Assignment without consent:
Barbados Trust Co Limited vs Bank of

James Watters

Under English law, an asset finance
agreement is assignable without consent – unless it states it is
not assignable or only assignable with the lessee’s consent.

It would be unusual for any lease,
especially in the middle or small-ticket area, to be non-assignable
but it is not unusual for big ticket leases and leases to local
authorities, NHS trusts and similar bodies only to assignable with

What if consent is not given when
the assignment occurs and given later – or never given?

These issues were most recently
considered by the courts in the case of Barbados Trust Co
Limited vs Bank of Zambia [2007] 1 CLC 434

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Masstock was due debt from Bank of
Zambia (BoZ), which it sold to Bank of America (BofA). Prior
consent to assign was required but deemed to be given if there was
no response to a request for it from BoZ within 15 days.

Consent to the assignment to BofA
was applied for on 2 December 1999 and BoZ failed to respond which
meant it was deemed to consent to the assignment on 17

In the meantime, Masstock entered
into an assignment with BofA on 10 December – before the deemed
consent was given.

Would the assignment be effective
when consent to it was only given after its date?

The first judge’s response to this
was practical.

He simply said that the giving of
deemed consent on 17 December was effective to complete the
acquisition by BofA: the assignment took effect on the date of
actual or deemed consent so that consent could be properly treated
as being given prior to the assignment.

His decision was appealed. In the
Court of Appeal, one judge, Waller LJ agreed with the first judge
but the remaining two judges did not.Waller LJ said it made no
commercial sense that, years after the event, BoZ could resist the
claim on the grounds that consent was not given when BoZ
appreciated that their consent had been “deemed” to have been

However, Rix and Hooper LJJ took
the simple view that, at the date of assignment, consent had not
been given and as a consequence the assignment to BofA was invalid
and it could not be said that prior consent had been given when it
was actually received subsequently.

It is not unusual for it to be
assumed that because consent is given after an assignment, this
somehow makes the assignment valid retrospectively.

This case makes it clear that that
view is wrong and, in legal terms, no assignment has occurred.

Next month we look at the rights of
an assignee in such circumstances.

The author is a partner at the
law firm Watson Farley & Williams LLP