Phoparisut v Saengthong

[2023] NSWDC 28

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Phoparisut v Saengthong [2023] NSWDC 28

Hearing dates:

29 September 2022, 11 October 2022, 25 November 2022 and 9 February 2023

Date of orders:

17 February 2023

Decision date:

17 February 2023

Jurisdiction:

Civil

Before:

Weber SC DCJ

Decision:

(1)   Judgment and verdict for the first plaintiff against the first defendant in the sum of $69,764;

(2)   Judgment for the second plaintiff against the first defendant in the sum of $22,200

(3) Interest thereon in each case at the rates pertaining from time to time pursuant to section 100 of the Civil Procedure Act.

(4)   Judgment and verdict for the second defendant against the plaintiffs.

(5)   Any parties wishing to be heard on costs should notify my associate of that fact no later than 4:00pm on 22 February 2023, with such indication to include particulars of the costs order sought (“Notification”).

(6)   In the absence of Notification, the court will make no order as to costs.

Catchwords:

CONTRACT – Principal and Agent – undisclosed principal – parties to transaction – assignment of debts

Legislation Cited:

Conveyancing Act 1919

Uniform Civil Procedure Rules

Cases Cited:

Bluebottle v DCT (2006) 233 ALR 747

Holt v Heatherfield Trust Ltd [1942] 2 KB 1

Imray v Griffın (1889) 10 LR (NSW) 114

McIntyre v Gye (1994) 51 FCR 472

Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1

Texts Cited:

Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

First Plaintiff: Orawan Phoparisut
Second Plaintiff: Chitpong Prasertsri
First Defendant: Chatkaew Saengthong
Second Defendant: Yossarudee Saengthong

Representation:

Counsel:
Plaintiffs: Mr D Olivieri
Defendants: Mr R Antill

Solicitors:
Plaintiffs: Phoenix Attorneys
Defendant: N/A

File Number(s):

2021/00120707

Publication restriction:

None

JUDGMENT

Introduction

1. These proceedings concern a form of investment in currency transactions, converting Australian dollars to Thai Bhat, which was promoted as earning a dividend to the investor.

2. The nature of the investment scheme was left very opaque on the evidence, though thankfully it is not necessary to understand it in order to resolve the proceedings.

3. The plaintiffs invested in the scheme at the instigation of the first defendant. All of the relevant communications in relation to the investment were conducted by Facebook messages from a page which bore the names Eve & Offy. Eve and Offy are the nicknames of the first and second defendants respectively, who are sisters.

4. The plaintiff's alleged both sisters were party to the investment transactions reliant upon the fact that the second defendant's name forms part of the identification of the Facebook page.

5. The first defendant does not deny organising the currency transactions, but says that she did so as a disclosed agent for one Siriluck Chimmalee, sometimes referred to as “Fatima”.

6. In addition, the first plaintiff has taken assignments of the debts of other investments in the currency scheme by third parties, however at the commencement of the proceedings, notice had not been given pursuant to s 12 of the Conveyancing Act1919 in relation to those assignments. Leave was granted to amend the Statement of Claim to plead the assignments, but not notwithstanding that the first plaintiff was on notice that the defendants alleged that it was necessary to join the assignors, the first plaintiff did not do so.

7. The defendant says that as a consequence the plaintiff is unable to recover the assigned debts.

The Issues

8. The parties were agreed that there were only three issues to be determined by me. These were:

1. whether the first defendant had made out in her defence of being a disclosed principal; and

2. whether the plaintiff had established that the second defendant was a party to the currency transactions; and

3. whether the plaintiff can recover damages in relation to the assigned debts.

The Disclosed Principal Issue

9. This issue in my view can be readily resolved.

10. There is simply no reference of any description in the Facebook exchanges to identify Siriluck Chimmalee as the first defendant's principal. Indeed, the exchanges involve the first defendant frequently using the personal pronoun “I” and referring to “my service” (see for example CB 85).

11. Mr Antill of counsel, who appeared for the defendant, drew my attention to CB 91 where the first defendant says, “other agents do not give a discount”. From this he asked me to infer that the first defendant was telling the plaintiffs that she too was an agent.

12. Two things should be said about this submission. The first is that the reference to agency in CB 91 appears to be a reference to the first defendant's role in seeking “investments” in a Thai underground lotto, and not the currency scheme. Secondly even on Mr Antill's construction of the communication, at best, they disclose that the first defendant is someone's agent. On any view of it no Facebook communications reveal Siriluck Chimmalee as the principal.

13. Mr Antill correctly conceded that in order for an agent to make out that he or she dealt with the third party as an agent for a disclosed principal, the identity of the principal must be disclosed.

14. The defence of the first defendant as being a disclosed agent must fail, and there should be judgment for the plaintiffs against her.

Was the Second Defendant a Party to the Transactions

15. The plaintiffs in relation to this issue rely on the fact that the Facebook page was described as the page of “Eve and Offy”. They say that this proves the second defendant's involvement in the business, and the fact that she was a party to the transactions, the subject of the proceedings.

16. The defendants however gave evidence that the first defendant used her sister’s Facebook page to communicate with investors without the second defendant's knowledge or consent. With similar sisterly disregard for proprieties the second defendant also gave evidence that the first defendant used a bank account of a company in which the first defendant's husband and the second defendant were directors and shareholders. The evidence discloses that this was also done without the second defendant's knowledge or consent.

17. It appears that the first defendant simply set up a bank account in the company's name, nominating herself as a relevant authorised officer to deal with the account, and thereafter began using the account for her own purposes.

18. These transactions most certainly do not conform with good commercial or corporate practice, but I consider them to be quite credible explanations of what occurred when placed in the context of this case.

19. I accept the evidence of the first and second defendants to the effect that the second defendant was not a party to the currency transactions. They were not shaken in cross examine as to their assertions in this regard, which, as I have indicated, I considered to be the most likely explanation for the facts, given the relationship between the defendants in the circumstances of this case.

20. I am fortified in this conclusion by the frequent use by the first defendant of the personal pronoun “I” and her description of “my service” in the Facebook messages. I note in that regard that there is no occasion in which the first defendant refers to “we” or “our service” in these exchanges.

21. The case therefore against second defendant must fail.

The Assignment Issue

22. By leave the plaintiffs put on an amended statement of claim by which the first plaintiff pleaded that she had taken assignment of the debts in relation to the currency scheme of certain third parties.

23. Notice of these assignments were not given to the defendants before commencement of these proceedings. The defendants put the plaintiffs on notice that in the circumstances it was necessary for them to join the assignors. This was so as the defendants contended that as the assignments were good only in equity, at the date of commencement of the proceedings. They were not good at law on that date.

24. The plaintiffs declined to join the assignors.

25. As is well known, section 12 of the Conveyancing Act 1919 provides the process by which a legal chose in action can be assigned at law. It requires written notice be given to the debtor. Until such written notice is given, any assignment is incomplete at law. The assignment may be complete in equity. However, the assignor remains the legal owner of the chose in action, and is a necessary party to any proceedings to recover the legal chose in action.

26. Thus if proceedings are commenced when an assignment of a legal chose in action is incomplete at law (even if complete in equity) then the assignor needs to be joined as a party to the proceeding.

27. In Bluebottle v DCT (2006) 233 ALR 747 Gzell J stated the well established principles in the following terms:

On the other hand, an equitable assignment, whether absolute or not, of the whole of a legal chose in action does not entitle the assignee to sue alone. The assignor, or the legal personal representative, must be a party to the suit, either as plaintiff or defendant: Imray v Griffın (1889) 10 LR (NSW) 114 at 130–1; McIntyre v Gye (1994) 51 FCR 472 at 480; 122

ALR 289 at 297. The rationale for the joinder is to protect the debtor against claims by the assignor or by a purchaser for value without notice of the assignment: Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1 at 14 (Performing Right Society).

In Holt v Heatherfield Trust Ltd [1942] 2 KB 1 at 4, Atkinson J said that an equitable assignee may sue in his own name provided that he makes the assignor a party to the action, as plaintiff if he consents, and as defendant if he does not. [72]-[73]

28. The principles are summarised in Heydon, JD, Leeming, MJ and Turner, PG, Meagher, Gummow & Lehane ’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) in the following terms:

[6-520] Position of assignor and assignee where legal property is assigned

Where what is assigned is legal property, and the assignment is merely equitable, the assignor does not part with the legal estate.594 Hence whether the assignment is absolute or not the assignor remains a necessary party to an action to enforce the interest assigned. The assignee is entitled to require the assignor to be joined, or to sue in the assignor's name.595 The equitable assignor of the legal chose in action can, on receiving an offer of indemnity against costs, be required to permit the assignee to sue in the assignor's name.596 The assignor is necessary party, because the defendant (debtor or fundholder) should be protected against claims by the assignor and by others, particularly bona fide purchasers for value without notice, claiming under the assignor.597

29. As I have earlier indicated in paragraph 5B of their Amended Statement of Claim, the plaintiffs have pleaded that the defendants were given notice in writing of the assignments on 8 June 2022 (after the proceedings were commenced) when the plaintiffs served the affidavit of the first plaintiff dated 6 June 2022.

30. The requirement to join the assignor is not avoiding by giving the Defendant wrtten notice of the assignment after the proceeding has been commenced. This is clear from the following passages in Holt v Heatherfield Trust Ltd [1942] 2 KB 1:

Absence of notice does not affect the efficacy of the transaction as between the assignor and the assignee. Until notice be given the assignment is an equitable assignment, but it is an assignment which

requires nothing more from the assignor to become a legal assignment. The assignee may himself give notice at any time before action brought, and, further than that, even before notice he may sue in his own name, provided that he makes the assignor a party to the action, as plaintiff if he consents, and as defendant if he does not consent. That is made quite clear in Performing Right Society Ltd v London Theatre of Varieties Ltd. Viscount Cave LC said, at p 14:

'… no action can now be defeated by reason of the misjoinder or non-joinder of any party; but this does not mean that judgment can be obtained in the absence of a necessary party to the action, and the rule is satisfied by allowing parties to be added at any stage of a case.'

That case turned upon whether an assignment of a musical composition not yet composed passed a good title to the Performing Right Society as and when the composition came into existence. It was held that there was no right of action for an infringement of copyright unless the composer was joined as plaintiff or defendant. Viscount Finlay put it thus, at p 8:

'The society became entitled to sue in respect of the interests so acquired, but their right to sue is subject to the general rule that the owner of the legal estate should be joined as a party.

At p 25, Lord Sumner pointed out that the matter had been raised and the plaintiffs had been given an opportunity of joining the legal owner; that deliberately the plaintiffs had not taken advantage of that opportunity; and that the courts were dealing with the matter in the absence of the legal owner and they could not give the relief prayed. It is elementary, I think, in such a case, because even in a student's book (Snell's Principles of Equity) it is laid down quite clearly [22nd Edn, at p 52]:

'But, if the assignment of a legal thing in action is only equitable, the original creditor must usually be joined, as plaintiff if he consents, if not, as defendant.'

[emphasis in bold added]

31. Mr Antill submitted that in these proceedings, the issue was raised by the defendants on 22 July 2022 soon after they became aware of the alleged assignments. He went on to submit that the plaintiffs have been given an opportunity to join the legal owners of the alleged debts but have refused to do so. In the absence of the legal owners of the alleged debts, Mr Antill submitted that the Court cannot give the relief sought by the plaintiffs.

32. He went on to submit that as a consequence of the non-joinder of the assignor in this case in relation to the recovery by the first defendant of the assigned debts must fail.

33. I accept Mr Antill’s contentions in this regard. The first plaintiffs claim in respect of the assigned debt must fail.

Conclusion

34. There was no dispute between the parties as to the quantification of judgment to which the plaintiffs were entitled against the first defendant in the event of the findings which I have set out above. The first plaintiff is entitled to judgment against the first defendant in the sum of $69,764. The second plaintiff is entitled to judgment and verdict against the first defendant in the sum of $22,200. The second defendant is entitled to judgment and verdict against both plaintiffs.

Costs

35. The first plaintiff has been partially successful against the first defendant, but unsuccessful against the second defendant.

36. The second plaintiff has been successful against the first defendant, but in a sum less than $40,000, and as such a costs order is not ordinarily made in the successful parties’ favour in those circumstances (see UCPR 42.35(2)). The second plaintiff was also unsuccessful against the second defendant.

37. The first plaintiff has been unsuccessful in relation to the assigned debts, which in monetary terms involved approximately half of the sum which the first plaintiff claimed.

38. The second defendant on the other hand has been successful against both plaintiffs.

39. It seems to me in these circumstances, the usual rule that costs follow the event is not appropriate. I take this view given the mixed results achieved by the parties in the proceedings, and in the case of th second plaintiff, the quantum of success.

40. In addition, I am cognisant of the fact that the plaintiffs and defendants were represented by the same legal representatives which is likely to make an assessment of costs in the circumstances very difficult in a practical sense.

41. At the end of the day, the task of the court in relation to costs is to do justice between the parties and in attempting to so do I consider the appropriate order is that there be no order as to costs.

42. I will however hear the parties on costs if it becomes necessary.

Orders

1. Judgment and verdict for the first plaintiff against the first defendant in the sum of $69,764;

2. Judgment for the second plaintiff against the first defendant in the sum of $22,200

3. Interest thereon in each case at the rates pertaining from time to time pursuant to section 100 of the Civil Procedure Act.

4. Judgment and verdict for the second defendant against the plaintiffs.

5. Any parties wishing to be heard on costs should notify my associate of that fact no later than 4:00pm on 22 February 2023, with such indication to include particulars of the costs order sought (“Notification”).

6. In the absence of Notification, the court will make no order as to costs.

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Amendments

24 April 2023 - Title

Decision last updated: 24 April 2023