Stopjoin Projects Ltd v Balfour Beatty Engineering Services (HY) Ltd

THE JUDGE: This is an application by the first defendant Balfour Beatty Engineering Services (HY) Limited, which I shall refer to as “Balfour Beatty”, to strike out the claim against it or obtain summary judgment on the claim in its favour on the ground that the claim stands no real prospect of success.

second defendant Brunel Control Systems Limited, who I shall refer to as “Brunel”, The claim is to recover sums alleged to be due and owing from Balfour Beatty to the under two construction subcontracts, under which Balfour Beatty, under its former name of Haden Young Limited, was the employer and Brunel was the subcontractor.

and commissioning of automatic control systems in works which were being carried The first subcontract was for the manufacture, supply, delivery, installation, testing out to six schools or educational establishments in or around Exeter. It has been D referred to in this application as the “Exeter schools contract”. The second subcontract was for broadly similar work in connection with works being carried out to premises in Portwall Lane in Bristol and I shall refer to that as the “Portwall Lane contract”.

The Exeter schools contract was concluded in February 2005. The contract sum was

£540,000. The contract sum of the Portwall Lane contract was £252,150. There is a dispute as to precisely when and how this contract came into being. It is common

not in fact produced until sometime in January 2007, record that it was agreed that the subcontract documentation for the Portwall Lane contract would include Haden Young’s Standard Conditions of Subcontract and, amongst other documents, a copy of the Minutes of the interview on 21^st November 2006. The Minutes also stated:

Articles of Agreement does any contract exist between our companies.”

Brunel started work on the Portwall Lane contract in December 2006. The Minutes of the post-tender interview were signed by the parties in or around January 2007 as being an accurate record of what was agreed at that meeting. Therefore, it is clear that

tender interview. Brunel also started work long before countersigning the Articles of Agreement.

Balfour Beatty says that the Portwall Lane contract was concluded at the post-tender interview meeting or, at the latest, shortly thereafter when work commenced. Balfour Beatty’s case is that the contract incorporated its Standard Conditions of Subcontract

Balfour Beatty strongly disputes that any sums are due under either contract. Its case is that Brunel failed properly to complete either subcontract and that some of its work was defective. Balfour Beatty alleges that the true position is that there is a balance owing from Brunel to Balfour Beatty of £10,767 in respect of the Exeter schools contract and £53,576 under the Portwall Lane contract, plus a further sum of £40,000 E relating to an additional alleged defect in the work under the Portwall Lane contract which was not discovered until May 2012.

Balfour Beatty makes no counterclaim for these sums because Brunel went into voluntary liquidation in August 2008 and has no money. Brunel has been joined by the claimant as second defendant in order to support the trust claim. The trust claim is

For the purposes of the present application only, I shall assume that there are, indeed, sums due from Balfour Beatty to Brunel in respect of both contracts rather than vice versa.

The first defendant’s application notice seeks striking out under rule 3.4 of the Civil Procedure Rules on various bases, including abuse of process (see CPR 3.4(2)(b)) and on the ground that the claim is “totally without merit” (CPR 3.4(6)). Balfour Beatty also invoke the inherent jurisdiction of the court. I agree with Mr Kearney, who appeared as counsel on behalf of the claimant, that the only real basis for the H application is that contained in CPR rule 3.4(2)(a): viz that there is “no reasonable grounds for bringing the claim”. Balfour Beatty relies on abuse of process as a ground only in order to emphasise that it considers both bases upon which the claimant asserts title to sue (as an assignee or as beneficiary of an implied trust) are hopeless.

agreement with the claimant under which it obtained a loan from the claimant of Mr Britton says that, on 1 £400,000 in return for assigning to the claimant its fixed assets and receivables i.e. book debts, under a deed of general assignment of the same date. That agreement was superseded by a second loan facility agreement of £500,000 which was concluded on

continued to experience financial difficulties and these continued into 2007 when the Portwall Lane contract was being undertaken. There is more than a hint in the

15.What is a matter of record is that in or around early June 2007, Dun & Bradstreet, the well-known credit rating agency, downgraded Brunel’s credit rating. This caused Haden Young to be concerned that Brunel might be unable to complete the Portwall Lane contract. There was a meeting on 6^th June 2007 between representatives of

the Portwall Lane contract documents or, as the letter puts it, “Advise any items unacceptable to you.”

Brunel signed and returned the Articles of Agreement in respect of the Portwall Lane contract under cover of a letter from Mr Britton dated 8^th August 2007. The letter of 8^th August said as follows:

“We enclose your copy of the signed documents which you require to allow payments to be made in accordance with our agreement. We understand that monies are being withheld on our claims for payment until such time as these documents are received. Please ensure all withheld monies are now released.

We have noticed certain items within the contract that we do not accept and have noted these within the signed contract. We must advise that all debts owed to Brunel Control Systems Limited have already been assigned to

regard to Brunel’s financial position as reported at Dunn & Bradstreet.” with a much higher level of protection, considering your concerns with

Haden Young’s Standard Conditions of Subcontract, which the parties agree were incorporated without modification into to the Exeter schools contract, contained the following material provisions. Clause 2.3 stated:

“No variation of or substitution for these conditions shall be binding on the contractor unless agreed in writing by the contractor.” Clause 7.1 provided:

(1) The subcontractor shall not without the prior written consent of the contractor wholly or partly assign this subcontract or any benefit or interest hereunder and shall not without the written consent of the contractor sublet any portion of the subcontract works. Such consent shall not relieve the subcontractor from his obligations under the subcontract and he shall remain fully liable for the proper execution of the subcontract works.

The subcontractor shall not assign either absolutely or by way of charge any sum which is or may become due and payable to him under this subcontract without the prior written consent of an officer of the contractor.”

On the copy of the Articles of Agreement which accompanied Mr Britton’s letter to Haden Young of 8^th August 2007, two annotations were made in manuscript. They concerned clause 15(2) and clause 7. In clause 15(2) Mr Britton had deleted the figure of 2.5 percent and substituted in manuscript the figure of 0 percent. He did so because

The second annotation, at the top of clause 7, was the insertion of the words “See cover letter”. The claimant invites the court to interpret that second annotation as saying, in effect, that Brunel could not enter into a contract with Haden Young for the Portwall Lane works which incorporated Haden Young’s Standard Conditions of Subcontract if clause 7 was retained because, as the covering letter said, the sums due to Brunel under that contract had already been assigned to the claimant and thus prior

the assignment which Brunel had already agreed with the claimant. It seems clear to me that, on any view, Brunel’s letter to Haden Young of 8^th August was a counter-

The response from Haden Young was a letter dated 21^st August 2007. It will help if I quote most of the contents of that letter:

“Thank you for your letter dated 8^th August 2007 enclosing an engrossed copy of the subcontract document to which you have added a number of unilateral amendments regarding your price and a handwritten annotation against clause 7 of the conditions. As a consequence to (sic) those amendments, payment terms will be 60 days rather than 35 days as previously discussed.

Your letter also refers to ‘… signed documents to allow payments to be

work been assigned to Stopjoin. They are Brunel Control Systems’ bankers and, therefore, are only interested in your performance over your payment

contract in a number of areas.

There the correspondence between the parties ended. Brunel continued with the Portwall Lane contract and did not leave site until May 2008.

under which the claimant agreed to provide Brunel with what I understand to be an In the meantime, the claimant and Brunel entered into a new loan facility agreement unlimited sterling overdraft facility with which to support its business. That new facility agreement was entered into on 8^th February 2008. A further deed of general

2008assignment was sent to or received by Haden Young. I shall assume for the purposes . Again, there is a dispute as to whether this, or any, notice of the February 2008

₂7.In the particulars of claim in the action, the claimant relies only on the February 2008 assignment in support of its claim. A day or so before the hearing, the claimant served in draft an amended particulars of claim. I agreed to hear the argument today on the footing that the proposed amendments had been allowed, without actually deciding whether permission to amend ought to be given and, if so, on what terms. In the

number of matters concerning the scope of the works and the subcontract price Mr Kearney submits that, after the post-tender interview on 21^st November 2006, a remained to be decided. The parties had, however, expressly agreed at the D 21^st November meeting that no contract would exist until an official order number had been issued by Haden Young, and Brunel had countersigned the Articles of

when the contract documents were finalised and the Articles of Agreement produced. Mr Kearney submits that operating in that way created no difficulty since,

Agreement were countersigned by Brunel on or about 8was no contract between the parties for the Portwall Lane works before the Articles of ^th August 2007. At that point,

When the Articles of Agreement were returned to Haden Young with Brunel’s signature on them, they contained two amendments made by Brunel. Mr Kearney G submits that the correct analysis of the correspondence which ensued and the conduct of the parties thereafter is that Haden Young accepted the explanation which was given by Brunel in its letter of 28^th August of the involvement of the claimant as assignee of Brunel’s book debts and that the contract which came into being at that point or shortly thereafter was a contract on Haden Young’s Standard Conditions of Subcontract

Alternatively, Mr Kearney submits that Haden Young by its conduct represented that it would not enforce clause 7 in respect of the assignment that Brunel had made to the claimant and, by waiver or estoppel, is now precluded from relying on clause 7 as an answer to the claimant’s claim as assignee of sums due under the Portwall Lane contract. As a second fall-back argument, Mr Kearney submits that if Haden Young

Balfour Beatty’s response to those submissions can be summarised in the following propositions:

If that is right, any modification of that contract, so as to delete clause 7, would have had to have been a variation of the contract terms. Variations were required by clause 2(3) to be agreed by Haden Young in writing. There was no F such agreement in writing. The correspondence between the parties did not amount to a written variation of the contract so as to delete clause 7 from it.

34. continuing status of the claimant as assignee since prior to August 2007, Mr Kearney Recognising this difficulty and that, in truth, the claimant’s case rests on the

complete the Portwall Lane contract, the contract did not include clause 7. Alternatively, Haden Young represented that it would not object to the assignment to the claimant which had already been made in 2006. The February 2008 assignment is relevant to the claimant’s title to sue in respect of the sums due under the Portwall Lane contract only because it did in fact supersede the October 2006 assignment.

36.Assuming for the purposes of argument that the proposed re-amendment of paragraph 26 of the particulars of claim would be allowed, Mr McCall’s chronology point falls away.

My conclusions on the remaining arguments about the assignment are as follows. The first question is whether the claimant stands a real prospect of establishing at trial that

no contract incorporating Haden Young’s Standard Conditions of Subcontract came into existence between Haden Young and Brunel any time before 8^th August 2007. If such a contract did come into existence before August 2007, nothing which passed between the parties in August 2007 amounted in my judgment to a variation of that contract so as to delete clause 7 or to modify it so as not to apply to the assignment which had already been made.

I regard the claimant’s argument that there was no contractual nexus based on Haden Young’s Standard Conditions at any time prior to 8^th August 2007 as thin, but just crossing the threshold of a real prospect of success. On the face of it, there is a strong case for saying that the parties cannot have intended that countersignature of the Articles of Agreement, which had been incorporated into several previous subcontracts between them, should hold up the creation of any contract in respect of the Portwall Lane works for as long as nine months after those works had started. All the present indications are that the parties were treating each other as contractually bound prior to August 2007. However, Mr Kearney is right that disclosure might shed more light on

I think that the letter of 8If there was no contract before Mr Britton wrote to Haden Young on 8^th August represented a counter-offer from Brunel and that this counter-offer was itself not accepted by Haden Young in its reply letter of ^st August. The letter of 21^st August from Haden Young represented a second counter-offer, both in relation to the deletion of the 2.5 percent main contractor’s 21 D discount and the permitting of the assignment. Whether there was agreement over deletion of the main contractor’s discount depends on Brunel’s conduct after August 2007. I have been referred to some evidence which suggests that the 2.5 percent main contractor’s discount was deleted from all payments made to Brunel after August 2007 and that the sums withheld in respect of the discount in payments made to Brunel between December 2006 and August 2007 were reimbursed to Brunel. Nevertheless, I E do not need to form a view as to whether Haden Young’s Standard Conditions of Subcontract were varied so as to delete the 2.5 percent main contractor’s discount. Whether the exchanges between the parties in August 2007 amounted to a representation by Haden Young that the anti-assignment provision in clause 7 would not be applied to the assignment in favour of the claimant in 2006 depends on how Haden Young reacted to the explanation of the claimant’s role given in Mr Britton’s F letter of 28^th August.

subcontract without saying or doing anything more than was said in the letter of 21In my judgment, Haden Young’s conduct in allowing Brunel to complete the ^st

indicate that Haden Young had consented to the assignment. No payments under the subcontract were made by Haden Young to the claimant. There was no communication between Haden Young and the claimant. Nothing was said by Haden Young to show that it acknowledged that the claimant was legally or beneficially circumstances, I consider that the claimant stands no real prospect of proving the entitled to any payments due to Brunel under the Portwall Lane contract. In those

waiver or estoppel on which it relies.

That leaves Mr Kearney’s fall-back argument that if no contract had come into being by 8^th August 2007, the correspondence between 8^th and 28^th August reflects a consensus about the subcontract terms, except clause 7 and the main contractor’s discount in clause 15(2). Thus a contract was concluded at that point: but without either of those provisions being incorporated. This argument relies upon the absence of consent by Brunel to clause 7, even if there was no representation by Haden Young that it would not enforce that clause. It asserts a contract based on the lowest common denominator. However, it is an argument which in my view gives insufficient weight to the content of the parties’ written exchanges. Brunel had acknowledged that the subcontract should include Haden Young’s Standard Conditions of Subcontract because it had countersigned and returned them. It had proposed two amendments. In reply, Haden Young had insisted on clause 7 by pointing out that the assignment was a

The claimant’s case is that clause 7 is no defence to a claim based upon an implied trust. In the claimant’s submission, a clause against the assignment of property does

Brunel, refuses or is unable to sue in his own name on behalf of the beneficiary, the beneficiary, here the claimant, may be allowed to sue the debtor himself by the device

was the decision of the Court of Appeal in Mr Kearney relied upon the following authorities in support of his argument. The first In Re Turcan[1889] 40 Ch D 5. That case

concerned a marriage settlement by Mr Turcan under which he covenanted to settle his entire estate and any interest in after-acquired property on certain trusts. After making the covenant, he took out certain insurance policies which, by their express terms, were not assignable. Mr Turcan was drowned in an accident and the proceeds of the insurance policies were paid to his executor. The first question the Court had to decide was whether the policy proceeds were covered by the covenant in the marriage

settlement. The Court of Appeal held that they were. The second question was whether the clause against assignment in the policies was an impediment to enforcing the covenant in respect of the policy proceeds. The Court of Appeal held that it was not. The reason for this part of the decision appears in the judgment of Cotton LJ at pages 10 to 11 of the report. He held that since Mr Turcan could in his lifetime have

That an implied declaration of trust is the rationale of the decision in In Re Turcan is clear from the explanation of that case given by Morritt LJ in paragraph 26 of his judgment in Don King Productions Inc. v Warren & Others[2000] Ch 291. This was the second of the cases on which Mr Kearney relied. It concerned an agreement

endeavoured to achieve that transfer by an agreement in September 1994 (“the first agreement”, clause 6.1 of which provided as follows:

and radio contracts absolutely. Such contracts shall be assigned to the partnership free and clear of any and all liens or encumbrances and, save as expressly provided herein, free of charge and without any recourse

transfer which the parties had desired for two reasons. The first was that it was legally impossible to assign the burden of the contracts. The second was that the contracts

Lightman J held, and the Court of Appeal agreed, that the two agreements reflected an H intention on the part of the parties to confer a beneficial interest in the relevant contracts on the new partnership. Morritt LJ, delivering the leading judgment in the Court of Appeal as to the effect of the two agreements, said at paragraph 30:

“In my view, the conclusion is ... largely dictated by the chronology. There can be no doubt that it was the intention of the parties, as demonstrated by clause 6.1 of the first agreement that the full benefit of the management and promotional agreements between Mr Warren (or his corporate vehicle) and a European registered boxer existing on 16^th September 1994 should be partnership property. Such an intention is reflected in the provisions of clause 7.1, which assume that the full benefit of such agreements is an asset of the partnership to be distributed in specie to Mr Warren. ... Given the terms of clause 6.1 of the first agreement and the legal inability of Mr Warren to assign the benefit of the agreement to the partners jointly, a trust within clause 1 was the only way the evident intention of the partners could

I interpret the “manifest intention” to which Morritt LJ there refers not as being an

Ltd & AnorThe next case to which Mr Kearney referred was [2005] EWCA Civ 646. Hesco Bastion was a company that manufactured Explora Group plc v Hesco Bastion

gabions, which had some use in military engineering. It had a marketing agent called TTF. TTF had succeeded in promoting the Hesco business by obtaining advertising for Hesco in a United States Armed Forces procurement catalogue. This had generated sales. Shortly before it went into liquidation, TTF entered into an agreement (“the CSA agreement”) with a phoenix company called Explora Group Plc. Under the CSA agreement, TTF purported to sell to Explora the benefit, subject always to the burdens, E of all its agency contracts with Hesco. Explora, as assignee of TTF, then sued Hesco for TTF’s entitlement to commission under the agency contracts. However, there was a prohibition on assignment in at least one of the agency agreements (“the 1995 agency agreement”) covered by the assignment in the CSA agreement.

Before Simon J, at first instance, it was argued that the anti-assignment provision in

In the Court of Appeal, the leading judgment was delivered by Rix LJ. He first referred to the argument about the effect of the prohibition on assignment in the 1995

Rix LJ then dealt with the issue as issue 8(b) in the section of his judgment which begins at paragraph 98. Rix LJ defined issue 8(b) in the following terms: “what if the C paragraph 104: right was assigned but was not assignable?” He gave the following answer at

judgment, he complained that he had not had an adequate opportunity to deal with the A problem then arose because, when Mr Strauss QC, counsel for Hesco, saw the draft point addressed in paragraph 104 and indicated the further points he would have wanted to make. In consequence Rix LJ added paragraphs 105 to 109 to his draft judgment, in which he dismissed Mr Strauss’ further submissions as to why the F prohibited assignment could not take effect as a trust in favour of Explora. At

Strauss asked the court to reconsider this issue 8(b) on the ground that At the time appointed for the hand-down of these judgments, Mr during his oral reply the court had indicated that it did not need to hear him G further in relation to it. He says – and I accept - that he would have wished to make further submissions not found in his written submissions, to the effect that, even if the right to commission was assigned, nevertheless there was no intention to create a trust in favour of Explora. His essential additional argument was to rely on a paragraph within the definition of Transferred Assets within clause 1 of the CSA, not otherwise cited to the

Mr Strauss relied on the words beginning ‘and any asset the transfer [etc] of… which… would or might cause or occasion a breach of third party rights’. He submitted that any assets whose assignment was even arguably contrary to a covenant against assignment were within these words as involving at least a possible breach of ‘third party rights’. He also submitted that consistently with this view, paragraph 9 of Schedule 1 to the CSA,

107relevant, if at all, to issue 8(a) rather than issue 8(b). If the debts in question . It seems to me that this is a bad point. First, it is a point which is

attempting to say that there simply had been no transfer in the first place. That illustrates the danger of allowing a party to seek the exceptional jurisdiction to reopen argument after a draft judgment has been distributed to the parties. Secondly, the clause is in my judgment dealing with assets in which third parties have an interest, not with a covenant against assignment.

1041995 above, that TTF holds any post 30 April 2002 book debts under the agency agreement in trust for Explora, was not supported by any

prohibition against assignment merely by joining the assignor/trustee. The court will be hesitant (see also Hayim v. Citibank NA[1987] AC 730 at 748F). However, in this case TTF has been a party to this action from the start, but was joined on terms that it wished to play no part in it: TTF plainly did not wish to make any claim in its own name. The points on non-assignability and intention to create a trust points were equally plainly on the H pleadings, but that did not tempt TTF to show any interest in the relevant claims.

That has been confirmed in the period since the distribution of our draft judgments. They have been copied by our direction to both the administrative receivers and to the liquidators of TTF, who have been expressly requested by Explora to enforce the post 30 April 2002 claim under the 1995 agency agreement (which we are informed is worth about £50,000). The liquidators have ignored the request, and the receivers, who have instructed Mr James Potts to appear on their behalf at the adjourned hearing at which Mr Strauss has asked us to reconsider our judgments, have through him made it expressly clear that they make no claim to commission under the 1995 agency agreement and accept that this claim belongs to Explora. In the circumstances, the suggestion that this court should leave this claim in some black hole is, as Mr Strauss himself accepts, wholly

The last of the cases on which Mr Kearney relied is Barbados Trust Company Ltd vBank of Zambia & Anor [2007] 1 Lloyd’s Rep 495. The facts in that case are that the

At all material times between 1992 and 1999 there was a single creditor recorded as holding all of the assets arising under the Oil Import Facility. That creditor sold its

The claim by Barbados Trust as an assignee failed before Langley J at first instance and failed on appeal (Rix and Hooper LJJ, Waller LJ dissenting), because the Court on

avoid the consequences of an assignment that was possibly ineffective by virtue of the The case is therefore one in which an express declaration of trust was made in order to anti-assignment clause in the Oil Import Facility. However, the judgments of Waller LJ and Rix LJ are instructive as to the circumstances in which, in a commercial

46. What then should be the attitude of the court? In that regard one should

in which the Vandepitte procedure should be available in normal circumstances.

That brings me to the final question, which is whether, if as I am now assuming, article 12 contains some prohibition on alienability, what attitude

On the question whether the prohibited assignment could take effect as a declaration of trust, Rix LJ said this, at paragraphs 87-89 of his judgment:

“87.

My conclusions under this issue are as follows. The fact that a

The ineffectiveness of the assignment in breach of a prohibition on assignment is understandable. It is not merely a matter of contract but of property. Although the would-be assignor has legal title to property in the

the property is held, to transfer that property so as to entitle the transferee to form of a chose in action, he lacks the power, because of the terms on which

89. There is, however, nothing in article 12.01(A) to suggest that the limitations on assignment go as far as preventing the contract between would-be assignor and assignee taking effect as between those two as a declaration of trust, and between them.” a fortiori nothing to prevent a personal contract

57.There being an express declaration of trust in that case, Rix LJ went on in paragraphs 98 and following of his judgment under “Issue 5” to consider whether it was appropriate that the Vandepitte procedure should be utilised by Barbados Trust. He

“The courts will .... be astute to disallow use of the procedural short-cut sanctioned in the Vandepitte case in a commercial context where it has no

of the Barbados Trust CompanyVandepitte procedure would have been inappropriate in the circumstances of the case. His answer to that question was “No” because (i) there

59.Rix LJ considered hypothetical situations where, in his view, the implication of a trust and use of the Vandepitte procedure would be justified. One example he gave was that of factored invoices. At paragraph 118 of his judgment he said:

A closely related example is that of factored invoices. A nonassignment clause will create difficulties for the factoring company.

However, it would be highly undesirable if customers could totally prevent their suppliers from factoring their book debts by the device of a non-

For these reasons, if I had decided issue (1) in favour of finding that BoA had a good legal title to the debt, I would, on balance, have been in favour of saying that, on the facts of this case as far as they appear and on the submissions we have heard, the Vandepitte procedure could be used to G recover into BoA’s possession, for the benefit of BT, a debt which on that hypothesis would have been an acknowledged debt owned by BoA. As it is, I do not have to make a final decision on this ultimate issue. That is perhaps just as well, as the argument on appeal has both far outstripped the evidence with which the parties had come to court in the first place and at the same time failed to focus on the particular facts before the court. Thus we know H little about the real considerations which have affected the relationships in this case. Moreover, there was no immediate relationship between BoA and BT to support the declaration of trust, which does not arise out of a failed assignment directly between BoA and BT. It might therefore have been said that that declaration was merely a device to bring before the court, at the instance of BT, a claim which BoA would otherwise have allowed to

I have quoted at some length from the judgments in the Barbados Trust Company case because of the arguments advanced by Mr McCall in saying that the claimant’s implied trust basis of claim stood no real prospect of success. Whereas Mr Kearney submitted that the implication of a trust to remedy the consequences of the failed assignment was the just solution, Mr McCall strongly contested that analysis. He went so far as to submit that reliance on the concept of trust in the present case was “an

Mr McCall emphasised that, unlike the Barbados Trust Company, the claimant here

that the deed of general assignment of October 2006 constituted or should be held to cannot rely on an express declaration of trust in its favour. The claimant’s argument is

of Sir George Jessel MR in the well-known case of Richards v Delbridge[1874] LR 18 Eq 11. Mr McCall submitted that the deeds of general assignment executed by Brunel did not evidence any such intention. Whether one looked at the deed of

Mr McCall contrasted the wording of the agreements in the Don King Productionscase. Both agreements had provided for the parties to transfer the benefit of the

management and promotional contracts to the partnership. The second agreement had expressly directed the parties to “hold all licences and promotional and management

have known, when they entered into the agreements, that the management and promotional contracts were not assignable. Mr McCall pointed out that there was no evidence that Brunel or the claimant appreciated that any of the book debts which were the subject matter of the assignments in September and October 2006 and February

they were created.

Mr McCall relied also on the reservation expressed by Lightman LJ in the Don KingProductions case about using the Vandepitte procedure as a shortcut in a commercial context – a reservation which he says was shared by Morritt LJ in that case in the Court of Appeal. Mr McCall submitted that using the Vandepitte procedure as a shortcut is precisely what the claimant is seeking to do by suing in its own name and joining Brunel as second defendant in the present case. He relied upon the concluding remarks in paragraph 119 of Rix LJ’s judgment in Explora Group plc v Hesco Bastion to the effect that, if the express declaration of trust (or an implied trust) was being used merely as a device to bring before the court a claim which would otherwise have been allowed to lapse by expiration of time, equity would probably not enforce the trust. This is exactly, says Mr McCall, how the Vandepitte procedure is being used in the present case because, if this action had not been commenced by the claimant when it was commenced, Brunel’s claim to be paid the sums allegedly due under the two

device of a trust. That would run flatly contrary to the judgment of Sir George Jessel MR in Richards v Delbridge. However, I accept Mr Kearney’s submission that in the

purported to make a transfer by way of gift which has failed.

The trust argument in this case rests on whether the claimant has a real prospect of persuading the court at trial to imply a trust on the ground that the deemed intention of

assignment failed.

The claimant will encounter some difficulties in advancing that argument. First, the wording of the assignment is one of absolute transfer of all interest and benefit and is not redolent of trust wording in the same way as the wording of the two agreements in the Don King Productionscase. On the other hand, the wording is not so very different from that of the CSA Agreement between TTF and Explora in Explora Groupplc v Hesco Bastion.

Second, the claimant cannot say that when the assignments were made, it and/or Brunel knew or appreciated that there might be a problem with assignment of the book debts in question because of the provision requiring Haden Young’s prior consent in the contracts under which those book debts arose. In the assignment dated February 2008, there was an express warranty by Brunel that the debts were assignable.

Notwithstanding these difficulties, I do not think that the trust argument stands no real prospect of success. I am not persuaded that it is being relied upon as a device to bring before the court a claim which would otherwise be time barred. Rix LJ was led to make the observation that he did in paragraph 119 of his judgment in the BarbadosTrust Company case because, as he pointed out, there was no immediate relationship

between the Bank of America and the Barbados Trust Company to support the express declaration of trust. There had been a number of intervening assignments and there

before the first of the assignments which is relied upon as giving rise to the declaration schools contract. Brunel had been receiving financial support from the claimant long

The position in this case is quite close to that in Explora Group plc v Hesco Bastion. In that case, as in this, the liquidator stands in the shoes of the assignor and is the putative trustee. He has shown no interest in asserting a claim to recover sums due under the subcontracts with Haden Young, notwithstanding that the company in

For these reasons, I am unable to conclude that the trust argument is one which stands no real prospect of success. Far from it being an opportunistic attempt at a shortcut, it seems to me that it is fairly arguable.

Accordingly, my conclusion is that the claim based upon the assignment in respect of the Portwall Lane contract should be struck out or that summary judgment should be given to Balfour Beatty in respect of it, but that Balfour Beatty’s application in respect C of the claims under both contracts based upon an implied declaration of trust must be dismissed.