Absolute Assignment or Assignment by Way of Charge?

In Estate Management and Business Development Company Ltd v Junior Sammy Contractors Ltd [2024] UKPC 33 the Privy Council, in an appeal from a decision of the Court of Appeal of Trinidad and Tobago, held that a contractor was entitled to recover payment from the employer. The employer had sought to resist payment on the ground that the contractor had absolutely assigned its rights under the construction contract to a merchant bank such that it no longer had the right to sue the employer for the outstanding sum. However, the Privy Council held that the assignment was by way of security for a loan from the merchant bank so that the assignment was an equitable assignment with the consequence that the contractor remained entitled to sue the employer. The case underlines the need to draft documentation with care because many of the difficulties in the present case arose from the fact that the documentation was found to lack coherence and was not well drafted. Had the documentation been drafted with greater clarity, the litigation might have been avoided.