Financial Crime World

Court Rules in Favor of LCaribbean, Invalidating Notice of Assignment

In a significant court decision, the crown’s application to discharge or vary a Mareva injunction was struck out, leaving them with no choice but to pay sums owed to LCaribbean as ordered. This ruling has far-reaching implications for all parties involved.

Background

The Government of Saint Lucia (GOSL) served notices on Kensington Caribbean Limited (KCL), purporting to assign accounts receivable from a project. However, the court found that these notices were invalid due to lack of evidence of acceptance by KCL.

Court Ruling

According to Article 1479 of the Code, any absolute assignment requires express notice in writing to the debtor or other person from whom the assignor would have been entitled to claim the debt. The court cited a UK case, Curran v Newpark Cinemas Ltd and others, which emphasized that for an assignment to be valid, it must be:

  • In writing
  • Signed by the assignor
  • Communicated to and accepted by the assignee

The notices served on KCL failed to meet these criteria, as there was no indication of acceptance or communication with KCL. As a result, the court ruled that any prior mandate from the customer is automatically annulled when the bank receives notice of the Mareva injunction, rendering it ineffectual and amounting to contempt of court.

Implications

This ruling has significant implications for all parties involved, including:

  • GOSL: The need for strict adherence to the requirements of assignment in law
  • KCL: The importance of clear communication and acceptance by the assignee
  • LCaribbean: The confirmation of their rights to receive payment as ordered

Conclusion

The court’s decision emphasizes the need for careful consideration when assigning debts or accounts receivable. It is essential to ensure that all necessary steps are taken, including providing written notice and obtaining acceptance from the assignee. This ruling serves as a reminder of the importance of following legal requirements to avoid potential disputes and complications.