Counsel's Opinion

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Credit Hire - Arguing Assignment of the Debt

Material 136 of the Law of Property Act 1925


It's sometimes the case in Credit Hire matters that the credit hire company has gone through financial difficulties and has entered into liquidation. The question at that point becomes the assignment of the outstanding debt and whether the claimant can still pursue the claim.

Under section 136 of the Law of Property Act 1925 the debtor is required to be informed of any such assignments in writing for them to be effective. It is also important to note that the Act provides no time limit in which to take this step.

As part of the claims procedure, the claimant should have been sent a notice in writing by their solicitors. These notices are usually included within the bundle and may be referred to within the claimant’s witness statement. Parties should ensure that they have copies of the said notices prior to their attendance at the hearing.

While this point is very rarely taken by defendants, it is prudent to ensure that the claimant is aware of the assignment. Providing them with a copy of the notification of assignment, (even at the door of court), is likely to be found sufficient to discharge the burden placed by the Act.

It is in any event questionable as to how relevant such an argument is. If it is raised, it should be strongly challenged as being misconceived.

The claimant brings the claim in their own name. There is no question of the loss being a subrogated loss. At all times, the loss remains the claimant’s loss, the only thing that alters is to whom the monies are to be repaid.

Clearly this would initially have been to the credit hire company given that the claimant contracted with them, however following the assignment of the debt it will now be the debt collection agency.

The claimant’s right to bring the claim and recover the hire charges is not affected as a result of the assignment.

If the claim is challenged on the basis that the credit hire organisation has been liquidated it is important to note that even without notification, the assignment between the credit hire organisation and the debt collection agency is a valid equitable assignment (whether the debtor/claimant is notified or not).

Such an assignment is freely convertible into a legal assignment at any time prior to the debt collection agency bringing a case directly against the debtor/claimant. The claim therefore can be pursued despite the credit hire company entering into liquidation.

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