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Standing - Assignee - Legal and Equitable Assignment

Assignments - Legal and Equitable

Nadeau v. Caparelli (Ont CA, 2016)

In this case the Court of Appeal canvasses principles applicable to the assignment of choses in action, and in particular the standing of the assignee to sue on their own:
[26] In Freudmann-Cohen v. Tran (2004), 2004 CanLII 34765 (ON CA), 70 O.R. (3d) 667 (C.A.), at para. 31, this court commented that whether an assignee can or cannot sue in its own name is a “facet of the law that is shrouded in mystery and history.” While the question of joinder certainly is linked to the history of the former division between the courts of common law and the courts of equity, the shrouds of mystery were largely dissipated by this court in DiGuilo v. Boland, 1958 CanLII 92 (ON CA), [1958] O.R. 384, (C.A.), aff’d [1961] S.C.R. vii.

[27] DiGuilo clarified that there are four kinds of assignments: legal assignments of legal and of equitable choses in action, and equitable assignments of legal and of equitable choses. According to DiGuilo, the following principles determine whether an assignee must join an assignor as party to an action to enforce an assignment:
(i) In the case of a legal assignment of either a legal or equitable chose – i.e. an assignment that complies with s. 53(1) of the Conveyancing and Law of Property Act – the assignee can sue alone: DiGuilo, at p. 397;

(ii) An assignee also can sue alone where there is an equitable assignment of an equitable chose in action. This followed from rule 89 (then rule 88) of the former Rules of Practice, R.R.O. 1980, Reg. 540, as amended, which stated: “An assignee of a chose in action may sue in respect thereof without making the assignor a party.” In DiGuilo, this court limited the scope of former rule 89 to equitable assignments of equitable choses in action (at p. 402-3);

(iii) In the case of an equitable assignment of a legal chose in action, however, the assignee must join the assignor as a necessary party (at pp. 397 and 403).
[28] When, in 1985, the Rules of Practice were replaced by the Rules of Civil Procedure, former rule 89 gave way to what is now rule 5.03(3), which states:
5.03(3) In a proceeding by the assignee of a debt or other chose in action, the assignor shall be joined as a party unless,

(a) the assignment is absolute and not by way of charge only; and

(b) notice in writing has been given to the person liable in respect of the debt or chose in action that it has been assigned to the assignee.
[29] The motion judge did not refer to rule 5.03(3) in his reasons, and it is not clear that the parties drew his attention to it.

[30] The impact of rule 5.03(3) on the principles of joinder laid down in DiGuilo has not received prior consideration by this court. In the present case, the parties agreed the assignment of the Note did not meet the requirements of s. 53(1) of the CLPA. It follows that the assignment was an equitable assignment of a legal chose of action. While the principles stated in DiGuilo would require the joinder of the assignor for an action on such an assignment, in my view rule 5.03(3) modifies DiGuilo to the following extent: as long as the assignment was absolute and notice in writing was given to the appellants of the assignment, Nadeau was not required to join 111 as a party.

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