Equitable Assignments
Teaching narrative
An assignment transfers an existing right or property interest from assignor to assignee. Equity became important because many choses in action could not historically be assigned at common law and because equity recognises assignments that do not satisfy the requirements for a statutory legal assignment.
The first question is always: what exactly is being assigned? Distinguish an existing debt or contractual right from future property, future income, a mere expectancy, or an assignment of the proceeds that may arise from an existing source. Characterisation determines whether consideration is required and when the assignment becomes effective.
Queensland provides a statutory route in s 199 of the Property Law Act 1974 for an absolute written assignment of a debt or other legal thing in action where written notice is given to the person liable. If the statutory requirements are not met, the assignment may still be effective in equity depending on the subject matter and the steps taken.
Equity can recognise assignments of future property for value once the property comes into existence, while a gratuitous promise to assign future property generally does not create an immediate proprietary interest. Students must distinguish a present assignment of an existing source or right from a promise concerning future receipts.
Rule and exam map
- Identify the exact chose in action or property.
- Ask whether the assignment satisfies Property Law Act 1974 (Qld) s 199 for legal effect.
- If not, analyse equitable effectiveness rather than assuming invalidity.
- Future property and future income require careful characterisation and often consideration.
Leading authorities
Leading High Court authority distinguishing ineffective assignments of future income/property from presently assignable rights.
Contrasts with Norman and illustrates a present assignment of a defined proportion of an existing right to royalties.
Classic equitable authority that future property can be assigned for value and attach when the property comes into existence.
Useful by analogy when analysing whether an assignor has done everything necessary to effect a transfer in equity.
Problem-solving method
Issue. Identify the equitable relationship, property or transaction and break it into sub-issues.
Law. State the exact doctrine, any applicable statute, and the authority that explains the rule.
Application. Apply each element to the facts, address the strongest counterargument, then identify the consequence or remedy.
Conclusion. Give a reasoned result and identify any fact that could change the outcome.
Tutorial-style problem
A consultant signs a document assigning “50% of all fees I may earn in the next five years” to a relative, without consideration. The consultant also assigns 50% of royalties payable under an existing licence agreement.
Model answer
Analyse the two purported assignments separately. The future consulting fees may be future property or income and, without consideration, may not create an immediate equitable proprietary interest. The royalties arise from an existing contractual source and may be capable of present assignment, depending on the wording and completeness of the transfer. Use Norman and Shepherd to explain the distinction.