Mark Sensing (Aust) Pty Ltd v Flammea

[2003] VSCA 41

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 4271 of 1996

MARK SENSING (AUST.) PTY. LTD. and

G. & J. POOLE PTY. LTD.

Appellants

v.

FRANK FLAMMEA & ORS

Respondents

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JUDGES:	ORMISTON, CHARLES and BUCHANAN, JJ.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 March 2003
DATE OF JUDGMENT:	24 April 2003
MEDIUM NEUTRAL CITATION:	[2003] VSCA 41

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CONTRACT – Sale and exploitation of intellectual property – Guarantee by directors as to return of deposit or price – Debt including deposit assigned to second appellant – No direct evidence of terms of assignment – Whether assignment included benefit of guarantee – Course of evidence – Whether judge entitled to refuse to allow tender of document after close of case and during oral submissions.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr P.G. Cawthorn	Vadarlis & Assoc.
For the Respondents	Mr P.W. Collinson Mr M. Ravech	Fetter Gdanski

ORMISTON , J.A.:

1. In this matter I have had the benefit of reading the judgment of Charles, J.A. in draft form and, for the reasons he expresses, I consider that the appeal should be dismissed.

CHARLES, J.A.:

1. In early 1993 Dr John Siau Ho Tan (“Dr Tan”), a Sydney scientist, had developed a process by which foodstuffs might be preserved for in excess of two years without refrigeration.  This method of food preservation was known as Cycloflash.  To exploit this technology Dr Tan came to an arrangement with Frank Flammea, Vince Attana and Murray Jackel to exploit the technology through a company controlled by Messrs Flammea, Attana and Jackel called A La Carte to Go Pty. Ltd. (“ALC”).  ALC, which had been incorporated in December 1992, was the trustee of the A La Carte Unit Trust which was dated 14 December 1992.

1. In late 1993 Mr Flammea and his associates caused to be incorporated two further companies for the purposes of exploiting the technology of Dr Tan, A La Carte to Go (Aust) Pty. Ltd. (“ALCA”) and A La Carte to Go International Pty. Ltd. (“ALCI”).  The directors of these companies included Dr Tan, Mr Flammea, Mr Attana and Mr Jackel.

1. ALCA required capital to proceed with its food technology project.  It came into contact with Mark Sensing (Aust) Pty. Ltd. (“MSA”), a wholly owned subsidiary of Just Australia China Holdings Ltd. (“JACH”).  MSA later made three payments towards the project, $100,000 on 10 March 1994, $100,000 on 15 March 1994 and $172,000 on 18 March 1994.  It is the first of these three payments that is in issue in this appeal.

1. The judge found that the payments were in fact made to ALCA, in one case at its request to Dr Tan’s company Shelf Stable Foods Pty. Ltd. (“SSF”).  MSA, having been unable to recover these sums from the recipient sought to recover them from

Dr Tan, Mr Flammea, Mr Attana and Mr Jackel, who became the defendants to the proceedings, and alternatively the sum of $100,000 from the defendants under a guarantee dated 10 March 1994.

1. The circumstances in which the payments came to be made were as follows.  In February 1994 Mr Flammea provided a quantity of information and material to one David Heycock to attract the interest of JACH in the investment.  Mr Flammea was himself invited to meet the JACH Board in late February 1994.  Those present at this meeting included the managing director, Peter Robert Just and Gordon Poole.  Mr Poole was assigned the task of investigating the proposal and did so.  He said in evidence that the directors of ALC disclosed to him their dire need for an immediate injection of cash and he was very quickly persuaded that the ALC group had a valuable product and that the business which they wished to conduct could be profitable.

1. A meeting was held at the Tower Hotel in Camberwell on 4 March 1994.  Mr Just and Mr Poole were present on behalf of MSA.  Each of Mr Flammea, Mr Attana and Mr Jackel were also present.  There was discussion about whether Mr Flammea’s company owned the Cycloflash technology and Mr Flammea said that it had not yet been transferred to ALC but that there would be no difficulty and that there was an agreement in place for this to be done.  When the conversation turned to financial matters Mr Flammea repeated that his company was in urgent need of funds to meet its commitments including the cost of purchasing a new sealing machine.  Mr Flammea said that those present at the meeting agreed upon the terms upon which JACH would participate in the project.  Mr Poole and Mr Just in evidence, however, said that no firm proposal was put and the trial judge was satisfied that no binding contract was then made.  The judge accepted that the basis of the proposed participation of JACH was discussed, along the lines set out in paragraphs 1 to 8 of a letter Mr Flammea wrote to Mr Poole on Monday 7 March.  In this letter Mr Flammea said –

We are pleased to confirm our acceptance of the proposal discussed last Friday.

Proposal Points:

1.      JACH will be given 25% equity in ALCA and ALCI.

2.JACH will be allocated two Board Members on ALCA and ALCI.

3.JACH will inject $200,000 into ALCA immediately.

4.JACH will raise a Letter of Credit for $172,000 immediately, being balance payment for sealing equipment and accessories.

5.JACH will pay an additional $878,000 into ALCA.

6.JACH will give the current shareholders $250,000 in JACH shares.

7.A Memorandum of Understanding to be formulated to allow for points 3 or 4 to be executed immediately.

8.The balance of the commitments by both parties are to be finalised within thirty (30) days to ensure that all points are formalised.

1. On Thursday 10 March there took place a further meeting at which the first cheque for $100,000 was delivered.  Mr Just had prepared a first draft heads of agreement and forwarded it to Mr Poole that day.  The cheque for $100,000 was made payable to SSF, at Mr Flammea’s request.  The meeting was certainly attended by Mr Poole, Mr Attana and Mr Flammea, and the document containing the first draft heads of agreement was produced at Mr Poole’s direction and executed by some of those present.  As printed the document is in the following terms -

“March 10 1994

The Directors
Mark Sensing (Australia) Pty Ltd
31 Jersey Road
BAYSWATER  VIC  3153

The Directors of A La Carte To Go (Aust) Pty Ltd and A La Carte International hereby acknowledge receipt of a deposit of $100,00-00 (sic) for the initial purchase of 25% of the Group Shareholding.

If after due diligence the Board of JACH does not approve of the purchase – this deposit is refundable within 30 days of written request.

We the following directors guarantee return of the deposit as set out in the above terms.

……………… JOHN TANN

……………… MURRAY JACKEL
………………VICTOR ATTANA
………………FRANK FLAMMEA”

Dr Tan, Mr Attana and Mr Flammea were present at the meeting and all three signed the guarantee.  Mr Jackel later signed the document.

1. The judge found that when Mr Poole handed over this cheque, he acted within his general authority as chairman and managing director of MSA, although he had no instruction from the Board of JACH to do so, and he was later rebuked by Mr Just for having handed over the cheque.  Mr Poole was obviously enthusiastic about the project, and this is shown by the minutes of the meeting of the Board of JACH of 11 March 1994, at which Mr Poole made an apology for any embarrassment he had caused to the Board.  The minutes record that Mr Poole gave the Board his personal guarantee to indemnify JACH against any loss as a result of the ALC proposal.

1. There was a further meeting of the JACH Board on 15 March.  Mr Just had prepared a report for the Board in which the ALC proposal was summarised, but with the additional term that JACH had an option to acquire a further 25% of ALCA and ALCI from existing shareholders, which would have raised JACH’s interest to a majority shareholding of 56.25%.  The funds for the acquisition were available and the meeting concluded with a resolution of directors that the proposal be accepted.

1. On 15 March, Mr Poole gave Mr Flammea a second cheque for $100,000 at the ALC office in Flemington.  The evidence was that Mr Poole was then excited about the project and that he said to Mr Flammea, “Frank, if JACH doesn’t go ahead with it, I will personally guarantee that I will go ahead with it”.  The judge accepted that Mr Poole on this and earlier occasions told Mr Flammea that he would guarantee that the initial $372,000 would be paid pending completion of due diligence.  The second payment was made with the approval of the JACH Board.

1. The third payment, of $172,000, was made by Mr Poole on 18 March.  At this time, there had been no concluded agreement for JACH or MSA to participate in the project.  Mr Poole remained enthusiastic and optimistic and indeed, even in June 1994, Mr Poole through his family trust still proposed to play a role like that intended for MSA in March 1994.

1. A further Board meeting of JACH took place on 27 May 1994.  The minutes record -

“MSA has provided $372,000 to ALC to date and this amount is shown as a loan to ALC in MSA’s account.  If MSA is floated this amount should be transferred out. 

G. Poole will transfer the $372,000 to his loan account and asked the JACH Board if they wish to take part in the ALC purchase.

Motion by P. Just that R. De Morgan prepare a report for submission to the Board of JACH on the A La Carte To Go proposal as soon as possible.  Seconded by D. Heycock.  Carried.  D. Heycock to give all available information to R. De Morgan by 4 p.m. this evening.”

1. On 17 June 1994, the JACH Board met again.  The minutes include the following entry -

“G. Poole.  P. Just advised that the MSA Board meeting dealt with the ALC matter and that a guarantee from G. Poole is no longer required.  G. & J. Poole would acquire the rights and interests in ALC from MSA via their loan account.”

G. & J. Poole Pty. Ltd., the second appellant (“G. & J. Poole”) was Mr Poole’s family company.

1. The trial judge found that the first advance of $100,000 was guaranteed by the three directors who are the respondents to this appeal, that the principal debtors, ALCA and ALCI, had not repaid this advance, and that the guarantors had not paid despite demand.  His Honour then found that the principal debt had been assigned from MSA to G. & J. Poole on or about 30 June 1994.  MSA had decided not to proceed with its investment in ALC, had demanded repayment, and had written off the debt as worthless.  Mr Poole in turn, it will be recalled, had advised the Board of JACH that he would accept the risk and take instead the benefit of the debt.  The principal question before the trial judge then was whether the benefit of the guarantee had been assigned by the first appellant (MSA) to the second appellant (G. & J. Poole) when the debt was assigned.  The trial judge said of this issue that -

“There was no evidence that the assignment of the debt from MSA to G. & J. Poole Pty Ltd was in writing or that notice of it was given to any A La Carte company or to the guarantors.  There is no evidence at all of any express agreement to assign to G. & J. Poole Pty Ltd the benefit of the guarantee.  Counsel for the plaintiffs, nevertheless, submitted, in reliance upon Consolidated Trust Co. Ltd. v. Naylor[1] that the assignment of the benefit of the principal debt was sufficient to carry with it the benefit of the security, particularly as this had been called up by the date of the assignment.  The difficulty which this submission must address is that there is no evidence of the terms of the assignment.  The minute of the 17 June JACH Board meeting refers to the transaction as an acquisition of "the rights and interests in ALC" and uses terminology which makes it plain that the assignment had not then occurred.  In these circumstances, I am unable to draw the inference that the parties to the assignment agreed that the benefit of the guarantee was to pass to the assignee.  I conclude therefore that G. & J. Poole Pty Ltd cannot enforce the guarantee as assignee and that, with respect to the claim of MSA, the liability of the guarantors has been suspended or has terminated.  In either event the claim against the guarantors must fail.”

[1](1936) 55 C.L.R. 423. See also International Leasing Corporation (Vic) Ltd. v. Aiken (1967) 2 N.S.W.L.R. 427 at 439 per Jacobs, J.A., and at 451, per Asprey, J.A.

1. This appeal relates only to the first payment made by MSA, the sum of $100,000 paid on 10 March 1994.  The appellants claim that the judge erred in that he should have found that the benefit of the guarantee given by the respondents on 10 March 1994 was assigned to the second appellant at the time of the assignment of the principal debt;  and secondly that his Honour should have allowed the appellants to reopen their case to tender the resolution of the board of MSA on 16 June 1994.  If the appellants succeed on the first argument, the second appellant should have judgment for $100,000;  if the second argument succeeds, there should be a new trial.

1. Counsel for the appellants submitted that there was the following evidence of the assignment of the principal debt:  the minutes of the JACH board meetings of 27 May and 16 June 1994;  and on 30 June 1994 accounting entries were made in the accounts of MSA and G. & J. Poole, the effect of which was to debit the debt in the accounts of MSA and show it instead in the accounts of G. & J. Poole as “shares in unlisted companies”.  Mr Poole also gave evidence of the transfer of the debt shown in the accounts.  At one point in his evidence-in-chief he was asked what in fact had happened to the debt created by the payment of the moneys, and answered -

“The debt itself, the $372,000 was transferred across against G. & J. Poole, one of my own companies, from Mark Sensing to cover that debt on the basis that if we could recover that or more back, if there was a profit that went to the company, that was the agreement I had with the directors;  if there was a loss, I wore it.”

It is clear that Mr Poole retained his enthusiasm for the venture after the other directors of MSA had determined not to proceed.  He was asked in cross-examination whether, in mid-April 1994 he had decided to cut the Flammea group out of the transaction because they were not needed.  His answer was that -

“It was becoming clear from the A La Carte directors that they were not going to survive very much longer the way things were, they didn’t have the funds to go further, what they did have was a highly developed vending machine that could not only vend food but other products, and they were very, very enthusiastic about that.  I wasn’t, not because the product was bad but it’s not my area.  I felt the best way to try and help them, the best way to try and get something sensible going was to broker a deal where a company was set up and a service agreement and a supply agreement was set up with A La Carte To Go vending and Frank Flammea and his directors and at least get the show back on the road.  This I felt was a feasible way of approaching it.  They had the vending machines, they had contacts, they had clients, and if you could keep the parties apart from the argument the technology, if you can get to the technology then you can do something.”

1. On the basis of the foregoing evidence, Mr Cawthorn for the appellants submitted that ALCA had been in financial difficulties and not paying moneys demanded as at April 1994.  Accordingly since G. & J. Poole had undertaken to assume responsibility for the indebtedness it would be entitled to recover whatever was able to be recovered.  The debt, that is, the obligation to refund the deposit, had been transferred to G. & J. Poole, since that company was to assume the burden of non-payment.  It was argued that since G. & J. Poole was assuming this burden, it also was intended to acquire the correlative benefit of the debt, the right to recover the deposit and the guarantee.  Since G. & J. Poole was acquiring the “rights and interests” in ALC, this could only have referred to the debt and the right to recover the deposit.  Mr Cawthorn submitted that the reference to “rights and interests” must mean any rights and any interest in relation to moneys advanced to ALCA.  Accordingly it referred to and implied a right to recover the guarantee.  The assignment, it was submitted, must be of all rights to recover in relation to the moneys advanced. 

1. The appellants relied on Consolidated Trust Co. Ltd. v. Naylor[2], for the proposition that where the instrument creating or evidencing the guarantee is one and the same as that creating or evidencing the principal debt (as it is in this case) then an assignment of the principal debt will carry with it an assignment of the guarantee.  Here, the guarantee was, it was submitted, an integral part of the document creating the primary liability.  The argument continued that by 27 May 1994 it was apparent that ALC was not going to repay the debt and, in those circumstances, it made no sense to transfer to G. & J. Poole only the rights against ALC.  Accordingly the trial judge should have found that since the principal debt was assigned, together with all rights and interests in relation to it, so also was the guarantee.  Judgment should therefore have been given for the second appellant, G. & J. Poole.  Alternatively, it was submitted, if the guarantee had not been assigned, judgment should have been given for the first appellant, MSA.

   [2]55 C.L.R. at 436.

1. Mr Cawthorn’s alternative submission was that the trial judge should have allowed the tender of minutes of the resolution of directors of MSA dated 16 June 1994.  That resolution provided –

“G. Poole advised that MSA has served notice on ALC for $372,000 along with others who are owed money by ALC.

Motion by P. Just that MSA sell its rights and entitlements in relation to ALC including rights to receive funds to G. & J. Poole P/L and that the amount of $372,000 in settlement be offset against the G. & J. Poole loan account.  Seconded by D. Heycock.  Carried.”

Reference had been made in the course of submissions to this resolution, which it was said was pleaded in two paragraphs of the respondent’s defence.  Counsel for the appellants had sought to tender the resolution referred to in the defendants’ pleadings, but the trial judge rejected the tender on the basis that it was too late to start reopening the case.  It was submitted that the judge should have allowed the tender since the matter had been raised by the defendants in their defence and no prejudice could have been caused by allowing the tender.  Accordingly, so it was submitted, in refusing the tender the judge failed to accord natural justice to the appellants and they were denied the opportunity to present evidence and argument on a vital issue which could have affected the result.  On this alternative basis it was submitted that there should be a new trial. 

1. I return to the appellants’ principal argument.  It is unnecessary to cite authority for the proposition that the benefit of a contract of guarantee is assignable as a legal chose in action.  It is a question of construction of the assignment of the principal debt whether the benefit of a guarantee such as the present, and not merely the principal debt, was intended to be assigned to the assignee.[3]  Wherever the words of assignment provide expressly for the assignment of the guarantee in respect of a debt, the position is clear.  If, however, there has been no express assignment of the guarantee, the words used may nonetheless be construed as sufficiently broad to extend to related securities, if the assignee is able to show that the express assignment of the principal contract has impliedly carried with it the benefit of the guarantee;  Consolidated Trust Co. Ltd. v. Naylor[4];  Farrow Mortgage Services Pty. Ltd. v. Hogg and Cathie[5].  But if the creditor simply assigns the benefit of the principal contract and the words of the assignment are limited to that transaction, the benefit of the guarantee securing it will not follow the assignment;  International Leasing Corp. (Vic.) Ltd. v. Aiken[6].  In this situation, neither the assignor nor the assignee is able to enforce the guarantee;  International Leasing Corp. (Vic.) Ltd. v. Aiken[7];  Hutchens v. Deauville Investments Pty. Ltd.[8] 

   [3]O’Donovan and Phillips:  The Modern Contract of Guarantee, 3^rd ed. (1996) 507.

   [4](1936) 55 C.L.R. 423 at 435-437.

   [5][1995] ANZ Conv.R. 233 at 238-239 (Full Court of Supreme Court of South Australia).

   [6][1967] 2 N.S.W.R. 427 at 439 per Jacobs, J.A. and 451 per Asprey, J.A.

   [7][1967] 2 N.S.W.R. at 439.

   [8](1986) 61 A.L.J.R. 65 at 68.

1. The appellant placed particular reliance on Consolidated Trust v. Naylor.  In this case a mortgagee had made an endorsement on a deed of mortgage of land under the general law for valuable consideration, stating that he thereby assigned to the appellant “all moneys secured by the within written mortgage and all my rights, powers and remedies thereunder.”  The deed contained a covenant of guarantee by the respondent.  Dixon and Evatt, JJ. said[9] –

“In our opinion the endorsed memorandum of transfer does amount to an assignment by writing of the defendant’s covenant sufficient to satisfy sec.12.  It is under the mortgagee’s hand and it states that he thereby assigns unto the plaintiff company all moneys secured by the mortgage written within it and all his rights, powers and remedies thereunder.  Because it is endorsed on the mortgage and refers to it as ‘the within written mortgage’, the memorandum of transfer must be read as it would be if it contained a full recital of the mortgage.  Unless, therefore, the circumstance that it is taken from a statutory form makes it proper to place some artificial limitation upon the natural meaning which the memorandum read in this manner would bear, the assignment of all moneys secured by the mortgage would be interpreted as an assignment of all the rights to recover such moneys which the instrument bearing the endorsement gave.  An assignment of moneys that are secured by personal obligations means an assignment of the obligations securing them.  The same moneys could not have been intended to belong to the transferee, the plaintiff, if paid by the mortgagor, but to the transferor, the mortgagor if paid by the surety, the defendant.”

In International Leasing Corp. Ltd. v. Aiken[10] Jacobs, J.A. offered the following explanation of this paragraph –

“It was held that the assignment of a mortgage debt did not assign a guarantee.  It seems to me that in that case the guarantee was only held to be assigned because the guarantee was included in the mortgage instrument and the words ‘assignment of all moneys secured by the mortgage’ was interpreted as including an assignment of all rights to recover such moneys which the instrument gave.  Thus the inclusion of the guarantee in the form of instrument was essential to the conclusion reached.”

[9]55 C.L.R. at 436.

[10][1967] 2 N.S.W.R. at 439.

1. It is to be observed that in the present case the guarantee upon which the appellants seek to rely is contained in the document dated 10 March 1994 in which the directors of ALC acknowledged receipt of the deposit of $100,000 which had been paid by the cheque made payable to SSF.  Mr Cawthorn submitted that the guarantee was therefore an “integral” part of the document creating the primary liability.  I think that this is not a correct characterisation of the document of 10 March 1994 which is set out in [8] above.  The cheque for $100,000 had been made payable to SSF at the request of Mr Flammea.  The document was, no doubt, evidence of the agreement under which the refundable deposit was paid, but in my view it is not properly described as the document which “created the primary liability” of ALCA or ALCI to return the deposit.

1. In the present case there was simply no evidence before the court which would have supported a conclusion that the assignment of the debt of $372,000 included an assignment of the guarantee given by the respondents in relation to the deposit of $100,000.  There was no written instrument of assignment at all, and as the learned judge said, “there is no evidence of the terms of the assignment”.[11]  The only evidence of the assignment tendered by the appellants was the evidence contained in the books and records of MSA and G. & J. Poole, showing the transfer of the original debt from MSA’s books to G. & J. Poole’s, the minutes of the meetings of the board of JACH on 27 May 1994 and 17 June 1994 and the evidence of Mr Poole to which reference has already been made.  From this evidence the judge was clearly entitled to conclude that there had been an assignment of the debt, as the appellants contended.  This conclusion was not challenged by the respondents, indeed they readily accepted it, since it was necessary to support their argument that the assignor was no longer able to enforce the guarantee.  But none of this evidence said anything at all as to the assignment of the guarantee, or its terms.  The minutes of 27 May stated that “G. Poole will transfer the $372,000 to his loan account and ask the JACH board if they wished to take part in the ALC purchase”, a statement merely as to Mr Poole’s future intentions.  The minutes for 17 June said that “G. & J. Poole would acquire the rights and interests in ALC from MSA via their loan account”, a statement which, as the trial judge said[12] -

“refers to the transaction as an acquisition of ‘the rights and interests in ALC’ and uses terminology which makes it plain that the assignment had not then occurred.”

The appellants understandably placed emphasis on the expression “the rights and interests in ALC” in these minutes.  But in my view these words do not imply any entitlement in respect of the guarantee undertaken by the respondents.

[11]Judgment at [65].

[12]Ibid.

1. Nor do the appellants receive support from the decision in Consolidated Trust v. Naylor.  In that case the words of assignment of the moneys secured by the mortgage expressly included reference to “all my rights, powers and remedies thereunder”, the guarantee and mortgage being contained in the same instrument.  In such circumstances the words of assignment were clearly apt to cover all the mortgagee’s rights and remedies, including the rights and remedies under the guarantee.  In the present case MSA was entitled to a chose in action, rather than rights created by an instrument.  The letter of guarantee, as I have said, evidenced the existence of the chose in action.  MSA assigned the debt of $372,000, including the later payments of $100,000 made on 15 March and $172,000 made on 18 March 1994, which were not recorded in any instrument other than the cheques by which they were paid.

1. Mr Collinson, for the respondents submitted that the distinction between an assignment of a debt and an assignment of rights, powers and remedies under an instrument is highlighted in Consolidated Trust v. Naylor.  He submitted that Dixon and Evatt, JJ. had rejected the alternative submission by the assignee of the mortgage that a mere endorsement upon the mortgage following the form given by the Conveyancing Act 1919-1932 was sufficient to transfer the mortgage.  Under the provisions of this Act, such a memorandum of transfer operated as a deed of assignment of the mortgage debt and as a deed of conveyance of the estate and interest of the mortgagee of and in the mortgaged property and vested the debt and estate and interest in the assignee together with all rights, powers and remedies of the mortgagee expressed or implied in the mortgage.  Their Honours held however[13] that the expression “mortgage debt” did not extend to the secondary and collateral liability of a guarantor.  I agree with these submissions. 

   [13]At 435.

1. The appellants then submitted that if it were found that the guarantee had not been assigned to G. & J. Poole, the judge should have given judgment for MSA.  But this submission must founder on the principle that if the principal debt has been assigned but the guarantee is not assigned, then the original creditor loses the right to recover under the guarantee.  There cannot be two persons entitled to recover the amount of the same debt;  Hutchens v. Deauville[14].

   [14](1986) 61 A.L.J.R. 65 at 68.

1. I turn then to Mr Cawthorn’s alternative argument that the judge should have accepted the tender of the minutes of the resolution of the board of directors of MSA of 16 June 1994.  The argument was that if the judge had had before him evidence of the contents of these minutes, his Honour might have concluded more readily that the assignment of the debt carried with it the rights associated with the guarantee.  It was put that the trial judge should have had regard to the prejudice likely to be suffered by the respective parties in accepting or rejecting the tender. 

1. The respondents, who had twice referred in their defence to this resolution, had not sought to rely upon it during the trial.  The resolution was first tendered by counsel for the appellants after all the evidence had closed, counsel for the respondents had completed his address and counsel for the appellants had almost completed his submissions.  A question then arose in the context of observations made by the judge that there was no evidence of any assignment of a cause of action MSA claimed to have under s.52 of the Trade Practices Act (Cwth) 1974.  Counsel for the appellants sought leave to reopen to tender the resolution in relation to this issue. 

The appellants’ counsel did not tender the resolution in relation to the question whether there was any evidence of an assignment of MSA’s rights under the guarantee.  The judge was, in my view, clearly entitled to reject the proposed tender in relation to the suggested assignment of a cause of action under s.52.  Causes of action under Part 5 of the Trade Practices Act are not assignable.[15]  The resolution of 16 June 1994 could not have assisted the appellants on this issue.  The judge rejected the tender saying to counsel “I think it’s a bit late now to start reopening the case”. 

[15]Poulton v. The Commonwealth (1953) 89 C.L.R. 540 at 571, 602; National Mutual Property Services (Australia) Pty. Ltd. v. Citibank Savings Ltd. (1995) 132 A.L.R. 514 at 538.

1. In rejecting the tender, the judge was, of course, exercising a discretion.  In my view there is nothing to show that his Honour exercised that discretion incorrectly.  Had his Honour permitted the appellants to reopen their case to rely on the resolution, it is likely that the respondents would have sought leave to cross-examine further Messrs Just and Poole, both of whom were at the relevant meeting.  Furthermore the resolution itself on any view could not constitute the assignment of the guarantee, it merely authorised the making of such an assignment;  cf. Equity Nominees Ltd. v. Tucker[16];  B a Solicitor and G a Solicitor v. Victorian Lawyers RPA Ltd.[17].  The resolution of 16 June 1994 of the MSA board had, I think, no more probative force than did the resolution of the board of JACH of 17 June 1994, the relevance of which had been dismissed by the judge on the basis that the terminology used made it plain that the assignment had not occurred.  Had the resolution been tendered, it would still have been the case that there was no written assignment before the Court, and no evidence of the actual terms of the assignment. 

   [16](1967) 116 C.L.R. 518 at 525.

   [17][2002] VSCA 204 at paragraph [39].

1. It follows that I would reject both of the appellants’ submissions.  I would therefore dismiss the appeal.

BUCHANAN, J.A.:

1. In my opinion the appeal should be dismissed for the reasons stated by Charles, J.A.