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At a recent trial in Liverpool County Court for an invoice finance client the Court heard the following substantive legal issues:
D relied on the case of Van Lynn Developments v. Pelias Construction Co. Ltd [1969] 1 Q.B. 607 in support of its argument regarding the validity of the notice of assignment but the Court agreed with C that it was the polar opposite of what Counsel for D had asserted.
The Judge found that it was abundantly clear that the assertion made by Counsel for D during her submissions, namely that C’s letter giving notice of assignment was defective and invalid because it did not state the date of the assignment, was fundamentally wrong in law.
For the same reasons, the assertions that’s C’s solicitor’s Letter Before Claim did not amount to a valid notice of assignment were equally flawed. To reiterate the words of Widgery, LJ in Van Lynn Developments v. Pelias Construction Co. Ltd:
“It is clearly necessary that the debtor should be given information which tells him that an assignment has been made, which identifies the debt, and which sufficiently identifies the assignee. I see no reason at all why other and irrelevant information should be required as a feature of the notice.”
Accordingly, the Judge was persuaded by counsel for C that, upon more detailed consideration, the case of Van Lynn Developments v. Pelias Construction Co. Ltd does not support D’s argument.
The Judge agreed that the notice sufficiently identified the nature of the assignment, including the fact of the assignment, the debt concerned and the parties and complied with section 136 LPA 1925 and that the date of the assignment is not essential to its validity.
D also tried to argue that it had not received the notice of assignment relied upon by but the Judge was not convinced.
He heard evidence that the notice was delivered by C on 26 April 2019, that it was issued automatically upon the take-on of C’s client and was not returned by Royal Mail.
On the balance of probability, he found that the notice was served on D.
His finding was fortified by the fact that each of the invoices issued by C’s client also provided notice of the assignment. There was no compelling evidence that D was confused about who to pay.
D argued that the invoices had not been legally assigned because there was no contract with C to allow the alleged assignment and no terms and conditions within the invoices to allow for it.
The Judge found nothing to suggest such a contract and/or terms and conditions are necessary for an assignment to be enforceable.
D also sought in written submissions to introduce an entirely new issue that the purported assignment cannot assign future debts because an assignment only transfers existing rights and does not create new ones.
The Judge found that counsel for D was attempting to shoehorn in this argument on the basis that the Notice of Assignment is invalid because it gives notice of an assignment which (according to D) fails at law.
The Judge did not accept it. He found that the point raised clearly related to the validity of the assignment, not the notice. D endeavoured to challenge the validity of the assignment late in the day and chose to abandon the argument rather than seek an adjournment. D was granted permission to amend its defence in other respects provided it did not have the effect of enabling it to introduce further new challenges by the back door.
The Judge determined that this was precisely what the Defendant was attempting.
Accordingly, D was not given permission to raise the issue of the validity of the Assignment again at this point.
Judgment was granted for C for the full amount claimed.
Invoice Finance providers can take comfort from this reinforcement of the decision in the Van Lynn case. Provided a notice of assignment is served, even if the date of the invoice finance agreement is absent, and the invoices also bear notice of assignment there can be no doubt that a debtor will be on notice of their interest.
To discuss any of the above further, please feel free to contact Phil: philsheard@bexleybeaumont.com | 07780 937624
