Assignment of Crown debt (Financial Administration Act s. 67)

A buyer taking over a business that sells to the federal government meets this rule when the seller’s unpaid invoices or future contract payments are to be transferred or pledged to the buyer or its lender. The Financial Administration Act treats money owed by the federal Crown differently from an ordinary receivable.

The rule and its exception

Section 67 says that, except as provided in the Act or another Act of Parliament, a Crown debt is not assignable, and a transaction purporting to assign one confers no rights or remedies. Section 66 defines a Crown debt as any existing or future debt due or becoming due by the Crown, and any other chose in action that can be enforced by action against the Crown. Section 68, subject to its terms, allows assignment of a Crown debt that is an amount due or becoming due under a contract, or of any other Crown debt of a prescribed class. The assignment is valid only if it is absolute, in writing and made under the assignor’s hand, does not purport to be by way of charge only, and notice has been given as section 69 provides. It stays subject to transfer restrictions in the original contract (s. 68(4)).

What to ask

• Is any receivable owed by the federal Crown, and does it arise under a contract?
• Does the contract restrict transfer? See the anti-assignment clause.
• Has notice been given in the form the Assignment of Crown Debt Regulations set?