Section 10 – Protection of debtor who performs in good faith
63.Previously, a claim would only transfer if the assignation was intimated to the debtor. However, the effect of the changes in the Act is both to extend the scope of intimation and to enable registration as a method of effecting a transfer of a claim. As such, the debtor may not know that a claim has been assigned, and may in good faith pay an assignor who is no longer the creditor.
64.This section has the effect that a debtor who does not, and should not, know that a claim has been assigned will still be discharged from the debt to the extent of any payment made to the assignor (or any person nominated by the assignor).
Example
Paul lends Roger £5,000. Paul assigns his right to repayment to Susan, and she registers the assignation in the RoA. The effect is to transfer the claim so that payment is due to Susan. But Roger, who knows nothing of the assignation repays Paul, and Paul accepts payment rather than telling Roger to pay Susan. Roger does not require to pay Susan any amount that he has paid in good faith to Paul.
65.Subsections (1) and (2) provide for a general rule protecting a debtor who performs in good faith to the assignor where a claim has been assigned in whole or in part. Co-debtors are also discharged to the extent of the performance, as if the debt is a joint one then it is discharged (to the extent of the performance) for all debtors, albeit that one debtor may have an ability to recover from the other. The “last known holder of the claim” formulation in subsection (1) deals with the fact that there may have been a chain of assignations rather than only one.
66.Subsection (3) provides that the fact that an assignation document has been registered, or that it is deemed to have been intimated, does not of itself mean that the debtor does not perform in good faith. In particular, debtors should not be expected to have to check the RoA.
67.Good faith is not further defined in this section. However, section 116 places the onus of showing that the debtor has performed other than in good faith on the person making such an assertion. Whether or not a debtor is in good faith will depend on the facts of the case.
Example
Susan might make intimation to Roger by means of sending him a 200-page document dealing with many matters, but including the words of intimation half way down page 172. Roger may be in good faith if he still pays Paul.
