Lloyd's Maritime and Commercial Law Quarterly
TRUSTS OF UNASSIGNABLE AGREEMENTS
Don King Productions v. Warren
Squabbles between promoters of pugilism over who should get the profits to be made from the likes of Mr Nigel Benn are not normally the stuff of this Quarterly. But the question before Lightman, J., in Don King Productions Inc. v. Warren & Ors
1 incidentally raised a point on the law of assignment which is of very considerable significance to commercial lawyers generally: namely, the effect inter partes of a purported assignment of a contract which is expressly or by its nature rendered unassignable. It therefore repays a little investigation.
Put briefly, two major boxing promoters (the American Don King and the English Frank Warren) agreed to go into partnership and pool their European operations. As part of the agreement, W purported to assign to the partnership, inter alia, all his promotion and management agreements (“P.M.A.s”) with a number of boxers. A further term of the partnership contract provided that if and when the arrangement came to an end all assets of the partnership should be purchased by W at a valuation. Relations presently soured, and the partnership was wound up. In the following litigation, K alleged that in these circumstances the P.M.A.s were partnership property and that W was accordingly bound to buy them back at market value. W, by contrast, insisted that he was under no such obligation and after the termination of the partnership he was entitled to exploit the P.M.A.s in question free of charge. His argument was that, it being clear that the P.M.A.s were in fact unassignable,2 his purported assignment of them to the partnership had been of no effect: from which it followed that they could not form part of the partnership assets so as to be caught by the “buy-back” clause.
Lightman, J., decided this point in favour of K, relying on two lines of reasoning.
His initial argument was as follows. First W’s attempt to assign the P.M.A.s for value would prima facie constitute the partnership the equitable owner of them. True, there was no evidence of any intent on W’s part to create a trust, with the troublesome congeries of mutual rights and duties that went with it. But this did not matter, since the House of Lords had made it clear in Westdeutsche Landesbank Girozentrale v. Islington L.B.C.3 that it was perfectly possible to have a split between legal and equitable ownership without thereby
1. [1998] 2 All E.R. 608.
2. Because of the vital importance of the personalities of both parties, the same reason that makes a contract of employment unassignable (Nokes v. Doncaster Amalgamated Collieries [1940] A.C. 1014). In addition, most of the agreements in any case specifically prohibited assignment.
3. [1996] A.C. 669.
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