FS Capital judgment on validity of assignment of contractor loans

[GregRickshaw]

Luca Modric is a barrister in the summer!? Wow

[Ian Richardson GT Leeds]

this is from the barrister acting for the contractors

https://www.linkedin.com/posts/james...member_desktop

[cojak]

Oh wowser! Thanks a lot for this Ian.

It could close down the original shark selling on the ‘debts’ to subsequent sharks though? I remember that someone here has pointed to the failure of Trusts to act properly in this area.

[Ian Richardson GT Leeds]

Thanks for the rapid posting.

If I'm reading things correctly - basically the trust can't reassign the loans and FS Capital Ltd's attempt to take ownership of the loans and so reclaim the money lent is invalid...

i don't think it's that definite

to me, it says that this attempted assignment was ineffective, and so the purported assignee has no interest in the loans

it doesn't say that other assignments would necessarily be ineffective (but it seems that it would be difficult for trust based schemes) and doesn't address at all whether or not the courts would support attempts to enforce collection of the loans by a party that has a proper interest in the loans

[eek]

Thanks for the rapid posting.

If I'm reading things correctly - basically the trust can't reassign the loans and FS Capital Ltd's attempt to take ownership of the loans and so reclaim the money lent is invalid...

[Ian Richardson GT Leeds]

Alan Adams & Ors v FS Capital Limited & Ors - Find case law (nationalarchives.gov.uk)

i haven't fully read this yet, but the key paras appear to be:

403.
In summary, my conclusions are as follows:

(1)
In relation to the 2014 Trust, the Loan Assets were vested in the Second Defendant, as trustee of the 2014 Trust.

(2)
In relation to the 2014 Trust, the Loan Assets were, subject to the question of improper purpose, vested in the First Defendant by the Deed of Confirmation.

(3)
The Disposal was effected for an improper purpose, and thereby constituted a breach of the Trusts.

(4)
The First Defendant had actual notice of the fact that the Disposal was effected in breach of trust. As such, the First Defendant cannot claim to be a bona fide purchaser for value of the Loan Assets without notice, and is bound by the rights of the Claimants, as Beneficiaries, in respect of the breach of trust.

(5)
By reason of the fact that the Disposal was effected for an improper purpose, the Disposal was void, so far as it purported to transfer the Beneficial Interest to the First Defendant.

(6)
The Claimants are not required, as a condition of the relief which they will be granted in relation to the Disposal, to make payment or repayment of the sum of £100,000 which constituted the basic consideration payable on the Disposal. While this position was accepted by the First Defendant on the hypothesis (which I have found to be correct) that the Disposal was void, the position would have been the same if I had decided that the Disposal was voidable.

(7)
In theory, the First Defendant is liable to the Claimants for knowing receipt of trust property. On my findings, this does not give rise to a material claim. Whether any order is required in this respect is a matter on which I will need to hear further from the parties.

(8)
The Second Defendant was in breach of its obligations as trustee of each of the Trusts. In the case of the 2011 Trust and the 2012 Trust this breach of trust arose out of the retirement of the First Defendant as trustee of the 2011 Trust and the 2012 Trust and the appointment of Pinotage PTC as new trustee. In the case of the 2014 Trust, this breach of trust arose out of the direct involvement of the Second Defendant with the Disposal. Whether any order is required in this respect is a matter on which I will need to hear further from the parties.