Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 A.C. 85

Building works included removal of asbestos under a contract restricting assignment without the contractor's written consent. The original employer later transferred its leasehold interest and purported to assign contractual claims to Linden Gardens without obtaining that consent. Further asbestos was discovered, and Linden Gardens incurred removal costs. It sought to enforce claims arising from the earlier work. The contractor argued that the assignment was ineffective because of the contractual prohibition. The dispute concerned the scope and validity of that restriction, particularly whether it extended to rights of action already accrued under the contract.

Did the contractual prohibition prevent assignment of accrued claims without the contractor's consent, and was that restriction enforceable rather than contrary to public policy?

The House of Lords upheld the contractual restriction on assignment. Read in its commercial context, the prohibition extended to assignment of the relevant contractual benefits and accrued claims without the contractor's consent, not merely an attempted transfer of future performance. The contractor had a legitimate interest in controlling the identity of the party with whom disputes would be conducted. There was no general public-policy rule invalidating such a restriction merely because contractual rights are property. The purported assignee could therefore not enforce the prohibited assignment against the contractor. This conclusion did not establish that contractual burdens can be transferred unilaterally; transferring obligations is a separate issue, generally requiring consent through novation.

A contractual prohibition on assignment can prevent an assignee enforcing transferred benefits or accrued claims against the counterparty, depending on its construction. Such a restriction is not inherently contrary to public policy. Assignment of rights must be distinguished from consensual substitution of contractual obligations.

Linden Gardens is central to assignment and privity in construction contracts. It should be read with the associated St Martin's litigation on recovery where loss falls on a later property owner, but the two issues are distinct. An invalid assignment does not by itself answer what damages the original employer may recover. For modern transactions, also consider any applicable statutory restrictions on anti-assignment terms. Begin with the clause, the rights purportedly assigned and the identity of the person seeking to enforce them.