Scholle Industries Pty Ltd v AEP Industries (NZ) Ltd

The case of Scholle Industries Pty Ltd v AEP Industries (NZ) Ltd dealt with the validity of an assignment of causes of action in tort and under the Trade Practices Act 1974 (Cth) (TPA). The plaintiff, Scholle Industries, sought to amend its statement of claim to include additional causes of action assigned to it by its parent company, Scholle Corporation. The appeal concerned the validity of these assignments and whether the plaintiff had a genuine commercial interest in the assigned causes of action. The master had refused to allow the amendment, finding that the plaintiff did not have a genuine commercial interest in the tortious cause of action and that the assignment under the TPA was invalid.

The key issues before the court were whether the assignment of the tortious cause of action was valid, and whether the invalidity of the TPA cause of action rendered the entire assignment invalid and therefore void. The plaintiff argued that it had a genuine commercial interest in the tortious cause of action and that the invalidity of the TPA cause of action did not affect the validity of the tortious assignment. The defendants contended that the invalidity of the TPA assignment invalidated the entire assignment, including the tortious cause of action.

The court found that the plaintiff had a reasonably arguable claim that it had taken a valid assignment of the tortious cause of action from Scholle Corporation. It held that the proposed form of pleading was adequate and that there was a reasonable argument that the invalid assignment of the TPA cause of action was severable from the balance of the assignment. Therefore, the appeal was allowed and the plaintiff was granted permission to plead the tortious cause of action.

This decision highlights the importance of the genuine commercial interest requirement in the context of assignments of causes of action and the principle of severability in the context of deeds of assignment. The court’s findings on these issues provided clarity for parties seeking to enforce assignments in similar circumstances.