Law report : BCCI to join depositors in suing Bank of England

Three Rivers District Council and others v Governor and Company of the Bank of England - Court of Appeal (Lord Justice Staughton, Lord Justice Waite a nd Lord Justice Peter Gibson), 23 November 1994.
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Where a plaintiff had equitably assigned his claim against the defendant, he could not continue pursuing the action without joining the assignee as a claimant.

The Court of Appeal allowed an appeal by the plaintiffs, Three Rivers District Council and 6,018 other depositors with the Bank of Credit and Commerce International SA (now in liquidation), all of whom are suing the Bank of England for misfeasance in failing to discharge its duty in supervising and licensing BCCI, against the refusal by Mr Justice Gatehouse on 20 April to give them leave to amend their writ and points of claim to add BCCI, to whom their claims have been equitably assigned, as a n

o n-claiming plaintiff.

The action was, in fact, being directed and financed by BCCI's liquidators, and any money recovered would go not just to the plaintiff depositors but all creditors in proportion to what they were owed. But although the claims were equitably assigned to BCCI, it was not itself made a party. The Bank of England objected. On 6 December 1993, the judge ruled the action be stayed unless the plaintiffs joined BCCI as a party. The plaintiffs then sought to amend their writ to add BCCI as a party "in order to comply with" the judge's order, but one "which makes no claim against the defendant".

The judge took the view that the claim disclosed no cause of action, since the assignees made no claim and the depositors had no claim left since they had assigned it. He refused leave to amend and stayed the action.

The plaintiffs now proposed adding "other than or in addition to the claims which it is already presenting using the names of the individually named plaintiffs who are the legal owners of the claims equitably assigned to it".

Sir Patrick Neill QC, V V Veeder QC and Dominic Dowley (Lovell White Durrant) for the plaintiffs; Gordon Langley QC, Nicholas Stadlen QC and Mark Phillips (Freshfields) for the Bank of England.

LORD JUSTICE STAUGHTON said that the issue was not whether one party could sue without joining the other: the judge had resolved that on 6 December 1993 and the depositors were ready to join BCCI as co-plaintiff. The question was whether the depositors still had a cause of action, despite the equitable assignment.

Before the Judicature Act 1873, the common law did not recognise an assignment of a chose in action, save in the case of bills of exchange and bills of lading. But equity would compel an assignor to allow the assignee to use his name.

His Lordship rejected the defendant's argument that after the 1873 Act the equitable assignor no longer had any cause of action and could not sue in his own name, even if his name was merely being used by the assignee. In his Lordship's judgment, the as

s ignor still had a cause of action at law, while the assignee had a cause of action in equity. The assignee could use the assignor's name, if he wished, as before the 1873 Act.

The assignee's claim prevailed, if he insisted upon it: the Supreme Court Act 1981 said so. But where the assignee was a party to the action and expressly declined to make a claim, there seemed no reason why the assignor would not claim what was his legal right.

The plaintiffs' amendments should be allowed, with or without the proposed additional words.

LORD JUSTICE WAITE agreed with the judge's approach but was prepared to allow the appeal and amendment if the additional words were included.

LORD JUSTICE PETER GIBSON would also allow the appeal on that basis. The authorities since 1873 clearly established that the equitable assignee could be regarded realistically as the person entitled to the assigned chose in action and able to sue the debtor on that chose, but that save in exceptional circumstances the court would require him to join the assignor as a procedural requirement so that the assignee might be bound and the debtor protected. If the assignor sued, he would not be allowed the maintain the action in the absence of the assignee.

The judge was right to refuse to allow amendments which, while bringing the assignee before the court, left the respective roles of assignor and assignee uncertain. The additional wording resolved that uncertainty, and on that basis the appeal should be allowed.

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