA. [Back] Note 7 I think that this is intended to refer to clause 11.1.3 of the BB Debenture, quoted at [19] above. [Back] Note 8 “Assignments by [Bexhill]: as a continuing security for the payment of the Secured Obligations [Bexhill] hereby with full title guarantee, assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, titles, interests and benefits in the Receivables…” [Back] Note 9 Section 136(1) provides: “Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor…or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice – (a) the legal right to such debt or thing in action; (b) all legal and other remedies for the same; (c) the power to give a good discharge for the same without the concurrence of the assignor;…..”. It is not necessary to set out the proviso. [Back] Note 10 Tailby v Official Receiver (1888) 13 App Cas 523. See also Annangel Glory Compania Naviera SA v M Golodetz Ltd et al (The “Annangel Glory”) [1988] 1 Lloyd’s Rep 45 at 47-8, where this principle was applied to future sub-freights. [Back] Note 11 [1902] 2 KB 190 at 193. See also, eg. Court Line Ltd v Aktiebolaget Gotaverken (The “Halcyon the Great”) 1984 1 Lloyd’s Rep 283 at 288 per Staughton J. [Back] Note 12 A reference to section 25 of the Judicature Act 1873, the predecessor of section 136 of the LPA 1925, although the phrase “chose in action” in the former statute was changed to “thing in action” in the latter. [Back] Note 13 [1996] 2 BCLC 78 at 84 and 85. [Back] Note 14 Coakley v Argent Credit Corporation Plc and others: decision of 4 June 1998, unrep. [Back] Note 15 [2005] 2 AC 680 [Back] Note 17 5.1: “This Debenture shall be in addition to…any other security which [Barclays] may at any time hold for any of the Secured Obligations….”; 5.2 “This Debenture shall remain in full force and effect as a continuing security until [Barclays] shall have certified in writing that the Secured Obligations have been discharged in full”.
[Back] Note 18 Whether they will be legal assignments within section 136 LPA 1925 will depend on whether express notice in writing has been given to the debtor in each case. [Back] Note 20 (1880) 16 ChD 315, in particular at 315 per James LJ, 316-7 per Cotton LJ and 321 per Lush LJ. [Back] Note 21 [1980] 1 WLR 277, in particular the passages at 283-4 per Lord Wilberforce, at 293-4 per Lord Russell and at 299-301 per Lord Scarman. [Back] Note 22 [2001] 1 AC 518, particularly at 522-3 per Lord Clyde and 581 per Lord Millett. [Back]