High Court finds that the assignment of the plaintiffs’ claim was void

In Body Corporate 160361 (Fleetwood Apartments) v BC 2004 Ltd and BC 2009 Ltd Justice Fogarty assessed the validity of the plaintiffs assigning their claim against the other defendants to the Council as part of a settlement agreement.  The Court found that the assignment of the plaintiffs' claim to the Council was void as it was contrary to public policy by undermining the law of maintenance and champerty, as well as meddling with the trial process.  The decision was contrary to a ruling by Justice Heath on the same issue in 2007 in which he said that the law of maintenance and champerty should no longer apply.

As a number of settlements in leaky building litigation contain an assignment clause, this is likely to impact many settlement negotiations.  Parties are unlikely to continue to settle on terms that include an assignment of a claim. Therefore, in the future all parties to a claim will need to actively participate in settlement negotiations if claims are to settle prior to trial.