Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd

Federal Court of Australia Act 1976 (Cth) s 31A Trade Practices Act 1974 (Cth) ss51AC, 52, 82 Agar v Hyde (2000) 201 CLR 552 considered Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited [1994] FCA 814 followed Batistatos v Roads and Traffic Authority of New South Wales (2006) 227 ALR 425 cited Bernstrom v National Australia Bank [2003] 1 Qd R 469 followed Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 cited Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41 considered and approved Chapman v Luminis Pty Ltd (No 4) (2001) 123 FCR 62 followed Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 cited Ex Christmas Islanders Assocation Inc v The Attorney-General for the Commonwealth (No 2) [2006] FCA 671 considered General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 discussed Harley v McDonald [2001] 2 AC 678 considered Hocking v Bell (1947) 75 CLR 125 applied Hocking v Bell (1945) 71 CLR 430 applied Jackamarra v Krakouer (1998) 195 CLR 516 cited Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 considered Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155 cited National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Limited (1995) 132 ALR 514 followed Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105 discussed and followed Poulton v The Commonwealth (1953) 89 CLR 540 followed Pritchard v Racecage Pty Ltd (1997) 72 FCR 203 approved Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 considered Re Commonwealth of Australia; Ex parte Marks (2000) 177 ALR 491 cited Rossetto v Meriton Apartments Pty Limited [2006] FCA 1290 considered South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 disapproved Swain v Hillman [2001] 1 All ER 91 considered Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 discussed Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 applied Trendtex Trading Corporation v Credit Suisse [1982] AC 679 discussed Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 cited Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 cited Walker v Citigroup Global Markets Australia Pty Ltd [2006] FCAFC 101 cited Warwick Entertainment Centre Pty Limited v Alpine Holdings Pty Limited (2005) 224 ALR 134cited William Brandt's Sons Co v Dunlop Rubber Co [1905] AC 454 followed BOSTON COMMERCIAL SERVICES PTY LTD (ACN 114 658 070) v GE CAPITAL FINANCE AUSTRALASIA PTY LTD (ACN 070 396 020) NSD 1123 OF 2006

NEW SOUTH WALES DISTRICT REGISTRY NSD 1123 OF 2006

JUDGE: RARES J DATE OF ORDER: 16 OCTOBER 2006

1. The proceedings be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth).
2. The applicant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1123 OF 2006

REASONS FOR JUDGMENT 1 GE Capital Finance Australasia Pty Ltd is a financier ('GE Capital'). It has been sued by Boston Commercial Services Pty Ltd (ABN 87 114 658 070) (new Boston) which claims to be the assignee of the business, including rights under its contracts, of Boston Commercial Services Pty Ltd (ABN 75 003 990 583) (old Boston). 2 On 9 November 2004 old Boston entered into a contract with GE Capital which provided for old Boston to make what were described as 'field calls' on customers of GE Capital who were not paying their debts in accordance with their loan agreements. 3 On 1 July 2005 old and new Boston entered into a sale of business agreement which was completed at 8.30a.m. on that day (cl 1.1(e)). Under the sale agreement old Boston sold to new Boston the business of debt collection and related services which the former had conducted (Sch A). Mr Derryn Harrison was the sole director of both new Boston and old Boston at all relevant times (Harrison affidavit pars 1 and 2 and company searches Trinca E&F). Old Boston promised, under the sale agreement, to deliver to new Boston all assignments, consents to assignments, releases and incidental documents necessary for new Boston to operate the business but only to the extent that those documents were held by old Boston. In addition, old Boston promised to deliver to new Boston a notice of assignment, novation or such other form of transfer or notice as new Boston might reasonably require with respect to the GE Capital contract (cl 6.2(c) and (e)). 4 Later in July 2005 old Boston went into a form of external administration and later was subject to a creditor's voluntary winding up. In October 2005 old Boston's creditors resolved that it be voluntarily wound up and liquidators were appointed. The liquidators resigned on 7 April 2006 and the evidence before me is that old Boston no longer exists. 5 On 1 July 2005, new Boston sent a letter to GE Capital saying that: '…as part of a corporate group restructure, from today's date, Boston Commercial Services Pty Ltd will be operating under a new ABN number, being 87 114 658 070. As such, all invoices from July 2005 forwards will be issued under this new number. All other contact and trading details for Boston remain unchanged.' 6 On 9 June 2006 new Boston commenced these proceedings. In its application it sought unliquidated damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) ('the Act'). New Boston's statement of claim is based on claims for breach of contract, misleading and deceptive conduct in contravention of s 52 of the Act and unconscionable conduct in breach of s 51AC of the Act. 7 The singular feature about the claim, as formulated in the statement of claim, was that new Boston is, in effect, suing GE Capital on the basis of its conduct affecting, its misrepresentations made to, and a contract entered into by, old Boston. New Boston has pleaded that the sale agreement constituted, or embodied, an assignment which in effect entitled it to succeed to old Boston's rights and liabilities, including choses in action, so as to entitle new Boston to exercise old Boston's causes of action in contract and under ss 51AC, 52 and 82 of the Act. 8 In essence new Boston's claim is that old Boston was invited in early February 2004 to tender for the supply of field agent services by GE Capital. GE Capital is alleged to have represented to old Boston that it would provide instructions to the successful tenderer to 'effect' field agent services in respect of 25% of its defaulting customers, that would result in approximately 282 field call instructions per month to old Boston. 9 New Boston pleaded that GE Capital specifically represented to old Boston that those services would be required for a period of two years with the possibility of a further extension and that that period was specifically provided for in the GE Capital contract. 10 The GE Capital contract did have a written term of two years. However, GE Capital also could terminate the GE Capital contract immediately by written notice without any liability or obligation if old Boston entered into liquidation or any other type of insolvency or ceased to conduct business to give effect properly to the GE Capital contract (cl 20(a)(v)). In addition, GE Capital also had the right to terminate the agreement at its discretion at any time by giving 14 days written notice, in which case it was liable only for the amount outstanding for services provided up to the date of termination (cl 20(b) and (c)). 11 The statement of claim also alleged that old Boston expended considerable time and cost to complete costing analyses for the purpose of preparing its tender, and in doing so it was alleged to have relied on the representations as to the volume of work which would be provided by GE Capital. The activity of inviting tenders and their responses took place between 4 and 13 February 2004. 12 On 8 March 2004 old Boston was advised by GE Capital that it had satisfied its criteria, subject to passing some form of auditing. This led to the formation of the GE Capital contract on 9 November 2004, to which I have referred. That contract contemplated that old Boston would be a contractor to provide services on the terms and conditions of the contract and that the relationship would be that of principal and independent contractor (cl 2(a)). The services schedule to the contract specifically provided that GE Capital gave no undertaking, representation or warranty as to the number or frequency of referrals of field calls that it may make to old Boston under the contract, but that old Boston was required to undertake such field calls as were requested in compliance with the provisions of the GE Capital contract (Services Sch cl 3). Somewhat confusingly, the GE Capital contract provided that old Boston must ensure that only persons who were its employees provided the services unless it obtained GE Capital's prior written consent to the contrary (cl 7(a)(vi)), while at the same time saying that old Boston should perform the services through employees, agents and servants and, provided that GE Capital had been advised of their identities, its contractors (cl 22(a)). However, old Boston was to remain fully responsible for the performance of all services provided under the GE Capital contract (cl 22(c)). 13 The statement of claim pleaded that old Boston incurred costs and expenses to prepare for complying with the service standards which were agreed between it and GE Capital on the basis that those expenses would be amortised over a two year term. Some hearsay evidence was relied on by new Boston that an employee was engaged at about $40,000 p.a. to co-ordinate field calls, expenses were incurred of approximately $18,000 associated with set up costs for the old Boston's information technology systems and $5,000 for reconciling payments made to old Boston which GE Capital paid by cheque in respect of each individual referral. 14 The statement of claim alleges that between November 2004 and November 2005 GE Capital provided less than half of the agreed number of defaulting customers on whom field calls might be made and set out a table showing the monthly numbers of instructions actually received by either old Boston or new Boston respectively. It is clear that on the monthly figures, on no occasion did GE Capital require 282 field calls per month to be made, and only on one occasion did the number of calls required exceed 200. 15 On 29 November 2005, GE Capital terminated the agreement. The 3 bases on which the claims for relief are pleaded are as follows:

(1) s 52 OF THE TRADE PRACTICES ACT 16 The statement of claim alleges that: · representations were made to old Boston between 4 February 2004 and 9 November 2004 relating to the number of customers who would be the subject of field call requests; · GE Capital provided proposed volumes of instructions in its request for proposals; · GE Capital knew, or ought to have known, that the figures provided to old Boston were misleading and deceptive; · old Boston acted in reliance on GE Capital's representation as to the volume of field calls and that reliance was reasonable, thus showing that there had been a contravention of s 52.

(2) s 51AC of the act 17 The statement of claim alleges that: · neither old Boston nor GE Capital was a public listed company; · the value of the GE Capital contract was less than $3 million per annum; · there was a discrepancy between the relative bargaining power of the parties which made their relative bargaining power uneven; · GE Capital had in excess of $250 million in revenue and was part of a multinational network whereas old Boston was a small Australian company; · '[GE Capital] in having an increase [sic] in bargaining power over [old Boston] used this to exert undue influence over [old Boston] by the misrepresentation that work would be provided to [old Boston].' · in some way, the conduct of GE Capital was unconscionable; · under the influence of GE Capital's representations as to the volume of work involved, old Boston acted in good faith while developing its proposal and complying with all of the requirements sought by GE Capital; · due to GE Capital's conduct old Boston had been put into a position of serious disadvantage in comparison with GE Capital.

(3) CLAIM IN CONTRACT 18 Next, the statement of claim pleads a count in contract that: · the entire GE Capital contract consisted of a Master Services Agreement, a Service Schedule and some purchase orders (the terms of which are relevant to damages but as I understand it are not relevant to liability; and see cl 29); · confusingly, 'the entire agreement was for [GE Capital] to provide [old Boston] with instructions in respect of 25% of defaulting customers per State in Australia to effect the field agent services based on representations made by [GE Capital].'; · old Boston acted in reasonable reliance upon that promise of GE Capital; and · GE Capital failed to perform its obligation to provide the relevant quantum of defaulting customers and instructions. 19 However, cl 31 provides that the terms and conditions of the GE Capital contract prevail over any inconsistencies with other documents, including the schedules to that document (which, in turn, prevail over any inconsistencies with the purchase order). And, cl 29 of the GE Capital contract provides that it is, together with the services schedule and the purchase orders, to constitute the entire agreement between the parties relating to the provisions of services by old Boston. Victorian law was made the governing law (cl 28).

SUMMARY JUDGMENT 20 GE Capital has applied under s 31A of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') for summary judgment in respect of the whole or part of the claim. Relevantly, s 31A provides: '(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section.' 21 The parties have been engaged in litigation in the Magistrates Court of Victoria in which new Boston claimed a failure to pay outstanding invoices of over $42,000. I was not informed by the parties as to what, if any, relationship that claim has with those in these proceedings. 22 Prior to filing its motion, GE Capital's solicitors sought particulars and details of the arrangements pursuant to which new Boston claimed to be entitled to sue in respect of the representations made to and conduct experienced by old Boston and to exercise old Boston's rights under the GE Capital contract. They also pointed out that in National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Limited (1995) 132 ALR 514 Lindgren J had held that causes of action under the Act were not assignable. Eventually, new Boston provided GE Capital with a copy of the sale agreement. 23 On 20 July 2006, GE Capital's solicitors sought particulars of the statement of claim. When the matter came on for hearing, I was informed that although the letter had been received on 25 July 2006, no particulars had been supplied. The solicitor for new Boston asserted, but GE Capital does not accept, that this was because he had been engaged in settlement discussions from July 2006 and in preference to answering formal legal letters he had sought to concentrate on those discussions which were ongoing. This assertion was made during the hearing and confirmed in Mr Gower's affidavit, which was filed on the following day. GE Capital objected to the affidavit being read as its contents were not accepted as accurate. Given that the way in which new Boston's claims were being put was in issue on the return of the motion I will read the affidavit but limit its use under s 136 of the Evidence Act 1995 (Cth) to evidence of an assertion of Mr Gower's state of mind and not as evidence of the truth of the assertion. GE Capital has not had an opportunity to test Mr Gower's assertion. In any event, I regard the assertion as providing no adequate explanation of the failure to provide particulars in a serious piece of contested commercial litigation. The provision of particulars of the way in which new Boston claimed its case was being put would obviously have assisted, if it were possible, new Boston's case in resisting the motion. 24 New Boston sought to resist the application but propounded a fallback position that should be granted leave to amend its claims for relief in s 51AC to include an allegation of unconscionable conduct in respect of itself and, to plead continuing representations by GE Capital. I was informed that there were emails between GE Capital and both new Boston and old Boston addressing the issue of the agreed amount of referrals and the number actually provided. New Boston also made an oral application to plead a claim in quantum meruit on the basis that if there were no contract between GE Capital and new Boston for the services provided after 1 July 2005, then new Boston should be allowed to make such a claim. New Boston argued that the less generous negotiated rate between GE Capital and old Boston for the provision of field calls (calculated on the basis of the volume of 282 per month) could be revisited based on the higher fixed costs and lower number of referrals which new Boston had in carrying out those field calls. 25 I am of opinion that before any such claim could be considered the current statement of claim would need to be repleaded so as to make clear the way in which the allegations were to be put. Further, the matters relied on would have to be pleaded properly in a way that articulates in a satisfactory form the material facts relied on to support the causes of action for which the proceedings are brought.

SUBMISSIONS 26 A number of cases have looked at how s 31A of the Federal Court Act might work. GE Capital argued that the Court should engage in a predictive assessment as to whether the proceedings had no reasonable prospect of success. It relied upon the analogy with the similar wording of s 345 of the Legal Profession Act 2004 (NSW) (and their analogues) although it accepted that there were differences in the way that that legislation worked. However, the concept of a claim so lacking in merit or substance as to be not fairly arguable was suggested as being helpful (Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at 331 [132] per McColl JA). In addition, reliance was placed on Bernstrom v National Australia Bank [2003] 1 Qd R 469 at [41] that a party who seeks to resist a claim for summary judgment on rr 292 and 293 of the Uniform Civil Procedure Rules 1999 (Qld), which are similar to, but not identical to s 31A, should provide evidence of this basic material to support the arguability of its claim. 27 GE Capital pointed out that the purpose to which s 31A was directed was to provide a more lenient test than the traditional one reflected by the exception which s 31A(3) creates. The latter provision identifies the concepts of hopelessness or being bound to fail which were part of the old test explained by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130 and provides that these are no longer the only basis for summary judgment. GE Capital relied on the second reading speech and explanatory memorandum for the introduction of s 31A to show that it was the intention of the Parliament to give the Court greater flexibility than Barwick CJ's well known test provided to strike out claims which were unlikely ever to succeed. 28 New Boston argued that GE Capital had to take the allegations in the statement of claim at their highest in an argument of the present kind. It pointed to the decision of the Full Court in Walker v Citigroup Global Markets Australia Pty Ltd [2006] FCAFC 101 at [77] which held that where there were inconsistent terms within the same contract, some being standard form terms while others were specially framed with the individual circumstances in mind, it will normally be appropriate to give greater effect to the specially negotiated terms. Here, new Boston had alleged that the promise for 25% or 282 field calls was contractual, and that its claim was clearly articulated. I am not sure that I could accept the clarity of the articulation in all respects, but the essential formulation was certainly able to be discerned in most instances. 29 New Boston argued that s 31A could not require both parties to put on evidence in detail or to conduct a mini trial. It submitted that it was not necessary for the case to be hopeless or bound to fail for it to have no reasonable prospect of success, but that the wording of s 31A did no more to change the previous law on the availability of summary remedies. 30 In particular, new Boston submitted that the new test to be applied should not equate to a finding that the claim must have reasonable prospects of success (see also Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232; Jackamarra v Krakouer (1998) 195 CLR 516 at 519-520 [3]-[4] Brennan CJ and McHugh J).

CONSIDERATION 31 The analogy suggested between the threshold of a standard of 'no reasonable prospect of successfully prosecuting a proceeding' and situations in which legal practitioners have been held by courts to be liable for costs orders in respect of claims cannot be decisive. In the latter class of liability an element of the test is whether the claim or defence 'has reasonable prospects of success' (see e.g. s 198J of the Legal Profession Act 1987 (NSW) and now; s 345 of the Legal Profession Act 2004 (NSW)). This analogy cannot be carried too far since the statutory provisions for such costs orders contain their own definitions and conditions in which the orders can be made. So much was made clear by McColl JA (with whom Hodgson JA and Ipp JA agreed) in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at 331 [134]. She pointed out, following what Gibbs J had said in The Queen v Moore; Ex parte Federated Miscellaneous Workers' Union of Australian (1978) 140 CLR 470 at 473 that the mere fact that a case is dismissed is not sufficient to establish that the proceedings were instituted 'without reasonable cause' under the provisions of s 197A of the Conciliation Arbitration Act 1904 (Cth). The concept of 'reasonable cause' for instituting proceedings is not the same as the statutory concept in s 31A, since, as McHugh J pointed out in Re Commonwealth of Australia; Ex parte Marks (2000) 177 ALR 491 at 499 [27], a person may institute proceedings on the basis of legal advice so as to have 'reasonable cause'. 32 In Ex Christmas Islanders Association Inc v The Attorney-General for the Commonwealth (No 2) [2006] FCA 671 at [20] French J pointed out that the power to award costs against a legal practitioner has been approached in different ways by State appellate courts and Full Courts of this Court as exemplified in Levick v Deputy Commissioner of Taxation (2000) 102 FCR 155 (under provisions such as s 43 of the Federal Court Actand O 62 r 9 of the Federal Court Rules). He reasoned that considerations of whether legal practitioners should be ordered to pay costs under the provisions governing this Court's jurisdiction depended upon whether there had been an error in the observation by a legal practitioner of a duty owed to the Court. French J followed the approach of the Privy Council in Harley v McDonald [2001] 2 AC 678 at 706 [57] where their Lordships said: 'The essential point is that it is not errors of judgment that attract the exercise of the jurisdiction, but errors of a duty owed to the court.' (see also at [2001] 2 AC at 703 [49], 706 [57]; and Cook v Pasminco Ltd [2001] FCA 1277 per Stone J and, the article by N Beaumont, 'What are "Reasonable Prospects of Success?"' (2004) 78 ALJR 812) 33 In Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 the Queensland Court of Appeal considered rr 292 and 293 of the Uniform Civil Procedure Rules 1999 (Qld) and Pt 24 of the Civil Procedure Rules (Eng) which had come into force in England and Wales in 1999. Williams JA (with whom McMurdo P at [1] and Atkinson J at [46]-[47] agreed) held that the approach adopted by Lord Woolf MR in Swain v Hillman [2001] 1 All ER 91 at 92 was appropriate. The Master of the Rolls said (at [11]): 'The words "no real prospect of being successful or succeeding" do not need any amplification, they speak for themselves. The word "real" distinguishes fanciful prospects of success or … they direct the court to the need to see whether there is a "realistic" as opposed to a "fanciful" prospect of success.' 34 Lord Woolf's approach was subsequently endorsed by the House of Lords in Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 at 259 [90], 261 [95] per Lord Hope of Craighead; 272-273 [133]-[134] per Lord Hutton, 282-285 [159]-[162], per Lord Hobhouse of Woodborough; see also at 294 [192] per Lord Millett. 35 Lord Hope discussed the scope of the enquiry occasioned by the English Rule saying ([2003] 2 AC at 260-261 [95]). He said, of a provision which was like s 31A, that it operates as an exception to the normal method by which issues of fact are tried in our courts: namely that once processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. However, if it were clear as a matter of law at the outset that even if a party was to succeed in proving all the facts that he, she or it offered to prove, the party would not be entitled to the remedy that was sought, then in such a case a trial of the facts would be a waste of time and money and it would be proper that action should be taken out of the court as soon as possible. Lord Hope instanced that in other cases it could be possible to say with confidence before trial that the factual basis for the claim was fanciful because it was entirely without substance. He said: 'It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgement. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.' 36 Lord Hobhouse noted that the English rule required the judge to undertake an exercise of judgment. He emphasised that the power was a discretionary one, being one where the choice the judge has is whether to exercise the power or not based on, ultimately, the judge's ultimate assessment of its appropriateness having regard to the prospects of success of the relevant party ([2003] 2 AC at 282 [158]). He said that under the rule: '… the judge is making an assessment not conducting a trial or fact-finding exercise. Whilst it must be remembered that the wood is composed of trees some of which may need to be looked at individually, it is the assessment of the whole that is called for. A measure of analysis may be necessary but the "bottom line" is what ultimately matters. … The criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality.' 37 He went on to note that the judge's assessment had to start with the relevant party's pleaded case but that the inquiry did not end there. He said that the allegations could be legally adequate but may have no realistic chance of being proved. On the other hand, Lord Hobhouse noted, the limitations in the allegations pleaded, alongside any lack of particularisation, may show that the party's case was hopeless ([2003] 2 AC at 284 [161]). Although Lord Hobhouse and Lord Millett were in dissent, I do not think that their identification of the principles was different to those expressed by the majority (Lord Steyn, [2003] 2 AC at 237 [1], agreed with Lord Hope and Lord Hutton, and see [2003] 2 AC at 265 [111] per Lord Hutton). 38 These authorities suggest that under analogous, but differently worded, provisions in the Queensland and English rules the court assesses whether there is a realistic, not fanciful, prospect of success. A claim that is hopeless or bound to fail does not even have a fanciful prospect of success. But, as Lord Hobhouse pointed out, at the heart of the exercise is the Court's assessment, on the incomplete materials available on a summary application, of the prospects of success were the matter to proceed to trial in the ordinary way. 39 In Agar v Hyde (2000) 201 CLR 552 at 575-576 [57]-[58] Gaudron, McHugh, Gummow and Hayne JJ held that the old test for summary disposal had been expressed in various ways but that all had described a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. They said that a less demanding test should not be applied where a defendant sought to have service of proceedings overseas set aside. The fundamental reason why their Honours rejected the general law adoption of a more lenient test was because it was unclear as to what new criterion was to be applied. They said: 'Are proceedings to be terminated upon a prediction (on what would almost invariably be less evidence and argument than would be available to trial) of the "likely" or "probable" outcome of the proceeding? That cannot be so. It would be wrong to deny a plaintiff resort to the ordinary processes of a court on the basis of a prediction made at the outset of a proceeding if that prediction is to be made simply on a preponderance of probabilities. And if it is not to be enough to persuade the court that it is more probable than not that the case against a defendant will fail, and some higher test (less than that now applied in applications for summary judgment) is to be applied, how is that test to be described? The attachment of intensifying epithets, such as "very" or "highly", offers little useful guidance for those judicial officers who would have to apply the test and who would have to do so, often enough, in a busy practice list. Such a test would be unworkable.' 40 And, more recently, in Batistatos v Roads and Traffic Authority of New South Wales (2006) 227 ALR 425 at 437 [46], Gleeson CJ, Gummow, Hayne and Crennan JJ said that the statements by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130 ' … should not be given canonical force'. They then referred with approval to the joint judgment in Agar v Hyde (2000) 201 CLR at 575-576 [57]. Gleeson CJ, Gummow, Hayne and Crennan JJ later said that the Court had an obligation owed to both sides to quell the controversy according to law (227 ALR at 441 [63]) and continued: 'The "right" of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process.' 41 GE Capital suggested that the concept of reasonable prospects of success could be analogous to a requirement of reasonable grounds for a state of mind such as discussed by the Court in George v Rockett (1990) 170 CLR 104 at 112. There the Court said that where a statute prescribes that there must be reasonable grounds for a state of mind, including suspicion and belief, it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person. 42 I am of opinion that properly construed, s 31A(2)(b) requires a person moving a motion for summary disposal ('the moving party') to satisfy the Court that there is no reasonable prospect of the party claiming relief ('the plaintiff') successfully prosecuting the proceeding or the part of the proceeding in question. Experience shows that there are cases which appear to be almost bound to fail yet they succeed. As Dixon CJ once said (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20): 'Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told…' 43 Brennan CJ and McHugh applied that observation in Jackamarra v Krakouer (1998) 195 CLR 516 at 522 [9] to a situation which an appellate court was exercising a discretion to permit a further step to be taken in an appeal that had already been instituted. Obviously, where there is a contested application under s 31A, both parties will be present to explain their case, but not in the context of a trial. The procedure envisaged by s 31A is summary. The concept of a party having 'no reasonable prospect of successfully prosecuting a proceeding' has some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff. That test was authoritatively stated by the Judicial Committee in Hocking v Bell (1947) 75 CLR 125 at 130-131, approving the following statement from the dissenting judgment of Latham CJ (Hocking v Bell (1945) 71 CLR 430 at 441-442): 'If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case.' (emphasis added) (see also Swain v Waverley Municipal Council (2005) 220 CLR 517 at 522 [9] per Gleeson CJ, 561-562 [128]-[131] per Gummow J and 580 [203], 582-583 [208]-[209] per Kirby J; see also at 531-532 [33]-[34] per McHugh J) 44 In a case to which s 31A applies, where there is a real issue of fact to be decided in the sense identified in the above principle, and, possibly, where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial. And, one must be mindful that in Hocking v Bell (1945) 71 CLR at 487, Dixon J said that in effect, every judge who had heard the matter (through four trials, two Full Court appeals and, to that point, the appeal to the High Court) would have formed the view that the plaintiff should have failed had they been able to decide the facts, yet the Privy Council restored the second jury verdict in her favour and so concluded the litigation. This raises a very real question, as to what reasonable prospects are for present purposes. 45 I am of opinion that in assessing what reasonable prospects of success are for the purposes of s 31A, the Court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking v Bell (1947) 75 CLR 125, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorize a summary termination of the proceedings which s 31A envisages. In moving the second reading of the bill introducing s 31A (the Migration Litigation Reform Bill 2005) the Attorney-General said that it strengthened '… the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases'. 46 In Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154-155, Dawson, Gaudron and McHugh JJ said that a party should not be shut out from litigating an issue which was fairly arguable and that the power to grant leave to amend should be exercised with that in mind. They observed (189 CLR at 154) that '…the ultimate aim of a court is the attainment of justice'. Obviously, s 31A regulates the attainment of justice by creating an entitlement in a party to be protected from claims or defences which fail to meet the threshold prescribed in the section. In granting leave to appeal on a decision involving the application of s 31A, Wilcox J observed in Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12] that it was arguable that the effect of s 31A was that there could be summary judgment for an applicant '… notwithstanding the possibility that the applicant's case will break down at trial; in other words, it is now not enough for a party resisting a summary judgment application to seek merely to put the other side to proof' (his Honour's emphasis). 47 GE Capital also argued that s 31A required the Court to dismiss a claim or defence based on a predictive assessment of its prospects, even though it may be possible that had the matter gone to trial it would have succeeded. I am of opinion that this is not how the section operates. It is engaged only to determine summarily a claim or defence which has no reasonable prospect of success. The purpose of the enactment is to enable the Court to deal with matters which should not be litigated because there is no reasonable prospect of any outcome but one. If there is a reasonable danger that a claim or defence could be dismissed under s 31A, which could succeed at a trial, the provision would create miscarriages of justice. It is a key feature of the judicial power under Ch III of the Constitution that the Court be in a position to, and in fact does, quell a controversy. The exercise of the judicial power to prevent the substantive agitation of a controversy in which each side has a reasonable prospect of success would defeat, not advance, the ends of justice. 48 It could not have been the intention of the Parliament in introducing s 31A to the Federal Court Act to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purpose of determining whether or not a proceeding had no reasonable prospects of success. Obviously, there will be cases in which, because of their nature, it is necessary to undergo detailed analysis. However, the assessment of whether there is a reasonable prospect of successfully prosecuting the proceeding must depend upon the evidence and pleading the subject of the application.

THE ASSIGNMENT 49 GE Capital argues that a claim under the Act cannot be assigned as a matter of law. The statutory cause of action under s 82(1) of the Act arises '… when the plaintiff suffers loss or damage "by" contravening conduct of another person' (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 per Mason CJ, Dawson, Gaudron and McHugh JJ). And, the plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage (175 CLR at 526). What s 82(1) authorizes is the recovery of the amount of loss or damage at the suit of the person who suffers it. The terms of the section appear to confer a right which is personal to the person who suffers loss or damage by the conduct of another done in contravention of a relevant provision of the Act. Now s 82(1B) provides that those damages may be reduced to the extent to which the Court thinks just and equitable having regard to the claimant's share in the responsibility for the loss or damage 50 A number of decisions of this Court identify the cause of action for the recovery of damages under s 82 as not being one which is capable of assignment. 51 In Allstate Life Insurance Co v Australia & New Zealand Banking Group Limited [1994] FCA 814 at 18 (unreported, Beaumont J, 7 November 1994) Beaumont J followed Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105 at 53,467 and 54,469; [1993] FCA 404 at 3-4 where Davies J said: 'In my opinion, a right to claim damages under ss. 82 and 87 of the Trade Practices Act 1974 (Cth) is, in general, a bare right of action which cannot be assigned. I am not speaking of an assignment such as may occur on the bankruptcy or death of a person or on the merger of a company into another entity. Absent such special circumstances, a right to claim under ss. 82 and 87 cannot, in my opinion, be assigned. Section 82 provides:- "(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." The section does not allow for the award of damages in respect of a loss which was not suffered by any party to the proceedings. Both the terms of the statutory provision and the principle as enunciated in cases such as Dawson v Great Northern & City Railway Co. [1905] 1 KB 260 at 270-1, Defries v Milne [1913] 1 Ch 98 and Pulton v The Commonwealth (1953) 89 CLR 540 at 602, preclude Mrs Regan from suing for damages in respect of any loss suffered by Mr and Mrs Park. Mr and Mrs park have discontinued their claims and that is an end to them. The assignment has effect, however, insofar as it assigns to Mrs Regan all the entitlement of Mr and Mrs Park under the mortgage into which all the applicants had entered as mortgagees. Thus, if any ancillary relief under s. 87 depends upon the approval or request of the mortgagors, the remaining applicants now hold all interests in respect thereof.' 52 Beaumont J agreed saying that in his view the contrary was not reasonably arguable. Lindgren J followed both these decisions in National Mutual Property Services (Australia) v CitiBank Ltd (1995) 132 ALR 514 at 539, as did von Doussa J in Chapman v Luminis (No 4) (2001) 123 FCR 62 at 116-117 [204]-[207]. And, in Pritchard v Racecage Pty Ltd (1997) 72 FCR 203 at 218F-G Branson J (with whom Spender and Olney JJ agreed) applied the reasoning of Davies and Lindgren JJ to hold that the estate of a deceased person could not satisfy the statutory requirement of s 82 of being a 'person' who suffered loss or damage. Her Honour also held that the estate could not satisfy the statutory requirements of s 87 of the Act of being 'a person who is a party to the proceeding' or 'a person who has suffered, or is likely to suffer, loss or damage'. 53 While the High Court has not specifically determined this issue, I am of opinion that it is not reasonably arguable, having regard to the decisions to which I have referred and the authorities on which they are based, that new Boston could succeed in the enforcement of any assignment under the sale agreement of causes of action under s 82 of the Act to recover loss or damage suffered by old Boston. Only a person who suffers loss or damage by the conduct done in contravention of a relevant provision of the Act can recover under s 82. As Gleeson CJ, Hayne and Heydon JJ said in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 604 [37], in a case where monetary relief is sought by a plaintiff who alleges that a particular misrepresentation was made to an identified person, of whom the plaintiff was one: 'The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone.' 54 Of course, here, new Boston does not claim a misrepresentation was made to it, but rather to old Boston. However, I do not consider that in the circumstances of the pleading in the present case, any material difference can be established so as to entitle new Boston, which did not exist at the time that the alleged representations were made, to assert some freestanding cause of action under the Act quite divorced from anything to do with old Boston. 55 The construction arrived at by the authorities, on s 82, to which I have referred, is reinforced by a consideration of the subsequently introduced amendment to s 82 in s 82(1B). That subsection specifically provides that the damages 'that the claimant may recover' are capable of being reduced by reason of the claimant's share of responsibility. It is difficult to see how the Court could award a third party that which the statute only authorises the claimant to recover. Moreover, s 82(1B) shows that it is only the person entitled to recover damages who can have the damages recoverable reduced by reason of that person's share of responsibility for the loss of damage. A stranger would be in the position identified by Hamilton LJ in Defries v Milne [1913] 1 Ch 98 at 112 (see too Poulton v The Commonwealth (1953) 89 CLR 540 at 602) where he said of an attempt to assign to a plaintiff a cause of action for the tort of waste: 'The plaintiff is under no measurable liability to [the defendants], and one essential ingredient in the plaintiff's cause of action in tort fails, and fails altogether. It seems to me, therefore, that the plaintiff has no direct right of action here because he has not been damnified.'

CLAIMS UNDER S 52 AND S 51AC OF THE TRADE PRACTICES ACT 1974 (CTH) 56 The pleading itself asserts that the relevant representations were made to old Boston and that old Boston relied on the representations in formulating its costings thereby incurring loss or damage. The statement of claim also alleges that between November 2004 and November 2005, GE Capital provided old Boston with less than half of the agreed amount of defaulting customers on whom to effect the field agent services. During the course of argument the reference to November 2005 was amended to June 2005. Obviously, after 1 July 2005 old Boston did not purport to provide any services. For the reasons I have given above, in whatever way this claim is formulated, s 82 permits only old Boston to recover that loss or damage. 57 Because s 82(1) also gives a right to recover loss or damage to a person who suffers it by conduct of another person that was in contravention of s 51AC, for the reasons given above, that cause of action is not capable of assignment to new Boston. It has no reasonable prospect of being successfully prosecuted by new Boston against GE Capital. 58 I am of opinion that in respect of each cause of action which old Boston had to recover loss or damage against GE Capital under s 82 of the Act, new Boston cannot assert any rights to recover that loss or damage because it has not been damnified. 59 The sale agreement did not dispose of or deal with any rights of old Boston to sue GE Capital for conduct in contravention of the Act. Whether or not rights to bring proceedings for damages under s 82 of the Act are assignable, in my opinion there is no reasonable prospect of success in new Boston's argument that the sale agreement effected a disposition of whatever rights old Boston had against GE Capital under the Act. Moreover, I do not think that, had the liquidator of old Boston sought to do so, new Boston could have prevented the liquidator enforcing old Boston's claims under the Act against GE Capital. Because of that, it seems to me that there is no reasonable prospect that it could be successfully argued by new Boston that an effective disposition of those rights had occurred. There was no communication from old Boston to GE Capital that assigned or made over whatever rights old Boston had in any respect, whether under the Act or in contract, to new Boston (William Brandt's Sons Co v Dunlop Rubber Co [1905] AC 454 at 462). 60 And, even though old Boston appears to have become deregistered, if the liquidator or creditors became aware that it had valuable rights against GE Capital, such as new Boston claims the rights it obtained under the sale agreement were, it is quite possible that steps might be taken to reregister old Boston to enable it to begin proceedings. I say all this because it seems to me to demonstrate the lack of efficacy of the basis upon which new Boston claims to assert old Boston's rights. I do not think that on the evidence before me there are reasonable prospects that such an argument could succeed. It may be countered that were old Boston reregistered, new Boston might be able to compel it to assign its rights in consequence of the provisions of the sale agreement. But no provision of the sale agreement offers reasonable prospects of success for new Boston to argue that it could compel the making over of old Boston's rights to sue under the Act. That agreement was silent on both that topic and the rights of old Boston to sue under that Act which were not part of the business the subject of the transfer. The damage which old Boston suffered, if any damage were suffered by the alleged contraventions, was a cause of action which appears, on any reasonably arguable construction of the sale agreement, to have been retained by old Boston. The sale agreement could not effect any assignment of the statutory causes of action to new Boston. 61 It follows that GE Capital is entitled to have the claims against it under the Act dismissed on the basis that they have no reasonable prospect of being successfully prosecuted against it. 62 Further, the claims under ss 51AC and 52 of the Act must be approached on the basis that there is a written agreement between the parties containing terms which are expressly in the teeth of alleged representations or of alleged oral contractual terms. Absent some misrepresentation, the written agreement executed by the person complaining must be taken as authoritative: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [39], 180-183 [45]-[50]. The process of negotiation was pleaded and was also referred to by Mr Harrison in his affidavit. The time in which substantial cost and effort were said to have been expended causing old Boston damage in preparing its proposal, involved about 9 days in February 2004. Following that, whatever may have happened in the meantime about which no complaint is made, only in November 2004 was the GE Capital contract signed. 63 The GE Capital contract appears to have been the result of a long process of negotiation. There is no suggestion that its terms were misrepresented. However, the written form of the GE Capital contract expressly negated any promise of a particular level of referrals to old Boston by GE Capital (Services Sch par 3). Old Boston had every opportunity to review the proffered terms which, according to Mr Harrison, GE Capital had sent in early September 2004 before it signed them in November 2004. There is no basis that appears in the pleading or in Mr Harrison's affidavit to support a claim that the express terms of the GE Capital contract were misrepresented to old Boston before it signed. Further, the statement of claim pleads the claim under s 51AC in a way which is not easy to comprehend. It does not disclose any intelligible basis on which it could be found that GE Capital acted in contravention of s 51AC by proffering the GE Capital contract to old Boston for consideration before signing. The allegations have no substance. 64 The manner in which GE Capital was performing during the period in which old Boston purported to carry out the GE Capital contract indicated that the GE Capital was not acting on the basis of any such promise. Both old and new Boston knew this by July 2005. These factors induce me to consider that the claims have no reasonable prospect of succeeding although I cannot say that it is hopeless or bound to fail. I think that this view is reinforced by the difficulty with which the pleader has sought to articulate the claims.

ASSIGNMENT OF CAUSE OF ACTION IN CONTRACT 65 The statement of claim alleges, in essence, that the representation that at least 282 field calls per month would be referred by GE Capital to old Boston became a term of the GE Capital contract. On that premise the pleading goes on to allege first, that new Boston can recover both the damages alleged to have been suffered by old Boston for the breach of the GE Capital contract, as opposed to damages for a misrepresentation preceding the entry into that contract, and, secondly, damages for the breach of that contract which it alleges was assigned to new Boston by the sale agreement. 66 No particular formality is required for an assignment for value to be valid and effective in equity. As Lord Macnaghten said in William Brandt's Sons Co v Dunlop Rubber Co [1905] AC 454 at 462: 'The language is immaterial if the meaning is plain. All that is necessary is that the debtor should be given to understand that the debt has been made over by the creditor to some third person.' 67 As he continued, the real question is whether what is asserted to be an assignment is notice to the debtor that the assignee is 'interested in the money' ([1905] AC at 462). 68 The letter sent by new, not old, Boston on 1 July 2005 in terms related future invoices to new Boston's ABN. It was silent about the payment of the debts due on any old invoices. But in any event, old Boston did not write the letter and so it gave no instruction to GE Capital. Whatever debt GE Capital may have owed old Boston on 1 July 2005 was never made over to new Boston. GE Capital could not have received a good discharge of any existing obligation to old Boston by paying new Boston, because old Boston never authorized GE Capital to do so. 69 I am of opinion that there was no assignment of the GE Capital contract to new Boston because old Boston never gave any notice in that behalf to new Boston. And old Boston did not give any notice of assignment to new Boston of any cause of action for any damages or debt which had accrued prior to 1 July 2005. These matters may not be fatal in themselves because it may be possible to reregister old Boston and to have it then give a formal notice of assignment of whatever causes of action in contract for damages or debt it had against GE Capital. 70 But, I do not think though that re-registration of old Boston would save any cause of action new Boston claims to have acquired under the sale agreement in respect of dealings after 1 July 2005. That is because anything that new Boston and GE Capital did after that date cannot be said to be referable to the contractual rights the subject of any assignment between new Boston and old Boston. No assignment made now can rewrite the history of the dealings between GE Capital and new Boston from 1 July 2005. 71 New Boston argued that the decision of the House of Lords in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 694, 702-703D, F-G supported its title to sue. New Boston said that it had a sufficient interest independent of the assignment in the sale agreement to justify it being able to assert old Boston's rights. 72 But it is clear from the way in which the matter has been pleaded and from the evidence, that there was no pre-existing relationship (ie before the sale agreement) between old Boston and new Boston. The sale agreement was intended to, in effect, have new Boston step into old Boston's business and carry it on for reasons which are not currently before me. This is not a case such as where a mortgagee having lent money to a mortgagor finds itself in the position where both were induced to enter into the original financing and undertaking of the purchase by misleading or fraudulent conduct of the third party so as to support some interest independent of contract. 73 New Boston argued that I should not follow the decision of the High Court in Poulton v The Commonwealth (1953) 89 CLR 540 at 602-603 which denied that a right of action in tort was assignable at all. It was suggested that this was the old view of the law. New Boston argued that I should follow what what Debelle J said of it in South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 at 58, namely that the decision could be explained as relating to an assignment of a claim in tort where the assignee had no genuine commercial interest. However, in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 403 [17] Gaudron, McHugh, Gummow and Hayne JJ made it clear that the doctrine of precedent in Australia binds me to follow the decisions of the High Court unless and until that court decides that the time is right for a change in the law. I propose to do that. There is no basis to read down the considered judgment of Williams, Webb and Kitto JJ in Poulton v The Commonwealth (1953) 89 CLR at 602 that a right of action in tort is incapable of assignment at law or in equity. I am of opinion that Debelle J was wrong not to have applied this binding authority. 74 Next, it was said that cl 6.2(e) of the sale agreement imported an obligation on old Boston to effect an assignment or novation. The trouble is, that old Boston never did. A novation is required in order to transfer both rights and liabilities: see Linden Gardens Ltd v Lenesta Ltd [1994] 1 AC 85 at 103E where Lord Browne-Wilkinson said that the burden of a contract cannot be assigned. The principle is that the benefit of a contract is capable of assignment but the burden cannot be assigned at all. Rather, if an existing contract is to be reordered, so that the obligations for which it provides are owed by as well as to a person not originally a party, a novation must occur. 75 Moreover, under the GE Capital contract, old Boston had to ensure that only those persons who were its employees provided the services, unless it obtained GE Capital's prior written consent to the contrary (cl 7(a)(vi)). Old Boston also provided a warranty that it and any agent or contractor used by it in the performance of the services, would have and continue to have during the term of that contract, full capacity and all necessary licences, permits and consents to enter into and perform the GE Capital contract (cl 10(j)). 76 While cl 22 of the GE Capital contract entitled old Boston to perform the services through employees, agents and servants, and, provided that GE Capital had been advised of their identities, contractors, obligations were imposed on old Boston to ensure that any such person who performed the services or to whom any confidential information, as defined in the GE Capital contract, was disclosed, was aware of and observed and performed the provisions of the GE Capital contract as though they were a party to it. Thus, it was clear that while not all the obligations under the GE Capital contract had personally to be performed by old Boston, the contract itself had no mechanism for transferring the obligations to perform under the contract from old Boston to someone else (cf Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 118E-120E). 77 While value appears to have been given in the sale agreement so as to enable principles of equity to support the enforcement by new Boston of whatever rights it was entitled to receive under that contract, the form of the letter of 1 July 2005 from new Boston to GE Capital was not an assignment. There is nothing from old Boston in writing informing GE Capital that new Boston is entitled to exercise old Boston's rights and nor is there any evidence that GE Capital ever agreed or appreciated that a different entity was in effect taking over the whole of the performance of the GE Capital agreement, contrary to its terms. One might infer from the evidence that GE Capital continued to deal with new Boston under the impression that nothing had changed until termination occurred. On the other hand, this is not so clear that an argument to the contrary could be said to have no reasonable prospect of success. The letter does seem to suggest that there being a different ABN there might be a different company. There is no evidence from GE Capital that this was not appreciated at all. So there may possibly be some claim which new Boston could articulate in quantum meruit or for contractual remuneration in the period after 1 July 2005. But this is speculation. 78 However, it seems to me that it is fanciful to suggest that there is any claim which new Boston can bring based on representations GE Capital allegedly made to old Boston. Old Boston never sought to pursue whatever rights it might have had to bring those claims and has now ceased to exist. It is not pleaded that any contract or pre-contractual representation alleged to give rise to a contractual term was ever made to new Boston, on the contrary, it is pleaded that all relevant dealings going to the formation of the GE Capital contract were between GE Capital and old Boston. In Rossetto v Meriton Apartments Pty Limited [2006] FCA 1290 at [15]-[16], Bennett J held that a company incorporated after representations were made to its director who at the time of the incorporation had been informed that the representations were untrue and had been offered rescission of the contract, had no arguable cause of action for the purposes of O 11 r 16. There is, of course, a distinction here. While new Boston must have been aware at the time of the sale agreement that the representation was untrue (if it became a contractual term) because it had been breached by GE Capital in relation to the number of field service calls, no offer had been made for rescission. 79 In Warwick Entertainment Centre Pty Limited v Alpine Holdings Pty Limited (2005) 224 ALR 134, the Court of Appeal of the Supreme Court of Western Australia held that it may not have been unreasonable for a party, who had been induced to enter into a contract by misrepresentations in breach of statutory norms such as s 52 of the Act, to affirm the contract (see e.g. 224 ALR at 152 [76] per Steytler P). However, here, new Boston did not have any representations made to it. By voluntarily entering into some new arrangements with old Boston, it could hardly be said to have any damage to it caused by the breach of GE Capital's obligations owed to old Boston. In my opinion any such contention is unarguably bad.

BREACH OF CONTRACT 80 I now turn to the claim for breach of contract. New Boston was correct in arguing that in an application under s 31A the Court should take the allegations in the disputed pleading at their highest (Bernstrom v National Australia Bank Ltd [2003] 1 Qd R 469 at [39]). In that context it is possible to see an argument that an express representation may have been made as to the volume of business which GE Capital would provide to old Boston under the GE Capital contract. It is also possible that new Boston may be able to establish, as it alleges, that an effective assignment occurred of the rights which old Boston had under the GE Capital contract. However, the claim sought to be assigned is of a right to sue for unliquidated damages for breach of contract which new Boston claims to have acquired only because of the effect of the transaction in which it acquired old Boston's business. 81 Old Boston is not a party to the proceedings. It does not exist. New Boston has made no application to amend, to reinstate it or join it. For the reasons given above, I do not consider there are any reasonable prospects of success of an argument for new Boston that an effective assignment of contractual rights can be proved. 82 The claim in contract alleges that GE Capital was in breach of the GE Capital contract because 'the entire agreement was for [GE Capital] to provide [old Boston] with instructions in respect of 25% of defaulting customers per State in Australia to effect the field agent's services based on representations made by [GE Capital]'. 83 However, cl 29 of the GE Capital agreement provides that it, together with the services schedule and purchase orders, constituted the entire agreement between the parties and that any additions or alterations made to it had to be in writing. Clause 6(a) provided that the services which GE Capital required old Boston to supply from time to time would be specified in the services schedule. That schedule provided that during the term of two years the services were those specified in Appendix A. And, cl 3 of the services schedule provided expressly that GE Capital gave no undertaking, representation or warranties as to the number or frequency of referrals of field calls it may make to old Boston under the GE Capital contract. 84 In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 180-183 [45]-[50] the High Court held that where parties had signed a written contract, they were to be taken as intending the act of signature to be conclusive, absent misrepresentation or fraud. While misrepresentations had been pleaded as to the statements made many months earlier in February 2004, when the parties actually signed the written agreement on 9 November 2004, there is no material before me which suggests that old Boston could have been acting under the influence of any misrepresentation as to the terms of the GE Capital contract. Its terms were in writing, they had been provided to old Boston in advance. They were not in the form of a contract of adhesion. Old Boston was free to sign or not the GE Capital contract as it pleased. Old Boston had the opportunity to review and consider the draft or proffered terms. In those circumstances, I consider that there is no reasonable prospect that old Boston would be able to establish, as alleged in the statement of claim, that there was a term of the GE Capital contract that some minimum number of field calls would be referred to old Boston per month. Such a proposition is not only expressly excluded by express words in the services schedule of the GE Capital contract, it is also inconsistent with the entire agreement clause. 85 In considering the claim in contract, it is important to appreciate that there is no claim that the GE Capital contract was vitiated by misrepresentation. Rather, it is claimed that an additional term was made either orally or by conduct which was part of that contract, although inconsistent with the express terms to which I have just referred. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [39], Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ referred to the position of a person acting on behalf of a company who signed a contractual document without reading it. They noted that the person could have read the contract had he wished and that the other party did not set out to conceal from him the terms and conditions on the document or to encourage him not to read them. As their Honours said, the other party '… had no way of knowing that he did not read the document. No case of mistake or non est factum is advanced'. They continued (219 CLR at 179 [40]: 'This Court, in Pacific Carriers Ltd v BNP Paribas ((2004) 218 CLR 451), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]).' 86 In trade and commerce, it is important that the courts encourage certainty in contractual relations. Here the parties entered into a contract at arms length in which there was a full opportunity to negotiate and where, as also in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [39]-[40], 182 [47], the parties had a full opportunity beforehand to consider the written terms which they signed. Neither party insisted on including what is now said to be a critical and agreed term which is inconsistent with what they signed. I do not think that there is any reasonable prospect that old Boston would have been able to establish that the alleged term as to the minimum number of field calls per month was in fact a term of the GE Capital contract. As Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said (219 CLR at 180-181 [45]): 'It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.' 87 Moreover, cl 20(a)(v) of the GE Capital contract provided that GE Capital was able without liability to terminate that agreement immediately by written notice if old Boston entered into liquidation or any other type of insolvency or if it ceased to conduct business to properly give effect to the GE Capital contract. By cl 20(b) GE Capital was also able to end the GE Capital agreement or a particular services schedule at its discretion at any time by giving 14 days written notice. Next, cl 20(d), provided that if GE Capital did terminate the GE Capital contract, other than pursuant to cl 20(b) no further amounts would be payable to old Boston even if they had already been invoiced. Again, the existence of those clauses tends to suggest that any term involving the non-termination of the GE Capital agreement for the proposed two year term could not be implied into the agreement and no such representation would have any reasonable prospect of being established. 88 Accordingly, while it may be arguable that old Boston incurred expenses in performing the task of preparing a response to GE Capital's invitation to provide field services in February 2004, and to that extent incurred some damage, I am of opinion that by the time the GE Capital contract was entered into in November 2004 the effect of those representations was well and truly spent. There is nothing in the material before me to indicate there is any reasonable prospect of new Boston establishing that it is entitled to enforce a contractual term to the effect alleged or that it can rely upon any representations or contraventions of s 52 of the Act. 89 New Boston sought to argue that the GE Capital contract was constructed on the basis of a price per call which old Boston had provided in February 2004 after doing the analysis based on the minimum number of calls per month. While that may have been the subjective intention of old Boston, the written agreement which it and GE Capital signed in November 2004 does not reflect anything other than a price which both parties were prepared to agree would be payable upon GE Capital referring any calls to old Boston: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]. 90 GE Capital also argued that on its proper construction the sale agreement did not purport to assign the right of old Boston to claims it may have had as at the date of the sale agreement for breach of contract or under the Act, even if the latter were assignable. 91 The effect of the decision of the House of Lords in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 was debated in argument. In particular, new Boston relied on passages in the speeches of Lord Wilberforce ([1982] AC at 694) and Lord Roskill ([1982] AC at 702-703 esp at 703D and F-G). There, Lord Wilberforce said that provided that the assignor had a genuine and substantial interest in the success of the litigation, by giving a guarantee of the costs previously incurred, it would have been able, without offending the common law against maintenance or champerty, to have taken a security interest in the litigation or its proceeds ([1982] AC at 694D-E). Lord Roskill spoke to similar effect when he said ([1982] AC at 703F-G): 'If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in 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 a savouring of maintenance.' 92 The latter proposition was cited with approval by Ipp JA, giving the leading judgment, in Project 28 Pty Ltd v Tim Barr Pty Limited [2005] NSWCA 240 at [40]-[41]. Ipp JA noted that such an interest, as is described by Lord Roskill, had to be a 'legitimate interest' which was distinct from the benefit the person supporting the action sought to derive from the litigation and something beyond a mere personal interest in profiting from the outcome of the proceedings ([2005] NSWCA 240 at [41]; see also Zhu v Domson Pty Ltd [2006] NSWCA 232 at [18]-[19] per Spigelman CJ). Since judgment was reserved in this matter, the High Court has decided Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41. There, Gummow, Hayne and Crennan JJ referred to this issue, although, as Callinan and Heydon JJ pointed out it only 'received some mention before this Court' (see [2006] HCA 41 at [260]). Gleeson CJ and Kirby J did not discuss this point. Gummow, Hayne and Crennan JJ observed that the House of Lords' conclusion in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 was that an agreement permitting a bank, which guaranteed the costs of a party to litigation in which the bank itself was also interested, to sell the party's claims in a litigation 'savours of champerty', 'since it involves trafficking in litigation - a type of transaction which, under English law, is contrary to public policy' ([2006] HCA 41 [79]). 93 Accordingly, the House of Lords held the assignment of the cause of action there was void. However, as Gummow, Hayne and Crennan JJ pointed out their Lordships' decision to stay the proceedings was founded upon an exclusive Swiss law jurisdiction clause, not upon any consideration of public policy concerning maintenance or champerty ([2006] HCA 41 at [81]). They noted that there was no case where maintenance or champerty had been held to be defence to, or reason enough to stay, an action that was maintained ([2006] HCA at [82]). Ultimately, Gummow, Hayne and Crennan JJ (with whom Gleeson CJ (at [1]) and Kirby J (at [146]) agreed on this issue) held that there was no abuse of process involved in someone seeking out those who may have claims, offering terms which gave the seeker control of the litigation and would also yield to the seeker, as it hoped and expected, a significant profit ([2006] HCA 41 at [88]). 94 Callinan and Heydon JJ said ([2006] HCA 41 at [261]): 'If the transaction between [the seeker] and each retailer had taken the form of an assignment to [the seeker] so that it could sue as plaintiff, the claim would fail because the assignment would be ineffective. Whether in an endeavour to escape that consequence, or for some other reason, the transaction took a different form.' 95 Callinan and Heydon JJ said that there was a serious question whether the Court of Appeal had been correct in concluding that, on the issue of the assignability of the cause of action, which had not been debated before it and of which only some mention had been made before the High Court, the retailer's action for money had and received was historically a claim in debt which was readily assignable without engaging the principles of about trafficking in litigation ([2006] HCA 41 at [260]). They referred, among other things, to what Williams, Webb and Kitto JJ had said in Poulton v The Commonwealth (1953) 89 CLR 540 at 602. 96 I do not think that the issue about the question of whether the claim in contract which old Boston may have had against GE Capital was or was not assignable is one which, having regard to the state of authorities referred to above, should be determined under s 31A in this case. 97 The substantial issue here is whether there was any transaction or notice effective to prove an assignment of a cause of action for damages for breach of contract, leaving aside the question of new Boston's capacity to enforce it. No notice of assignment was ever given by old Boston to GE Capital. I am of opinion that the sale agreement did not assign any cause of action old Boston had for debt against GE Capital. If, as new Boston contended, the sale agreement assigned the whole of old Boston's rights under the GE Capital agreement, since it is impossible to assign both the burden or obligations of a party owed to another party under a contract without the other's consent, the whole structure must fail. But, I am of opinion that the contention is fatally flawed for a further and fundamental reason, namely that the sale agreement did not give new Boston any assignment of old Boston's accrued rights. 98 The sale agreement provided in cl 6.2 as follows: 'On Completion the Vendor must deliver to the Purchaser: (a) possession and control of the Business; (b) all or any title documents in respect of the assets of the Business; (c) all assignments, consents to assignments, releases and incidental documents necessary for the Purchaser to operate the business but only in so far as those documents are held by the Vendor; and (d) an effective transfer executed by the Seller for all items of intellectual property including but not limited to: (i) the telephone numbers appearing at item 4 of Schedule A; (ii) an Application for Transfer of Legal Ownership for the domain name www.bostonservices.com.au. (e) a notice of assignment, novation or other such form of transfer or notice as the Purchaser may reasonably require with respect to any contract held or entered into by the Purchaser with American Express Australia Limited, GE Capital Finance Australasia Pty Limited and any other client or customer of the Vendor that the Purchaser may require.' 99 The 'Business' was defined as being 'debt collection and related services' (Sch A item 1). As I have noted, there is no evidence that any document amounting to notice of an assignment or an assignment was ever delivered by old Boston to new Boston. But cl 6.2, if it created an independent obligation of old Boston to deliver a document amounting to an assignment of whatever rights old Boston had against GE Capital, would nonetheless be enforceable in equity. However, the clause is concerned with perfecting, by delivery of an appropriate instrument, that which some other part of the sale agreement has made over from old Boston to new Boston. Indeed, cl 6.2(e) contemplates that old Boston will need to do something about ensuring that GE Capital becomes bound to perform the GE Capital contract through the services offered by new Boston, in place of old Boston. That is very different to an obligation on the part of old Boston to assign its existing causes of action in contract to new Boston. 100 I am of opinion that cl 6.2 did not create any obligation in equity on the part of old Boston to assign any cause of action for breach of contract which it had against GE Capital. New Boston did not point to any other clause in the sale agreement which effected such a disposition. Rather, new Boston alleged that the defined term 'the Business' had this effect. However, the definition of 'the Business' in cl 1.1(a) defined that term as meaning the business identified in item 1 of Schedule A (set out above) and included the work in progress as at completion, the total of accounts receivable owed to new Boston at that date and any other items specifically referred to in the sale agreement forming part of the 'Business'. So while it is clear that the sale agreement assigned the total of the accounts receivable owed to old Boston at the date of completion, being 1 July 2005, the cause of action in damages in breach of contract (or for that matter under s 82 of the Act) does not ever appear to have been assigned or to have been the subject of the sale agreement at all. 101 On the material before me there is no basis to suggest there had been any novation of the contract between old Boston and GE Capital. No notice was given by old Boston of any assignment to GE Capital and there is nothing pleaded by which GE Capital could be bound to perform the GE Capital contract with new Boston. There is nothing which appears in the evidence and pleadings before me to reveal a case with any reasonable prospects of succeeding, in which new Boston could argue that either it or GE Capital could enforce against the other the provisions of the GE Capital contract. The claim old Boston may have had is for damages not debt, based on breach of the alleged term for a minimum number of referrals. 102 No doubt there may be some issues between new Boston and GE Capital relating to their rights inter se in respect of work performed by new Boston for GE Capital, but the subject matter of the proceedings before me does not relate to those rights (e.g. quantum meruit). Rather, the proceedings concern the rights asserted by new Boston as assignee, and only as assignee, of the rights of old Boston under the GE Capital contract and in respect of that contract's formation and performance. I am of opinion that there are no reasonable prospects of success for new Boston to argue that it became entitled to enforce old Boston's rights under the GE Capital contract or that the document signed by both of those parties did not contain the entire agreement between them.

CONCLUSION 103 There is no reasonable prospect that new Boston would be able to establish that it had suffered any damage in reliance upon any pleaded representation, conduct or term, because at the time it entered into the sale agreement, it was fully aware of the apparently repudiatory conduct of GE Capital and of its substantial failure to adhere to the alleged representation of the level of field calls which is at the heart of the complaints. 104 I have considered whether I should allow new Boston an opportunity to replead. At the hearing, new Boston orally sought leave to amend its claim under s 51AC of the Act to allege that the conduct relied on in the statement of claim was also addressed to new Boston. It sought leave to plead that GE Capital made continuing representations to not only old Boston but also to new Boston and to plead a claim in quantum meruit. There is no evidence to support the claim of new Boston under s 51AC or the allegation of continuing representations. I do not consider that claims which are entirely unsupported by evidence, and are inherently unlikely, should be allowed to be made by an amendment of the kind proposed. As explained above, if new Boston wishes to make a claim in quantum meruit, it will need to do so in fresh proceedings on a basis that is properly articulated. There is nothing on the material before me to show that any such claim is fairly arguable: Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 at 154-155. I consider that the pleading and the material before me is so fundamentally flawed that I should not grant leave to amend. Because this is not a decision on the merits, it will be open to those advising new Boston to take further proceedings, if some can be formulated, which can articulate a cause of action which has reasonable prospects of success. 105 I am of opinion that these proceedings should be dismissed. I certify that the preceding one hundred and five (105) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Solicitor for the Applicant: Insight Litigation & Legal Services

Solicitor for the Respondent: Blake Dawson Waldron