GRIMMOND v TAYLOR; MERV GRIMMOND PTY LTD v TAYLOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and MCHUGH JJA 30 September 1987, 16 March 1988 [1988] NSWCA 57 ASSIGNMENT — action for recovery of debt by creditor — assignment of debt — re-assignment — debtor asserted received notice of assignment but not re-assignment — no consideration for re-assignment — question of fact — no question of principle. ORDER Appeal dismissed with costs. Mahoney JA I agree with the judgment of McHugh JA. Priestley JA The facts in these appeals are set out in the reasons of McHugh JA. I agree with him that the appeals should be dismissed because the appellants did not show that there had been an assignment of the relevant debts in compliance with s12 of the Conveyancing Act, and will mention only matters relevant to that point. One of the conclusions stated by Herron DCJ on this aspect was "I am not satisfied that these debts were so assigned". The facts relevant to this observation of his Honour were that Mr Grimmond was shown in examination in chief a photo copy of a form letter from Shell, commencing "Dear Customer', referring to an assignment in writing to Shell by Mr and Mrs Taylor of the debts of their distributorship business. The letter said "Enclosed you will find a statement showing the balance, which according to our records, is still owing on your account." The letter asked for prompt remittance of moneys due, subject to investigation of any differences between the amounts shown in the enclosed statement and the customer's records. Mr Grimmond said he received a similar document "as managing director of Mervyn Grimmond Pty Limited". Beyond that, he did not say in what circumstances, nor did he say when he received the "similar" document. No enclosure was produced. He did not say that the document he received had an enclosure showing any amounts owed by him or the company to Mr and Mrs Taylor. He did not say how the photo copy came into existence or where the document he had received was. All that he said was that he received a similar document. The form letter was tendered and became Exhibit 10. No cross-examination was directed to Mr Grimmond on the matter. It seems to me that in saying that he was not satisfied that "these debts were so assigned", Herron DCJ must have had in mind the non production of the enclosure referred to in the form letter. The fact that no cross-examination was directed to Mr Grimmond on this matter might possibly have caused counsel for Mr and Mrs Taylor a difficulty, in that it might have been said that in not challenging his account he was signifying to the court that the plaintiffs were accepting the document and its implications at face value, but there was material before the trial judge which showed there was in the circumstances of the case no such difficulty. The solicitor who had the carriage of the matter for the plaintiffs gave evidence that prior to the hearing the solicitor for the defendants had said a defence based on the assignment of the debt might be raised at the trial. She had replied to him "as far as we are concerned this debt was not one that was 2 UNREPORTED JUDGMENTS assigned to Shell and in any event Shell has now reassigned all the debts apart from four large debts to our client." In cross-examination it was suggested to her that she had not mentioned the reassignment, but it was made plain that it was accepted that she had said the plaintiffs' position was that the debt had not been assigned to Shell. This of course is not evidence on the question whether or not the relevant debts had been assigned to Shell. I refer to it because it explains the conduct of the trial. The defendants were on notice before the trial, and the court knew they were on notice, that the plaintiffs claimed the relevant debts had not been assigned to Shell. Yet the only proof tendered to the court on the issue was the form letter lacking the enclosure which would show whether or not the debts in question had been subject to the alleged assignment. In the circumstances, where Mr Grimmond's credibility was in question throughout the proceedings, it seems to me that it was well open to the trial judge to say that he was not satisfied that the particular debts had been assigned. In the circumstances I would not be satisfied either. In my opinion the appeal should be dismissed with costs. McHugh JA In two actions heard together In the District Court at Coffs Harbour, Herron DCJ held the two appellants liable in actions for moneys payable for goods sold and delivered. The first appellant was held liable in the sum of $8,356.63 which included the sum of $3,000 for interest; the second appellant, a company, was held liable in the sum of $33,027.37 which included a sum of $12,000 for interest. The appellants allege that verdicts in the actions should be entered in their favour on the ground that the debts in question had been legally assigned to The Shell Company of Australia Limited (Shell), and that, if there was a reassignment of the debts, the appellants had no notice of it and no consideration was given for the re-assignment. The factual background. In February 1978 the respondents, Mr and Mrs Taylor, as partners, purchased the Shell Agency Depot known as "Coffs Harbour Fuel Services". At the time the second appellant, Merv Grimmond Pty Limited (the company) was a sub-agent of Shell. The first appellant, Merv Grimmond, was managing director of the company. In November 1978 Shell refused to give any further credit to the company. As a result, a conversation took place between Mr Taylor and Mr Grimmond. Mr Taylor agreed that petrol would be supplied to the company on the basis that the Taylor partnership would become personally liable to Shell but would be reimbursed by the company. Under this arrangement, petroleum products to the value of $21,027.37 were supplied to the company between the 17th November, 1978 and the 13th July, 1979. In December 1978, Mr Grimmond said to Mr Taylor that he would like a separate account for fuel for his motor vehicles. He asked that this account be placed in his own name. Petroleum products to the value of $5,356.63 were supplied to him. His Honour found that on or about the 13th July, 1979 and subsequently Mr Grimmond acknowledged that he and the company owed the respondents the two sums of $5,356.63 and $21,027.37. However, despite attempts by the Taylors to obtain payment of the monies, they remained unpaid. The Deed of Assignment. On the 18th November, 1982 the Taylors and Shell entered into a Deed of Assignment under which the Taylors assigned to Shell "all debts now due and owing or which at any time hereafter become due and owing... in connection with URJ GRIMMOND v TAYLOR; MERV GRIMMOND PTY LTD v TAYLOR (McHugh JA) 3 the business or businesses carried on by them at Jordan Esplanade, Coffs Harbour... and known as Coffs Harbour Jetty or elsewhere and from time to time on any account whatsoever whether entered in any book or not". The Deed contained a proviso for the "re-assignment or re-conveyance" of the debts. On the Sth June, 1985 Shell re-assigned to Taylor "all right title and interest" in the debts except for four debts which are irrelevant to the present proceedings. On the 9th December, 1983 Shell apparently forwarded to customers of the Taylors standard form notices of the assignment of the debts to Shell. The material parts of the letter were as follows:- "As you are no doubt aware, Mr and Mrs Taylor have assigned in writing to the Shell Company of Australia Limited the debts of their distributorship business. Enclosed you will find a statement showing the balance, which according to our records, is still owing on your account. It is possible that the balances as stated by us differ from the amount outstanding according to your records. If this is the case we would appreciate your advising us of any differences. Otherwise your prompt remittance of money due would be appreciated.... In evidence Mr Grimmond was shown a copy of this document and was asked the following questions:- "... did you ever as Managing Director of Mervyn Grimmond Pty Ltd receive a similar document? A. Yes, I did receive a similar document. Q. Did you ever receive a similar notice in relation to the reassignment? A. No, I did not receive it." He was not shown any "statement showing the balance...... still owing on your account". The contention of the appellants. The appellants contend that the Deed of Assignment of the 18th November, 1982 was an absolute assignment of their debts to Shell and that they received notice of the assignment in the standard letter to which I have referred. Accordingly, they contend that the respondents lawfully assigned the debts to Shell: Conveyancing Act 1919, s12. The next step in the argument is that the appellants contend that they were given no notice of the re-assignment; accordingly, there could be no assignment pursuant to the provisions of s12 of the Conveyancing Act. They then contended that the re-assignment was also ineffective in equity because it was a voluntary transfer of property for which the respondents gave no consideration. The trial judge's reasons. At the trial Herron DCJ dismissed a similar submission by the appellants saying:- "At some stage the plaintiffs did assign debts to the Shell Oil Company but I am not satisfied that these debts were so assigned, and I am certainly not satisfied that the section was complied with. In particular I do not think that the debtor was notified in writing as required by the section notwithstanding a letter which has been tendered in evidence from the Shell Oil Company itself. In any event, even if I am not correct in this, I think that the assignment by the Shell Company Australia Limited back to the plaintiffs and dated 5 June 1985 put the plaintiffs in a position where they are competent to bring these actions." Was there an original assignment of the debts? The material parts of the Deed of Assignment of the 18th November, 1982 were as follows:- "WHEREAS: 4 UNREPORTED JUDGMENTS A.By an Agreement dated the 25th day of August 1980 (hereinafter called 'the Agreement') Shell appointed the Mortgagor [i.e. the Taylors] to act in concert with Shell in the storage and sale of Shell's petroleum goods and products in such capacity as is more particularly described in the Agreement. B.The Mortgagor has agreed to be bound by the terms and conditions contained in the Agreement and in this Deed. C. The Agreement provides, inter alia, that the Mortgagor will furnish to Shell security in respect of the Mortgagor's accountability to Shell under the Agreement for moneys due to Shell D. In pursuance of the Agreement and the provisions of this Deed the Mortgagor has agreed at the request of She] I to convey and assign the property hereinafter described to Shell upon the terms and conditions hereinafter contained. NOW THIS DEED WITNESSETH that the Mortgagor as beneficial owner hereby assigns and conveys unto Shell all debts now due and owing or which may at any time hereafter become due and owing to the Mortgagor in connection with the business or businesses carried on by them at Jordan Esplanade Coffs Harbour in the State of New South Wales and known as Coffs Harbour Jetty or elsewhere and from time to time on any account whatsoever whether entered into in any book or not (hereafter called 'the mortgaged premises') TO HOLD the same unto Shell absolutely subject to the proviso for redemption herein contained." Upon the proper construction of this Deed, I think that it assigned to Shell current or future debts in respect of businesses currently carried on at Coffs Harbour Jetty or elsewhere in the State of New South Wales. The assignment was in respect of the debts of businesses "carried on by them" at Coffs Harbour or elsewhere. I do not think that in its natural and ordinary meaning the Deed assigned the debts of any business which was no longer carried on by the Taylors. So the first question is whether the business which was being carried on by the Taylors when they sold petroleum products to the company and Mr Grimmond personally was the same business which was carried on at Jordan Esplanade, Coffs Harbour "and known as Coffs Harbour Jetty"? There is no other evidence which suggests that the business which sold the products to the company and Mr Grimmond was carried on in addition to the Coffs Harbour Jetty business. If the two businesses were the same then the debt would be assigned; for I do not think that it is possible to confine the debts assigned to those incurred after the agreement of 25th August, 1980 referred to in Recital A of the Deed of Assignment. The evidence on the point is vague and unsatisfactory. There is no direct evidence that the business referred to in the Deed of Assignment is the same business which supplied petroleum products to the appellants in the period before the 13th July, 1979. In his evidence Mr Grimmond referred to a conversation with Mr Taylor on the 17th November, 1978 "outside the Bulk Freights Coffs Harbour Jetty Depot'. He said that Mr Taylor "mentioned to me that he was taking over the Shell Depot". Mr Taylor said that conversation occurred in February 1978. Mr Grimmond was a thoroughly unsatisfactory witness whose evidence was rejected by his Honour in every essential respect. However, his cross-examination seems to have accepted that a conversation did take place outside that Depot. I find it impossible to conclude, however, that the Bulk Freights Coffs Harbour Jetty Depot referred to in Mr Grimmond's account of that conversation was the same business referred to in the Deed of Assignment or the URJ GRIMMOND v TAYLOR; MERV GRIMMOND PTY LTD v TAYLOR (McHugh JA) 5 same business which supplied petroleum products to the appellants. Indeed if the Taylors were taking over a She] I business in November 1978, it must have been a different business from the one taken over in February 1978. However, the invoices sent to the appellants refer to the Taylors as distributors of She] I products and gives their address as "PO Box 56, Coffs Harbour Jetty" This is some evidence connecting the two businesses. More significantly Mr. Taylor said in evidence that the Deed of Assignment was given "for the purpose of providing security over my business at the Shell Depot". Earlier he had described the business which supplied the petroleum products to the appellants as the Shell Agency Depot. I think that this is sufficient to draw the conclusion that the debts of the business which were assigned were debts of the same business which supplied the products to the appellants. That conclusion seems inevitable if account is taken of the Statement of Claim which refers to the address of the business which supplied the products as Jordan Esplanade, Coffs Harbour - the same address as the business of the Deed of Assignment. While I think that the debts in question were assigned, I do not think that they were assigned at law. For the assignment to be effective at law, the appellants would have had to receive notice of the assignment: Conveyancing Act 1919, s12. Mr Grimmond said that he received the standard form letter from Shell concerning the assignment of the debts of the Taylor partnership. But I think that his Honour rejected this evidence of Mr Grimmond. His Honour said that he did "not think that the debtor was notified in writing as required by the section notwithstanding a letter which has been tendered in evidence from the Shell Oil Company itself'. The letter did not come from the custody of the appellants. Apparently it had been annexed to an affidavit sworn on the 19th June, 1985 in connection with other unidentified litigation. Moreover, the standard form letter referred to a statement showing the balance "which according to our records, is still owing on your account'. Yet no such statement was produced by the appellants. Moreover, the standard form letter was not addressed to the appellants or either of them. It had no addressee except "Dear Customer". It may be that in the passage to which I have referred his Honour was not rejecting Mr Grimmond' 5 evidence as to the receipt of the letter but merely asserting that no notice in accordance with the section was given. Counsel for the appellants argued that it "would require a more specific finding by his Honour as to the credit of Mr. Grimmond in this instance" to conclude that his Honour rejected Mr. Grimmond's evidence that he received the letter. Counsel contended that his Honour merely found that the letter was not a notice within s12 of the Conveyancing Act 1919. On the authorities the standard form letter was clearly sufficient to satisfy s12: Denney, Gasquet & Metcalfe v Conklin [1913] 3 KB 177; Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669. Accordingly, it is difficult to see why his Honour would have said that notice was not given within the meaning of s12 if he accepted the evidence of Mr. Grimmond that the appellants had received the letter. Accordingly, I think that his Honour's remarks must be read as a rejection of the evidence of Mr Grimmond on this point. His Honour had rejected the evidence of Mr Grimmond on every substantial matter where it was in conflict with Mr Taylor. Moreover, the circumstances surrounding the alleged receipt of the standard form letter were highly suspicious. If the appellants did not receive notice of the assignment, then at law the title to the debts remained with the respondents although, of course, in Equity the debts were the property of Shell. But the important consequence of the finding 6 UNREPORTED JUDGMENTS that the debts were not assigned at law is that the respondents were always entitled to sue in their own names for their recovery. I see no ground for disturbing the learned trial judge's conclusion on the 5 question of the assignment of the debt. In my opinion the appeal should be dismissed with costs.