Moresner Pty Ltd v Australia & New Zealand Banking Group Ltd

[1995] FCA 483

CATCHWORDS

IN THE FEDERAL COURT OF AUSTRALIA     )
QUEENSLAND DISTRICT REGISTRY         )  No. QG 171 of 1993
GENERAL DIVISION  )

BETWEEN   :    MORESNER PTY LTD
  First Applicant

AND      :    Donald William BETTS
  Second Applicant

AND:    AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Respondent

CORAM:    SPENDER J
PLACE:    BRISBANE
DATE:     7 JULY 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

The relief claimed in the notice of motion is refused.

Note:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )
QUEENSLAND DISTRICT REGISTRY         )  No. QG 171 of 1993
GENERAL DIVISION  )

BETWEEN   :    MORESNER PTY LTD
  First Applicant

AND      :    Donald William BETTS
  Second Applicant

AND:    AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Respondent

CORAM:    SPENDER J
PLACE:    BRISBANE
DATE:     7 JULY 1995

REASONS FOR JUDGMENT

This is a notice of motion seeking that the application by the first and second applicants be dismissed pursuant to O 20 r 2(1) of the Federal Court Rules and/or that the statement of claim be struck out pursuant to O 11 r 16 of the Rules, or pursuant to the inherent jurisdiction of the Court. 

The motion also seeks that the first applicant be removed as a party to these proceedings pursuant to O 6 r 9 of the Rules on the grounds that it having claimed no relief in the proceedings, it is not an applicant properly so called and/or it has otherwise been unnecessarily or improperly joined herein.  The motion also seeks in the alternative that the application so far as it has been brought by the first applicant be dismissed pursuant to O 20 r 2(1) on the grounds that it discloses no reasonable cause of action by that applicant and is otherwise frivolous.  The motion also seeks
that paragraph 5 of the application be struck out on the ground that it discloses no reasonable cause of action in that unjust enrichment is merely a concept and not a definitive legal principle or itself a cause of action.  Certain specified paragraphs are said to be embarrassing and/or to disclose no reasonable cause of action, and finally the motion seeks that each of the paragraphs of the application, together with those parts of the statement of claim relating to the question of estoppel, be struck out on the grounds that no reasonable cause of action is therein disclosed, in that the cause of action sought to be relied on is incapable of assignment.

Order 20 r 2(1) provides:

"Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding -

(a)no reasonable cause of action is disclosed;

(b)the proceeding is frivolous or vexatious; or

(c)the proceeding is an abuse of process of the Court,

the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. "

Order 11 r 16 is concerned with the striking out of a pleading.  It relevantly provides:

"Where a pleading -

(a)discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b)has a tendency to cause prejudice, embarrassment or delay in the proceeding; or

(c)is otherwise an abuse of process of the Court,

the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out. "

The principal claim on the strike out applications is that no reasonable cause of action has been disclosed in that the only relief sought has been sought by the second applicant who claims an entitlement to sue by reason of the assignment to him of the causes of action referred to in the application, which choses in action, without more having been alleged and/or proved, are incapable of being so assigned.  It is further said that no reasonable cause of action has been disclosed and that the only relief sought is sought by the second applicant, who claims an entitlement to sue pursuant to an absolute assignment to him of choses in action, without alleging that the respondent received notice of that assignment on any date prior to the date of commencement of the proceedings.  It is also said that no reasonable cause of action has been disclosed, or that the application is embarrassing, in that the only relief sought has been sought by the second applicant, who claims an entitlement to sue by reason of the assignment to him of the causes of action referred to in the application, which assignment is alleged to have been made pursuant to a deed dated 28 May 1992, which deed having been incorporated in the statement of claim by reference, is on its face contrary to and contradicts the
matters alleged in paragraph 1(b)(i) of the statement of claim. 

In the amended application, the second applicant claims against the respondent:

"1. Damages pursuant to s82 of the Trade Practices Act 1974, as amended, for breach of s52.

2.Relief pursuant to s87 of the Trade Practices Act 1974, as amended, including:-

(a)an order avoiding or cancelling the Cross Deed of Covenant dated 12 March 1987.

3.A declaration that the Respondent is and was estopped and precluded from asserting or alleging that the Cross Deed of Covenant dated 12 March 1987 imposed obligations on the First Applicant as a convenantor for monies that at any time were or are owing to the Respondent by:-

(i)Kenneth Bernard Rehder except for the Rehder/Macnab joint account;

(ii)Aumpi Rehder;

(iii)Northern Paradise Pty Ltd; and

(iv)Paradise Barns Pty Ltd

4.The sum of TWO HUNDRED AND NINETY THOUSAND DOLLARS ($290,000.00) being moneys paid by the First Applicant to the Respondent under a mistake.

5A.In the alternative the sum of TWO HUNDRED AND NINETY THOUSAND DOLLARS ($290,000.00) by which the Respondent has been unjustly enriched.

5B.In the alternative, the sum of TWO HUNDRED AND NINETY THOUSAND DOLLARS ($290,000.00) as monies payable by the Respondent to the First Applicant for money had and received by the Respondent for the use of the First Applicant.

6.Interest on all claims under s51(a) of the Federal Court of Australia Act 1976.

7.Costs.

8.The Applicant intends to rely on both the Jurisdiction of Courts (Cross-Vesting) Acts 1987 in respect of the relief sought against the Respondent in paragraphs 3 to 5 hereof. "

Paragraph 1 of the amended statement of claim is in the following terms:

"1. (a)     The First Applicant ("Moresner") at all material times was a company incorporated according to law.

(b)(i)                By Deed dated 28 May 1992 between Moresner and the Second Applicant, Moresner assigned to the Second Applicant all its right title and interest in the choses in action particularised in the application.

(ii)By written notice dated 28th October 1993 the Second Applicant and Moresner notified the Respondent of the assignment. "

I accept that an applicant in the Federal Court is obliged to plead the material facts upon which it relies in order to establish its cause of action: O 11 r 2(a).  What is required to be pleaded is every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court:  Read v Brown (1888) 22 QBD 128 at 131 per Lord Esher MR.

The central submission by the respondents on the strike out motion is that the choses in action referred to in the application are all "bare rights to litigate" and that a bare right to litigate cannot be assigned: Trendtex Trading
Corporation v Credit Suisse [1982] AC 679. Lord Roskill in that case at p. 703 said that it was a fundamental principle of our law that a bare right to litigate was not assignable. His Lordship continued:

"But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance. "

It was submitted on behalf of the bank that just as an assignee of a debt must plead the fact of the assignment, the assignee of a cause of action must plead those facts, if any, which take him outside the reach of the general or fundamental principle.  It may be accepted that an assignee ought to plead so as to show how his title is derived: Seer v Lawson [1980] 16 Ch.D. 121 at 124.

Here it was submitted that what has been left unpleaded forms part of the essence of the second applicant's cause of action.

The bold submission by Mr T. D. O. J. North, counsel for the bank, on this present application is that the law as outlined by the House of Lords in Trendtex is not the law of Australia and that this is so clearly the case that the statement of claim should be struck out.
         The deed referred to in paragraph 1 of the statement of claim between Moresner Pty Limited and Donald William Betts has as its recitals, the following:

"A.  Australia and New Zealand Banking Group Limited ("ANZ") and its officers appropriated certain funds over which Moresner held to its credit with ANZ, or was otherwise entitled, purportedly in pursuance to various documentation entered into between Moresner and other persons, including Robert Peter MacNab and Kenneth Bernard Rehder and their associated entities, referred to as Cross Deeds of Covenant (the "ANZ Misappropria- tions").

B.By virtue of the ANZ Misappropriations Moresner has suffered loss and damage and is thereby entitled to pursue a right of action against ANZ and its related officers (the "Chose in Action").

C.Moresner is indebted to Betts for an amount of THREE HUNDRED THOUSAND DOLLARS ($300,000.00).

D.Moresner agrees to assign a proportion of its interest in the Chose in Action to Betts, being an interest to which an amount of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) is attributable, upon the following terms. "

Needham J in Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706, considering an assignment of a right of action for damages, said that the critical question is whether there is a genuine and substantial interest in the success of the litigation or whether the assignee had a genuine and commercial interest in taking the assignment and enforcing it for his own benefit. McPherson J in J. C. Scott Constructions v Mermaid Waters Tavern Pty Ltd [1984] 2 Qd.R 413 at 429 at first instance accepted the legitimate and genuine business interests test from Trendtex and Re Timothy's.  Connolly J in the judgment of the Full Court expressed himself in terms of whether or not the assignor had sufficient interest to justify its maintaining proceedings by the assignee.

In the Trendtex case, both the debt and the cause of action arose out of one general overall transaction, but it seems to me to be at least strongly arguable that a creditor with a pre-existing debt arising from a distinct transaction, who takes an assignment of a cause of action, has a sufficient commercial interest so as to support an effective assignment. A mere creditor, it is at least arguable, is capable of taking an assignment, and that that was sufficient was the view of Needham J in Re Timothy's.  It is in my opinion not so clearly wrong that I should act on it on a strike out application.

There are serious difficulties confronting the applicants and in these reasons I do not want to indicate that I am not conscious of their seriousness.  Paragraph 1(b)(i) of the statement of claim asserts an assignment of -

"...all its right, title and interest in the choses in action particularised in the Application. "

It was submitted by counsel for the bank that the deed shows on its face that the assignment is both partial and conditional, and it was submitted that for an assignment to be an absolute assignment, the entire interest of the assignor in the chose in action must for the time being be transferred unconditionally to the assignee and placed completely under his/her control.  There is an argument by Mr McQuade, counsel for the applicants, concerning the construction of the deed of assignment, with which I see difficulties, but the matter is not such as in my opinion to require the proceedings or the statement of claim to be struck out. 

It was accepted by Mr McQuade that notice to the bank was not given prior to the filing of the application and the statement of claim, and that therefore there is no legal assignment of the chose in action.  It was submitted nonetheless there was an equitable assignment, that for such an assignment there is no requirement that it be in writing, nor is communication to the debtor required.  He submitted that an equitable assignment of a chose in action, whether legal or equitable chose in action, entitles the assignee to the right to sue for its recovery, citing Durham Brothers v Robertson [1898] 1 QB 765 at 769. He submitted that consistent with that case, where the assignment is equitable, the assignor must be a party to the action either as plaintiff or defendant and it is not a point of objection that the assignor as first applicant is claiming no relief in the proceedings. Mr McQuade referred to Caddy v Beattie [1908] VLR 17 at 19 for the claim that, where there is a purported legal assignment of either a legal chose in action or an equitable chose in action which is not perfected by notice in writing, the assignor is a necessary party to the action. It is at least arguable in my opinion that the first applicant is a proper party to these proceedings.
         Two further matters of complaint should be referred to.  It was asserted by Mr North that unjust enrichment is not a cause of action but a unifying legal concept.  That so much may be accepted, see David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378 in the judgment of
Mason CJ, Deane, Toohey, Gaudron and McHugh JJ.

It seems to me on the facts of this case that it is arguable that the basis for an action for recovery of an amount paid under a mistake of fact or law lies in restitution or unjust enrichment and that that action is a common law action for recovery of the value of the unjust enrichment.  The liability of a party to make restitution is imposed upon the person who has been unjustly enriched and it is not necessary in a pleading to allege that the recipient of the payment has been unjustly enriched where the allegations of the traditional restitutionary claims of a mistake of payment, mistake of law and so on have been alleged.

In my opinion, a claim or prayer for relief in unjust enrichment is not so untenable as to warrant it being struck from the pleading.  Foster J in Metroplaza Pty Ltd v Girvan N.S.W. (In Liqn.) (1993) 15 ATPR 41-241 was of that view.

It is plain on the authorities that a case must be very clear to justify the summary intervention of this court to prevent the respondent to this motion from submitting his case for determination: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. Litigants are not to be deprived of a right to submit real and genuine controversies for determination and, as Barwick CJ made plain in General Steel Industries Inc v Commissioner of Railways (N.S.W.) (1964) 112 CLR 125, particularly at 129-130, it is necessary to demonstrate on an application that the case is so clearly untenable that it cannot possibly succeed.

These principles have been repeated on many occasions including Brownbill v Esanda Finance Corporation (1991) 31 FCR 153 at 158 and Davis v Commonwealth (1986) 68 ALR 18 at 23.

Consistent with those authorities, I will not strike out the proceedings or the statement of claim.  I think it right to observe, however, that there are some matters in the statement of claim which would benefit by amendment.  I will hear the parties as to what further directions should be made for the prosecution of this litigation.  I will also hear counsel on costs.

I certify that this and the  preceding ten (10) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.

Associate

Date: 7 July 1995

Counsel for the applicants:  Mr P. P. McQuade
instructed by:              Henderson & Associates

Counsel for the respondent:  Mr T. D. O. J. North
instructed by:              Minter Ellison Morris Fletcher

Date of Hearing:            15 December 1993