England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
QUEEN'S BENCH DIVISION
HHJ SIMON BROWN QC
IBM40039

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/10/2012

Lord Justice Aikens :

The Background to the appeal.

1. This appeal is from an Order of HHJ Simon Brown QC dated 11 October 2011, following a two day trial of certain issues on 6-7 October 2011 in the Birmingham Mercantile Court. Bexhill UK Limited, the current respondents, whom I shall call "Bexhill", had claimed against Mr Abdul Razzaq, the current appellant, whom I shall call Mr Razzaq, an order for possession of a commercial property called 342 Londonderry Road, Oldbury, West Midlands, of which Mr Razzaq was the registered proprietor ("the Property"). But, as the judge said in [1] of his judgment, this outwardly simple claim has a more complicated commercial background which gives rise to the issues on appeal. That background needs explanation.
2. Bexhill is a company that provides "premium credit funding" to insurance brokers. This enables insurance brokers to offer to their clients, insureds under insurance policies, the facility to pay their annual insurance premiums (which are, of course, due to the insurers) by instalments, rather than in one, annual, lump sum. In the present case the system worked as follows: Mr Razzaq traded as an insurance broker. He and his wife were the owners and directors of RSA Premium Credit Limited ("RSA"). That company was used by Mr Rassaq to provide premium credit facilities for his clients, the insureds. Clients of Mr Rassaq would enter into a credit premium agreement with RSA, whereby RSA funded the immediate payment of the full annual insurance premium and the client insureds would then repay the annual premium amount to RSA (doubtless plus interest) in instalments over the year.
3. In order that RSA could fund the payment of the whole annual premium "up front" to the insurer whilst the clients repaid the amount of the premium (plus any interest) to RSA in instalments, RSA would borrow the necessary funds from Bexhill. Bexhill entered into a "Facility Agreement" with RSA dated 23 June 2006, ("the Bexhill FA"), to which Mr Razzaq was also a party as "guarantor".
4. Under clause 5 of the Bexhill FA, RSA agreed to grant to Bexhill a "security interest" over "all its present and future undertaking and assets" as "security for all amounts owing from time to time" by RSA to Bexhill under the Bexhill FA "…and any other relevant documents". Under clause 38.1 of the Bexhill FA, Mr Razzaq, as guarantor, guaranteed to Bexhill the due and punctual payment by RSA of "all moneys from time to time owing" to Bexhill "…hereunder". Mr Razzaq also agreed, under clause 38.2, that in the event of default of RSA paying any moneys payable under the Bexhill FA to Bexhill, he would "…immediately upon demand…" pay to Bexhill the amount of such moneys.
5. Mr Razzaq gave to Bexhill a legal charge dated 28 March 2007 over the Property. This charge was stated in the Charge document to be a "charge by way of legal mortgage as security for the payment of…one hundred and forty thousand pounds payable on demand" and the lender was identified as Bexhill. In fact, Bexhill had not loaned £140,000 or indeed any sum to Mr Razzaq personally. Bexhill's case before the judge was that this Charge was given by Mr Razzaq as security for his obligations as guarantor under the Bexhill FA and that this was the common intention of the parties when the Charge was executed. The judge heard evidence and argument on that point and concluded, at [11] of his judgment, that the parties had intended that the Property would be a security for Mr Razzaq's personal guarantee (given by clause 38 of the Bexhill FA) in respect of sums owed by RSA to Bexhill. But he also concluded that the Charge only operated as security for up to a maximum for Mr Razzaq's liability of £140,000. Those conclusions have not been appealed.
6. Bexhill did not itself fund the sums it advanced to RSA under the Bexhill FA. Instead Bexhill, in turn, drew on a facility arrangement with Barclays Bank PLC ("Barclays"), which had been concluded on 20 March 2002. The Barclays-Bexhill Facility Agreement ("BBFA") was intended to cover many arrangements such as those between Bexhill and RSA. I will describe the BBFA in more detail below. Continuing with the terms of the Bexhill FA, clause 48 stated that (unless otherwise advised by Bexhill, which did not happen in this case) RSA was thereby notified that Bexhill had assigned to Barclays, pursuant to a debenture, (the "BB Debenture", to which I will also refer below) "…all its right title and interest in this [Bexhill FA] including all the rights and remedies in connection with the Finance Agreements [between RSA and its clients] and all proceeds and claims arising from this Agreement".
7. In Schedule 2 of the Bexhill FA there is a letter from Bexhill to RSA dated 20 June 2006. This records that, by a debenture dated 20 March 2002, (ie. the "BB Debenture"), Bexhill had "…assigned to Barclays Bank PLC…all its present and future right, title and interest in and to the [Bexhill FA]…including all rights and remedies in connection with the [Bexhill FA] and all proceeds and claims arising from the [Bexhill FA]". The letter also stated that Bexhill "irrevocably authorises and instructs [RSA] from time to time" to do various things set out in sub-paragraphs (a) to (e). These include (at (b)) "...to hold sums from time to time due and payable by you to us under the [Bexhill FA] to the order of [Barclays]"; and (under (d)) "…to comply with the terms of any written notice or instructions in any way related to or purporting to relate to the [BB Debenture], the sums payable to [borrowers of funds from RSA] or the debts represented thereby, which you receive from time to time from [Barclays] without any reference to or further authority from [Bexhill]…". This letter also stated that, by execution of the Bexhill FA, RSA acknowledged in favour of Barclays that RSA accepted "…the instructions and authorisations contained in this notice" and that RSA undertook "…to act in accordance with and comply with the terms of this notice". The letter was signed by Mr Razzaq on behalf of RSA and a copy was sent to Barclays. This letter was created pursuant to an obligation of Bexhill to Barclays under clause 3.3 and Schedule 2 of the BB Debenture, which I will deal with further below.
8. To complete the agreements between Bexhill, RSA and Mr Razzaq, I must refer to one more document. This is a Debenture dated 24 June 2006, ("the RSA Debenture") which RSA granted to Bexhill pursuant to clause 5 of the Bexhill FA, referred to above. By this document RSA agreed, on a demand in writing to RSA "...to pay or discharge to [Bexhill] all moneys and liabilities which shall for the time being…be due owing and incurred to [Bexhill] by [RSA] under the terms of any finance agreements pursuant to which [Bexhill] makes facilities available to [RSA]". Under clause 3 of the RSA Debenture, RSA charged various assets of RSA in favour of Bexhill. First, it granted a "first fixed charge" over all book debts and other debts due or owing to RSA "from time to time." Secondly, RSA granted a "first fixed charge" over "all agreements for the financing of insurance premiums" between RSA and its clients and "all receivables arising therefrom". Thirdly, RSA granted a charge "by way of legal mortgage" over "all freehold and leasehold property of [RSA] now vested in it…". That did not include the Property, of course, because that was owned by Mr Razzaq personally, not by RSA.
9. Next, I must describe the contractual documentation between Bexhill and Barclays. The BBFA, dated 20 March 2002 granted to Bexhill, (subject to conditions), two loan facilities, each up to a maximum aggregate principal amount of £2.5 million, to be used by Bexhill in financing "Bexhill Facilities". A "Bexhill Facility" is defined in the BBFA as a "properly documented factoring facility made by Bexhill to a Qualifying Retail Financier (a) in accordance with the Bexhill Facility Criteria and (b) for the purposes of financing Qualifying RF Loans".^[1] There was apparently no debate before the judge on whether RSA constituted a "Qualifying Retail Financier" within the definition, nor whether the Bexhill FA constituted a "properly documented factoring facility"^[2] between Bexhill and RSA as a QRF. There is also a definition of "Receivables".^[3] It should be noted that this definition is not the same as that in the BB Debenture, which I will set out below. One of the conditions to which the BBFA was subject was that Barclays would have the benefit of the security created pursuant to the "Security Documents", which included a Debenture to be given by Bexhill to Barclays: see clause 2.2 of the BBFA.
10. Under the BBFA, Bexhill had to establish a "Collection Account", which was a specified account in a specified bank, into which Bexhill was obliged to pay directly all repayments, payments of interest and other charges made by QRFs in respect of sums borrowed by them under their facilities with Bexhill. The sums paid into the Collection Account were to be used to pay back the loans drawn down by Bexhill under the BBFA: see clause 8.3. Bexhill's ability to use funds paid into the Collection Account was restricted by clause 13 of the BB Debenture, to which I shall refer below.
11. By clause 17 of the BBFA Bexhill covenanted with Barclays to do various things. In particular, by clause 17.1.3 Bexhill had to restrict its activities to various matters there set out. Then, by 17.1.10, Bexhill undertook to:

"…ensure that Bexhill is clearly stated to be acting as principal and not agent, in respect of each Bexhill Facility on all documentation and correspondence relating thereto, and shall ensure that no reference to [Barclays] or any subsidiary or holding company of [Barclays] is made in such documentation and correspondence".

12. In clause 18 of the BBFA, various occurrences are described as "Events of Default". If one or other occurred, Barclays could give written notice to Bexhill to declare the loan to be immediately repayable and then, on written notice, could call for repayment: clause 18.1.4 and 18.2.1.
13. To complete the documentary round-up I must refer further to the BB Debenture, dated 20 March 2002, which has become central to the arguments between the parties. By clause 2 of this debenture, Bexhill covenants to pay or discharge on demand "the Secured Obligations" as defined, "…as and when they fall due". The definition, which is set out in clause 1.1, is long, but the first phrase is the important part. In that, "Secured Obligations" means "…(i) all indebtedness, liabilities and obligations which now or at any time hereafter may be due, owing or incurred in any manner whatsoever to [Barclays]…by [Bexhill]….". It is therefore very wide indeed.
14. Clause 3 of the debenture is headed "Fixed and Floating Charges". Clause 3.1 is headed "Assignments by [Bexhill]". Clause 3.1.1 and 3.1.2 provide:

"3.1.1 As a continuing security for the payment of the Secured Obligations…[Bexhill] assigns and agrees to assign absolutely in favour of [Barclays] all of [Bexhill's] rights, title, interest and benefit in the Receivables.

3.1.2 As a continuing security for the payment of the Secured Obligations, [Bexhill] hereby with full title and guarantee assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, title, interest and benefit in and to each Relevant Contract^[4] and all collateral and rights thereunder."

15. The term "Receivables" is defined in clause 1.1 of the BB Debenture as follows:

"Receivables means:

(i) all present and future book and other debts, rentals, royalties, fees, VAT and monetary claims and all other amounts recoverable or receivable by [Bexhill] from other persons or due or owing to [Bexhill] (including, but not limited to, the Qualifying RF Receivables and all other amounts payable to [Bexhill] under the [Bexhill FA] and the Retail Financier Assignments) whether actual or contingent and whether arising under contract or in any other manner whatsoever;

(ii) the benefit of all rights and remedies relating to any of the foregoing including, without limitation, claims for damages and other remedies for non-payment of the same, all entitlements to interest, negotiable instruments, guarantees, indemnities, Encumbrances, reservations of property rights, rights of tracing and unpaid vendor's liens and similar associated rights; and

(iii) all proceeds of any of the foregoing."

16. By clause 3.3, which is headed "Notice of Assignment", Bexhill undertakes as follows:

"Immediately upon execution of this Deed (and immediately upon the obtaining of any Insurance or the execution of any Relevant Contract after the date of this Deed) [Bexhill] shall:

3.3.1 in respect of each Relevant Contract, deliver a duly completed notice of assignment to each other party to that Relevant Contract (with a copy to [Barclays]), and use its best endeavours to procure that each such executes and delivers to [Barclays] an acknowledgement, in each case in the respective forms set out in schedule 2 (Forms of notice to and acknowledgement by party to Relevant Contract) (or in such other form as [Barclays shall agree); and…

3.3.2 relates to insurances and is not relevant. "

17. Schedule 2 contains a standard form of letter and the letter of 20 June 2006 from Bexhill to RSA is in that form. RSA was therefore given notice that Bexhill had assigned to Barclays "all its present and future right, title and interest in and to" the Bexhill FA, including "all rights and remedies in connection with" it and "all proceeds and claims arising from" it.
18. Clause 3.2 is sub-titled "Fixed Charges given by [Bexhill]". By this clause, Bexhill charged and agreed to charge in favour of Barclays, "by way of first fixed charge" all its "…right, title, interest and benefit in and to the Collection Account….". By clause 3.2.13, Bexhill charged and agreed to charge "to the extent not effectively assigned under clause 3.1.1 by way of first fixed charge all of the Receivables". By clause 3.3.1, Bexhill undertook to deliver a duly completed notice of assignment to each of the counterparties to facilities that Bexhill had (or would) enter into. Bexhill also undertook to endeavour that each counterparty executed and delivered an acknowledgement to Barclays. Under clause 3.4, which is entitled "Floating Charge", Bexhill charged all its "present and future assets and undertaking…which is not effectively charged by way of first fixed mortgage or charge or assigned" to Barclays by way of a first floating charge, by way of continuing security for the payment of the Secured Obligations.
19. By clause 7.1.2 Bexhill agreed to execute a legal assignment "in such form as [Barclays] may reasonably require over all or any of the Receivables and give notice of such assignment to the relevant Debtors and/or [QRFs]".^[5] Under clause 11.1.2 Bexhill undertook to ensure that all payments received under "Bexhill Facility Agreements" were paid directly into the Collection Account. By clause 11.1.3 Bexhill undertook to "collect all other Receivables in the ordinary course of trading as agent for [Barclays]" and immediately upon receipt "pay directly all monies which it may receive in respect of the Receivables into the Collection Account or such other account as [Barclays] may from time to time direct", but in the meantime to hold all monies so received in trust for Barclays.
20. Clause 13 of the BB Debenture placed severe limitations on what Bexhill could do with any sums deposited in the Collection Account. By clause 13.1 Bexhill could not withdraw any amount unless consent had been given by Barclays in accordance with the terms of clause 13.2. Even if consent was given, amounts standing to the credit of the Collection Account had to be applied in the order set out in clause 13.3 before any withdrawal by Bexhill could take place. Effectively, Barclays had complete control over the sums credited to the Collection Account which had to be established by Bexhill in accordance with the BBFA.
21. Clause 16.1 of this Debenture states that "…the security constituted by this Debenture shall become immediately enforceable upon the occurrence of an Event of Default^[6] which is continuing unremedied and unwaived…". It also provides that "…After the security constituted by this Debenture has become enforceable, [Barclays] may in its absolute discretion enforce all or any part of this security in such manner as it sees fit".
22. Since the trial two further relevant documents have been created. The first is an agreement between Bexhill and Barclays dated 20 July 2012, thus only three days before the appeal hearing. The document purports to amend the BBFA and the BB Debenture. I will refer to it as the "Amendment Agreement". Paragraph (D) of the recitals explains that its purpose is to "clarify and restate aspects of the [BBFA and the BB Debenture] and effect amendment of the same so far as necessary to enable Bexhill to enforce debts owing to them arising from or relating to Bexhill Facilities against any party to a Bexhill Facility". Clause 2 stipulates that "the Parties restate and reaffirm their shared intention that nothing in the [BBFA] or by operation of the [BB Debenture] shall deprive Bexhill of its legal title to sue on debts constituting a Bexhill Receivable". By clause 3 Barclays assigned "to the extent that [Barclays] has obtained an equitable interest or benefit in any Bexhill Receivable" such interest or benefit to Bexhill "as necessary to perfect Bexhill's cause of action against a party owing sums constituting the Bexhill Receivable", but subject to three conditions which are then set out. The third one (in clause 3.3) provides that it will be Bexhill that notifies Barclays of the "particular Bexhill Receivable reassigned [to Bexhill] hereunder for the purpose of perfecting Bexhill's cause of action…": (my emphasis).
23. Pursuant to that condition, Bexhill wrote a letter dated 20 July 2012 to Barclays. In this it stated, somewhat curiously, that:

"Pursuant to terms of [the Amendment Agreement] Bexhill UK Limited hereby notifies [Barclays] that it [viz. Barclays] has reassigned to [Bexhill] any equitable interest [Barclays] may have in the Bexhill Receivables related to Bexhill Facilities to [RSA] and Abdul Razzaq T/A Razzaq Insurance Brokers dated 23 June 2006".

The facts

24. The facts leading to the claim by Bexhill against Mr Razzaq for possession of the Property were only dealt with shortly by the judge but I think that there is little, if any, dispute about them, at least for present purposes. At some time in late March 2007 Mr Ravi Thakkar, Bexhill's managing director, telephoned Mr Razzaq and said that RSA's account with Bexhill was in arrears. He asked Mr Razzaq to sign a charge securing the Property as part of a deal to reschedule the debts owed by RSA to Bexhill and to avoid the necessity of calling on the guarantee given by Mr Razzaq by clause 38 of the Bexhill FA. The Charge was duly executed, as already noted.
25. RSA failed to repay the arrears. Bexhill started the proceedings for possession of the property. The claim form is in a standard format for "Particulars of Claim for Possession (mortgaged residential premises)". Bexhill is identified as the only claimant. There is no suggestion that it is making the claim as agent for another, named or unnamed. The claim seeks possession of the Property (which, of course, did not constitute "residential premises") on the ground that the defendant, Mr Razzaq had "not paid the agreed repayments of loan and interest" of an "advance …of £140,000 payable on demand". The claim states that the Charge was "security under a personal guarantee provided by [Mr Razzaq] in relation to funds lent to [RSA]". The claim refers to the Bexhill FA, which is annexed to the claim form. The claim states that the "monies owed" are set out in a schedule attached. That schedule is headed: "On 1 August 2007 all outstanding balance from RSA to [Bexhill] has been reconciled and set up as one Finance Agreement over 6 months with interest rate 5.55% flat". There is then a table which sets out when various instalments of principal and interest are due to be paid. At the foot it says that the "current balance outstanding to Bexhill" is £79,672.50. The claim form states that a sum of £5,460.84 had been repaid (from sums received by Bexhill from RSA's clients) and that a letter of demand had been sent on 14 November 2007 to Mr Razzaq, but there had been no response. The prayer asks that Bexhill, the claimant, be granted possession of the Property.

What did the Judge decide?

26. The judge dealt with three issues only in his judgment. This appeal is not concerned with the third one so I will not refer to it again. First, as already noted, he ruled on the correct construction of the Charge. He held, at [11], that the parties' common intention was that the Property would be security for Mr Razzaq's personal guarantee given by clause 38 of the Bexhill FA. The judge also held that the security given by the Charge was limited in amount to £140,000. Those conclusions are not appealed.
27. Secondly, the judge dealt with a defence of Mr Razzaq to the claim. The defence was that Bexhill had no right to sue for possession of the Property pursuant to the Charge. The judge recited the submission of counsel for Mr Razzaq that Bexhill had no title to sue for possession because any rights that Bexhill may have had to do so had been assigned to Barclays. The judge recorded that counsel for Bexhill made two points in response: first, that Bexhill was entitled to bring proceedings on behalf of Barclays, as its agent, and there was an implied right to do so under "clause 11.1".^[7] The second point was, insofar as I understand it, that the Bexhill FA post-dated the BB Debenture and so this somehow had an effect on whether it was a valid assignment. The judge dismissed this latter argument and it has not been resurrected on appeal, at least in that form, so I need say no more about it.
28. On the question of Bexhill's right to sue, the judge first referred to the definition of "Receivables" in the BBFA and stated, at [14], that the sums due from the facilities that Bexhill had provided to RSA were those Receivables, "…because what is clear is that [Barclays] provides a known facility to Bexhill and there is, in a debenture, a clear reference to Receivables in there": [14]. The judge next referred to the BB Debenture and the definition of Receivables in that document. He then set out the terms of clause 3.1 of that Debenture, the relevant parts of which I have quoted at [14] above.^[8]
29. Turning specifically to the "agency" argument, the judge seems to have proceeded on the basis that it was accepted that there had been some kind of absolute assignment of Bexhill's right to sue Mr Razzaq for possession of the Property pursuant to the Charge, as opposed to an assignment by way of charge only. At least, the judge does not deal with any argument to the contrary on the point. The issue, therefore, was whether Bexhill was entitled to sue Mr Razzaq on Barclay's behalf as its agent. The judge concluded, at [17], that the parties knew and understood that Bexhill was acting "in the capacity of agents for" Barclays and that Bexhill would undertake the enforcement of Barclay's rights and interests, in particular in relation to the Receivables. He noted that Barclays had "certainly not been involved in these proceedings and is not concerned with what is enforcement". He referred to clause 11.1.3 of the BB Debenture and concluded, again in [17]:

"So, in my judgment, the assignment point ….is a bad one. Here [Bexhill] are acting as agents for [Barclays] in the process of enforcing and collecting all the Receivables which are due to be accounted for to [Barclays]…".

30. The judge therefore appears to have held, on the construction of all the contractual documents that: (a) Bexhill had assigned absolutely to the Bank its right to sue Mr Razzaq on the Charge (it being a security for his obligation as guarantor under clause 38 the Bexhill FA), but (b) Bexhill was nonetheless entitled to sue Mr Razzaq under the Charge as agent of Barclays. Therefore the assignment point was "a bad one".
31. In the Order of 11 October 2011, it is recorded in paragraph 1 that there be judgment for Bexhill on the issue of "whether [Bexhill] has the right and title to sue upon [the Charge]". In paragraph 2 of the Order the issues of (a) what sums were secured by the Charge and (b) the counterclaim to the claim for possession, were both adjourned for a further hearing. Consequential directions were also given.

The arguments of the parties and the issues on appeal

32. On behalf of Mr Razzaq, Mr Robert Leonard submitted: (1) generally speaking, an agent has no right to bring an action against another on behalf of a principal, because a right of action is a personal right which cannot be delegated to an agent to enforce; only the principal can do so in person. Upon the correct construction of the contractual documents between Bexhill and Barclays that rule applies in this case. (2) On the correct construction of all the contractual documents, in particular the BB Debenture, there was an "absolute" assignment by Bexhill to Barclays of any right concerning the Charge, including the right to sue on the Charge. (3) Therefore, any rights that Bexhill had to sue on the Charge had been absolutely assigned to Barclays. (4) Even if the assignment was only an equitable assignment, because it was an assignment of a future "thing in action" when the BB Debenture was created, both Barclays and Bexhill had to be named as claimants in the action on the Charge against Mr Razzaq. (5) It was too late to permit Barclays to be added as a claimant now.
33. On behalf of Bexhill, Mr Robin Rathmell submitted: (1) any assignment of rights by Bexhill to Barclays under the Bexhill-Barclays contractual documents (in particular the Debenture), including the right to sue on the Charge, was an assignment "by way of security or charge" only. (2) The word "absolutely" in clause 3.1, when read correctly in the context of all the contractual provisions between Bexhill and Barclays, did not mean that there was any transfer of title in respect of the Charge (including the right to sue on it) from Bexhill to Barclays. That construction was consistent with the commercial intention of Bexhill and Barclays, which was not to transfer any title to Barclays, at least before any default by Bexhill. (3) The BBFA terms indicated clearly that Barclays intended to remain a stranger to all contracts concluded between Bexhill and its clients such as RSA. Moreover, although he accepted that the Bexhill FA and sums payable thereunder may be within the term "Receivables" within the BBFA definition, the Charge and the right to sue on it were not within the definition of "Receivables" in the BB Debenture. (4) In any case, if there had been an assignment (of any sort) from Bexhill to Barclays of the right to sue Mr Razzaq under the Charge then: (a) there had been a re-assignment by the Agreement of 20 July 2012, so that the point had disappeared; if not (b) in the circumstances permission to join Barclays as a second claimant should be given. However, Mr Rathmell accepted that there was, at present, no extant application to join Barclays or any draft amendment to the Particulars of Claim so that if this court's conclusion was that there had been an assignment (of any sort) to Barclays, then the issue of whether Barclays should be joined as a claimant would have to be remitted to the judge. (5) On the "agency" point (ie. on the assumption that there had been an "absolute assignment"), Mr Rathmell submitted that as Bexhill would have retained the legal title to sue and as it was Bexhill that was in privity of contract with Mr Razzaq, then the terms of clause 11.1.3 of the BB Debenture were broad enough to authorise Bexhill to act as agent in making the claim against Mr Razzaq on behalf of Barclays. He accepted that the proceeds of any judgment in that action would be held by Bexhill as trustee for Barclays.
34. The contracting parties to the Charge are Bexhill and Mr Razzaq. On the face of it, Bexhill should therefore be able to sue for remedies under that Charge, including the right to possession of the Property. The only way that it is suggested that Bexhill is disabled from exercising that right is because it has transferred its rights in the Charge (including the right to sue in respect of it) to Barclays, by way of an absolute assignment that is not by way of charge only. Logically, the first issue to consider is whether, upon the correct construction of the Bexhill-Barclays contractual documents and on the findings of the judge, there has been an absolute assignment of Bexhill's rights in respect of the Charge, including the right to sue Mr Razzaq on the Charge for possession of the Property, which right is, of course, a "thing in action". In stating this I am drawing a distinction between, on the one hand, an absolute assignment of a thing in action which transfers rights in the thing in action from A to B; and, on the other hand, an assignment "by way of charge only", which is, effectively only a right to exercise a claim on some identified property in certain identified events, as opposed to an absolute transfer of a property right. I appreciate that an "absolute" assignment could be either a legal assignment in accordance with section 136 of the Law of Property Act 1925,^[9] which would be a completed transfer of the equitable and legal title to the thing in action from A to B, or an "absolute" assignment which takes effect in equity only. In the latter case, upon the assignment the assignee becomes the beneficial owner of the thing in action, but the legal title of the thing in action remains with the assignor.
35. Neither the Bexhill FA nor the Charge existed at the time that the BB Debenture was executed. It was (at least implicitly) common ground at the hearing before us that the "thing in action" consisting of the rights of Bexhill in respect of the Charge, including the right to sue Mr Razzaq on the Charge, constituted a "future thing in action" at the time of the execution of the BB Debenture. It was certainly common ground that once the rights concerned with the Charge came into existence they could, in theory, either be the subject of an "absolute" assignment in equity or an assignment by way of charge only.
36. To determine this first issue on the nature of the assignment of the thing in action constituted by the right to sue Mr Razzaq on the Charge, it is necessary to decide three issues. First, do Bexhill's rights on the Charge, (including the right to sue on it), which the judge found was a security for Mr Razzaq's guarantee given in clause 38 of the Bexhill FA, come within the terms of "Receivables" as defined in the BB Debenture. Secondly, if they do, what is the nature of the "Assignments by [Bexhill]" created, in particular, by clause 3.1 of that Debenture. Thirdly, (although I do not believe that there was much, if any, dispute about this), if the effect of clause 3.1 of the BB Debenture was that the right to sue Mr Razzaq on the Charge was assigned to Barclays "absolutely" once it came into existence, was that an assignment that took effect in equity, as opposed to it being an absolute legal assignment?
37. I hope that I correctly represent Mr Leonard's position on the various possible outcomes as follows: (1) he accepted that if there was an assignment "by way of charge only", then Bexhill would have title to sue for possession of the Property pursuant to the Charge without needing to join Barclays in the action. (2) On the other hand, if the right to sue Mr Razzaq under the Charge has been "absolutely" assigned to Barclays in the sense indicated above, then it would be necessary to consider whether Bexhill was entitled, without joining Barclays, to pursue the claim against Mr Razzaq as agent for Barclays. (3) If Bexhill was entitled to pursue the claim as agent for Barclays, then I think Mr Leonard accepted that Bexhill could maintain the claim without the need to join Barclays. But, (4), if there has been an "absolute" assignment which takes effect in equity and Bexhill could not act as agent for Barclays in pursuing the claim, then Barclays had to be joined for the claim to be able to continue. I understood Mr Rathmell to accept this analysis. There is no current application to amend the claim to join Barclays. Therefore, if that question becomes relevant, it seems to me that this court could not deal with that issue any further. Any further consideration of that point must be remitted to the judge to consider if there were hereafter to be an application to amend to join Barclays.

Issue One: Is Bexhill's right to sue on the Charge a "Receivable" within the definition set out on the Bexhill-Barclays Debenture.

38. Part (i) of the definition of "Receivables" in the BB Debenture includes the wording: "…all present and future book debts and other debts… and monetary claims and all other amounts recoverable or receivable by [Bexhill] from other persons or due or owing to [Bexhill] (including but not limited to the QRF Receivables and all other amounts payable to [Bexhill] under the Bexhill Facility Agreements…) whether actual or contingent and whether arising under contract or in any other manner whatsoever." Mr Rathmell argued that the definition of "Receivables" in the BB Debenture did not include the title to a cause of action in recovery of a debt, but only the benefit of the proceedings that might follow from an action. He emphasised particularly the words "the benefit of all rights and remedies relating to any of the foregoing…" in clause (ii) of the Definition of "Receivables".
39. In my view sums due from Mr Razzaq to Bexhill in his position as guarantor of the obligations of RSA pursuant to clause 38 of the Bexhill FA plainly fall within the terms of clause (i) of the Definition of "Receivables" in the BB Debenture. It is very wide. It is specifically not limited to "QRF Receivables" or "amounts to Bexhill under the Bexhill Facility Agreements", but embraces "…all other amounts recoverable…by [Bexhill] from other persons or due or owing to [Bexhill]…".
40. Then Part (ii) and (iii) of the definition of "Receivables" include the wording: "…the benefit of all rights and remedies relating to any of the foregoing including, without limitation, claims for damages and other remedies for non-payment of the same…and; (iii) all proceeds of any of the foregoing". The right of Bexhill to sue Mr Razzaq for possession of the Property in order to enforce the Charge, which the judge has held was created as a security for Mr Razzaq's obligations as guarantor under the Bexhill FA must, in my view, fall within "all rights and remedies relating to" that which is set out in Part (i). It is, in particular, a "right [or] remedy for non-payment" of the sums due from Mr Razzaq as guarantor under the Bexhill FA. The words "…the benefit of…" at the beginning of (ii) do not mean "the proceeds of". Here "benefit" means "value" or "advantage". If "benefit" only covered the fruits of any proceedings to recover a debt there would be no content in (iii) which refers to "all proceeds of any of the foregoing".
41. Accordingly, I would hold that the nature of Bexhill's right to sue Mr Razzaq under the Charge is clearly a "thing in action" which falls within the ambit of "Receivables" as defined in the BB Debenture. What is the consequence of the fact that this right to sue only came into existence (at the earliest) the moment the Charge was executed in March 2007? It cannot stop the right to sue on the Charge being within the definition of "Receivables" because Part (i) of the definition refers to "all present and future book and other debts [etc]" (my emphasis). But whether the "thing in action", once created, is the subject of an assignment, and if so, what sort of assignment, must depend on the correct construction of the BB Debenture and the events at the time the Charge was executed, which are the next issues.

Issue Two: what is the nature of the "assignments" created by clause 3 of the Bexhill-Barclays Debenture?

42. There are two questions that need consideration under this topic. The first is whether the terms of the BB Debenture, taken as a whole, assign, ie. transfer, "absolutely" to Barclays certain existing property, including "things in action", or whether the terms create an assignment by way of charge only. The second question, which must depend on the answer to the first, is, what is the position with regard to "things in action" that do not exist at the time that the Bexhill-Barclays Debenture was executed, but come into existence in the future, as in the case of the Charge. The Charge was, at the date of the BB Debenture, a "future thing in action", just like future book debts. Future things in action can be the subject of an absolute assignment if there is a contract (for valuable consideration) to assign future things in action. In such a case, once the thing in action comes into existence in the hands of the assignor the beneficial interest passes directly into the hands of the assignee, although the legal interest remains in the assignor. ^[10]
43. In written submissions made by Mr Leonard in response to Mr Rathmell's written submissions, he suggested that Bexhill should not be permitted to argue the point that the BB Debenture created an assignment by way of charge only, so that Bexhill could sue Mr Razzaq on the Charge on its own behalf. It was submitted that if this point had been raised before the judge, then there would have been further disclosure on the way Bexhill and Barclays treated the accounts between them. This argument was not particularly pressed orally before us. In any case I would reject it. As the cases make clear, the true effect of security documents such as the BB Debenture depends upon their construction, considered against the commercial background. There is no shortage of material to deal with that point.
44. As a preliminary remark on this issue, it is important to recall the effect of an assignment of a right, whether or not it is a statutory legal assignment. The assignee becomes either the legal or beneficial owner of the thing in action and its benefits. He does not become a party to any contract or deed which contains or gives rise to the right. The assignee will only become a party to the contract (or deed) if there is a novation of the instrument containing or giving rise to the right.
45. Whether a particular instrument creates an "absolute" assignment or an assignment "by way of charge only" is a question of construction of the relevant instrument taken as a whole. That principle and the consequences of an assignment being "absolute" or "by way of charge only" were explained by Mathew LJ in Hughes v Pump House Hotel Co.^[11] In that case a builder sued to recover debts from his client under a building contract, but the defendant client asserted that the builder had assigned absolutely his right to sue for the debts to the builder's bank, by virtue of the terms of an instrument between the builder and his bank, that assignment having been given in consideration of the bank agreeing to continue to provide the builder with finance facilities. Mathew LJ said:

"In every case of this kind, all the terms of the instrument must be considered; and, whatever may be the phraseology adopted in some particular part of it, if, on consideration of the whole instrument it is clear that the intention was to give a charge only, then the action must be in the name of the assignor; while on the other hand, if it is clear from the instrument as a whole that the intention was to pass all the rights of the assignor in the debt or chose in action to the assignee, then the case will come within section 25^[12] and the action must be brought in the name of the assignee".

Mathew LJ concluded that, upon the correct construction of that instrument, the intention of the parties was to pass to the assignees "complete control of all monies payable under the building contract" and that notice of the instrument had been given to the debtor client, so that there was an "absolute assignment" within the statute. Cozens-Hardy LJ gave a concurring judgment. The same approach on how to determine the legal effect of a security document was adopted by Millet LJ in the more recent case of Orion Finance Ltd v Crown Financial Management.^[13] He emphasised the need to look at the "substance of the parties' agreement" as found in the language that they have used in the document, in order to determine what the parties intended would be the legal effect of the document. In a subsequent case, Rimer J emphasised the need to prefer a construction which "makes commercial sense".^[14]

46. The BB Debenture is one of three "Security Documents" defined at the outset of the BBFA. Given the breadth of the definition of "Secured Obligations" in the BB Debenture, it is clear that this was one of the means by which Barclays secured the obligations that would be owed by Bexhill to Barclays once Bexhill drew on the loan facilities provided to it under clause 2 of the BBFA. To determine what types of security the parties agreed that Barclays should have in respect of the "secured obligations" it is necessary to examine closely the terms of the Debenture itself, albeit in their commercial context, then ask: what type of security did the parties intend thereby to create in favour of Barclays, which was extending loan facilities to Bexhill of £5 million.
47. Mr Rathmell emphasised that the BB Debenture was a security for a banking facility. He argued that an absolute assignment of Receivables would amount to their sale by Bexhill to Barclays and that this would be inconsistent with the relationship of lender and borrower of funds. If there was a "sale" of the Receivables, which were widely defined, then Barclays would be owner of all Bexhill's property, even if its value exceeded that of Barclay's loans to Bexhill. He submitted that this did not make commercial sense and the court had to construe the BB Debenture in a way that gave it commercial sense.
48. The starting point on the nature of the security granted to Barclays must be clause 3. On the face of clause 3.1.1 Bexhill "assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, title, interest and benefit in the Receivables", which is consistent with the assignment being absolute in the sense discussed above. Mr Rathmell concedes this much. So, based on this clause alone, once the "thing in action" constituted by the right to sue on the Charge came into existence, that would be the subject of an equitable assignment in favour of Barclays. Does that preliminary conclusion have to be modified in the light of the other provisions of this Debenture and the BBFA and by looking at the transaction as a whole to see the commercial sense of it, as Mr Rathmell argued?
49. Clause 3.2 identifies particular interests which are said to be the subject of either a "first legal mortgage" or a "first fixed charge". Before us there was a particular debate about the effect of clause 3.2.6 which purports to create a first fixed charge in favour of Barclays over the Collection Account. Mr Leonard drew our attention to the House of Lords' decision of In re Spectrum Plus Ltd^[15] in which it was held that a provision in a debenture that purported to create a "specific fixed charge" over book debts that had to be paid by the chargor into a specific bank account amounted in law to a floating charge only on the terms of that particular instrument. Mr Leonard at first submitted that, on the correct construction of the present Debenture, a "first fixed charge" was created over all monies standing to the credit of the Collection Account. Mr Rathmell was inclined to agree, especially in the light of the restrictive terms about Bexhill's ability to have access to the Collection Account that are set out in clause 13 of this Debenture. In reply submissions Mr Leonard modified his stance, because he accepted (correctly) that under the normal banker/customer relationship monies standing to the credit of a customer in an account with the bank will be property of the bank but the customer will have the benefit of a thing in action, namely the bank's debt to the customer in the amount of the credit balance in its favour. He submitted that the bank can and does have a fixed charge over that particular thing in action: see In re Bank of Credit and Commerce International (No 8).^[16]
50. But, as I understand it, whatever the position is on the security in respect of the Collection Account, it does not affect Mr Leonard's principal argument, which is that the nature of the assignment granted by clause 3.1.1 and 3.1.2 is unaffected. I agree. The words of clause 3.1.1 and 3.1.2 concern the Receivables and "each Relevant Contract". The words at the beginning of clause 3.2 state that Bexhill "hereby charges and agrees to charge, in favour of [Barclays] the following assets which are at any time owned by [Bexhill] or in which [Bexhill] is from time to time interested" (my emphasis). So the succeeding sub-paragraphs of clause 3.2 are only relevant to the present problem if the "thing in action" constituted by the rights concerning the Charge, including the right to sue on the Charge, are within one of those "following assets", and so fall outside the ambit of clause 3.1.1 and 3.1.2. In my view it is clear that the rights concerning the Charge do not fall within any of those "following assets". Clause 3.2.13, which provides that there will be a fixed first charge on assets "to the extent not effectively assigned under clause 3.1.1" begs the question of what is covered by clause 3.1.1 itself. As I have already said, in my view the rights concerning the Charge including the right to sue under the Charge are clearly within the ambit of clause 3.1.1.
51. In favour of the assignment being "absolute", Mr Leonard relied on the fact that, by clause 11.1.3, Bexhill agreed to collect all Receivables "in the ordinary course of trading" as "agent for" Barclays; in other words, the agent would be collecting his principal's assets. He submitted that clause 16 was not against his construction because it was concerned only with the enforcement of rights that had been or were agreed to be transferred, rather than the assignment, or transfer, itself. Mr Rathmell submitted that the security created by this Debenture was contingent and was only intended to transfer rights upon a default by Bexhill under the BBFA. He relied on clause 5.1 and 5.2,^[17] clause 7 and clause 16. He submitted that the requirement in clause 7 that Bexhill would promptly execute "such deeds or documents and take any action required by [Barclays] to perfect and protect the security created (or intended to be created)…" by the Debenture showed that the assignment in clause 3.1 was not "absolute". He submitted that this argument was reinforced by the terms of clause 7.1.2, by which Bexhill undertook to execute a legal assignment over "all or any of the Receivables and give notice of such assignment to the relevant Debtors…". Mr Rathmell also relied on clauses 3.2 and 17.1.3 and 17.1.10 of the BBFA to demonstrate that the parties intended that Barclays remain a stranger to all the contracts entered into by Bexhill with others, including Mr Razzaq.
52. I have concluded that Mr Leonard's submissions on this issue are correct. The wording of clause 3.1.1 is simple and clear. On the face of it the clause assigns absolutely to Barclays all existing Receivables^[18] and when future Receivables come into being then they will be the subject of an absolute assignments in equity. None of the sub-clauses of 3.2 apply to the particular thing in action comprised in the right to sue on the Charge. Clause 5 only confirms that the BB Debenture is a continuing security and is not prejudiced by other forms of security given by Bexhill. Clause 7 obliges Bexhill to "perfect and protect" the security created by the Debenture, but that does not touch the question of what has already been created by clause 3.1.1. Clause 7.1.2 is consistent with there being an existing "absolute" assignment in equity of a thing in action. Clause 11.1.3 is concerned only with the collection of Receivables, not with the issue of whether any interest in them has been assigned "absolutely" to Barclays. It is common in the commercial world for A to act as agent for B to collect money or other property that belongs to B.
53. Clause 16 deals with enforcement of the security, not the prior question of whether a security, in the form of a transfer of rights, has been created. It is a general clause, covering all the security "constituted by" the BB Debenture. Even if the effect of clause 16 is that Barclays could not enforce the right to sue on the Charge until there had been an Event of Default, the right would be there once the Charge came into existence. This does not create any difficulty for Bexhill if it wished to exercise a right to sue on the Charge before an Event of Default. Either Bexhill would obtain Barclay's agreement to be added as a claimant (in its capacity as assignee in equity) or, if Barclays refused its consent, Bexhill could add Barclays as a defendant to the action.
54. As for the more general arguments of Mr Rathmell that an absolute assignment is inconsistent with the commercial relationship between Barclays and Bexhill, I think this fails to take sufficient account of the distinctions drawn between the assignment created by clause 3.1 and the effect of the individual sub-clauses in clause 3.2. Clause 3.1 does transfer things in action to Barclays absolutely. Clause 3.2 creates various forms of charge. Both can be characterised as "continuing security" for the loan facility Barclays has afforded Bexhill. The creation of security by the transfer of rights relating to "Receivables" in favour of Barclays is consistent with the relationship of borrower and lender, particularly given the terms of clause 16. In my view the requirement in clause 17.1.10 of the BBFA that Bexhill must ensure that it is clearly stated to be acting as principal and not agent in respect of each Bexhill Facility and all documentation relating to it, does not point to an intention that there should be no "absolute" assignment of rights. Bexhill can be stated as being the principal to a contract with a third party, but the benefit of the rights under that contract can still be transferred to another. As already noted above, there is a difference between being assignee of a right under a contract and being the party who entered into that contract as principal. It is understandable that Barclays would not wish to take on any of the burdens of contracts with third parties, but only have the advantage of any benefits as assignee of rights. Further, as Mr Leonard pointed out, if Bexhill did not contract as principal, it would have nothing to assign.
55. To my mind the deciding factor is the obligation of Bexhill in clause 3.3 of the BB Debenture to give a notice of assignment to other parties to "Relevant Contracts" and the terms of that notice, as set out in schedule 2 of the BB Debenture. The standard form of letter is much more consistent with an absolute assignment rather than one by way of charge only. Further, the standard form of letter stipulates expressly that "all rights and remedies in connection with" any agreement that is made between Bexhill and its customers (such as RSA) and "all proceeds and claims arising from" such an agreement are also assigned. The phrases "in connection with" and "arising from" are broad. To my mind they would include RSA's rights on the Charge and the right to sue Mr Razzaq in respect of it.
56. Although the terms of clause 48 of the Bexhill FA and the letter of 20 June 2006 from Bexhill to RSA cannot assist on the correct construction of the BB Debenture and its effect, because they were created long after the BB Debenture, it is interesting to recall the terms of those documents. Clause 48 notified RSA that Bexhill had assigned to Barclays, pursuant to the BB Debenture, "…all its right title and interest in this [Bexhill FA] including all the rights and remedies in connection with the Finance Agreements [between RSA and its clients] and all proceeds and claims arising from this Agreement". Further the letter of 20 June 2006, in conformity with the terms of the standard wording in schedule 2 of the BB Debenture, states that by the BB Debenture Bexhill "has assigned to [Barclays] all its present and future right, title and interest in and to the [Bexhill FA]…including all rights and remedies in connection with [the Bexhill FA] and all proceeds and claims arising from [it]". Mr Razzaq signed the Bexhill FA and acknowledged receipt of the letter.

Issue Three: Nature of the "absolute assignment" of the rights connected with the Charge including the right to sue Mr Razzaq on the Charge

57. It follows from the previous discussion that once the Charge came into existence then the right of Bexhill to sue Mr Razzaq on it was assigned "absolutely" to Barclays in equity. No express notice of the assignment of this particular right by Bexhill to Barclays was given to Mr Razzaq, so the statutory formalities to make this an absolute legal assignment were not completed.

Issue Four: Was Bexhill authorised by Barclays to act as its agent to sue Mr Razzaq for possession of the Property pursuant to the Charge,

58. When there has been an assignment that takes effect in equity, the general rule is that it is the equitable assignee who has the right to sue, because it is the equitable assignee who is beneficially entitled to the thing in action. The assignor will not be allowed to maintain an action regarding the thing in action unless the assignee is joined as a party to the claim: see Three Rivers DC v Governor and Company of the Bank of England.^[19] In the present case this means, on my analysis, that Bexhill, which is the assignor with the legal interest in the Charge and the right to sue on it, could not normally sue Mr Razzaq on the Charge without joining Barclays. To get round this difficulty, it is argued that Bexhill can sue on its own, doing so as the agent of the equitable assignee, viz. Barclays. If, as I have held, there is an absolute assignment of the thing in action comprised in the Charge in equity then, following the analysis in the Three Rivers case, if Bexhill were able to sue on its own, it must be doing so in two capacities. First, it must be acting as the agent of the equitable assignee (Barclays) and, secondly, as principal, in its capacity of holder of the legal title of the thing in action.
59. This raises two problems: the first is whether, under the contractual arrangements between Bexhill and Barclays, the latter has given Bexhill authority to bring an action, as agent for Barclays, as an aid to recovery of "Receivables" created after the BB Debenture and which have become the subject of an absolute assignment to Barclays by virtue of clause 3.1 of the BB Debenture. The second problem is to identify the capacity (or capacities) in which Bexhill has actually brought the claim against Mr Razzaq for possession of the Property.
60. This second issue was not specifically argued before us. If it had been crucial to the outcome of the case it might have been necessary to obtain further argument from counsel on the point. But I have reached a clear view on the first of the two issues under this "agency" point in favour of Mr Razzaq, so, although I am in his favour on the second aspect also, I think that there is no need for further submissions on it.
61. On the first aspect, viz. has Barclays given Bexhill authority to bring an action, as agent for Barclays, as an aid to recovery of "Receivables" that have been absolutely assigned to Barclays by the BB Debenture, it is necessary to examine again the terms of the BB Debenture, in particular clause 11.1.3. That clause obliges Bexhill to "…collect all Receivables in the ordinary course of trading as agent for [Barclays]…". I have already accepted that the Charge comes within the BB Debenture definition of "Receivables", so the issue is whether the obligation to "collect all Receivables in the ordinary course of trading as agent for Barclays…" also grants Bexhill authority to sue on the Charge acting as agent for Barclays, as Mr Rathmell submitted it did.
62. In my view it plainly does not. Clause 11.1.3 obliges Bexhill to "collect all other Receivables [that are not paid into the Collection Account] in the ordinary course of trading as agent for [Barclays]…". That limits the collection to the ordinary course of trading. It does not expressly authorise Bexhill to act as agent for Barclays in any court proceedings to enforce, on behalf of Barclays, remedies which will result in obtaining monies which will then be paid into the Collection Account. Here, on the assumption that Barclays is the equitable assignee of all rights under the Charge, including the right to sue to enforce it, the argument would have to be that, by this clause, Barclays gave authority for the legal assignor to act as agent of the equitable assignee to bring an action on the thing in action to enforce its equitable rights. I think that it would need much more explicit wording than this to grant Bexhill such an authority to act as agent.
63. Further, the notion of Bexhill acting as agent for Barclays in this way seems to me to be inconsistent with what has been assigned to Barclays. By (ii) of the definition of "Receivables" Bexhill assigned the "benefit" ie the value or advantage of all claims for "damages and other" remedies relating to the Receivables set out in (i) of the definition. It would, in my view, need clear wording to authorise Bexhill to bring proceedings in Barclay's name of the very thing that had been assigned by clause 3.1.
64. Mr Rathmell relied on three cases in support of his proposition that such a generally worded clause grants Bexhill authority to act as agent for the equitable assignee of rights, whilst also acting as legal assignor and holding the proceeds of any such action as trustee of the equitable assignee. The first is the well-known case of Lloyd's v Harper.^[20] That was on very different facts and established only that Lloyd's, in its then form of being a newly created statutory body corporate, could, as trustee or agent for other underwriters, bring an action against the estate of a father who had guaranteed his son's liabilities upon him becoming a member of Lloyd's before it was incorporated. The second is the equally well-known case of Woodar Investment Development Limited v Wimpey Construction UK Limited.^[21] But in that case Lord Wilberforce was careful to point out that an agent may be able to sue on a contract which was made by him on behalf of his principal "if the contract gives him such a right". On my construction of the BB Debenture and BBFA, no such right is granted by Barclays to Bexhill. Neither Lord Russell nor Lord Scarman said anything pertinent to the present issue. The third case is the no less well – known Alfred McAlpine Construction Ltd v Panatown Ltd (No 1).^[22] Lord Clyde only made the general proposition that an agent may recover substantial damages that his principal has suffered. It does not deal with the issue of whether the agent has authority to bring the proceedings in the first place. Lord Millett reiterated the general rule (which Lord Goff of Chieveley had also noted) that allowing the contracting party to recover damages for the benefit of a third party did not offend the "privity rule". That has nothing to do with the present case where the very right to claim damages or any other remedy has been transferred to the third party concerned by virtue of the terms of the BB Debenture.
65. The judge said, at [17], that the parties knew and understood that Bexhill was acting as agent for Barclays. He referred to clause 17.1.10 of the BBFA and requirement that Bexhill must restrict its activities to (amongst other things) "the enforcement or realisation of [the Bexhill FA]". That obligation is in general terms and there is nothing in it giving Bexhill authority to act as agent for Barclays to bring an action on Barclays' behalf in the latter's capacity as an equitable assignee of rights under the Charge. The judge also referred to the terms of clause 11.1.3 of the BB Debenture. But, for the reasons I have given above, in my view that does not assist Bexhill.
66. That brings me to the second point under this issue. On the face of the claim form, Bexhill is the sole claimant and there is no indication that it is acting in any capacity other than as principal. If Bexhill were acting in two capacities, ie. as legal assignor (principal) and also as agent for the equitable assignee (Barclays) then one would expect there to be some indication of this. There is none. The only suggestion that Bexhill has been acting as agent for Barclays has been in counsel's argument before the judge and this court. Even then it has not been suggested that Bexhill has been acting in two capacities, both as principal and agent. I think it obvious that Bexhill has only ever been acting on its own behalf in bringing the proceedings pursuant to the Charge. It cannot suddenly (and unilaterally) change the capacity in which the proceedings are brought half way through them and without any indication that it is doing so, even assuming that it has authority to do so, which, in my opinion, it does not have. It was not argued that Barclays has, somehow, ratified the actions of Bexhill in a capacity of being Barclay's unauthorised agent. The terms of the Amendment Agreement of 20 July 2012 are, in any event, wholly inconsistent with any argument on ratification.
67. Accordingly, I would hold that Bexhill cannot bring and has not brought, these proceedings as agent for Barclays as principal and equitable assignee.

Conclusion and Disposal

68. For all the reasons I have attempted to give, I would allow Mr Razzaq's appeal. I would propose that, instead of paragraph 1 of the judge's order of 11 October 2011, there should be suitable declarations to the effect that (a) the Charge and the right to sue Mr Razzaq on it are the subject of an absolute assignment which operates in equity in favour of Barclays; (b) Bexhill does not have the right, as sole claimant, to sue Mr Razzaq on the Charge, either on its own behalf or as agent for Barclays; (c) if the claim against Mr Razzaq is to be pursued, an application to join Barclays to the action must be made; and (d) any such application will be remitted to the judge to determine. Counsel will need to consider what further consequential orders need to be made.

Lady Justice Black

69. I agree.

Lord Justice Ward

70. I also agree.

Note 1   A “Qualifying Retail Financier” (“QRF”) is defined as a “wholly owned subsidiary of an insurance broker” that entered into a facility with Bexhill. A “Qualifying RF Loan” is defined as a properly documented loan made by a QRF to an “End Customer” (a) in accordance with the terms of the Qualifying RF Loan Criteria and (b) for the purposes of funding the premium of an insurance policy”. Mr Leonard submitted that RSA was not within the definition of QRF and that the Bexhill FA was not a “Bexhill Facility” within that definition. But those matters were not explored in detail before us.     [Back]

Note 2   As Mr Leonard pointed out, the Bexhill FA is not, in the traditional sense, a “factoring facility”, whereby A sells to B, the “factor,” the account receivables of A, in return for a lump sum, which will be a discounted amount of A’s total account receivables sold.    [Back]

Note 3   The definition of Receivables in the BBFA is: “…on any relevant date, the gross amount which is legally recoverable in respect of Qualifying Retail Financier Receivables pursuant to a Bexhill Facility [net of sums due to the QRF] on the assumption that such Bexhill Facility is voluntarily terminated by the QRF on such date…”.    [Back]

Note 4   “Relevant Contract” is defined as meaning “each of the Retail Financier Assignments and the Bexhill Facility Agreements as may be in existence from time to time”.     [Back]

Note 5   Notice of this “assignment” is given by Bexhill to RSA in clause 48 of the Bexhill FA and the letter in Schedule 2 of that agreement. There is a similar standard wording of a notice of assignment in Sch 2 of the Bexhill-Barclays Debenture. There is no separate “assignment” document between Bexhill and Barclays.     [Back]

Note 6   This has the same definition as in the BBFA.    [Back]

Note 7   I think that this is intended to refer to clause 11.1.3 of the BB Debenture, quoted at [19] above.     [Back]

Note 8   “Assignments by [Bexhill]: as a continuing security for the payment of the Secured Obligations [Bexhill] hereby with full title guarantee, assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, titles, interests and benefits in the Receivables…”    [Back]

Note 9   Section 136(1) provides: “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 thing in action, of which express notice in writing has been given to the debtor…or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice – (a) the legal right to such debt or thing in action; (b) all legal and other remedies for the same; (c) the power to give a good discharge for the same without the concurrence of the assignor;…..”. It is not necessary to set out the proviso.    [Back]

Note 10   Tailby v Official Receiver (1888) 13 App Cas 523. See also Annangel Glory Compania Naviera SA v M Golodetz Ltd et al (The “Annangel Glory”) [1988] 1 Lloyd’s Rep 45 at 47-8, where this principle was applied to future sub-freights.    [Back]

Note 11   [1902] 2 KB 190 at 193. See also, eg. Court Line Ltd v Aktiebolaget Gotaverken (The “Halcyon the Great”) 1984 1 Lloyd’s Rep 283 at 288 per Staughton J.    [Back]

Note 12   A reference to section 25 of the Judicature Act 1873, the predecessor of section 136 of the LPA 1925, although the phrase “chose in action” in the former statute was changed to “thing in action” in the latter.    [Back]

Note 13   [1996] 2 BCLC 78 at 84 and 85.    [Back]

Note 14   Coakley v Argent Credit Corporation Plc and others: decision of 4 June 1998, unrep.    [Back]

Note 15   [2005] 2 AC 680    [Back]

Note 16   [1998] AC 214.    [Back]

Note 17   5.1: “This Debenture shall be in addition to…any other security which [Barclays] may at any time hold for any of the Secured Obligations….”; 5.2 “This Debenture shall remain in full force and effect as a continuing security until [Barclays] shall have certified in writing that the Secured Obligations have been discharged in full”.     [Back]

Note 18   Whether they will be legal assignments within section 136 LPA 1925 will depend on whether express notice in writing has been given to the debtor in each case.     [Back]

Note 19   [1996] QB 292    [Back]

Note 20   (1880) 16 ChD 315, in particular at 315 per James LJ, 316-7 per Cotton LJ and 321 per Lush LJ.    [Back]

Note 21   [1980] 1 WLR 277, in particular the passages at 283-4 per Lord Wilberforce, at 293-4 per Lord Russell and at 299-301 per Lord Scarman.    [Back]

Note 22   [2001] 1 AC 518, particularly at 522-3 per Lord Clyde and 581 per Lord Millett.    [Back]