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Hello
I have a question about notice requirements when a debt is assigned.
The situation is as follows (I posted this on a another business forum before I can across this site and the threads here about notice of assignment of a debt). I have added some additional information for the purposes of this question:
"My question relates to the activities of a trading company that knows CHouse is about to strike it off/dissolve it for non compliance. Can the company transfer its debtors to another company before it is struck off/dissolved?
I was a customer of Altd and owed ALtd monies for advertising services in magazines published by ALtd. The owner of ALtd was a close friend ("Y") and, when my business hit a difficult patch and I could not pay the invoices I owed ALtd, I gave a charge over my property in respect of the debt.
The charge was given in the name of XLtd, another company owned Y. I assumed at the time that XLtd was rightly entitled to the benefit of the charge, as a company in the same group as ALtd. After all, I was dealing with a good friend, it never occurred to me that he would be deceiving me in any way. Even though by that time he was threatening to issue bankruptcy proceedings if I did not give the security
It was only 2 years later that I was tipped off with information that lead me to discover ALtd had only printed a small fraction of the magazines I had contracted for (5-10,000 copies per edition rather than 70-100,000 copies each, with 7 editions printed in total). Of course, had I known that earlier, I would have disputed the debt and not given the charge.
I also had no idea at the time that I gave the charge that Altd had been dissolved - it continued to trade under the same brand name, at the same address, with the same staff. In fact, I now know there was another company, Bltd, and from what I can make out, it carried on Altd's trade after Altd was dissolved. It seems 2 editions of the magazine were published by Bltd.
At the time I gave the charge, I was not even aware of the existence of Bltd and I did not know that both Altd and Bltd had been dissolved.
In 2013 I received a letter from Y enclosing a copy of the charge, now showing him as the registered owner in place of XLtd, and demanding payment or he would seek enforcement. This was the first I was aware that the charge had been assigned. In fact I was so taken aback I did a Land Registry search, because my initial reaction was that he must have fabricated the copy register document!
The charge is still in place some 8 years after being given and I am looking into applying to court to have it set aside on the basis that it should never have been given in the first place."
I received no notice at any time that the debt I owed Altd had been assigned to Bltd and then BLtd had assigned it to Xltd. Nor was I notified that Xltd had assigned the charge to Y.
Am I understanding correctly what I have read here re section 196 PA1925 :
- I should have been given notice at each assignment. I was given no such notice. In fact, if anything, great care was taken to ensure I had no idea of what was going on behind the scenes.
- That may not be fatal to Y who now has the charge in his own name. He could argue they were equitable assignments rather than legal assignment.
- However, if he relies on equitable assignment to the enforce the charge, he would have to join in the legal action the company that assigned the charge to him, ie XLtd.
ALtd , BLtd and XLtd have long been dissolved (Y has a trail of companies struck off for non compliance......) so he would not be able to do that.
Have I over-simplified or missed something here?
Many thanks for your help, much appreciated.
SNZ
I have a question about notice requirements when a debt is assigned.
The situation is as follows (I posted this on a another business forum before I can across this site and the threads here about notice of assignment of a debt). I have added some additional information for the purposes of this question:
"My question relates to the activities of a trading company that knows CHouse is about to strike it off/dissolve it for non compliance. Can the company transfer its debtors to another company before it is struck off/dissolved?
I was a customer of Altd and owed ALtd monies for advertising services in magazines published by ALtd. The owner of ALtd was a close friend ("Y") and, when my business hit a difficult patch and I could not pay the invoices I owed ALtd, I gave a charge over my property in respect of the debt.
The charge was given in the name of XLtd, another company owned Y. I assumed at the time that XLtd was rightly entitled to the benefit of the charge, as a company in the same group as ALtd. After all, I was dealing with a good friend, it never occurred to me that he would be deceiving me in any way. Even though by that time he was threatening to issue bankruptcy proceedings if I did not give the security
It was only 2 years later that I was tipped off with information that lead me to discover ALtd had only printed a small fraction of the magazines I had contracted for (5-10,000 copies per edition rather than 70-100,000 copies each, with 7 editions printed in total). Of course, had I known that earlier, I would have disputed the debt and not given the charge.
I also had no idea at the time that I gave the charge that Altd had been dissolved - it continued to trade under the same brand name, at the same address, with the same staff. In fact, I now know there was another company, Bltd, and from what I can make out, it carried on Altd's trade after Altd was dissolved. It seems 2 editions of the magazine were published by Bltd.
At the time I gave the charge, I was not even aware of the existence of Bltd and I did not know that both Altd and Bltd had been dissolved.
In 2013 I received a letter from Y enclosing a copy of the charge, now showing him as the registered owner in place of XLtd, and demanding payment or he would seek enforcement. This was the first I was aware that the charge had been assigned. In fact I was so taken aback I did a Land Registry search, because my initial reaction was that he must have fabricated the copy register document!
The charge is still in place some 8 years after being given and I am looking into applying to court to have it set aside on the basis that it should never have been given in the first place."
I received no notice at any time that the debt I owed Altd had been assigned to Bltd and then BLtd had assigned it to Xltd. Nor was I notified that Xltd had assigned the charge to Y.
Am I understanding correctly what I have read here re section 196 PA1925 :
- I should have been given notice at each assignment. I was given no such notice. In fact, if anything, great care was taken to ensure I had no idea of what was going on behind the scenes.
- That may not be fatal to Y who now has the charge in his own name. He could argue they were equitable assignments rather than legal assignment.
- However, if he relies on equitable assignment to the enforce the charge, he would have to join in the legal action the company that assigned the charge to him, ie XLtd.
ALtd , BLtd and XLtd have long been dissolved (Y has a trail of companies struck off for non compliance......) so he would not be able to do that.
Have I over-simplified or missed something here?
Many thanks for your help, much appreciated.
SNZ
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