The Owners - Strata Plan No 5290 v CGS & Co Pty Ltd

The Owners - Strata Plan No 5290 (the Appellant) appealed a decision of Bryson AJ concerning the effectiveness of an assignment of a building contract. The Appellant, as proprietor, had entered into a building contract with a company that subsequently went into liquidation. The liquidator of the building company purported to assign the company's entitlements under the building contract to a third party. The building contract contained an express prohibition against the assignment of rights. The dispute centred on whether this purported assignment was effective to allow the assignee to sue the Appellant under the contract.

The primary legal issue before the Court of Appeal was whether the liquidator, acting under section 477(2)(c) of the Corporations Act 2001 (Cth), had the power to assign the building company's contractual rights to a third party, notwithstanding an express contractual prohibition on assignment. This required the court to consider the interplay between the statutory powers of a liquidator and the contractual terms agreed between parties.

The Court of Appeal held that the statutory power of a liquidator to deal with the property of a company under section 477(2)(c) of the Corporations Act 2001 (Cth) did not override an express contractual prohibition against assignment. The court reasoned that the assignment of contractual rights is a matter governed by contract law, and a liquidator's powers are limited by the nature of the property they are empowered to deal with. In this instance, the contractual rights themselves were not assignable due to the express prohibition, and therefore the liquidator could not assign what the company did not have the power to assign.

The appeal was allowed, and the previous answers to specific questions regarding the effectiveness of the assignment were set aside and replaced with a determination that the assignment was not effective. The Appellant was awarded costs of the appeal.