National Australia Bank Ltd v Block
[2011] QDC 238
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- Unreported Judgment
- National Australia Bank Ltd v Block[2011] QDC 238
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National Australia Bank Ltd v Block[2011] QDC 238
National Australia Bank Ltd v Block[2011] QDC 238
DISTRICT COURT OF QUEENSLAND
CITATION: | National Australia Bank Ltd v Block [2011] QDC 238 |
PARTIES: | NATIONAL AUSTRALIA BANK LTD (Plaintiff) AND PHILLIP ROSS BLOCK (Defendant) |
FILE NO/S: | D3895/10 |
DIVISION: |
|
PROCEEDING: | Application for summary judgment; application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 7 October 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 16 September 2011 |
JUDGE: | McGill DCJ |
ORDER: | Judgment for the plaintiff on the claim in terms to be finalised. Counterclaim struck out. Defendant’s application dismissed. |
CATCHWORDS: | ASSIGNMENT – Equitable – benefit of loan contracts and mortgage – whether assignor can sue debtor – no notice of assignment – effect of contract with assignee PRACTICE – Summary judgment – action for debt and to enforce mortgage – whether any real possibility of assignment of plaintiff’s interest – whether need for assignee to be a party PRACTICE – Parties to actions – claim to enforce debt and mortgage – whether equitable assignment – assignee not a necessary party to proceeding APT Finance Pty Ltd v Bajada [2008] WASCA 73 – cited. Boulton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd R 202 – distinguished. Edwards v Santos Ltd [2011] HCA 8 – cited. Gray v Morris [2004] 2 Qd R 118 – cited. Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210 – cited. LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105 – applied. MacDonald v Robins (1954) 90 CLR 515 – cited. Miles v Bull [1969] 1 QB 258 – considered. Nolan v King and Cook [1931] St R Qd 342 – followed. Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 – cited. Oshlack v Richmond River Council (1998) 193 CLR 72 – cited. Thomas v National Australia Bank Ltd [2000] 2 Qd R 425 – followed. Three Rivers District Council v Bank of England [1996] QB 292 – considered. Walter & Sullivan Ltd v J. Murray & Sons Ltd [1955] 2 QB 584 – considered. |
COUNSEL: | J.W. Peden for the plaintiff E.J. Forrester for the defendant |
SOLICITORS: | Gadens Lawyers for the plaintiff Ranger Legal Lawyers for the defendant |
- [1]This is an application for summary judgment under r 292. By a claim and statement of claim filed 16 December 2010 the plaintiff sought to recover amounts payable under two loans to the defendant, both of which were secured by a mortgage over a property. The plaintiff also sought judgment for possession of the property. A notice of intention to defend and defence were filed on 27 April 2011. That document is a very bulky one, running to some 93 pages, but it was not enough to deter the plaintiff and an application for summary judgment was filed on 11 July 2011.
- [2]By the time the application came before me, it had been before at least two other judges, one of whom seems to have thought, from the volume of material filed, that the matter was complex and difficult. In fact, the argument was really quite straight forward. At the hearing the defendant sought to raise the issue of amending the defence, but there is no point in worrying about the terms of the defence if an application for summary judgment is successful; summary judgment depends not on whether a good defence has been pleaded, but on whether there is any real possibility that the outcome of the trial will be anything other than a judgment for the plaintiff. Because this looks to a hypothetical future trial and one of the things that could happen at a trial, or before a trial, is that the pleadings may be amended,[1] what really matters is the true situation rather than the state of the pleadings. For that reason, there is no point in considering the terms of the defence unless the application under r 292 is unsuccessful.
Application for summary judgment
- [3]The application of UCPR r 292 and the authorities on it were analysed in the judgment of the Court of Appeal in LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105, at [26]-[30]. As far as I know that is the most recent exposition by the Court of Appeal, and I am intending and seeking to give effect to it. On behalf of the defendant it was submitted that I should follow the approach adopted by Chesterman JA in Boulton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd R 202 at [24]. The difficulty with that approach is that it was expressly rejected by the other two members of that court. Holmes JA at [2] referred to the “no real prospect” test in r 292, and said “I do not think it can be safely paraphrased in the way Chesterman JA proposes.” Daubney J said at [66]:
“I respectfully do not agree with his Honour’s interpretation of the ‘no real prospect of success’ test postulated under r 292 … in respect of summary judgment applications by plaintiffs … .”
- [4]This is not the first time this has happened; as Chesterman JA himself recognised at [15] in Boulton Properties, in Gray v Morris [2004] 2 Qd R 118 his judgment went further than that of other members of the court. For that reason I have always regarded it as being in substance a dissenting judgment, as is his judgment in Boulton Properties in this respect. His Honour’s approach to the test under the rule appears to equate it with the test for striking out a proceeding, under General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, which I regard as a more rigorous test.
- [5]I accept that a degree of caution is appropriate when approaching an application for summary judgment, as indicated by the passages from the decisions in the High Court which were said in LCR Mining Group (supra) to be relevant to the application of the Queensland rules, but that is as far as the matter should go. I note that in that decision White JA, with whom the other members of the court agreed, approved the propositions that once an applicant for summary judgment has made out a prima facie case the evidentiary onus shifts to a respondent [22], and that r 292 must be applied in the context of the overriding purpose of the UCPR laid down in r 5.
- [6]One feature of the rule, however, which has not received a great deal of attention in the Queensland decisions, is the requirement in sub-rule (2)(b) that the court also be satisfied that there is no need for a trial of the claim. This is similar to the provision in the English rules considered in Miles v Bull [1969] 1 QB 258 by Megarry J, that a defendant could obtain leave to defend if “there ought for some other reason to be a trial.”[2] His Lordship said at pp 265-6:
“These last words seem to me to be very wide. They also seem to me to have special significance where, as here, most or all of the relevant facts are under the control of the plaintiff, and the defendant would have to seek to elicit by discovery, interrogatories and cross-examination those which will aid her. If the defendant cannot point to a specific issue which ought to be tried but nevertheless satisfies the court that there are circumstances that ought to be investigated, then I think that those concluding words are invoked. There are cases where the plaintiff ought to be put to strict proof of his claim, and exposed to the full investigation possible at a trial; and in such cases it would, in my judgment, be wrong to enter summary judgment for the plaintiff.”
- [7]Such an approach seems to be consistent with the general statement by four judges in Agar v Hyde (2000) 201 CLR 552, cited in LCR Mining Group (supra) at [29]. I accept that in an appropriate case it may well be proper to be guided by them in the application of r 292(2)(b). The matter, however, must depends on the facts of a particular case, and the state of the evidence presented to the court, as indeed was the outcome in relation to particular issues sought to be raised by the defendant in LCR Mining Group (supra), which both the judge at first instance and the Court of Appeal concluded did not give rise to a need for a trial of the claim.
Issue of fact
- [8]On the hearing of the application, the only matter argued on behalf of the defendant was that there was a risk or real possibility that the plaintiff’s interest in the loans and mortgage had been the subject of securitisation, a process which involves an equitable assignment of the plaintiff’s interest to a third party which holds it as trustee under a master trust for a large number of individual holders of interests. I had the benefit of a helpful exposition of the securitisation process, but for the purposes of this application all that matters is that it involves an equitable assignment to the trustee of the master trust, with the ultimate beneficial interest being spread among a large number of holders of securities, no notice of any of this is given to the debtor, and responsibility for receiving payments and dealing with debtors remains with the plaintiff.
- [9]In supplementary written submissions the defendant argued that the assignment here was really legal, and that notice had been given to the defendant because the defendant’s investigations suggested that the interests may have been assigned. That is not the sort of notice required for a legal assignment: the Property Law Act 1974 s 199(1) requires “express notice in writing” of the assignment to effect a legal assignment under that provision. There is no suggestion of that here, so there has been no notice and no legal assignment; any assignment could only be equitable. What we are considering here is a possible equitable assignment of legal rights. If there had been a legal assignment, of course, only the assignee could sue.[3]
- [10]The defendant has no evidence that the plaintiff’s interest in the particular loans made to him was the subject of securitisation, but there was evidence suggesting that the plaintiff has securitised a lot of loans,[4] so that, viewed in the abstract, there is a real possibility that this might have occurred with the plaintiff’s loans, particularly in a context where notice of this having occurred is deliberately not given to the debtor. If the plaintiff’s interest has been assigned in equity, it was submitted for the defendant that this has two consequences: first, the plaintiff will have suffered no loss, or at least will not have suffered the loss of the full amount claimed, as a result of any default by the defendant, because the plaintiff has already received whatever it was paid for its interest in the loans in return for the assignment. It was submitted that this was a relevant consideration in assessing damages for breach of contract. Second, the effect of the equitable assignment is that the assignor alone cannot sue to enforce the loans, the action as it is presently constituted cannot proceed, and it is necessary to join the assignee, either the trustee of the relevant master trust or all of the holders of the various securities, each of whom would hold a small part of the equitable interest originally assigned by the plaintiff.
- [11]The plaintiff’s initial response is that these defences are based on the idea that the plaintiff’s interest in the transactions with the defendant has been the subject of securitisation, and the true position is that it has not been. The plaintiff has filed affidavits from a number of employees and a contractor which on their face say that the plaintiff’s records for the transactions with the defendant, which are computerised, contain entries which would show if the plaintiff’s interest in these particular transactions had been the subject of securitisation, and from an examination of those records these transactions have not been securitised.[5] Indeed, one of the affidavits is to the effect that one of the transactions with the defendant, a personal line of credit, cannot be the subject of securitisation.[6]
- [12]There was no evidence to contradict any of this, although it was submitted on behalf of the defendant that there were deficiencies in the affidavits because the deponents did not explain the basis upon which they were familiar with the relevant records, and were not on the face of the affidavits in a position to say how reliably the records which were accessed identified whether or not a particular transaction had been the subject of securitisation. It was also submitted that some of the affidavits were unclear, and that overall the affidavit evidence was contestable. None of the deponents was cross-examined, however, and no notice requiring any deponent for cross-examination had been given.
- [13]There was a side issue here, because someone in America, whose expertise and sources were not disclosed, had purported to provide to the defendant’s wife CUSIP numbers associated with one of the plaintiff’s loans to the defendant.[7] This was said to be evidence of assignment of the home loan; it did not apply to the other loan, a line of credit. I do not regard it as such evidence, or as worthy of any weight. The plaintiff’s solicitors have made their own enquiries, which show that CUSIP numbers relate to investment funds, not specific investments, and the numbers nominated identity two specific funds which do not hold securitised loans.[8] The CUSIP number is a red herring: it does not give rise to any doubt as to the plaintiff’s success on the claim.
- [14]The plaintiff’s affidavits are not entirely free from jargon, particularly jargon associated with the use of computer systems by the plaintiff. Nevertheless, the substance of what is being said in them is clear enough to me: that according to the plaintiff’s records the transactions with the defendant have not been the subject of any securitisation. I acknowledge that, the way securitisation works, a debtor would not be told that his transaction had been dealt with in this way, so that the only way to find out would be through discovery of the plaintiff’s records, but it seems to me that the effect of the material in the affidavits is to show what the plaintiff’s records say about the matter, which is that these transactions have not been the subject of securitisation.
- [15]The only possible alternative explanations for the state of the affidavits that occur to me are that the various witnesses are conspiring to give false evidence against the defendant, or that all of them are so incapable of dealing with the plaintiff’s computer systems properly that none of them is able to detect that these transactions have in fact been the subject of securitisation. In the circumstances I regard those as fanciful, and no other basis for rejecting their evidence was argued on behalf of the defendant. I am therefore satisfied that there is no real possibility that if there were a trial it would be proved that the transactions involving the defendant had been the subject of securitisation. In those circumstances, no defence which was relied on in submissions would arise, and the plaintiff would succeed. I am satisfied about that with the required degree of certainty, and that there is otherwise no need for a trial of the claim, and accordingly on this basis I give summary judgment for the plaintiff.
Claim in debt
- [16]I should, however, deal on a precautionary basis with the other issues raised in argument. The plaintiff’s alternative response to these arguments was as follows. As the first point, the plaintiff is not suing for damages but in debt, and in those circumstances the question of the loss suffered by the plaintiff is irrelevant. On the face of the pleading, that is precisely how the plaintiff is suing, and in my opinion that is a complete answer to this first point. Although it is alleged that the defendant failed to make the payments required under the loan contracts, in breach of those contracts, that was relevant simply in terms of the quantification of the amount payable under the contracts, and there is no allegation that any particular loss or damage has been suffered. If the plaintiff is entitled to recover the full amount of the claim in debt, whether there would be a parallel claim in damages which would produce a judgment for a lesser sum is irrelevant.
- [17]The defendant submitted that the plaintiff would be unjustly enriched if it recovered money from the defendant when it had already been paid for the assignment of its interest; but if there had been an assignment the plaintiff would hold any amount recovered on behalf of the assignee,[9] so there is no question of unjust enrichment. This in itself could not provide a basis for relief from forfeiture (the defendant has not repaid the amounts borrowed) or make the recovery of these amounts a penalty (for the same reasons), and no factual basis for a defence on either basis was suggested by the defendant. There is no rational basis for any in personam claim by the defendant against the plaintiff arising out of an equitable assignment of the plaintiff’s interest.[10]
Effect of equitable assignment
- [18]The alternative basis advanced on behalf of the plaintiff in relation to the second part of the defendant’s argument was that, even if there had been an equitable assignment to a trustee of a master trust of the plaintiff’s interest in these loans, so that they had been the subject of securitisation, the plaintiff can still sue, and the absence of any other party was not fatal to the action. The point was argued at some length, and in the circumstances I will address it on a precautionary basis.
- [19]The traditional position in the case of an assignment in equity of a common law chose in action, that is an equitable assignment of legal property, was that the assignor remained the party entitled to sue at law to enforce the obligation, and the assignee in order to enforce its rights needed to bring proceedings at law in the name of the assignor, or in equity, to require the assignor to allow the assignee to enforce the debt in the assignor’s name.[11] Equity would in some circumstances require the debtor to be made a party to the proceeding so that all issues about the debt could be enforced in the one proceeding, so long as the assignor was also a party.[12] Following the enactment of the Judicature Act 1873 (Eng) the process was streamlined, although the assignee still had to sue in the name of, or join, the assignee.[13] In time the view was expressed that, at least in certain circumstances, it was unnecessary for the assignor to be joined as a party, so that the assignee could sue directly. It was also decided that the requirement of joinder was only one of practice. Broadly speaking, the history of the development of the law in relation to an equitable assignment of a legal chose in action has been to facilitate the enforcement of the obligation by the assignee.
- [20]It was submitted on behalf of the plaintiff, however, that notice to the debtor has always been an essential requirement of the enforceability of the chose in action by the assignee, so that it necessarily followed that, in the absence of such notice, the assignor was still free to enforce the debt or other obligation. The effect of the assignment was that the assignor became a trustee of the benefit of the chose for the assignee,[14] and once the debtor was aware of the interest of the assignee equity would not permit him to act so as to defeat that interest, for example by making some arrangement with the assignor. In effect, once the debtor knew of the presence of the assignee, the assignor could no longer alone give a good discharge for the debt.[15]
- [21]This situation was illustrated by one of the decisions on which the defendant relied,[16] where part of a debt was assigned and the creditor gave express notice of the assignment to the debtor, but subsequently sued to recover the whole of the debt. Because it was an assignment of only part of the debt the assignment was ineffective at law despite notice, but the transaction was effective as an equitable assignment of that part of the debt, and accordingly the Court of Appeal held that the assignee was a necessary party, particularly in circumstances where the assignor had expressly agreed, and disclosed to the debtor, that the assignee could give a good discharge for part of the debt. In such circumstances, it was held to be necessary for the protection of the debtor for the assignee to be a party, because otherwise there was a risk that the assignee’s equitable interest might not be protected by the assignor, in which circumstances the assignee may have a remedy against the debtor even if the debtor had already paid the assignor.[17]
- [22]It is worth noting what the Court of Appeal did in relation to a cross appeal against an order which stayed the proceedings. The court held that the defendants were entitled to an order dismissing the claim unless within a fixed period it was put in proper form, which could be by joining the assignee as plaintiff should it be willing to do so or as defendant should it not be so willing, but Parker LJ added at p 589:
“Alternatively, the plaintiffs might be able to induce [the assignee] to consent to the authority to pay being withdrawn, substituting some letter of trust under which the plaintiffs undertook to hold any sum recovered in the proceedings in trust for [the assignee].”
- [23]In other words, it was open to the assignor and the assignee to agree between themselves that the assignor could sue on the debt as an alternative to the assignee being joined as a party to the action.
- [24]That decision is obviously distinguishable from the present case because in the present case there has been no notice to the defendant of any assignment given by the plaintiff or anyone else.[18] However, that decision was referred to in a later Court of Appeal decision[19] where there was some language which on its face suggested that the assignee was a necessary party, without reference to the existence of notice.[20] In that case, the issue of whether an assignee could sue in the absence of notice, and whether an assignor could sue without joining the assignee in the absence of notice, were not in issue, and I suspect the practical explanation for what was said by the Court of Appeal in England is that the possibility of a situation like the present was simply not addressed.[21] That follows from the comment that a proceeding by an assignor would be unusual.
- [25]Another member of the court, Staunton LJ, discussed in some detail the question of whether the assignor of an equitable assignment retained a cause of action, and concluded at p 303:
“In my judgment the assignor still has a cause of action at law; and the assignee has a cause of action in equity. That was ultimately the position of Sir Patrick Neill in his reply, and I think that it is right. It is the solution which comes nearest to reconciling all the authorities. It allows the assignee still to use the assignor’s name, if he wishes, as before the Judicature Act. Of course the assignee’s claim prevails, if he insists upon it. The Supreme Court Act 1981 says so. But where the assignee is a party to the action, and expressly declines to make a claim, I can see no reason why the assignor should not claim what is his legal right.”
- [26]There is the consideration that in Three Rivers District Council, although the proceedings were commenced by the assignors prior to any notice of the assignment, shortly after the proceedings were commenced the defendant was informed by the plaintiffs’ solicitors that each of the plaintiffs had entered into an agreement to assign his claim against the bank to another bank which was in liquidation, with the proceedings having in fact been brought by that bank in the name of the individual depositors. There was also the consideration that Peter Gibson LJ had, earlier in his judgment at p 308, said:
“An assignor, if the assignment is known, will not be allowed to sue at his own name for himself. He may sue as trustee for the assignee if the assignee so wishes, but in that event he should reveal his representative capacity (RSC O 6 r 3(1)(a)) and if he attempts to recover for himself, even if, for example, only part of the debt has been assigned, he will be required to join the assignee.”
- [27]There are two significant features of this statement of principle, which preceded the analysis of the six authorities, which were absent from the restatement after that analysis at p 313. The first is that the restriction on the suit of the assignor applied only “if the assignment is known.” The second, that even then there was an alternative to the assignee being joined: the assignor could sue in a representative capacity, provided that that was disclosed as required by the procedural rules at that time.[22] There is no reason to think therefore that even Peter Gibson LJ was expressing the view that the assignor could not sue without joining the assignee in circumstances where no notice of the assignment had been given by either the assignor or the assignee.
- [28]Insofar as the court decided that an equitable assignee cannot sue in the names of the assignors without itself being a party to the suit, that appears to be contrary to what was said by Dixon CJ in MacDonald v Robins (1954) 90 CLR 515 at 524, and by Windeyer J in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 27, in a passage approved by Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at [41]. It is not necessary for me to consider whether the language of Peter Gibson LJ should be adopted at face value, or even whether that proposition is fairly arguable, because there are two decisions of appellate courts in Queensland which in my view are conclusive against the submission advanced on behalf of the defendant. They are binding on me, and lead to the conclusion that the defendant’s argument is bad in law.
- [29]The first is Thomas v National Australia Bank Ltd [2000] 2 Qd R 425. In that case, the appellant sought to enforce a cause of action which he asserted against the defendants prior to his becoming bankrupt, and which thereupon (if it existed) vested in his trustee in bankruptcy. After his discharge from bankruptcy he obtained from the trustee an assignment of the cause of action, and brought a proceeding on it. In these circumstances his title to sue was based on his standing as an assignee of the trustee in bankruptcy, and prior to the proceeding being commenced no notice of the assignment had been given to the defendants, and the assignment was only equitable. It was submitted on behalf of the defendants that the assignment was not effective to pass title to sue to the assignee until notice of it had been given to the defendants, which did not occur prior to the time when the suit was commenced, and that because the assignor was not joined as a party to the suit, it was a nullity.
- [30]The court rejected those arguments, holding that the assignment was effective as between the parties to it from the time when it occurred, and that, although notice had to be given to the defendants to enable to assignee to sue in his own name, that could be given at any time, indeed by the commencement of the action. It was further held that in any event the non-joinder of the assignor was not fatal to the proceeding, since the requirement that the assignor be joined was only a rule of practice, and in the circumstances there was no reason to think that any useful purpose would be achieved by having the trustee in bankruptcy before the court.
- [31]Pincus JA, with whose reasons Thomas JA agreed, said at [18]:
“It is not in question that an equitable assignment is good as between assignee and assignor, without notice to the debtor. The only debateable 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; or whether on the other hand notice to the debtor is necessary in order to pass title to the debt.”
- [32]His Honour considered the various authorities on the subject, and concluded that the correct position was the former: [25]. Accordingly, that is an authoritative determination that in Queensland until notice is given the debtor may pay the assignor. If that is the law in Queensland it necessarily follows that before notice the assignor may sue to enforce the debt, because the whole purpose of requiring the assignee to be a party if there has been an assignment is to ensure that the debtor will get a good discharge as a result of a payment to the assignor. The effect of the decision in Thomas is that the debtor will get a good discharge from the assignor in the absence of notice, and it necessarily follows that there is no reason to join the assignee. The assignor in the circumstances as they exist at present can enforce the debt at law.[23]
- [33]It would be surprising if it were otherwise: given that the starting point of the developments was a situation where the debt was enforceable in law only by the assignor, it would require something substantial to create a situation where the debt was not enforceable at law by the assignor. There is no reason for equity to protect the interest of an assignee who has not given notice of the assignment, so there is no reason why the debtor could not pay the assignor and obtain a discharge which would be good as against the assignee.
- [34]Apart from this, it is clear from the material before me in relation to the operation of securitisation, the material put before me by the defendant, that it is part of this process that the assignor, the plaintiff, will continue to be responsible for dealing with a debtor notwithstanding the assignment.[24] This is referred to as “servicing” the transactions, which includes receiving payment of moneys payable under them, and presumably suing to enforce them. If pursuant to the terms of the contract between the assignor and assignee it is for the assignor to receive payment, so that the assignee is relying on the terms of the assignment to recover payment from the assignor, it follows that the assignor can sue to enforce the debt covered by the assignment without joining the assignee.
- [35]That was established by a decision of the Full Court in a situation where the creditor’s business was the subject of a mortgage which was in the nature of a floating charge: Nolan v King and Cook [1931] St R Qd 342. The mortgage was treated as an equitable assignment, but the effect of the mortgage was that the assignor was entitled to deal with the property the subject of the charge in the ordinary course of business, which was held to include being able to sue to enforce an obligation which was subject to the mortgage without joining the mortgagee, at least so long as there was not shown to have been default which would cause the charge to crystallise. That was on the basis that as between the assignor and the assignee it was at that time a matter for the assignor to deal with the debtor,[25] exactly the same situation as applies here. It follows that that decision, which is also binding on me, is authority for the proposition that, because of the structure of the securitisation referred to in the defendant’s material, the plaintiff is entitled to enforce debts subject to securitisation without joining whoever holds any equitable interest as a result of the assignment, assuming there is one. For this reason as well, I am bound to reject the legal arguments advanced on behalf of the defendant.
- [36]There is a further point: the proposition that the assignee has to be joined as a party to the proceeding is, as was pointed out by Pincus JA in Thomas, only a rule of practice: [28]. His Honour concluded that the absence of the assignor in that case did not render the proceeding a nullity, but at most simply a defect in procedure which may be dispensed with: [29]. The same would apply in reverse;[26] assuming that the result of the rule of practice as to who should be a party to the proceeding is that the assignee should be a party, whether as plaintiff if cooperating or as defendant if not cooperating, that is also a defect in procedure that may be dispensed with.
- [37]If the argument for the defendant were correct, it would mean that the plaintiff would be unable to sue to recover the debt subject to securitisation without first joining as parties, as extra plaintiffs or extra defendants, potentially a host of currently unidentified corporations, or perhaps other entities or even individuals, who would each own a small share in the ultimate equitable interest in the debt. As pointed out by Pincus JA, to apply a rule of practice which can lead to undue delay, expense and technicality would be contrary to the requirements of UCPR r 5, and if there is no useful purpose to be served in joining the host of ultimate holders of the beneficial interest in the securitised debt, the appropriate course would be simply to proceed without them as parties, just as in Thomas it was held appropriate to have proceeded without the assignor even if, as a matter of procedure, he should have been joined in that matter.
- [38]In the present case, where (on the hypothesis of securitisation) none of the holders of the equitable interests have given notice to the defendant seeking to protect any interest, and where the securitisation mechanism provides that it is the plaintiff that will “service” the debts and obligations of people like the defendant, even if there is a rule of practice requiring the ultimate assignees of the equitable interest, or for that matter the intermediate trustee, to be joined, it would remain a matter of the discretion of the court, and in my opinion such a joinder ought not to be required, essentially for the same reason as in Thomas: because no useful purpose would be achieved by such a joinder. For that reason as well, the submissions on behalf of the defendant ought not to succeed.
- [39]A point made by Pincus JA in Thomas at [18] is equally applicable here:
“If the doctrine which we are invited to accept it 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.”
- [40]In my opinion, therefore, if there were any doubt as to the factual proposition that there has been no equitable assignment of the plaintiff’s interest in the transactions with the defendant so as to defeat an application for summary judgment under r 292, which I have found there is not, the application would still succeed and the defendant’s arguments would still fail because, so far as they are based on the proposition that the action cannot succeed without the equitable assignees being joined as parties, it is wrong in law. For my purposes, I am bound by Queensland appellate decisions to decide as I would, so there can be no question of the matter being open for argument before me; for my purposes, the arguments advanced by the defendant are conclusively bad in law. Were it necessary, I would have been satisfied that, even on the hypothesis that these transactions with the defendant have been the subject of securitisation, the defendant’s submissions are wrong at law and accordingly (to the necessary degree of satisfaction) there is no real possibility of the defendant succeeding at a trial, and there is otherwise no need for a trial of the proceeding, so that the application for summary judgment ought to succeed anyway.
Conclusion
- [41]In these circumstances, there is no longer any need to be concerned about the state of the defence. There is also a counterclaim. The counterclaim on the file was filed by the defendant personally, but in his most recent application the defendant has sought leave to file and serve a substitute counterclaim, a copy of which is Exhibit EJ4 to the affidavit of Mr Forrester sworn 13 September 2011. The original counterclaim is almost incomprehensible nonsense; it seems to be asserting that as a result of the defendant having sent various meaningless documents to the plaintiff, the plaintiff has to pay the defendant a large sum of money.
- [42]The proposed replacement counterclaim is much more focused, and is based solely on the allegations in paragraph 23 of the proposed substitute defence. That sets out the material facts relating to the defendant’s argument as set out earlier in these reasons, the starting point being that the plaintiff has assigned its equitable interest in the loan agreements and mortgage to a third party, and therefore cannot keep any benefit from enforcing these agreements because it has suffered no loss or damage from the defendant’s breach of the loan agreement or mortgage, so that by seeking to enforce it the plaintiff is seeking double compensation.[27] It is also alleged that this makes the mortgage a penalty and hence unenforceable, and that the failure to disclose the assignment was misleading or deceptive conduct or unconscionable conduct.[28]
- [43]However dubious all this may be as a matter of law, it is sufficient for present purposes to say that it is all based on a factual proposition that there has been an assignment, and for the reasons that I have given earlier I am satisfied that there is no real possibility that if there were a trial it would be found that the plaintiff’s interests had in fact been assigned. Accordingly there is no point in giving leave to amend in order to substitute as a counterclaim a case which could be immediately the subject of a successful application for summary judgment under r 293. In those circumstances the appropriate course is to strike out the existing counterclaim, which the defendant did not seek to justify, but without leave to amend. It follows that the defendant’s application filed 15 September 2011 is no longer appropriate and is also dismissed.
- [44]I invited the parties at the conclusion of the hearing to put before me when these reasons were published draft orders which would reflect the outcome desired if that party were successful. When these reasons are published I will therefore hear submissions as to the appropriateness of the draft orders sought on behalf of the plaintiff. I expect that it would be appropriate that they include an order for costs in favour of the plaintiff, but I will hear argument on that point as well.
Footnotes
[1]Edwards v Santos Ltd [2011] HCA 8 at [52].
[2]Those rules were based on the more traditional approach where, once an application for summary judgment was made, a defendant required leave to defend; the UCPR contemplates that a defendant is defending before such an application can be made, so that if the application is unsuccessful no order needs to be made to permit the defendant to continue to defend. Accordingly, older authorities speaking about granting “leave to defend” should no longer be applied literally, in the same way as the old authorities referring to giving leave to a plaintiff to enter judgment.
[3]Property Law Act 1974 s 199(1); APT Finance Pty Ltd v Bajada [2008] WASCA 73 at [31].
[4]This was not disputed by the plaintiff at the hearing.
[5]Affidavit of Gration filed 8 August 2011; Affidavits of Duns, Be, Lewis, all filed 22 August 2011.
[6]Affidavit of Be (supra).
[7]Affidavit of Underwood filed 8 August 2011, Exhibit JU3.
[8]Affidavit of Dighton filed 22 August 2011: The funds hold shares, and a small amount in a related cash fund.
[9]Young, Croft and Smith On Equity (2009) p 714.
[10]Both loan agreements, and the mortgage, expressly permitted assignment by the plaintiff: Affidavit of Malik filed 11 July 2011, Exhibit WM-1 Clause 31.1; Exhibit WM-2 Clause 23.1; Exhibit WM-5 Clause 25.1.
[11]Three Rivers District Council v Bank of England [1996] QB 292 at 299 per Staughton LJ.
[12]Tolhurst (2002) 118 LQR 98 at 99, 101.
[13]Young, Croft and Smith On Equity (2009) p 714.
[14]Young, Croft and Smith On Equity (2009) p 714.
[15]Ibid p 709.
[16]Walter & Sullivan Ltd v J. Murray & Sons Ltd [1955] 2 QB 584.
[17]See p 588: “The whole object of the notice to the debtor is to protect the assignee. After receipt of that notice the debtor pays the assignor at his peril.”
[18]A suspicion in the mind of the defendant that there has been an assignment would obviously not qualify as notice even in equity, since he has no notice of the identity of any particular assignee.
[19]Three Rivers District Council v Branch of England [1996] QB 292.
[20]See p 313 per Peter Gibson LJ: “If, unusually, the assignor sues, he will not be able to maintain the action in the absence of the assignee.”
[21]This was part of a general statement of the position of an assignee and an assignor said to be established by six authorities discussed in the reasons for judgment; the first of these, William Brandt’s Sons & Co v Dunlop Rubber Co [1905] AC 454 was said to show that payment of the assignor did not discharge the debtor “once he has notice of the assignment” (p 308); and from the last, Deposit Protection Board v Dalia [1994] 2 AC 367, a passage was quoted referring to the protection of the assignee “provided he gives notice”: p 313.
[22]There is by contrast no general rule in the UCPR requiring disclosure of any representative capacity of this nature; Division 4 of Part 1 of Chapter 3 is concerned only with the situation where a party who has the same interest as all persons who could have been made parties in the proceeding is made a party as the representative of all of them.
[23]See also Jennings v Credit Corp Australia Pty Ltd [2000] NSWSC 210 at [31] per Santow J.
[24]See Affidavit of defendant filed 21 July 2011 Exhibit JB1 p A70; Exhibit JB2 p 592-3; Exhibit JB3 p 60, 61, which provides expressly that the plaintiff can sue.
[25]See p 349 per Henchman J; p 350 per Macrossan SPJ, who said that as long as the plaintiff could under the mortgage give effective discharges to debtors paying debts, he could sue in his own name to recover debts.
[26]As confirmed by the Court of Appeal of Western Australia in APT Finance Pty Ltd v Bajada [2008] WASCA 73 at [30], where some doubt was expressed as to the effect of the Three Rivers decision. In APT Finance the court held that the assignor could sue alone until notice of the assignment was given to the debtor, wherefrom the assignment became legal and only the assignee could sue.
[27]This is not right, because the assignor holds the benefit of the enforcement for the assignee: Jennings (supra) at [31]; Young, Croft, and Smith, op cit, p 714.
[28]That is also not right; the documents expressly permit assignment and there is nothing misleading about not disclosing an assignment because it does not affect the debtor, as I have just shown.