HT-2023-000306 - [2025] EWHC 385 (TCC)

The second limb of the Preliminary Issue arises because of the conclusion that the assignment of the MPA Claim was ineffective by virtue of clause 16.2 of the PM Appointment.

It is helpful to set out again clauses 16.2 and 18.2 of the T&Cs.

Clause 16.2 provides:

“The benefit of this Appointment may be assigned by the Client by way of an absolute legal assignment to any person providing finance or refinance to the Client in connection with the Project or to any person (A1) acquiring the Client’s interest in the Project and by (A1) to another person (A2) acquiring A1’s interest in the Project. No further or other assignment is permitted and, in particular, A2 is not entitled to assign this Appointment.”

Clause 18.2 provides:

“Nothing in this Appointment confers or purports to confer any right to enforce any of its terms on any person who is not a party to it. Only the Client (and the Client’s Permitted Assignees) and the Consultant can take action to enforce the terms of this Appointment.”

The Claimant says that the use of the Vandepitte procedure is appropriate for this claim. In essence, that procedure is a procedural mechanism which allows the beneficiary under the trust to bring the claim himself, while joining the trustee as a party, where the trustee has refused to sue.

The procedure was explained by Lord Wright in Vandepitte v Preferred AccidentInsurance Corp of New York [1933] AC 70(PC) at 79:

“No doubt at common law no-one can sue on a contract except those who are contracting parties and (if the contract is not under seal) from and between whom consideration proceeds: the rule is stated by Lord Haldane in Dunlop Pneumatic Tyre Co v Selfridges & Co: “My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as, for example, under trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in personam. In that case, as in Tweddle v Atkinson, only questions of direct contractual rights in law were in issue, but Lord Haldane states the equitable principle which qualifies the legal rule, and which has received effect in many cases as, for instance, Robertson v Wait, Les Affrétteurs Rétunis v Société Anonyme v Leopold Walford (London) Ltd, Lloyds v Harper – namely, that a party to a contract can constitute himself a trustee for a third party of a right under the contract, and thus can confer such rights enforceable in equity on the third party. The trustee can then take steps to enforce performance to the beneficiary by the other contracting party, as in the case of other equitable rights. The action should be in the name of the trustee; if, however, he refuses to sue, the beneficiary can sue, joining the trustee as defendant.

The Claimant says that given the express statement in Recital F to the Declaration of Trust that Kazu 1 has “declined to bring the MPA Claim”, Mr Goldkorn is entitled to utilise the Vandepitte procedure by bringing the MPA Claim himself.

In my judgment, before considering the applicability, or otherwise, of the Vandepitte procedure, it is necessary to start with the contract. Clause 16.2 prevents assignment of the claims for damages to Mr Goldkorn in the circumstances which have occurred. Further, clause 18.2 prevents anyone other than the Client, the Client’s permitted assignees and the Consultant from taking action to enforce the terms of the Appointment. Mr Goldkorn is not the Client, nor is he the Client’s permitted assignee, and he is not the Consultant.

In my judgement, therefore, the effect of clauses 16.2 and 18.2 is that Mr Goldkorn is prevented from taking action, as he has done by issuing proceedings to enforce the Appointment. His claim is for damages for breach, and that is indeed a claim to enforce the terms of the Appointment.

In my judgment, that is the complete answer to the claim brought as a Beneficiary.

Both Counsel addressed argument to me on whether the Vandepitte procedure was applicable by reference to Don King Productions Inc v Warren [2000] 291 Ch, and Barbados Trust Co Ltd v Bank of Zambia [2007] EWCA Civ 148. In my judgment, neither authority has any relevance in the circumstances of this case because the language of clauses 16.2 and 18.2 of the T&Cs prevents the Claimant from doing what he is attempting to do through these proceedings. In any event, although the Barbados Trust case contains conflicting guidance, it is common ground that the views expressed in the judgments of the Court of Appeal in respect of whether the Barbados Trust Company Ltd could avoid the non-assignment clause via the use of the Vandepitte procedure were obiter.

Accordingly, the Claimant does not have title to bring any of the claims set out in the Particulars of Claim against MPA as beneficiary of rights held on trust for him by Kazu 1 pursuant to the Declaration of Trust dated 14 February 2022 either (a) in his own name or (b) in order to compel Kazu 1 to enforce those rights on his behalf.

The answer to both Issues formulated through the Preliminary Issues ordered to be determined by Eyre J at paragraph 2 of his Order dated 22 August 2024 is: “No”.

I invite Counsel to draw up the Order to reflect this Judgment. I extend time for the hearing of any consequential applications for a period of 14 days after hand down with liberty to apply to both parties.