Cabot's methods of buying debts?

[pt2537]

12. Provisions for legal assignment of debts and other legal things in action.

Provided certain conditions are complied with, any debt or other legal chose or thing in action1 may be assigned so as to vest

in the assignee the legal right to the same and all the remedies for it, with power to give a good discharge without the

concurrence of the assignor2.

The conditions which must be complied with are: (1) the assignment must be in writing under the hand of the assignor; (2)

the assignment must be absolute, and not purporting to be by way of charge only; and (3) express notice in writing of the

assignment must be given to the debtor, trustee, or other person from whom the assignor would have been entitled to claim

the debt or thing in action3.

Such an assignment takes effect from the date of the notice4 and will be subject to equities having priority over the right of

the assignee5.

The provisions described above do not affect the enactments6 enabling assignees of policies of life assurance granted by

assurance companies to sue on them in their own names7; nor do they apply to any transfer of title to uncertificated units of a

security8 by means of a relevant system9 or to any disposition or assignment of an interest in uncertificated units of a security

title to which is held by a relevant nominee10.

 

1 See paras 14-15 post.

 

2 Law of Property Act 1925 s 136(1).

 

3 Ibid s 136(1).

 

4 Ibid s 136(1); and see para 21 post.

 

5 Ibid s 136(1). As to these equities see para 23 post.

 

6 Ie the enactments of the Policies of Assurance Act 1867: see INSURANCE vol 25 (2003 Reissue) para 548 et seq.

 

7 Law of Property Act 1925 s 136(2). The effect is that a policy of life assurance granted by an assurance company may be assigned at law by

virtue of the Policies of Assurance Act 1867, and also by virtue of the Law of Property Act 1925 s 136(1): see INSURANCE vol 25 (2003 Reissue)

para 548 et seq.

 

8 For the meaning of 'unit' in relation to a security, and 'uncertificated' in relation to a unit of a security, see the Uncertificated Securities

Regulations 2001, SI 2001/3755, reg 3(1); and COMPANIES.

 

9 For the meaning of 'relevant system' see ibid regs 2(1), 3(1); and COMPANIES.

 

10 Ibid reg 38(5). For the meaning of 'relevant nominee' for these purposes see reg 38(6); and COMPANIES.

 

13. General effect of statutory provisions.

The provisions relating to assignment1 did not create any new rights, but they enabled the legal right to a debt or other chose

or thing in action to be transferred to the assignee, together with all legal remedies, including the right to sue in his own

name2. They have not made assignable contracts which were not assignable in equity before3; nor, on the other hand, have

they impaired the efficacy of equitable assignments which would previously have been valid4. The statutory provisions

effected an improvement in the position of a donee of a legal chose in action by enabling him to sue at law in his own name

as assignee without regard to whether or not the assignment was for valuable consideration5. To be a valid assignment within

the provisions described above, an assignment must be of the whole debt or chose in action6.

 

14. Meaning of 'debts'.

To be within the relevant provisions of the Law of Property Act 19251, the debt must be a debt of a definite sum2. An

assignment of the balance which may remain after satisfying a third party debt order is effective and attaches to the balance

in the hands of the debtor after payment into court under the order3.

An absolute assignment of a specified future debt is within the Act4; as, for example, the balance standing at any time after

the date of the assignment to the credit of the assignor at a bank5, or future rents6, or a retention fund under a building

contract7.

Examples of debts within the Act include the following: a debt due on the covenant in a mortgage deed8; rent already accrued

due under a lease9; a judgment debt10; a balance11, or a deposit12, standing to the assignor's credit at his bank; the amount due

on a solicitor's bill of costs, even before the delivery of a signed bill13; a debt due from a solicitor to a town agent14; a debt

certified as due from a company in liquidation15; and the balance due to a legatee of his share in the residuary estate of a

deceased person1

 

16. Necessity for assignment to be absolute and not to purport to be by way of charge.

 

In order that an assignment may be within the Law of Property Act 1925 it must be absolute, and must not purport to be by

way of charge only1.

An assignment which is conditional and not absolute, as, for example, an assignment expressed to be until money advanced is

repaid2, or an assignment of a policy of life insurance authorising the assignee to draw the insurance money in the event of

the assignor predeceasing the assignee3, is not within the Act. An assignment of salary to become due to the assignor under

his employment with third parties is, however, an absolute assignment4.

The existence of a trust in favour of the assignor, whether of the whole debt assigned5 or of the surplus after retainer of a

definite sum by the assignee6, does not prevent the assignment being absolute, if it is absolute in point of form. Likewise a

promise to pay the assignor a sum of money calculated according to the amount received by the assignee as the fruits of the

assignment can have no effect at all on the nature of the assignment if otherwise absolute7.

A document given by way of charge is a document which only gives a right to payment out of a particular fund or property,

and does not absolutely transfer the fund or property8. In order to determine whether an assignment purports to be by way ofcharge only, all the terms of the instrument must be considered, and, whatever may be the phraseology adopted in some

particular part, the intention must be determined on consideration of the whole9. It is immaterial whether the consideration is

a fixed sum or a current account, nor does it matter that the assignee has obtained a power of attorney and a covenant for

further assurance10. The fact that the assignment is expressed to be by way of security is not by itself sufficient to make it

purport to be by way of charge only11, but such an expression coupled with other circumstances may have that effect12. An

assignment of so much of a future debt as shall be enough to satisfy an uncertain future indebtedness is an assignment by way

of charge only13.

A mortgage in ordinary form which transfers the property with a proviso for redemption and reconveyance is an absolute

assignment within the Act14; and where there is an assignment of a debt, absolute in form but in fact made by way of

security, it will be within the Act, although an equitable right to reassignment on redemption will be implied15. Where,

following the assignment of insurances to the mortgagee, the insurances continue to protect the owner's interests in respect of

any losses and liabilities which he had incurred as mortgagor and owner or as operator of a vessel, the assignment does not

constitute an absolute assignment16

 

 

 

the above is an extract from Halsburys Laws of England

 

it from my reading of it seems to blow the LoP arguement from the like of cabot right out of the water

 

shouold anyone want a full copy of the text let me know

[pt2537]

Hi Rory,

 

im beginning to see that my self with what ive read on Cabot

 

now then, i would be very interested to see them try that LoP arguement in Scotland, that would be fun and well worth a trip up from southampton just to see it:)

 

regards

 

paul

[pt2537]

and Wales Tom, you forgot Wales;)

[pt2537]

ah, i know that but does everyone else, thats why i always refer to England & Wales:)