Absolute assignment not purporting to be by way of a charge

Introduction

1.   The effect of assignment has far reaching consequences, especially in relation to a party’s right, be it the assignor or assignee, to bring an action in respect of the assigned rights. There are a plethora of cases whereby the assignor’s case had been struck out for the lack of locus standi due to the rights having already been assigned to a third party assignee, and also whereby the assignee’s case had been struck out for the lack of locus standi due to its failure to join the assignor as a party to the proceedings.

2.   By and large, this conundrum is brought about by the statutory effect of section 4(3) Civil Law Act 1956. To bring matters to clarity, a short trip down the historical development of the law on assignment is required.

Development of the law

3.   Chitty LJ in Durham Brothers v Robertson succinctly stated the position of the common law on assignment prior to section 23(6) Judicature Act 1873 (the equivalent of our section 4(3) Civil Law Act 1956) in the following manner:-

“...As is well known, an ordinary debt or chose in action before the Judicature Act 1873 was not assignable so as to pass the right of action at law, but it was assignable so as to pass the right to sue in equity. In his suit in equity the assignee of a debt, even where the assignment was absolute on the face of it, had to make his assignor, the original creditor, party in order primarily to bind him and prevent his suing at law, and also to allow him to dispute the assignment if he thought fit. This was a fortiori the case where the assignment was by way of security, or by way of charge only because the assignor had a right to redeem. Further, the assignee could not give a valid discharge for the debt to the original debtor unless expressly empowered so to do.

...Now it was in order to afford some remedy for this state of the law that subsection 6 of section 23 was passed.

Two matters, as is apparent on the face of it, had to be regarded: first, the simplifying the remedy in favour of the assignee; and, secondly, the protection of the original debtor.”

4.   Therefore, prior to the enactment of section 4(3) of the Civil Law Act 1956, an assignment only confers an equitable right to the assignee and never a legal right.  Since the legal right remains with the assignor, only the assignor had the right to sue.

Suspension of works and the obligation to proceed regularly and diligently

1. Almost invariably, all modern construction contacts would contain a term which requires the contractor to proceed regularly and diligently with the works. Prima facie, this is a statement of the obvious, but this seemingly harmless provision had nonetheless caused much ink to be spilt on its jurisprudence.

2. The often quoted English Court of Appeal case of West Faulkner v London Borough of Newham (1994) 71 BLR 1 aptly defined that the obligation to proceed regularly and diligently was:

“... essentially to proceed continuously, industriously and efficiently with appropriate physical resources so as to progress the works steadily towards completion substantially in accordance with the contractual requirements as to time, sequence and quality of work.”

3. The resultant effect is that without an express provision under the construction contract, the contractor is not allowed to suspend work or ‘slow down’ its progress even if there are breaches of obligations on the part of the Employer. In Canterbury Pipelines v Christ Church Drainage [1979] 16 BLR 76 it was held as follows:

“ ... Apart from suing for interim payments, or requiring arbitration where that is provided for ,the remedy – and apparently the only remedy – which the contractor is recognised as having at common law is rescission if a sufficiently serious breach has occurred. If he chooses not to rescind, his own obligations continue. He is bound to go on with the work. All the available English and Commonwealth textbooks on building contracts state the law consistently with this view ..."