Local Court of New South Wales CITATION: Auto Panel Beaters Radiators Pty Ltd v Chantal J Hilderbrant [2004] NSWLC 6 JURISDICTION: Civil PARTIES: Auto Panel Beaters Radiators Pty Ltd Chantal J Hilderbrant FILE NUMBER: 12900/03 PLACE OF HEARING: Downing Centre DATE OF DECISION: 04/08/2004 MAGISTRATE: Magsitrate B A Lulham CATCHWORDS: Practice and Procedure - Assignability of chose in action - claim in tort for negligence LEGISLATION CITED: Browntown Limited & Ors v Edward Moore Inbucon Ltd (1985) 2 ALL ER 499 at 506 Trendtex Corporation v Credit Suisse (1982) AC 679 Poulton v The Commonwealth & Ors (1952 - 1953) 89 CLR at 602 CASES CITED: Dawson v Great Northern and City Rail Co (1905) 1 KB 260 Defries v Milne (1913) 1 Ch 98 Monk v Australia and New Zealand Banking Group Limited (1994) 34 NSWLR 148 National Mutual Property Services (Australia) Pty Limited & Ors v City Bank Savings Limited & Ors 132 ALR 514 Mr Reimer by leave for the plaintiff REPRESENTATION: Mr Vinden of Counsel Abbott Tout Solicitors ORDERS: Assignment to the plaintiff of the tort of negligence was not effective, and the proceedings by the plaintiff should be dismissed.; I will hear from the parties as to the approprate orders and also on the question of costs. Reasons for Decision 1 This matter was heard by me in the Motions List at the Downing Centre. There were in fact five matters before the Court. The plaintiff in each case was Auto Panel Beaters & Radiators Pty Ltd. There were different defendants in each of the other matters but each of the defendants was represented by the same firm of solicitors, and each of those matters raised the same issues to be determined by me in this matter. I understand there may be further similar cases raising the same issues. 2 When the Notice of Motion was filed on 31 October 2003, the NRMA Insurance Limited was the second defendant. The Motion sought that the proceedings against both defendants be dismissed upon the grounds that the Statement of Claim did not disclose a cause of action, and that the plaintiff has failed to prosecute the matter. The defendant relied upon the affidavit of Sylvia Agatha Kozlowski, sworn 31 October 2003. Subsequently an order was made by consent that the proceedings against the second defendant be dismissed. 3 The ground argued before me was that the Statement of Claim did not disclose a cause of action against the first defendant, and I propose to determine the matter on that issue. The plaintiff did not file any evidence on the Notice of Motion. The factual situation can be ascertained from the documents annexed to affidavit of Ms Kozlowski. 4 The plaintiff carried on business as a panel beater or car repairer. The plaintiff sought to rely on a document dated 27 September 1996, which document was entitled Deed of Release Paper and Assignment of Debt. I propose to set out the form of the document in full; CLAIM NUMBER: MVA 42726440 DEED OF RELEASE PAPER & ASSIGNMENT OF DEBT I/We hereby declare and authorise the following: (1) I/We are the owners of the vehicle the subject of the above claim. (2) The drivers full name is Maria Ferro (3) The drivers D.O.B. is 7.3.53 The drivers licence no. is 8998TP Expiry Date (4) The drivers driving experience and years licenced is 21 yrs (5) The vehicle is insured (or not insured) with NRMA Insurance Company (6) The policy number is comprehensive (7) I authorise that my full settlement cheque and payment is to be made direct to Auto Panel Beating & Radiators Pty Ltd. ACN 0014175490, 1509 Botany Rd, BOTANY NSW 2019. Total Amount $3,747.01 (8) I have made no other claim in relation to this accident. (9) ON ACCEPTANCE OF PAYMENT TO MY REPAIRER AUTO PANEL BEATING & RADIATORS PTY LTD. THIS WILL BE A FULL AND FINAL SETTLEMENT AND DISCHARGE OF MY/OUR CLAIM. NO FURTHER ACTION WILL BE TAKEN, PAYMENTS OR INSTALMENTS ARE ACCEPTABLE, INSURANCE COMPANIES EXCLUDED . I HEREBY AUTHORISE AND DIRECT AUTO PANEL BEATING & RADIATORS PTY LTD. AND ITS ASSOCIATES (LEGAL AND DEBT RECOVER SERVICES) TO ACT ON MY BEHALF TO RECOVER ALL COSTS AND EXPENSES IN RELATION TO THIS MOTOR VEHICLE ACCIDENT. NAME: MARIA FERRO (please print) SIGNED: M Ferro (Owner or authorised agent) DATE: 27-9-986 WITNESSED: DATE: 27 Sept 1996 5 The Statement of Claim relied upon by the plaintiff claimed the sum of $2,723.96 for debt. interest of $1,597.17, and issue and service fees of $85.00. making a total of $4,406.13. The Statement of Claim disclosed the cause of action as follows; THE PLAINTIFF IS THE ASSIGNEE OF THE OWNER OF MOTOR VEHICLE REG: LWY 818. THE DEFENDANT WAS THE DRIVER OF THE DEFENDANT'S MOTOR VEHICLE AND SO NEGLIGENTLY MANAGED AND DROVE HIS MOTOR VEHICLE SO THAT IT COLLIDED WITH VEHICLE REG: LWY 818. DEFENDANT'S MOTOR VEHICLE REG: TXR 718. DATE OF COLLISION: 9/9/1996. PLACE OF COLLISION: HEFFRON ROAD AND BUNNERONG ROAD PAGEWOOD. THE PLT IS THE ASSIGNEE OF THE OWNER OF MOTOR VEHICLE REG: LWY 818. CHANTAL HILDERBRANT. 1ST DEFENDANT, INSURED BY THE 2ND DEFENDANT WAS THE DRIVER OF THE VEHICLE REG: TXR 718 AND SO NEGLIGENTLY MANAGED AND DROVE SUCH MOTOR VEHICLE SO THAT IT COLLIDED WITH VEHICLE REG: LWY 818. DUE TO THE DEF'S NEGLIGENCE THE PLTF HAS INCURRED THE EXPENSES OF THE REPAIRS OF LWY 818 IN THE SUM OF $2,723.96 WHICH SUM THE PLTF'S CLAIMS. Plus interest pursuant to Section 39A(1) of the Local Courts (Civil Claims) Act 1970 from 30/9/1996 to the date of entry of judgment at the rate of 9% per cent per annum Date of issue: 04/07/2002 6 The document entitled Deed of Release Paper & Assignment of Debt is a most interesting document. It is stated to be an assignment of debt. Interestingly it authorises and directs the plaintiff to act on behalf of the party Maria Ferro to recover all costs and expenses in relation to the motor vehicle accident. I do not believe anything is gained from an attempted analysis by me of the legal effect of the document. It is apparent from the terms of the Statement of Claim that the plaintiff relied on the document as an assignment of a cause of action, and purported to bring the claim against the defendant Chantal J Hilderbrant as the assignee of the owner of the motor vehicle, namely Maria Ferro. The plaintiff as assignee was pursuing the claim of Maria Ferro in negligence against the driver of the other vehicle, Chantal J Hilderbrant alleging negligence by that driver and seeking to recover the cost of the repairs to the motor vehicle of Maria Ferro. It would appear that the plaintiff carried out the repairs to the vehicle. 7 That factual background and the Statement of Claim lodged in person by the plaintiff simply and squarely raises for determination the legal question which has concerned the legal profession including many judges for many years, namely; Is a right to sue for tort assignable? 8 I have spent a very considerable period of time researching the law in relation to the assignability of choses in action. I tried to come to grips with the law as set out in chapters 6, 7 and 9 of Equity Doctrines and Remedies by Meagher Gummow and Lehane. I found the law difficult to understand, and I was therefore somewhat heartened to hear what Lloyd LJ had to say in Brownton Limited & Ors v Edward Moore Inbucon Ltd (1985) 3 All ER 499 at p.506 as follows; 'In this judgment in the Court of Appeal in Trendtex Trading Corporation v Credit Suisse (1980) 3 All ER 721, Oliver LJ referred to the "maize of contradictory cases and over subtle distinctions" which have bedevilled this branch of the law and to the confusion which has some times resulted. No single phrase has given rise to greater confusion than the rule described by Lord Roskill in the House of Lords as still being a fundamental principle of our law that you cannot assign a "bare right to litigate".' 9 The law in Australia was stated by Judges Williams, Webb and Kitto of the High Court in Poulton v The Commonwealth & Ors [1952-1953] 89 CLR at p.602. The facts were quite complicated. One basis for the plaintiff's claim was that as a wool dealer he had become the equitable assignee of the proceeds of the sale of the wool granted to him by the owner and he wished to proceed against the Commonwealth in conversion. In relation to this aspect of the claim, the Judges in their joint judgment stated as follows; "In the second place, if it were true that the Commonwealth were guilty of conversation of the Dunlands wool, it would be the Dunlands who could elect to waive the tort and take the proceeds of sale. This would be so both because there was not in fact any purported assignment to the plaintiff of the right of action for tort, and because according to well established principles the right was incapable of assignment, either at law or in equity; Dawson v Great Northern and City Railway Co. (1905) 1 KB 260 Defries v Milne (1913) 1 Ch 98. 10 That common law position was considered in the leading case of Trendtex Trading Corporation v Credit Suisse (1982) AC 679. In a speech with which three other members of the House of Lords agreed, Lord Roskill said (at 703); " But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of a claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, has often been said is a branch of our law of maintenance… If the assignment is of a property right or interest and the cause of action is ancilliary to that right or interest, or if the assignee has a genuine commercial interest in taking the assignment and enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance". 11 The decision in Trendtex Trading Corporation was considered in a very helpful decision of His Honour Cohen J in Monk v Australian and New Zealand Banking Group Limited (1994) 34 NSWLR 148. In that matter a company purported to assign to the plaintiff in the action all choses in action which it may have had against the defendant. The chose of action was for conversion. The question which Cohen J had to decide was as follows; "Whether a right of action for the tort of conversation was capable of assignment to the plaintiff either at law or equity, and if so whether the assignment was effective." 12 The learned judge considered Poulton v The Commonwealth and Trendtex and observed as follows (p.152E); "I agree that there seems no logic in making a distinction between a cause of action of tort and one in contract if the basis of the claim is a commercial one. If there is an interest such as was referred to in Trendtex , it seems to me of little significance as to whether the label to the cause of action is contract or on the same facts it is a claim in tort. What is significant in the view of the House of Lords in Trendtex is that the assignment is only valid, either if there has been an assignment of a property right and the cause of action is ancillary to it, or if the assignee has a genuine commercial interest in taking the assignment and enforcing it for his own benefit." 13 Judge Cohen further stated (p.153C); "In the authorities where the Trendtex test has been applied, the commercial interest has gone beyond a mere personal interest in profiting from the outcome of the proceedings and has required an interest by the assignee in the assignor or its business affairs or activities which the assignment might in some way protect." 14 Applying those principles to the facts in the case before him, the learned Judge found that the chose in action referred to in the Deed of Assignment consisted only of causes of action in conversion. There was no assignment of the cheques themselves or of the proceeds of any successful action arising out of them. He came to the decision that the assignment to the plaintiff of the tort of conversation was not effective. 15 The principles arising from the decision in Trendtex and in Monk were carefully considered by Lindgren J, Federal Court Judge in National Mutual Property Services (Australia) Pty Limited and Ors. v City Bank Savings Limited & Ors. 132 ALR 514. In that case a large number of claims for damages arose out of circumstances in which the investors were induced to enter into "negative gearing packages". Claims were asserted against individual agents and also against the Insurance Group and City Bank as principals. The Insurance Group paid the investors claims in full and took assignment of the investors causes of action against the Bank and the individual agents. Judge Lindgren found that the causes of action did not satisfy the test for assignment in Trendtex Trading Corporation in that they were not ancillary to a "proprietary right or interest which was being assigned", nor did the assignee have a "general commercial interest in taking the assignment and enforcing it for its own benefit." 16 Lindgren J stated (p.540); "By reference to three matters, however, I do not think that the "genuine commercial interest" limb of the Trendtex test is satisfied. First, the genuine commercial interest referred to in Trendtex is not a nebulous notion of the general commercial advantage of the assignee but something more specific and limited. In particular, it does not embrace an interest arising from an arrangement voluntarily entered into by the assignee of which the impugned assignment is an essential part, like the arrangement in the present case. Rather, the expression refers to a commercial interest which exists already or by reason of other matters, and which receives ancillary support from the assignment." 17 He further found (p.540); "Thirdly, it may well be that without the making of the payments by National Mutual companies to the claimants, they or most of them, would not have sued because of the relative modesty of the individual amounts at stake. In light of this in paying out all claims in full and taking assignments, the National Mutual companies might be seen to have behaved commendably. But the fact remains that their conduct is, on the above hypothesis, directed to the encouragement of litigation the proceeds of which will go to the themselves where otherwise there may have been no litigation at all. Thus, there are present the two evils of maintenance and champerty at which the rule against the assignment of bare causes of action is directed." 18 Applying those principles to the present case, I am not satisfied that the "genuine commercial interest" limb of the Trendtex test is satisfied. In this case the plaintiff had no genuine commercial interest in the motor vehicle which had been damaged in the motor vehicle accident. He had a general commercial interest in obtaining work as a panel beater and I am of the view that the commercial advantage which the plaintiff sought to obtain by taking the assignment, and then carrying out the repairs and seeking to enforce the claim for negligence against the other party involved in the accident, does not create the sort of "genuine commercial interest" referred to in Trendtex. 19 I do not believe that taking the purported assignment before or after carrying out the repair work would alter the legal position. 20 I can see little difference in the factual situation in Monk where the purported assignment of a claim in tort of conversation was disallowed and the facts in this case. The fact that the plaintiff was seeking to recover his costs of repairs does not give him a genuine commercial interest in taking the assignment in the sense that the repairer has an interest "In the assignor or its business affairs or activities which the assignment might in some way protect" see Monk (p.152 E). 21 I rely also on the comments made by Lindgren J in National Mutual in relation to the twin evils of maintenance and champerty. The crime of maintenance including champerty and liability in tort for maintenance including champerty were abolished by the Maintenance Champerty and Barratry Abolition Act 1993. However, s6 of that Act reserves the right to raise a defence of public policy because of acts which amount to maintenance. 22 In my view there are very strong public policy considerations against the extension of the right to assign a chose of action to the tort of negligence. It would make it extraordinarily difficult to hear claims for damages for personal injuries if the person injured had no personal interest in the amount of damages to be awarded by the Court as a result of having assigned the claim to some other person. The difficulties in assessing the plaintiff's honesty and integrity in giving evidence as to his injuries and disabilities would be immeasurably more difficult. 23 A potential danger raised by the present case is that the repairer, having taken an assignment of the claim in negligence to recover the cost of the repairs may be tempted to inflate the cost of the repairs. I accept that in many cases the repair quotation is assessed by an assessor, although in some cases I doubt the assessors are as independent as they claim. Clearly if assignments are allowed the owner has no further interest in ensuring that the cost of the repairs are reasonable and, in my view the absence of such personal interest by the owner ought not be encouraged. 24 Accordingly I have come to the view that the assignment to the plaintiff of the tort of negligence was not effective, and the proceedings by the plaintiff should be dismissed. 25 I will hear from the parties as to the appropriate orders and also on the question of costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.