I understand the “law of assignment” to involve the law governing the transfer of a chose in action.  In practical terms the important questions are (i) who can sue the debtor and, as an aspect of this question, to whom can the debtor look for a good receipt?; (ii) what must be done to effect to an assignment?, (iii) what defences may the debtor raise if sued by the assignee, with or without the assignor.

The requirements of a legal assignment are set out in Ontario in the Conveyancing and Law of Property Act:

53.(1)   Any absolute assignment made on or after the 31st day of December, 1897, by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action is effectual in law, subject to all equities that would have been entitled to priority over the right of the assignee if this section had not been enacted, to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor.

The transfer is achieved by the notice; until the debtor receives notice it can pay the assignor and get a good receipt from it.  Without notice, there can be no assignment in the sense in which I use that word.

An equitable assignment also requires notice but that notice need not meet the requirements of a legal assignment. The classic statement of the effect of notice is that of Lord Macnaghten in William Brandt’s Sons & Co. v. Dunlop Rubber Company, Limited., [1905] A.C. 454 (H.L.).  Lord Macnaghten was there dealing with what constitutes an equitable assignment where the notice in question did not “purport to be an assignment nor use the language of an assignment”.  He said, p. 462:

An equitable assignment does not always take that form.  It may be addressed to the debtor.  It may be couched in the language of command.  It may be a courteous request.  It may assume the form of mere permission.  The language is immaterial if the meaning is plain.  All that is necessary is that the debtor should be given to understand that the debt has been made over by the creditor to some third person.  If the debtor ignores such a notice, he does so at his peril.  If the assignment be for valuable consideration and communicated to the third person, it cannot be revoked by the creditor or safely disregarded by the debtor.

(Emphasis added.)

On the facts given by Peter, no notice was given to C, the debtor and, as I said, there could then be no assignment.  The giving of notice is the method by which the right of the assignee to the chose in action is conferred; the notice protects the assignee’s “title” in the chose in action; as Lord Macnaghten says, after notice the debtor pays the assignor “at [its] peril”.  In other words, without notice, there would have been no transfer of the chose in action, either at law or in equity; C would have been free to pay B and no one else could say that C did not have the right to do that.  On C’s paying B, no one else can have a claim against C. The chose in action has disappeared; the debt has been discharged.  The subsequent fight between the other parties mentioned by Peter does not involve an assignment because there hasn’t been one and, until C gets notice there cannot be one.

Angela Swan

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