Investors Compensation Scheme Ltd v West Bromwich Building Society

JurisdictionEngland & Wales
Judgment Date03 October 1996
Date03 October 1996
CourtChancery Division

Chancery Division

Before Mr Justice Evans-Lombe

Investors Compensation Scheme Ltd
West Bromwich Building Society Same v Hopkin & Sons (a Partnership) Alford and Others v West Bromwich Building Society Armitage v Same

Chose in action - cause of action - not separable for purposes of assignation

Claims by investors not validly assigned to compensation scheme

Whereas a cause of action might constitute a chose in action capable of assignment, there was no authority for the proposition that part of the remedies available to the owner of that chose to enforce his ownership could be separated from his cause of action so as to constitute an assignable chose in action in its own right.

Mr Justice Evans-Lombe so held in the Chancery Division when declaring, on preliminary issues:

1 That upon the true construction of the standard Investors Compensation Scheme claim forms, claims for

(i) damages or equitable compensation for undue influence, misrepresentation, breach of duty, and/or breach or assistance in breaches of fiduciary duty; and

(ii) an account of sums owing between the Alford and Armitage investors and West Bromwich Building Society "after abatement or adjustment in respect of the said damages and/or compensation"; made by those investors (a) had not been validly assigned to the ICS; and (b) could be pursued by the said investors.

2 That the claims advanced by ICS had not been validly assigned.

ICS was established under the provisions of section 54 of the Financial Services Act 1986 pursuant to which there were brought into existence the Financial Services (Compensation of Investors) Rules 1990.

Investors suffering losses as a result of breaches of the rules obtained compensation from the scheme by submitting claim forms which under section 3(a) of the forms required a declaration that the claimants had received no compensation of any kind and confirming that they did not expect to receive any in the future.

A further declaration stated that ICS would take over the claimants' rights and claims against third parties on the payment of any compensation as described in the transfer of rights at section 4 of the form.

Section 3(b) of the claim form provides: "ICS agrees that the following claim shall not be treated as a third party claim for the purpose of this agreement and the benefits of such claim shall inure to you absolutely:

"Any claim (whether sounding in recission for undue influence or otherwise) that you have or may have against [the West Bromwich Building Society] in which you claim an abatement of sums which you would otherwise have to repay to that society in respect of sums borrowed by you from that society in connection with the transaction and dealings giving rise to the claim (including interest on any such sums)."

Section 4 provides: "5 We agree that in the event of our receiving moneys or assets in respect of the claim from the participant firm or from any trustee appointed under the Financial Services Act 1986 we will forthwith pay or transfer them to ICS.

Section 6 provides: "We hereby assign to ICS each and every third party claim and the benefit thereof".

The two preliminary issues for decision were:

"1(a) Whether, upon the true construction of the express and (if any) implied...

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