Champerty And Assignment Of Causes Of Action

Published date19 March 2024
Law FirmWilliam Fry
AuthorMr Ruairi Rynn and Paul Convery

McCool Controls and Engineering Ltd v Honeywell Control Systems Limited[2024] IESC 5.

The facts

McCool Controls and Engineering Limited (Company) was the original plaintiff in proceedings against Honeywell Control Systems Ltd (Honeywell) for alleged breaches of an agreement between the parties. The proceedings were commenced in 2005. Mr McCool was the managing director and majority shareholder of the Company, and he brought an application to substitute him for the Company as the plaintiff in the proceedings, where the Company could no longer afford legal representation. The application was based on an assignment entered into between the Company and Mr McCool, whereby the Company assigned the cause of action to him for the nominal consideration of '1 (First Assignment). The First Assignment contained a clause allowing Mr McCool to reassign any or all the rights transferred (onward transmission clause).

Honeywell successfully applied to have the substitution order discharged. The High Court (Noonan J) found that the assignment was invalid and an abuse of process as it amounted to an impermissible attempt to circumvent the rule in Battle (as discussed in our article here). The assignment was also found to savour of champerty (meaning it is conducive to carrying out champerty) because it expressly provided for the onward transfer of the cause of action to a disinterested third party. Mr McCool appealed the decision to the Court of...

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