In the recent High Court decision in Nicoll -v- Promontoria (Ram 2) Ltd  EWHC 2410 (Ch), the validity of an assignment of debts and the notice requirements is considered.
The High Court in this case considered whether a notice of assignment in relation to a debt, which mentioned an unverifiable date of assignment, was still valid and enforceable against the debtor.
The debt in question originally arose between the debtor and the Co-operative Bank (Bank) and was evidenced in various facility letters between September 2010 and May 2013. A sum of over £10 million was advanced by the Bank to the debtor, and security was taken by the Bank in the form of charges over certain property. The overall balance was repayable by May 2015, but the debtor defaulted on the payment terms.
On 29 July 2016, the Bank assigned (or purported to assign) its debt and security to Promontoria. Both the Bank and Promontoria provided joint notice of the assignment in a single document to the debtor on 2 August 2016, with wording that the debt had been assigned ‘on and with effect from 29 July 2016’. There was no express reference to the date of the assignment or the assignment effective date, but rather this was defined by reference to the completion date in a related but unreferenced loan sale deed, so a more complicated analysis of a series of documents was required to reach the actual date of the assignment.
Promontoria proceeded to pursue the debtor for the debt by serving a statutory demand, dated 27 January 2017, and referred to the deed of assignment within its contents for payment of the outstanding debt.
The debtor’s attempt to have the statutory demand set aside was dismissed at the initial hearing, but the debtor received leave to appeal to the High Court on one issue. The debtor sought to challenge the effectiveness of the assignment of the debt based on an inability to work out from the notice of assignment whether the completion date for assignment had actually occurred. The debtor argued that:
- the case of WF Harrison -v- Burke  1 W.L.R. 419 is authority that a notice of assignment that gets the date of assignment wrong is invalid and, as a result, the assignment is not good against any debtor; and
- the date of assignment stated in the notice given to him was unverifiable, and therefore potentially wrong, rendering the notice invalid
The High Court agreed that the documentation disclosed by Promontoria to the debtor after the notice of assignment was insufficient to verify the date on which assignment had occurred, due to cross-referencing to other documents and there being conditions for completion. However, the High Court distinguished this case from WF Harrison -v- Burke case as the joint notice of assignment did not specify the date of the deed of assignment. It specified the date on which the assignment took effect, which is different. In WF Harrison -v- Burke, the notice of the assignment (given by the assignee only) specified the date of the assignment document (as opposed to the assignment itself) and got it wrong. In the present case, the notice of assignment was from both Promontoria and the Bank, i.e. assignor and assignee and made clear that the parties considered the assignment to be complete. In the circumstances, the debtor was not entitled to challenge Promontoria’s title to the debt.
The High Court accepted that while Promontoria had not produced evidence which in terms showed what the effective date of the assignment was, the joint notice clearly showed that both the Bank and Promontoria agreed and accepted that the assignment had taken place, and was sufficient evidence for the present purposes to be valid. The judge said: ‘The question is not whether Promontoria have provided a chain of proof through the wording of the documents. If that were the question then Promontoria would fail. The question is whether Promontoria has demonstrated that there is a completed assignment. I consider that it has. The crucial matter is the notice of assignment, against the background of the assignment document. The assignment documentation demonstrates a clear intention to assign even if the documents do not match up as they ought to. The notice of assignment provides clear evidence that the assignment has taken place.’ Accordingly, the High Court concluded that there was no arguable case that the assignment’s effective date had not occurred and considered that the assignment had been sufficiently demonstrated to be effective as against the debtor.
The High Court clearly held that a notice of assignment of a debt given to a debtor was valid, even though the assignment effective date, referred to in the notice, could not be verified by the debtor. The judgment provides strong support for the proposition that it is not open to debtors to seek to find alleged defects in any assignment, as long as they have been properly notified of the assignment and most importantly that the assignor and assignee both agree that the assignment is valid. This is a welcome decision for all creditors.