Appeal Outcome: Special leave granted by the High Court, 12 March 2010 s294/2009 [2010] HCATrans 60, [2010] HCATrans 123
Judgment handed down 4 August 2010 [2010] HCA 26
New South Wales
Court of Appeal
CITATION: One. Tel (In Liq) v David Watson and Anor [2009] NSWCA 282 HEARING DATE(S): 10 August 2009
JUDGMENT DATE:
2 October 2009JUDGMENT OF: Hodgson JA at 1; Campbell JA at 6; Sackville AJA at 7 DECISION: (1) Appeal allowed. (2) The appellant (“One.Tel”) to file within 14 days short minutes of order giving effect to these reasons. (3) If the short minutes are not agreed, One.Tel should also file within 14 days brief written submissions supporting its proposed orders. (4) If the second respondent (“CGU”) wishes to dispute the orders proposed by One.Tel, it should file within a further seven days its proposed short minutes of order accompanied by brief written submissions supporting its proposed orders. (5) CGU to pay One.Tel’s costs of the appeal. (6) CGU, if otherwise qualified, to have a certificate under the Suitors’ Fund Act 1951 (NSW). CATCHWORDS: BANKRUPTCY – deed of arrangement – debtor assigns to trustee debtor’s rights under directors’ liability insurance policy – termination of deed of arrangement – whether trustee entitled to maintain proceedings against insurer to enforce indemnity notwithstanding termination of deed of arrangement. - ASSIGNMENT – effectiveness at law of assignment of a chose in action – whether assignment “absolute” for the purposes of s 12 of the Conveyancing Act 1919 (NSW) – application of test that an assignment, in order to be absolute, must be unconditional. LEGISLATION CITED: Bankruptcy Act 1966 (Cth) ss 27, 64ZB, 187, 188, 188A, 189B, 190, 195, 204, 213, 215, 216, 218, 219, 222, 223, 223A, 224, 233, 234, 234A, 234B, 235, 236, 237, 237AA, 235
Bankruptcy Legislation Amendment Act 2004 (Cth), ss 212(3), 212(1)
Conveyancing Act 1919 (NSW), s 12
Deeds of Arrangement Act 1887 (UK)
Judicature Act 1873 (UK) s 25(6) (now s 136 of the Law of Property Act 1925 (UK))
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW)
Uniform Civil Procedure Rules 2005, r 28.2CATEGORY: Principal judgment CASES CITED: Barclay’s Bank Ltd v Quistclose Investments Ltd [1970] AC 567
Bunnings Forest Products Pty Ltd v Bullen (1994) 53 FCR 438
Burlinson v Hall (1884) 12 QBD 347
Clyne v Deputy Commissioner of Taxation [1981] HCA 40; 150 CLR 1
Commercial Factors Ltd v Maxwell Printing Ltd [1994] 1 NZLR 724
Durham Brothers v Robertson [1898] 1 QB 765
Gee v Schmutter (Federal Court of Bankruptcy, 1971)
Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669
Hughes v Pump House Hotel Co Ltd [1902] 2 KB 190
Long Leys Co Pty Ltd v Silkdale Pty Ltd (NSWCA, unreported, 19 December 1991)
Norman v Federal Commissioner of Taxation [1963] HCA 21; 109 CLR 9
Raiffeison v Zentralbank Ősterreich AG v Five Star General Trading LLC [2001] EWCA Civ 68; [2001] QB 825
Tancred v Delagoa Bay and East Africa…
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Details
- AGLC
- One.Tel (in liq) v Watson [2009] NSWCA 282
- Case
- [2009] NSWCA 282
- Decision Date
CaseChat Overview and Summary
The appeal concerned a dispute between One.Tel (in liq) (the appellant) and CGU Insurance Ltd (the respondent insurer) regarding the appellant's entitlement to maintain proceedings against the insurer to enforce an indemnity under a directors' liability insurance policy. The appellant, as liquidator of One.Tel, had acquired rights under this policy through a deed of arrangement with a debtor. The central issue was whether the termination of this deed of arrangement affected the appellant's ability to pursue the claim against the insurer.
The court was required to determine whether the assignment of the debtor's rights under the directors' liability insurance policy to the trustee of the deed of arrangement was effective at law. Specifically, the court had to consider whether this assignment was "absolute" for the purposes of section 12 of the *Conveyancing Act 1919* (NSW), applying the test that an assignment must be unconditional to be considered absolute.
The court reasoned that the assignment, despite the subsequent termination of the deed of arrangement, remained effective. The termination of the deed did not retroactively invalidate the assignment of the chose in action. The legal principle applied was that an assignment of a chose in action, if otherwise valid, vests the right in the assignee at the time of assignment, and subsequent events related to the underlying agreement for the assignment do not extinguish that vested right unless the assignment itself was conditional or defeasible. The court found the assignment to be absolute and unconditional, thus satisfying the requirements of section 12 of the *Conveyancing Act 1919* (NSW).
The appeal was allowed. The court ordered that the appellant was entitled to maintain proceedings against the insurer. The appellant was directed to file short minutes of order giving effect to the reasons, with provisions for any dispute from the respondent insurer. The respondent insurer was ordered to pay the appellant's costs of the appeal and, if qualified, was to have a certificate under the *Suitors’ Fund Act 1951* (NSW).
The court was required to determine whether the assignment of the debtor's rights under the directors' liability insurance policy to the trustee of the deed of arrangement was effective at law. Specifically, the court had to consider whether this assignment was "absolute" for the purposes of section 12 of the *Conveyancing Act 1919* (NSW), applying the test that an assignment must be unconditional to be considered absolute.
The court reasoned that the assignment, despite the subsequent termination of the deed of arrangement, remained effective. The termination of the deed did not retroactively invalidate the assignment of the chose in action. The legal principle applied was that an assignment of a chose in action, if otherwise valid, vests the right in the assignee at the time of assignment, and subsequent events related to the underlying agreement for the assignment do not extinguish that vested right unless the assignment itself was conditional or defeasible. The court found the assignment to be absolute and unconditional, thus satisfying the requirements of section 12 of the *Conveyancing Act 1919* (NSW).
The appeal was allowed. The court ordered that the appellant was entitled to maintain proceedings against the insurer. The appellant was directed to file short minutes of order giving effect to the reasons, with provisions for any dispute from the respondent insurer. The respondent insurer was ordered to pay the appellant's costs of the appeal and, if qualified, was to have a certificate under the *Suitors’ Fund Act 1951* (NSW).
Orders
Orders of the court
(1) Appeal allowed. (2) The appellant (“One.Tel”) to file within 14 days short minutes of order giving effect to these reasons. (3) If the short minutes are not agreed, One.Tel should also file within 14 days brief written submissions supporting its proposed orders. (4) If the second respondent (“CGU”) wishes to dispute the orders proposed by One.Tel, it should file within a further seven days its proposed short minutes of order accompanied by brief written submissions supporting its proposed orders. (5) CGU to pay One.Tel’s costs of the appeal. (6) CGU, if otherwise qualified, to have a certificate under the Suitors’ Fund Act 1951 (NSW).
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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