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.