Section 11 – Further provision as to protection of debtor
68.This section provides protection for debtors who are in good faith where an assignor is not. It also protects debtors against inadvertent errors by assignors (such as forgetting that a claim has already been assigned).
69.Subsection (1) sets out the four criteria which must each be met in order for the protection in subsection (2) to apply:
The first criterion is that the holder of the claim grants more than one assignation document in respect of the same claim (or part claim) to different people,
The second criterion is that the claim is transferred by one of the assignation documents to the true holder (typically, by registration of the assignation),
The third criterion is that the debtor is informed that the claim is assigned to the purported holder (either by notice from the original holder of the claim or the purported holder, or by being made party to judicial proceedings), and
The fourth criterion is that by virtue of being so informed, the debtor performs to the purported holder.
70.Subsection (2) has the effect that if the performance to the purported holder is in good faith then the debtor is discharged from the claim (or part) to that extent, and does not need to compensate the true holder. This also extends to co-debtors (see paragraph 65 of these Notes).
Example
Liana owes Kimberley £1,000. Kimberley then assigns her claim to Monica. Monica registers the assignation in the RoA (and does not intimate). Kimberley then assigns the same claim again to Neil, who intimates to Liana. Liana pays Neil, who is not the true holder, but provided she is in good faith she is discharged from the obligation to pay Monica.
71.Subsection (3) imports the rules that apply under section 10 of the Act, namely that the debtor is not in bad faith merely because an assignation document has been registered in the RoA, or because intimation has been deemed to have taken place. See paragraph 66 of these Notes.
72.In relation to good faith, see paragraph 67 of these Notes and section 116 of the Act.
