Crooks v Newdigate Properties Ltd (formerly UPUK Ltd) and others

Property – Option to purchase – Finders’ fee – First defendant acquiring option to purchase property – Option being assigned to appellant – Defendants discharging liability in respect of judgment debt to claimant — Whether appellant assignee entitled to benefit of judgment debt – Appeal dismissedThe claimant (C) entered into an agreement with the first defendant company (UPUK) whereby UPUK agreed to pay a finders’ fee of £250,000 to C, subject to the acquisition and sale by UPUK of a property found by C. UPUK acquired an option to purchase the property and then assigned it to the second defendant company (NBT). C alleged that, by assigning the option to NBT, UPUK had acted in breach of contract and with a view to defeating his entitlement to the finders’ fee. The third, fourth and fifth defendants controlled UPUK and NBT and C alleged that they had procured the assignment. C brought claims against the five defendants for the same loss based on the same cause of action. The third defendant (the respondent) did not defend the claim and a default judgment was entered against him. The other defendants settled the claim by a consent order, which provided for the judgment against the respondent to be assigned to NBT. The benefit of the judgment against the respondent was later assigned to the fourth defendant (the appellant).The appellant subsequently appealed a declaration in the Birmingham District Registry that the respondent’s liability under the default judgment had been discharged in full by the payment to C by the other defendants pursuant to the consent order and therefore the judgment could not be enforced by the appellant as assignee.The respondent contended that his liability under the judgment had been discharged by the payments under the consent order; the other defendants could have asked for contributions under the Civil Liability (Contribution) Act 1978 but had failed to do so within the two-year time limit. The appellant argued that the payments made under the consent order were not in satisfaction of the claim against the defendants but were payments for the benefit of the assignment of the judgment debt to NBT and that the judgment debt had survived intact. Held: The appeal was dismissed.Although there was no release of the judgment by operation of law, the payments made pursuant to the consent order at least equalled the full amount of C’s claim and therefore extinguished the respondent’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. The appellant, as assignee of the judgment, was in no better position.The appellant’s argument to the contrary foundered on basic principles. The provision in the consent order for assignment of the judgment debt against the respondent was expressed to be conditional upon C receiving the total settlement sum. By the time of the assignment, the debt would already have been extinguished by the payments under the order and there was nothing for C to assign. Further, even if there were a debt to assign, the assignment of a debt did not change the character of the debt. The respondent remained liable after the assignment as he had been before, under a judgment in respect of a joint liability in tort. Payments by the other joint tortfeasors necessarily reduced or extinguished the respondent’s liability. The assignee in that respect 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 of the debtor to raise defences to enforcement arising out of the subject matter of the assignment. That included the right to require credit to be given for sums paid in or towards satisfaction of the underlying liability. That would be so even if the payments were made not only after the assignment but also after notice of the assignment had been given to the debtor. The creditor could not deprive the debtor of that right by an agreement with the assignee to which the debtor was not a party. Michael Pryor (instructed by Howes Percival LLP, of Leicester) appeared for the appellant; James Morgan (instructed by Berryman LLP) appeared for the respondent.Eileen O’Grady, barrister