Contract Wording Prohibited Assignment and Declaration of Trust

In <span class="news-text_italic-underline">Goldkorn v MPA (Construction Consultants) Ltd and another [2025] EWHC 385 (TCC)</span>, Jonathan Acton Davis KC, sitting as a deputy High Court judge, ruled that neither a purported assignment nor a declaration of trust entitled the beneficiary to pursue a professional consultant for alleged negligence. The court addressed the issue of whether the claimant had a right to bring a claim against the consultant under the terms of the contract.

Case Background

Kazu, the client, engaged MPA as its project manager for a development project in London. Clause 16.2 of the appointment agreement outlined that the benefit of the appointment could be assigned by the client to a person providing finance or refinance for the project or to any person acquiring the client's interest in the project. However, the client later entered liquidation and granted a deed of assignment to Mr Goldkorn, the claimant, giving him the right to pursue the consultant for negligence. Subsequently, the client executed a declaration of trust in favour of the claimant, which permitted the claimant to claim in his own name but prohibited claims in the trustee’s name.

Court’s Decision

The court determined that the claimant had no title to bring the claim, finding that:

1. <span class="news-text_medium">Assignment of Rights:</span> The claimant was not a permitted assignee under the terms of Clause 16.2, as he did not acquire the client’s “interest in the project” which referred specifically to an interest in the construction works themselves.
2. <span class="news-text_medium">Prohibition Against Assignment:</span> Clause 16.2’s prohibition against assignment extended to accrued rights of action, including claims in both contract and tort.
3. <span class="news-text_medium">Trust:</span> The claimant could not pursue the claim as a beneficiary under the trust. The court referred to Clause 18.2, which stated that only the client and its permitted assignees could enforce the terms of the appointment. Since the claimant was neither the client nor a permitted assignee, he could not take action to enforce the appointment.

Practical Implications

This ruling may offer reassurance to consultants and contractors that contract wording designed to restrict assignment is effective, particularly in preventing claims by third parties. The judgment emphasises the importance of carefully considering the scope of contractual wording and its impact on enforcing rights under the <span class="news-text_italic-underline">Contracts (Rights of Third Parties) Act 1999</span>. Parties may now reassess how they phrase such provisions to ensure their primary intention—preventing third parties from bringing claims—is properly captured.