An assignment of the cause of action should not be recognised or given effect because it was a ‘sham’.
Hirst LJ said that the assignment was: ‘a mere stratagem or device to enable the company to carry on the proceedings, with the support of Mr. Pratt’s [the assignee] legal aid, which manifestly neither they nor he could afford to do otherwise. . . The sole purpose of the assignment was therefore to tap the resources of the legal aid fund, which are available to Mr. Pratt only because of his own impecuniosity.’ To give effect to the assignment would conflict with ‘the underlying policy of the Act,’ which was that ‘legal aid should not be available to corporate plaintiffs.’
Leggatt LJ said: ‘When Parliament decided that legal aid should not be available to corporations, it cannot have been its intention that a corporation should be able to nominate an employee, to whom it has assigned a right of action, to conduct the litigation on its behalf with the assistance of legal aid for which he was eligible.’
Judges:
Hirst LJ, Leggatt LJ, Glidewell LJ
Citations:
[1993] BCLC 723
Jurisdiction:
England and Wales
Cited by:
Distinguished – Norglen Ltd (In Liquidation) v Reeds Rains Prudential Ltd and Others; Etc CA 6-Dec-1995
An assignment of a cause of action in order to be eligible to apply for Legal Aid is not against public policy. An assignment of a cause of action was not invalid solely on the ground that its purpose was to enable the action to be prosecuted on . .
Wrongly decided – Norglen Ltd (In Liquidation) v Reeds Rains Prudential Ltd and Others; Circuit Systems Ltd (In Liquidation) and Another v Zuken-Redac HL 1-Dec-1997
An assignment of a cause of action by a company in liquidation was valid, even though the dominant purpose was to avoid having to give security for costs, and to get legal aid. In dismissing the argument that the transactions were a device to defeat . .
Lists of cited by and citing cases may be incomplete.
Legal Aid, Company
Updated: 16 May 2022; Ref: scu.223194