Thomas v National Australia Bank Limited
[1999] QCA 525
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- Unreported Judgment
- Appeal Determined (QCA)
- Thomas v National Australia Bank Limited[1999] QCA 525
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Thomas v National Australia Bank Limited[1999] QCA 525
Reported at [2000] 2 Qd R 448
Thomas v National Australia Bank Limited[1999] QCA 525
Reported at [2000] 2 Qd R 448
SUPREME COURT OF QUEENSLAND
CITATION: | Thomas v NAB Ltd & Ors [1999] QCA 525 |
PARTIES: | GRAHAM ARNOLD PRANCE THOMAS (plaintiff/appellant) v NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) (first defendant/first respondent) LLOYDS BANK NZI LIMITED (ACN 000 931 760) (second defendant) ARTHUR ANDERSEN (a firm) (third defendant/second respondent) JOHN EBBAGE (fourth defendant/third respondent) |
FILE NO/S: | Appeal No 3326 of 1999 SC No 237 of 1996 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 21 December 1999 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 17 November 1999 |
JUDGES: | McMurdo P, Pincus and Thomas JJA Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: | Appeal allowed with costs. Orders made below set aside and in lieu order that the application made by the respondents to the learned primary judge be dismissed with costs. |
CATCHWORDS: | EQUITY – GENERAL PRINCIPLES – ASSIGNMENTS IN EQUITY – EFFECT OF EQUITABLE ASSIGNMENT AND RIGHTS OF ASSIGNEE – RIGHT OF ASSIGNEE TO SUE IN OWN NAME – right of action assigned to appellant by trustee in bankruptcy – at time action brought respondents had not received notice of assignment - whether notice to debtor necessary in order to pass title to the debt – whether failure to join the trustee in bankruptcy made the action a nullity – whether, as a matter of procedure, trustee in bankruptcy should be joined PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – INTERPRETATION AND GENERAL PROVISIONS – whether joinder of trustee in bankruptcy warranted - need to avoid undue technicality – application of r 5 Uniform Civil Procedure Rules Anning v Anning (1907) 4 CLR 1049; Equus Financial Services Limited v Glengallen Investments Pty Ltd (Appeal No 262 of 1993, 19 May 1994); Gorringe v Irwell India Rubber and Gutta Percha Works (1886) 34 ChD 128; In re City Life Assurance Company Limited [1926] Ch 191; Performing Right Society Ltd v London Theatre Varieties Ltd [1924] AC 1; Tolhurst v Associated Portland Cement Manufacturers (1900) Limited [1903] AC 414; Walker v Bradford Old Bank Limited (1884) 12 QBD 511; Ward v Duncombe [1893] AC 369; William Brandt’s Sons & Co v Dunlop Rubber Company Limited [1905] AC 454, considered Mountain Road (No 9) Ltd v Michael Edgley Corporation Ltd [1999] 1 NZLR 335; Warner Bros Records Inc v Rollgreen Ltd [1976] QB 430, not followed Uniform Civil Procedure Rules, r 5, r 765 |
COUNSEL: | Mr A J Morris QC, with him Mr D Atkinson for the appellant Mr P A Keane QC, with him Mr P D T Applegarth for the respondents |
SOLICITORS: | Hollingworth & Spencer for the appellant Thynne & Macartney for the first respondent Clayton Utz for the second and third respondents |
- McMURDO P: I have read the reasons for judgment of Pincus JA who has set out the relevant facts and issues.
- As Pincus JA points out, an equitable assignment of a debt is effective as between the assignor and the assignee without notice to the debtor.
- There is a body of authority to the effect that an equitable assignee's title to sue on the chose in action arises against third parties only if notice has first been given to them: see Mountain Road (No 9) Limited v Michael Edgley Corporation Pty Ltd[1] which relied on Warner Bros Records Inc v Rollgreen Ltd.[2]
- Mr Keane QC, who appeared with Mr Applegarth for the respondent, submits that rule originates in Dearle v Hall:[3]
"… if you mean to rely on contract with the individual, you do not need to give notice; from the moment of the contract, he, with whom you are dealing, is personally bound. But if you mean to go further, and to make your right attach upon the thing which is the subject of the contract, it is necessary to give notice; and, unless notice is given, you do not do that which is essential in all cases of transfer of personal property. The law of England has always been, that personal property passes by delivery of possession; and it is possession which determines the apparent ownership. If, therefore, an individual, who in the way of purchase or mortgage, contracts with another for the transfer of his interest, does not divest the vendor or mortgagor of possession, but permits him to remain the ostensible owner as before, he must take the consequences which may ensue from such a mode of dealing. … If you, having the right of possession, do not exercise that right, but leave another in actual possession, you enable that person to gain a false and delusive credit, and put it in his power to obtain money from innocent parties on the hypothesis of his being the owner of that which in fact belongs to you. The principle has been long recognised, even in courts of law. … one of the badges of fraud was, that the possession had remained in the vendor. Possession must follow right; and if you, who have the right, do not take possession, you do not follow up the title and are responsible for the consequences." (Sir Thomas Plumer MR)
Lord Lyndhurst LC , referring to that passage, said:
"This doctrine is not confined to chattels in possession, but extends to choses in action, bonds, etc. … it is expressly applied to bonds, simple contract debts and other choses in action. … In cases like the present, the act of giving the trustee notice, is, in a certain degree, taking possession of the fund: it is going as far towards equitable possession as it is possible to go; for, after notice given, the trustee of the fund becomes a trustee for the assignee who has given him notice."[4]
- The learned authors of Equity Doctrine and Remedies[5] note that:
"… It is a rule which is applicable only between competing equities. It is not applicable when the competition is between an equity and a legal interest."
- Dearle v Hall has received considerable criticism: see Lord Macnaghten in Ward v Duncombe:[6]
"I am inclined to think that the rule in Dearle v Hall has on the whole produced at least as much injustice as it has prevented. …
… it seems to me that when your Lordships are asked to extend the rule to a case not already covered by authority, it is proper to inquire into the principles upon which the rule is said to be founded. … I do not think that those principles are so clear or so convincing that the rule ought to be extended to a new case."
- In Warner Bros Records Inc v Rollgreen Ltd,[7] Sir John Pennycuick noted:
"I would only like to add one word on Dearle v Hall. The court was there concerned with a trust fund where trustees were directly accountable to all persons having an interest in the trust fund, whether original or derivative. The question at issue was the priority as between various assignees of original interests. Although the judgment in that case contains valuable statements of principle which have been cited by Lord Denning MR, the case is not, I think, directly in point on the position of an equitable assignee of the benefit of a contract.
For myself, I see considerable objection to framing an issue in terms of a declaration of the principles of law in a given context without reference to the particular facts of the case. I should have thought that it would be better to set out certain assumptions and then ask for the determination of the issue of law by reference to those assumptions."
- A relevant consideration for the court in reaching its decision in Warner Bros Records Inc v Rollgreen Ltd was that the assignment was of an option to extend a contract for the personal services of pop singer, Rod Stewart. That fact may well be the reason why the learned authors of Equity Doctrines and Remedies[8] state:
"That notice is important to bind the debtor or trustee and for the purpose of retaining priority, but it is not necessary to the validity of the assignment. … The decision of the Court of Appeal in Warner Bros v Rollgreen … should not be taken as stating a contrary view."
- In Warner Bros Records Inc v Rollgreen Ltd, the grantor was surprised to receive a letter from a record company with whom he had had no dealings, the record company purportedly acting upon the exercise of an option which had been assigned to it by the record company with whom the grantor had contracted. In this case, the appellant claims he had direct dealings with the respondents before he entered into bankruptcy; the element of surprise is not a consideration here. Warner Bros Records Inc v Rollgreen Ltd is distinguishable on its facts from this case. I am not persuaded that Mountain Road was rightly decided for these reasons and for the reasons given by Pincus JA.
- Even if the law were that an assignee cannot sue on the assigned cause of action until notice is given to interested third parties, in Queensland this appears to capable of remedy by an application to amend under SCR O 32 r 1(1) and r 1(6) or UCPR r 375(1).[9] At the time the action commenced (with the issue of the writ on 9 January 1996), notice of the assignment had not been given to the respondents. At least by 3 November 1997 all respondents had received written notice of the assignment. The plaintiff pleaded that it was "empowered, by Deed of Assignment dated 5 January 1996 and duly executed by the Trustee in Bankruptcy of the Plaintiff's Estate, to commence proceedings against the Defendants for the causes of action set out herein". Although notice was not specifically pleaded, the right to bring the action was. The first defendant initially admitted that allegation but later withdrew the admission.
- The respondents claim an amendment cannot cure the situation here which is a nullity not a mere irregularity, but such distinctions have become blurred in the civil jurisdiction in recent years. As this appeal is by way of re-hearing, s 81 of the Supreme Court of Queensland Act 1991 and UCPR r 375(1) permit amendment even though the cause of action arose after the proceedings started. The statutory force of s 81 would seem to overcome the nullity argument. This is a clear case where such leave should be given nunc pro tunc and were it necessary I would grant such leave.
- On either basis, the appeal must be allowed.
- I agree with Pincus JA for the reasons he has given that the non-joinder of the assignor, the trustee in bankruptcy, does not make the action a nullity.
- I agree with the orders proposed by Pincus JA.
- PINCUS JA: The appellant brought an action in the Supreme Court on 9 January 1996 to enforce rights of action assigned to him, by deed, by a trustee in bankruptcy. At the time when the action was brought the appellant had not given the respondents, defendants in the suit, notice of the assignment. The parties agreed to have tried as a preliminary question whether the appellant was entitled to bring and maintain the action "in that prior to the commencement of the action no notice was given to the defendants [of the assignment]". It was held by the learned primary judge, his Honour the Chief Justice, that not having given notice of the assignment prior to the commencement of the action, the appellant had no right to bring and maintain it. His Honour therefore dismissed the action with costs.
- Mr Morris QC, who led Mr Atkinson for the appellant, argued that the assignment was effective to vest the cause of action assigned in the appellant, before notice of the assignment was given to the respondents; they are the persons the right of action against whom was assigned. Mr Keane QC, who led Mr Applegarth for the respondents, supported the primary judge's reasons, but also raised against allowance of the appeal an argument not mentioned in those reasons. Mr Keane contended that the order dismissing the action could be upheld on the basis that the trustee in bankruptcy, being the assignor of the chose in action, was a necessary party to the appellant's suit and that since the trustee had not been joined the suit was a nullity.
- At the time when the respondents made their applications the statement of claim contained an allegation that the plaintiff was "empowered by a Deed of Assignment ... to commence proceedings against the Defendants for the causes of action set out herein". That is an allegation of law, or one of mixed law and fact; but its meaning is clear enough and the respondents delivered pleadings denying the allegation. The applications which they made to the learned primary judge were a challenge to the correctness of the allegation; the respondents asserted, successfully, that the appellant had no right under the deed of assignment to commence proceedings against the respondents for the causes of action in question. When the statement of claim just referred to was delivered, notice of the assignment by the trustee in bankruptcy had been given to the respondents. A difficulty (pointed out during the hearing of the appeal) in the path of the respondents is constituted by the terms of O 32 r 1(5) and (6) of the then Rules of the Supreme Court. Their effect was to allow amendment of a pleading even after expiration of a relevant period of limitation, to substitute a new cause of action arising after issue of the writ, subject to the conditions in O 32 r 1(5). It is unclear whether the allegation of empowerment to sue under the deed was part of the amendment, or part of the original statement of claim. However that may be, the rule shows that the fact that a particular cause of action arose only after issue of the writ does not by any means, under present law, necessarily put a plaintiff out of court. Mr Morris QC informed us that he suggested to the primary judge that the statement of claim should be amended, if an allegation of notice was necessary.
Assignment passes title to a chose in action, whether or not notice of the assignment has been given.
- It is desirable to make three preliminary points. One is that there is no reason, as far as I can discern, to distinguish between assignments of legal property and assignments of property recognised by the law of equity, for present purposes. A second is that it is not in question that an equitable assignment is good as between assignee and assignor, without notice to the debtor. The only debatable point is whether the meaning of this statement is that the property assigned passes, without notice, but until notice is given the debtor may pay the assignor; to put the matter in another way, the question is whether notice affects priorities only, or whether, on the other hand, notice to the debtor is necessary in order to pass title to the debt. It should be noted, thirdly, that if the doctrine which we are invited to accept is correct the results make little practical sense; it is a merely technical point, which should not be given effect to if the authorities in favour of it are less than compelling. The giving of notice of assignment a day before issue of the proceedings makes them good whereas giving notice a day after the proceedings makes them (it is said) completely null. I contrast the position where there is an obligation to pay a debt on demand, in relation to which it has been the law for nearly four centuries, that no demand before action is necessary: Dockrey v Tanning Cro Jac 243; (1610) 79 ER 209.
- Although some authority relevant to the point precedes Walker v Bradford Old Bank Limited (1884) 12 QBD 511, it is sufficient to begin with that case. That concerned an assignment of a bank account; a question debated was whether the right to the chose in action passed to the assignee only from the date of notice to the bank. The court (Williams and Smith JJ) rejected that contention (517). Their view was that the effect of failure to notify the bank was that the assignee had to sue in the assignor's name or otherwise make him a party. The judgment said:
"In my view the meaning of the sub-section is, that until the assignee has given the prescribed notice, he would have to sue as he would theretofore have sued; but when the notice is given then he may bring an action at law in his own name without being incumbered with having to sue in the name of the assignor, or of having to make him a party to the action".
Then in Gorringe v Irwell India Rubber and Gutta Percha Works (1886) 34 ChD 128, a question arose as to the effectiveness of an assignment of a debt. Cotton LJ said:
"It is contended that in order to make an assignment of a chose in action, such as a debt, a complete charge, notice must be given to the debtor. It is true that there must be such a notice to enable the title of the assignee to prevail against a subsequent assignee. That is established by Dearle v Hall, but there is no authority for holding this rule to apply as against the assignor of the debt. Though there is no notice to the debtor the title of the assignee is complete as against the assignor". (132) (emphasis added)
It will be noted that Cotton LJ held that notice is unnecessary to make the title complete against the assignor. The reasons appear to imply that the relevance of notice is to protect against subsequent assignees. Of course, if an assignment passes no title, it has no effect whatever, for all it purports to do is to pass title.
- In Ward v Duncombe [1893] AC 369, the question was one of priorities and much of the judicial discussion had to do with the rule in Dearle v Hall [1828] 3 Russ 1, that rule being that assignees of a fund vested in trustees take priority according to the date on which they give notice to the trustees. Lord Macnaghten remarked at 392:
"Notice does not render the title perfect. Notice was not even a step in the title until it was made so by the decision in Foster v Cockerell. Apart from the rule in Dearle v Hall, an assignee of an equitable interest from a person capable of disposing of it has a perfect equitable title, though the title is no doubt subject to the infirmity which attaches to all equitable titles. And that infirmity is not and cannot be wholly cured or removed by notice to the trustees".
- In Anning v Anning (1907) 4 CLR 1049, the question was the validity of an assignment by way of gift; Isaacs J expressed himself in terms which are consistent with the view stated by Lord Macnaghten, as to the relevance of notice. Isaacs J said (at 1064):
"If as between themselves all rights have been transferred to the donee, the mere fact that notice of the transfer is necessary to be given to some third person in order to protect it is immaterial. The transfer as between donor and donee has taken place, and that is sufficient to perfect the transaction as a gift.
The donee has it completely in his power to obtain perfect protection by giving the notice … ". (emphasis added)
And at 1069 his Honour said:
" … notice in a case of an equitable assignment … is neither necessary to perfect the assignment that being already complete, nor capable of making effectual the assignment if otherwise wanting … notice is only necessary to inform [the trustee] of the change of identity of the person entitled and to warn him against parting with the fund to the person who has in fact parted with it …". (emphasis added)
- In In re City Life Assurance Company Limited [1926] Ch 191, a question arose as to the validity of an assignment of an insurance policy. Pollock MR remarked (215):
"It is quite clear that as between the assignor and the assignee an assignment is complete without notice given".
Warrington LJ at 220 said:
"The equitable assignment itself is absolute and complete whether notice is given or not … The object of giving notice, and the only object, is to prevent or render difficult, first, any arrangements between the debtor and creditor which may be to the detriment of the assignee of the debt, and secondly, to prevent any subsequent assignee of the debt from obtaining priority over the original assignee who gives the notice, and it is only in reference to those matters that the notice becomes material".
The result was that the assignee of a debt owed by a holder of an insurance policy was held to be entitled to claim the debt, without according to the debtor a right of set-off based on the policy, which would have been available against the assignor, a company in liquidation. The case illustrates that references to an equitable assignment being effective "as between an assignor and assignee" without notice to the debtor do not mean that it is void against all persons other than assignor and assignee. In the City Life case the assignment was effective as against the debtor; it deprived him of a right of set‑off. This effect of the decision appears, with respect, to have been overlooked in the reasons of the Court of Appeal in Mountain Road (No 9) Ltd v Michael Edgley Corporation Pty Ltd [1999] 1 NZLR 335 at 344 (line 10).
- Reference to Meagher, Gummow and Lehane, "Equity: Doctrines and Remedies" (3rd ed) at p 199 suggests that the accepted view is not that which was adopted by the primary judge. The authors say:
" … there can be an effective assignment of a debt … without notice to the debtor … notice is important to bind the debtor … and for the purpose of retaining priority … but is not necessary to the validity of the assignment …".
Dixon J in Comptroller of Stamps (Vict) v Howard- Smith (1936) 54 CLR 614 at 622 remarked:
" … communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him to respect the assignment and in order to preserve priorities".
- The principal authority relied on below appears to have been the decision of the New Zealand Court of Appeal in Mountain Road (No 9) Ltd v Michael Edgley Corporation Pty Ltd (above). There, a question arose whether an equitable assignment of a cause of action took effect, to enable suit to be brought by the assignee, before notice was given to the persons alleged to be liable. None of the passages to which reference has been made above is quoted in the judgments. The New Zealand court relied for its conclusion principally, it appears, upon the decision of the English Court of Appeal in Warner Bros Records Inc v Rollgreen Ltd [1976] QB 430, in which authorities contrary to the conclusion reached appear to have been overlooked. Although Meagher, Gummow and Lehane (op cit) at p 199 say the English case should not "be taken as stating a contrary view", that decision appears to me irreconcilable with the dictum of Dixon J in Comptroller of Stamps (Vict) v Howard-Smith. It is noticeable that the only decision relied on by Denning MR in support of the view that notice is necessary to "perfect" the assignee's title, Stocks v Dobson (1853) 4 De GM & G 11; 43 ER 411, was one in which the issue was not whether the assignee had any title, but merely whether the assignee, having given no notice to the debtor before the debtor settled with the assignor, could make him pay again.
- There are authorities tending both ways. But it appears, with respect, clear enough that the weight of authority on this point, at least so far as Australia is concerned, favours the appellant. The proper conclusion is that the view adopted in the New Zealand case, that the assignee's title is not complete, so as to enable suit to be brought before notice is given to the person liable, should not be followed.
Non-joinder does not make the action a nullity
- It was submitted for the respondents that the failure to join the assignor, the trustee in bankruptcy, made the action a nullity. The reason for that, it was said, was that the appellant had no standing to sue. In Tolhurst v Associated Portland Cement Manufacturers (1900) Limited [1903] AC 414, the benefit of a contract was assigned by a company which went into liquidation. An action was brought to determine rights as between the assignee and the other party to the contract. It was held that there was no need to join the assignor because it was "a mere name … without any means and without any executive or board of directors" (420-421); Lord Macnaghten recognised that the assignor ought "in ordinary circumstances" be joined.
- Next, in William Brandt's Sons & Co v Dunlop Rubber Company Limited [1905] AC 454, an action was brought by the assignee of a debt without joining the assignor. The case has some resemblance to the present, in that the assignor went bankrupt. In the leading speech it was said that:
"Strictly speaking, Kramrisch & Co, or their trustee in bankruptcy, should have been brought before the Court. But no action is now dismissed for want of parties, and the trustee in bankruptcy had really no interest in the matter". (462)
- The third House of Lords decision, and that which is most plainly inconsistent with the proposition that the action this Court has to consider is a nullity, is Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1. It had to do with an assignment of copyright and the decision was that the assignee could not obtain a perpetual injunction against infringement of copyright without joining the assignors. Viscount Finlay, though troubled (18) by the inconvenience of the result, held that the assignor should have been joined:
"Except under very special circumstances the ordinary rule should be observed, that the legal owner should be a party to the proceedings … [b]ut whatever may be the balance of convenience, the established rules of practice should be adhered to, even in cases, of which I think the present is one, when their observance in all probability will serve no useful purpose. The parties have joined battle on the applicability to the present case of this particular rule of practice, and we must decide according to law, however much we may regret that success in the action should depend upon a mere technicality which has no relation to the merits of the case". (19) (emphasis added)
Lord Sumner discussing the rule requiring joinder of the legal owner – i.e. the assignee – said that the rule:
" … is essentially a matter of practice, and the established practice ought not to be disturbed, or at any rate only very sparingly. As it is certain that there is no practice to regard the joinder of the legal owner as generally unnecessary, it is for the appellants to show that it has been the practice to dispense with it in such cases as the present". (29) (emphasis added)
Discussing Brandt's case, Lord Sumner added:
"Plainly the House did not consider itself to be departing from established rules of practice, nor has the case ever been so regarded. It has, therefore, now to be shown that the present case is within the principle of the exception to which effect was then given". (31)
It is particularly to be noted that there it was accepted that proceedings might be begun and certain relief obtained without joining the assignor:
"That an equitable owner may commence proceedings alone, and may obtain interim protection in the form of an interlocutory injunction, is not in doubt; but it was always the rule of the Court of Chancery and is, I think, the rule of the Supreme Court, that, in general, when a plaintiff has only an equitable right in the thing demanded, the person having the legal right to demand it must in due course be made a party to the action … under Order XVI, r 11, no action can now be defeated by reason of the misjoinder or non‑joinder of any party; but this does not mean that judgment can be obtained in the absence of a necessary party to the action, and the rule is satisfied by allowing parties to be added at any stage of a case". (14) (emphasis added)
- The New South Wales Court of Appeal, in Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 referred to the requirement of joinder of the assignor as "a rule of procedure which may be dispensed with" (11,518) and in National Mutual Life Nominees Ltd v National Capital Development Commission (1975) 6 ACTR 1 at 7‑8 the relevant requirement was described as "so much a formality that if the assignor did not consent, he could be joined as a defendant …".
- In this Court, the point was discussed by Fitzgerald P and McPherson JA in Equus Financial Services Limited v Glengallen Investments Pty Ltd (Appeal No 262 of 1993, 19 May 1994). That concerned an assignment of a debt. Fitzgerald P remarked:
"If there has been an equitable assignment, the only possible defect in the proceeding commenced by the appellant is the absence of [the assignor] as a party, which does not justify the dismissal of the action …".
The whole of the judgment of McPherson JA deals with the topic and all of it is relevant in the present case. I will, however, quote part only:
"To countenance this application to strike out the action would go far towards resurrecting the old rules for joinder of parties along with many of their abuses, which it was the avowed object of the Judicature system to eliminate … [n]ow under O 3, r 11 of The Rules of the Supreme Court, the Court must not refuse to determine a cause or matter by reason only of non-joinder of parties …
The matter of non-joinder arises here only if the assignment is not statutory but simply equitable, or if it is at present nothing more than a mere agreement to assign …
The reason for making the assignor a party to an action brought by an equitable assignee is to ensure that the assignor is bound by the outcome of the proceedings. If the assignor is not bound, payment by the debtor to the assignee in accordance with the judgment involves the risk that it will not necessarily discharge the debt … Even so, the court does not always insist on joinder if satisfied that it can, in terms of O 3, r 11, effectually and completely adjudicate without adding parties. An example where it can be predicated that, apart from the plaintiff assignee in equity, no one has an interest in the subject debt, so that the assignor is in substance a bare trustee for the assignee".
- The proposition that the absence of the assignor from the proceedings instituted rendered them a nullity is plainly wrong.
- I should add that it is unnecessary for the purposes of this case to consider the correctness of statements such as those made in Ingall v Moran [1944] KB 160, to the effect that an action by a person claiming to be administrator but who has in fact obtained no grant is a nullity; I note that the decision of this Court in Noble & McBride v State of Victoria & State of Queensland ([1999] QCA 110; Appeal No 9023 of 1997, 13 April 1999) may throw doubt on the authority of Ingall v Moran, so far as this State is concerned.
- There remains the question whether as a matter of procedure, which it is, the trustee in bankruptcy should have been joined, or should now be joined, in the present case. It is difficult to see any practical advantage in doing so, unless it be the advantage to the respondents of further delay and complexity. It was argued for the respondents that joinder of the trustee was desirable so that he might be made liable for costs; unless, improbably, the trustee agrees to be a plaintiff that would not occur. The possibility of getting costs has not, in any of the authorities which I have found, been put forward as a reason for the practice of joining the assignor; the advantage of having the assignor present as a party is generally said to be to avoid the possibility that, having paid the assignee, the debtor may be then faced with a claim by the assignor. That is not put forward here, where no suggestion has been made that the respondents are fearful of an action against them by the trustee. Of course, if the trustee were joined one would not expect him to take any part in the proceedings.
- I referred above to the emphasis laid by one of the judges in the Performing Right Society Ltd case on the technicality of the outcome arrived at. Although it is not strictly necessary to do so, I think it desirable to expand on that. This appeal comes before us at a time when we are governed by the Uniform Civil Procedure Rules 1999; but we need not apply them unless satisfied that "it is in the interests of justice to proceed by way of rehearing": r 765. The facts to which the rights of action the subject of the assignment relate are already old. There have been six statements of claim in the suit, which was begun in January 1996. The case appears to be one in which it is in the interests of justice to apply the new r 5, defining this Court's and the parties' overriding obligations. Rules 5(1) and (2) are as follows:
"(1)The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
(2)Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules".
- The proper interpretation of this rule appears to be that, when faced with an established practice which can lead to "undue delay, expense and technicality", the Court should attempt to avoid these results. There is power to order the joinder of the trustee in bankruptcy in the circumstances set out in r 69(1)(b); but it is my opinion that there is no reason to think that the presence of the trustee before the Court is either "necessary" within the meaning of the former subrule or "desirable, just and convenient" within the meaning of the latter; there is no suggestion that the trustee has any further interest in the matter being litigated.
- To return to r 5, the "overriding obligations" are imposed not only on the Court but on the parties and each party is to "proceed in an expeditious way". I note that the obligation to do so is taken to be an undertaking to the Court.
- In my opinion the appeal should be allowed with costs, the orders made below set aside and in lieu it should be ordered that the application made by the respondents to the learned primary judge be dismissed with costs.
- THOMAS JA: Prior to October 1991 the appellant had a cause of action against the respondents. Whether it will succeed has yet to be determined. Upon the appellant being declared bankrupt on 24 October 1991 his rights of action passed to his trustee in bankruptcy. The trustee did not see fit to bring proceedings upon these rights. The bankruptcy terminated on 8 December 1994. By a deed of assignment dated 5 January 1996, in consideration of payment of $500 by the appellant, the trustee assigned to him all of its rights, title and interest in any right of action which may have been vested in the trustee in relation to the estate of the appellant against, amongst others, the respondents.
- I agree with the following five propositions advanced by Mr Morris QC on behalf of the appellant.
- A cause of action existed against the respondents.
- It was validly assigned in equity to the appellant.
- The former trustee upon such assignment became a bare trustee.
- The appellant's action was commenced within the limitation period.
- Notice of assignment was given to the respondents within the limitation period, although after commencement of the action.
- In my view the mere fact that the action was commenced before the notice of assignment was given did not preclude the appellant from maintaining the action.
- Order 32 Rule 1 (6) of the Rules of Court (as in force until 30 June 1999) provides:
"Subject to this rule, an amendment may be allowed under this rule notwithstanding that the effect of the amendment would be to add or substitute a cause of action arising after the issue of the writ of summons or other proceedings by which the proceedings were commenced."
- No other part of Order 32 Rule 1, in my view, would preclude the making of an amendment to the statement of claim, if amendment were actually required, such as, for example, that notice of the assignment was given to the respondents. In the circumstances I do not think that such an amendment was strictly necessary, as the statement of claim alleges, somewhat broadly, that the appellant was empowered by the relevant deed of assignment to commence proceedings. The defences contain denials of that allegation thereby placing that question in issue. Interestingly the respondent bank initially admitted the appellant's allegation of empowerment under the deed to commence proceedings, but later withdrew the admission. The correctness of the allegation could be examined by obtaining particulars, or through discovery. If the allegation could be demonstrated to be unsubstantiated an interlocutory application could be brought to strike it out. Alternatively its correctness could be litigated by ordinary contest at trial. If any amendment were necessary it would in my view be readily allowable under Order 32 Rule 1 (6). Similarly, if joinder of the trustee as a party were necessary, such joinder would be readily allowable under Order 3 Rule 11 of the Rules of Supreme Court, or under Rule 69 (1)(b) of the Uniform Civil Procedure Rules[10].
- I have read the reasons prepared by Pincus JA and agree with them. In particular I agree that in the present circumstances it is not necessary for the further conduct of the action that the former trustee in bankruptcy be made a party. The artificiality of such a step is only emphasised by the fact that the appellant is asserting his own original rights against the respondents, such rights having been temporarily lost by operation of law and having been subsequently retrieved after termination of the bankruptcy.
- In my view then the appellant needs neither amendment nor joinder of an additional party, and even if he did, those are remedies that would be available to him in the pending action under the Rules of Court. The notion that the proceedings were a nullity is erroneous.
- The appeal should be allowed. I agree with the orders proposed by Pincus JA.
Footnotes
[1] [1999] 1 NZLR 335.
[2] [1976] QB 430.
[3] (1828) 3 Russ 1; 38 ER 475 at 483.
[4] (1828) 3 Russ 1; 38 ER 475 at 494-495.
[5] Meagher, Gummow & Lehane, 3rd ed., Butterworths 1992, 237 [820].
[6] [1893] AC 369 at 393-394.
[7] [1976] 1 QB 430 at 445.
[8] Meagher, Gummow & Lehane, 3rd ed., Butterworths 1992, 199 [686].
[9] At the time of the primary hearing the former were the appropriate Rules of Court. The decision was a "final decision in a proceeding" with respect to UCPR, r 765, see de Innocentis v Brisbane City Council & Anor [1999] QCA 404; Appeal No 12032 of 1998, 24 September 1999 per Chesterman J, [32]ff; this appeal is therefore a rehearing and UCPR, r 375(1) and s 81 of the Supreme Court of Queensland Act 1991, which commenced 1 July 1999, apply.
[10] Equus Financial Services Limited v Glengallen Investments Pty Ltd (Appeal No 262 of 1993, 19 May 1994, especially per McPherson JA).