Law of Assignments

1. Law of Assignments Assoc Prof Cameron Stewart

2. Last week… • Law vs Equity • Legal and Equitable estates • Equitable maxims • Equitable doctrines • Priority systems • Now onto ways of transferring interests

3. Legal and Equitable assignment • In the assignment of property, the nature of the assignment is important. A legal assignment gives the assignee a legal interest in that property. If it is an equitable assignment the assignee obtains an equitable interest in property. The nature of the assignee’s property right is crucial in the context of competing rights to that property

4. Rights and liabilities not capable of assignment • Somethings cannot be assigned at all • Public pay • An assignment of pay by the holder of a public office is prohibited on the basis that such pay is made to enable the office holder to maintain his or her office with decorum and propriety.

5. Rights and liabilities not capable of assignment Arbuthnov v Norton (1846) 4 Moore 219; (1846) 13 ER 474 Norton, a judge, assigned the equivalent of six months pay to which he was entitled to his legal personal representative upon death. The entitlement was assigned as security for an advance. The Privy Council ruled, after Norton’s death, that the assignment was valid. This was so because the pay that was assigned only fell due upon Norton’s death, that is, when Norton no longer held public office. Because the pay was not payable during his life, the assignment in no way diminished Norton’s ability to maintain the dignity of his office.

6. Rights and liabilities not capable of assignment Bare rights to litigate Bare rights to litigate include rights to sue in tort, rights to sue for unliquidated damages in contract and bare rights to sue in equity. None of these rights are rights of property and therefore they are not assignable. Debts and rights to sue for liquidated sums in contract are assignable because they are regarded as rights of property.

7. Rights and liabilities not capable of assignment Why? Encourage litigation Torts and crimes of barratry, champerty and maintenance

8. Rights and liabilities not capable of assignment The rule in Glegg v Bromley does not preclude the assignment of the verdict (future property) to which the assignor may become entitled as a result of the prosecution of litigation proceedings. In Glegg v Bromley at KB 475; All ER Rep 1140, the assignor assigned ‘all that interest, sum of money, or premises to which she is or may become entitled under or by virtue of any verdict, compromise, or agreement which she may obtain’ in relation to an action in tort

9. Rights and liabilities not capable of assignment Vaughan Williams LJ said: I know of no rule of law which prevents the assignment of the fruits of an action. Such an assignment does not give the assignee any right to interfere in the proceedings in the action. The assignee has no right to insist on the action being carried on … There is in my opinion nothing resembling maintenance or champerty in the deed of assignment.

10. Rights and liabilities not capable of assignment Exceptions to Glegg v Blomley If the assignee has a genuine commercial interest in taking the assignment of a bare right to litigate, then the assignment is valid

11. Rights and liabilities not capable of assignment Exceptions to Glegg v Blomley If there is an assignment of property with an incidental right to litigate it is valid. This is so because there is no assignment of a bare right to litigate, the right being incidental to a right of property. Accordingly, no issues of maintenance or champerty can arise. Thus, the right to rescind for undue influence in Dickinson v Burrell (1866) LR 1 Eq 337 was assignable because it was incidental to the real property assigned to the assignor.

12. Rights and liabilities not capable of assignment An assignment by an insured to an insurer of the insured’s right to sue, in consideration of a payment made by the insurer to the insured in satisfaction of a claim pursuant to an insurance policy between the insured and insurer, is valid. This stems from the insurer’s right of subrogation.

13. Rights and liabilities not capable of assignment • The benefit of a contract may be assigned before there is a breach of the contract. For a breach after assignment the assignee is entitled to sue irrespective of whether the claim is for liquidated or unliquidated damages

14. Assignments at law • Old system title • Torrens title • Goods

15. Assignments at law • Debts and other choses in action • ‘personal rights of property which can only be claimed or enforced by action, and not by taking physical possession’ • Torkington v Magee [1902] 2 KB 427 at 430

16. Section 12 of the Conveyancing Act stipulates: 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 chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees.

17. Section 12 1. There must be a clear intention to assign rather than a mere authorisation that the debtor or other person pay another.

18. Section 12 2. The assignment must be absolute and not by way of charge. The basic reason why the assignment must be absolute is to ensure that the debtor or other person is protected in that at all times he or she knows to whom payment must be made. Furthermore, the requirement that the assignment must be absolute enables the assignee to sue on the debt or chose in action in his or her name because an absolute assignment means that the assignor no longer has any interest at all in the debt or chose in action.

19. Section 12 In Durham Bros v Robertson [1898] 1 QB 765 there was an assignment of a book debt which was expressed to endure until money lent by the assignee to the assignor was repaid. Not an absolute assignment because it was conditional upon repayment

20. Section 12 Part of a debt or chose in action cannot be assigned pursuant to s 12. This is because the assignor still has an interest in the debt or chose in action and thus must be joined in any proceedings instituted against the debtor by the assignee. A part of a debt of chose in action can only be assigned in equity

21. Section 12 3. The assignment must be in writing signed by the assignor 4. Express notice in writing must be given to the debtor by either the assignor or assignee. There are no formal requirements as to the notice and it need not even state the date of the assignment. The importance of the notice is that the debtor be advised as to whom he or she must pay.

22. Things Section 12 can’t do 1. Future choses 2. Change priorities - An assignment under s 12 is subject to equities having priority over the rights of the assignee 3. Assign equitable interests????? Everett v Commissioner of Taxation (1980) 143 CLR 440

23. Assignments in equity • The assignment of future property • The rule in Holroyd v Marshall (1862) 10 HLC 191 at 211; (1862) 11 ER 999 at 1007 • Valuable consideration • Is the property present or future property?

24. Norman v Federal Commissioner of Taxation • Voluntary deed between a husband and wife whereby the husband purported to assign to the wife two items of property. First, there was interest on a loan, which the borrower was entitled to repay to the assignor at any time and without notice. Second, there were dividends on certain shares owned by the assignor. • Tax Com argues that voluntary hence ineffective • HC – both were future property

25. Norman v Federal Commissioner of Taxation • IS it the right to receive money (present property) or the money itself (future property)?

26. Shepherd v Commissioner of Taxation • Inventor was entitled to royalties in relation to the manufacture of castors. • By a voluntary deed he assigned ‘all [his] right title and interest in and to an amount equal to ninety per centum of the income which may accrue during a period of three years … from [the] royalties’.. • Tax Com says ineffective because its future property • HC says present property

27. Future or Present? • Everett v Commissioner of Taxation (1980) 143 CLR 440; 28 ALR 179 a taxpayer purported to assign a fraction of his share in a partnership together with the right to receive a corresponding share of partnership profits. The majority of the High Court of Australia held that the assignment involved present property.

28. Future or Present? • In Booth v Federal Commissioner of Taxation (1987) 164 CLR 159; 76 ALR 375 the High Court of Australia ruled that the assignment by a landlord of a percentage of the right to receive rent payable in respect of particular premises involved present property, holding that the assignment was analogous to the facts of Shepherd and not Norman

29. Description of the property • For a valid assignment of future property the property must be described with sufficient particularity to permit its identification when it comes into existence or into the possession of the assignor.

30. Assignment of future property and specific performance • This passage in Holroyd suggests that the assignment is not valid if, as at the date upon which the subject matter of the assignment comes into the hands of the assignor, the court would decline an order for specific performance of the contract to assign.

31. Assignment of future property and specific performance • If A, for valuable consideration agrees to assign future property to B, and consideration has been paid or executed by B, when A acquires property that falls within the description of that which A agreed to assign, equity determines that the property vests in B as soon as it is acquired by A and can be identified. There is no need for any further assurance by A or action to be taken by B • equity looks on that as done which ought to be done

32. Nature of the assignee’s right • What is the nature of the right? • If debt or similar to debt, if the assignor goes bankrupt and then discharged the debt is discharged? • Re Lind [1915] 2 Ch 345 • The practical implication of Re Lind is that an assignee of an expectancy taken as security for a loan has the right not to prove his or her debt in the assignor’s subsequent bankruptcy, and can simply rely on the security, in much the same way as an ordinary secured creditor can do upon the bankruptcy of a debtor

33. The equitable assignment of legal property • Assignment of legal property for consideration • If no requirement for writing then n assignment of legal property for consideration takes effect immediately the consideration is paid or executed • If there is a requirement for writing then doctrine of part performance

34. The voluntary assignment of legal property assignable at law • Milroy v Lord (1862) 4 De G F & J 264 at 274; (1862) 45 ER 1185 at 1189 • The first limb of Milroy v Lord: Corin v Patton (1990) 169 CLR 540 • The second limb of Milroy v Lord: Costin v Costin (1995) NSW Conv R 55-811

35. The voluntary assignment of legal property not assignable at law • If the legal property cannot be assigned at law the assignment will be effective in equity if the assignor has manifested an intention to make an immediate and irrevocable transfer • The principles set out in Milroy v Lord do not apply. Nor is consideration required

36. The equitable assignment of equitable property • The assignment of equitable property can only be achieved in equity. Because equitable property is not recognised at common law it cannot be the subject of a legal assignment. For a voluntary assignment of equitable property the assignment must be absolute. Apart from any statutory requirement of writing, all that is necessary for a valid equitable assignment is ‘a clear expression of an intention to make an immediate disposition’

37. Problem • Monica, aged 27, and Chandler, aged 26, were married five years ago. Three years ago they purchased, as joint tenants, a house under Torrens title. About a year ago their marriage began to break down. They decided to keep up the pretence of being married because a divorce would have damaged their respective careers. Six months ago Monica was diagnosed as having breast cancer.

38. One week ago Monica met with her brother Ross and told him that she wanted him to have her interest in the house she had purchased with Chandler. To effectuate this gift she handed Ross a duly executed Memorandum of Transfer transferring her interest in the house to Ross, together with a letter addressed to Ally, the solicitor in whose office the certificate of title was held. The letter directed Ally to release the title deed to Ross.

39. The next day Ross went to Ally’s office to collect the title deed but Ally refused to release it to Ross on the ground that she could not do so without also having a direction to that effect from Chandler. Ross left Ally’s office without the certificate of title. Before anything else was done in relation to this matter Monica was killed in a car accident. • Ross seeks your advice as to whether he is entitled to Monica’s interest in the house.

40. Answer • The issue raised by this problem is whether the transaction between Monica and Ross amounted to an effective equitable assignment of the property to Ross. If it did the assignment would have severed the joint tenancy between Monica and Chandler with the result that Chandler would not have inherited Monica’s interest in the property on her death pursuant to the principle of survivorship. At her death Monica would have held her interest in the property as trustee for Ross. If the transaction was not an effective equitable assignment of the property, Monica would have died holding her interest in the property as joint tenant with Chandler who would inherit her interest pursuant to the principle of survivorship.

41. Answer • Given that Monica sought to assign her legal interest in the property to Ross for no consideration, the question of whether it was assigned in equity invokes the principles in Milroy v Lord (1862) 4 De G F & J 264 at 274; (1862) 45 ER 1185 at 1189 where it was held that such an assignment would be valid in equity only if Monica had done all that was necessary to be done in order to render the assignment binding upon her: see [4.6.7]. It should be noted that there has been no legal assignment of the property because the transfer document has not been registered: see [4.3.4].

42. Answer • On the basis of the High Court decision in Corin v Patton (1990) 169 CLR 540; 92 ALR 1, or in Queensland pursuant to s 200 of the Property Law Act 1974 (Qld), the principles in Milroy v Lord mean that Monica would have assigned her interest in the property to Ross if (i) she had performed those acts towards a legal assignment of the property which she and she alone could perform and (ii) whether the gift to Ross was beyond recall by Monica: see [4.6.9]–[4.6.12]. Monica’s actions satisfy the first of these requirements

43. Answer • However, Ally’s refusal to hand over the title deed to Ross without Chandler’s consent means that the gift to Ross was not beyond Monica’s recall. In Costin v Costin (1995) NSW Conv R 55–811 the New South Wales Court of Appeal held that a refusal by a solicitor such as Ally to hand over the title deed meant that an assignment such as Monica’s would be ineffective in equity :see [4.6.13].. On the basis of this decision Monica would not have assigned her interest in the land to Ross with the result that Chandler inherits the property pursuant to the principle of survivorship.