McMAHON v STATE BANK OF NEW SOUTH WALES [1990] NSWCA 123

McMAHON v STATE BANK OF NEW SOUTH WALES

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, PRIESTLEY and MEAGHER JJA 6 March 1990, 20 March 1990

[1990] NSWCA 123

Appointment of receiver — creditor's reliance on breaches unknown to him at time of appointment — creditor's reliance on breaches discovered only as a result of appointment — sufficiency of evidence of breach.

Mahoney JA I agree with the judgment of Meagher JA. Before this Court, Mr Evatt, for the appellant, stated his grounds of appeal as being: whether, in justification of appointment of the receiver, the Bank could rely on the information found by the receiver only after his appointment; and whether there was evidence that the vehicle leased by the company was of a value more than $10,000.

On the first ground, Mr Evatt relied on passages in Bunning v Cross 141 CLR 54 at 78-80, and in Miller v Miller 141 CLR 269 at 277 to establish that the information as to the leasing transaction was obtained illegally and so could not be relied on. The argument was essentially that, if the leasing transaction had to be relied on as to the ground for appointing the receiver, the receiver's entry into possession was not justifiable unless it could be justified by the leasing transaction and therefore the discovery of the facts as to that transaction in some way involved illegality.

There may be circumstances in which entry into possession by a chargee or his receiver may involve, in the relevant sense, illegality. But in this case what was done was done pursuant to a claim of right which, were the trial pursued, might well prove to be justified. What the receiver did was done in the pursuit of that claim of right. I do not think that any illegality resulted in this case.

One matter relevant to this arose in argument. The receiver may be appointed when the moneys received by the charge become payable. They become payable upon a breach, such as the leasing transaction, not automatically but only "at the option of the Bank": CL24. And the question arose whether, if the leasing transaction was known when the Bank, by appointing the receiver, exercised its option, it could be said to have exercised the option granted by the charge by reason of that breach.