The appellant's case against the respondent rests entirely upon the proposition that an assignment was effected by either or both (i) a Deed dated 7 January 1991 between Rural and the appellant and (ii) a document on Rural's letterhead signed by Rural, headed "Notice of Assignment", which was forwarded by the appellant to the respondent under cover of a letter dated 27 March 1991.That document (the "Notice") was in the following terms:

RURAL FINANCE PTY. LIMITED HEREBY GIVES YOU NOTICE that on the day of January 1991 it assigned to Equus Financial Services Limited of Level 1, 2 Clarke Street, South Melbourne its interest under the Loan Agreement it has with you dated the 30th day of June 1989 including its right to monies and you are hereby directed to make all payments of monies due under the loan agreement to Equus Financial Services Limited."

Both its heading and the tense and context in which reference is made to assignment suggest that the Notice assumed that an assignment had earlier been effected, inferentially by the Deed dated 7 January 1991.

It is unnecessary to decide whether either, or both, the Deed and the Notice constituted an absolute assignment within the meaning of section 199 of the Property Law Act 1974 (as amended). It is sufficient if either, or both, constituted an equitable assignment. Indeed, in that event, the respondent did not really contest that the order made below dismissing the appellant's action should be set aside. If there has been an equitable assignment, the only possible defect in the proceeding commenced by the appellant is the absence of Rural as a party, which does not justify the dismissal of the action: R.S.C. O.3 r.11; William Brandt's Sons and Co. v. Dunlop Rubber Company Limited (1905) AC 454.

It was not disputed that the appellant and Rural's respective promises in the Deed provided consideration for each other. In these circumstances, no more (and no less) is needed for an equitable assignment than a clearly manifested intention to divest the assignor of property or an interest and vest it in the assignee: Meagher, Gummow and Lehane "Equity Doctrines and Remedies", 3rd Ed., para. 683. Prima facie, that requirement is satisfied by the Notice; see, in particular, the direction by Rural to the respondent to pay the appellant and the assertion that an assignment had been effected. However, it was argued for the respondent that the Notice has to be construed with the Deed, which on its proper construction indicates that assignment was not intended until payment for the assignments had been made, which was in turn to follow the receipt by the appellant of acknowledgments from the respondent and other borrowers that they were liable to the appellant as assignee from Rural. The appellant accepted that it had received no such acknowledgment from the respondent and that only part of the agreed payment, a sum of $1.00, has been made by it to Rural.

The foundation of the respondent's argument is clause 2.1.1 of the Deed which, taken by itself, indicates that assignment is to occur, by operation of the Deed, "Upon payment of the Consideration ... ." The provisions with respect to "Consideration", which is defined in clause 1, are complex and in part inconsistent. However, some provisions are consistent with a construction of clause 2.1.1 which postpones assignment to a time subsequent to the execution of the Deed: see, for example, clause 2.2.1, Item 3 (which is left blank in the executed Deed), and clauses 2.3.1. and 8.7. The overall effect of these provisions, so far as presently material, is that the "Consideration" is to be, or may be, paid over a period of time but is not due until acknowledgments are received from the borrowers, with the possible consequence from clause 2.1.1 that there is no assignment until then and/or full payment is made.

However, the introductory paragraph of clause 2.2.4 is in the following terms:

"2.2.4 Notwithstanding any other provision of this Agreement the following terms and conditions shall apply to the Class B Loan Agreements. To the extent that there is any inconsistency between the provisions of this Clause and the other provisions of this Agreement, the provisions of this Clause shall prevail."

(It is common ground that the Loan Agreement between Rural and the respondent is a "Class B Loan Agreement"). The remaining provisions of clause 2.2.4, especially clause 2.2.4.1 and 2.2.4.3, taken with Item 4, Annexures A and A2 and clause 4.1.2.2, make it plain that an acknowledgment was not to be received from the borrower, and the payment for the assignment of a Class B Loan Agreement was not to be made by the appellant to Rural, until after a document substantially in the terms of the Notice given to the respondent had been given to the borrower. In these circumstances, the proper conclusion is that the parties to the Deed, the appellant and Rural, intended that each Class B Loan Agreement was to be assigned to the appellant by the Deed or, in any event, by, or prior to, the Notice or equivalent document.

It follows that the appeal should be allowed and the order dismissing the appellant's action set aside. The respondent must pay the appellant's taxed costs of and incidental to the appeal.

Separate reasons for judgment of Fitzgerald P., McPherson JA. and Derrington J.. All concurring as to the orders made.

APPEAL ALLOWED. Order made below on 10 December 1993 dismissing the appellant's action set aside. The respondent to pay the appellant's taxed costs of and incidental to the appeal.

CATCHWORDS: ASSIGNMENT - choses in action - debt - equitable assignment - debtholder agreed to assign certain debts to third party in consideration of assignee making loan to the assignor - consideration not paid at time of assignment - construction of deed did not require payment until after notice of assignment given to borrower - whether there was an equitable assignment with intention to a sign property clearly manifested.

I agree. As Lord Macnaghten said in William Brandt's Sons & Co. v. Dunlop Rubber Company Limited [1905] A.C. 454, 462, no action is now dismissed for want of parties. To countenance this application to strike out the action would go far towards resurrecting the old rules for joinder of parties along with many of their abuses, which it was the avowed object of the Judicature system to eliminate. See Werdeman v. Societe Generale d'Electricite (1881) 19 Ch. 246, 251, 254, 255; Carrick v. Armstrong [1969] Qd.R. 185, 191-192. Now under O.3, r.11 of The Rules of the Supreme Court, the Court must not refuse to determine a cause or matter by reason only of non-joinder of parties; instead, the names of anyone who ought to have been joined may be added, either as plaintiffs or as defendants, if their presence is necessary in order to enable the Court to adjudicate effectually and completely, and settle all the questions involved.

In an action such as the present it was therefore not correct procedure to apply to strike out the action on the ground that the assignment alleged in favour of the plaintiff was defective or incomplete. If the deed dated 7 January 1991 did not produce a valid statutory assignment, it may nevertheless be effective as an equitable assignment; and, if not even that, it is at least capable of being viewed as an enforceable agreement to assign, which will or may take effect as a present assignment on the happening of a future event. Tailby v. Official Receiver (1888) 13 App. Cas. 523, 543; Re Androma Pty. Ltd. [1987] 2 Qd.R. 134.

The matter of non-joinder arises here only if the assignment is not statutory but simply equitable, or if it is at present nothing more than a mere agreement to assign. To cover those possibilities the assignor Rural Finance Pty. Ltd. should have been made a co-plaintiff with Equus Financial Services Limited. To achieve that now, Rural's written consent is needed under O.3, r.11. If it is not obtained, Rural may be joined co-defendant : cf. Meldrum v. Scorer (1887) 56 L.T. 471.

The reason for making the assignor a party to an action brought by an equitable assignee is to ensure that the assignor is bound by the outcome of the proceedings. If the assignor is not bound, payment by the debtor to the assignee in accordance with the judgment involves the risk that it will not necessarily discharge the debt. See Weddell v. J.A. Pearce & Major [1988] Ch. 26, 4041. Even so, the court does not always insist on joinder if satisfied that it can, in terms of O.3, r.11, effectually and completely adjudicate without adding parties. An example is where it can be predicated that, apart from the plaintiff assignee in equity, no one has an interest in the subject debt, so that the assignor is in substance a bare trustee for the assignee. In cases like that joinder of the assignor has been dispensed with. See William Brandt's Sons & Co. v. Dunlop Rubber Co. Limited [1905] A.C. 454, 462; Camfield Pastoral Company v. Dixon [1972] Qd.R. 289, 305; Calaby Pty. Ltd. v. Ampol Pty. Ltd. [1990] NTSC 28; (1990) 71 N.T.R. 1, 18-19.

The present case is, on what we know of it to this point, not so completely free from dispute or doubt as to justify dispensing with the need to join the assignor Rural as a party to the action, the more so if the plaintiff's title to be paid rests in the end on nothing more than an enforceable agreement to assign that has not yet matured into a present equitable assignment. The assignor should have been joined; but that is no reason for striking out the action altogether.

Like the President, I would allow the appeal with costs and set aside with costs the orders made below.

I have had the advantage of reading the views of the President and McPherson J.A. I agree with them that the appeal should be allowed and would agree with their reasons except that I would hold that in my view there has been an absolute, that is, unconditional assignment at law of the subject debt and it is unnecessary to have recourse to equity to support it. That would have the effect of making it unnecessary for the plaintiff to join the assignor in the action.

All of this depends on the construction of the Loan Agreement between the assignor and the assignee, which causes some difficulty. In particular, the provisions of cl. 2.2.4, upon which the appellant must rely, has a dramatic effect on this point but not directly. To explain this it is necessary to refer to it in the context of the whole scheme set up by the document.

As security for a loan the assignor agreed to assign certain debts owed to it by various borrowers. Unfortunately these are also called "loan agreements" when they are referred to in the text, but little ambiguity appears because of the context. Some of these borrowers, including the respondent, come within what is described as B Class loans. The consideration for the assignments was to be the payment to the assignor of moneys by way of loan, the amount of those moneys to be calculated by the appellant, the assignee, by reference to the value of all the debts to be so assigned. The calculation was comfortably left in the assignee's discretion because the transaction was a loan only and not a sale.

The difficulty begins with cl. 2.1 which is the major provision on the topic. It says, among other things, that:

"Upon payment of the Consideration in the manner herein set out specified in Item 3 the Assignor as beneficial owner separately and severally assigns, conveys and sets over to the Assignee the following:

2.1.1 all of the Assignor's right title and interest in and to each of the Loan Agreements, the Securities and all moneys and damages (to the extent that the same are assignable) which may now or hereafter be or become payable or recoverable under the Loan Agreements;

2.1.2 all other moneys and damages (to the extent that the same are assignable) which may now or hereafter be or become payable or recoverable under the Loan Agreements or any of the Securities;

2.1.3 to the extent that they are assignable all powers, licences, authorities, rights and remedies vested or which become vested in the Assignor under the Loan Agreements;

2.1.4 to the extent that they are assignable all judgments or orders which may have been or be obtained by the Assignor in respect of the Loan Agreements, the Securities or any other rights;

2.1.5 all the Assignor's right title and interest in and to and the benefit of any guarantee given to the Assignor for the performance of the Customer's obligations under the Loan Agreements ("the Loan Guarantee");

provided that if the Assignor shall pay to the Assignee the Repurchase Amount, the Assignee shall at the cost of the Assignor reassign to the Assignor all interest of the Assignor in the Loan Agreements hereby assigned to the Assignee by the Assignor in accordance with the conditions hereof."

If this were all that were said upon the matter, then, as the appellant has not paid "the consideration", there would have been no unconditional assignment, and the appellant would have needed to rely upon an equitable one. But this is seriously changed by cl. 2.2.4 in respect of the loan agreement of the kind to which the respondent was a party as the debtor.

As its opening and major provision clearly says, that clause makes special provision for B Class Loan Agreements and expressly states that in the event of conflict with any other part of the document its own terms should prevail.

It then contains some complex arrangements concerning a variety of possible circumstances, including the exercise of various options by the appellant, in respect of, broadly, its acceptance or rejection of any of these loan agreements as part of the security for its loan to the assignor.

The significant feature for present purposes is that it does not directly say that there should be an immediate assignment of them that is not conditional upon the payment of any part of the consideration. However, it is clearly predicated that (i) there is to be an immediate assignment of the benefits of each such loan agreement to the appellant, with immediate notice of the assignments to the respective debtors; and (ii) the consideration for such assignments was not to be paid at that time, but later.

With that introduction, it is convenient now to examine that clause, which reads:

"2.2.4 Notwithstanding any other provision of this Agreement the following terms and conditions shall apply to the Class B Loan Agreements. To the extent that there is any inconsistency between the provisions of this Clause and the other provisions of this Agreement, the provisions of this Clause shall prevail.

2.2.4.1 On or shortly after the date of this Agreement the Assignee shall forward to each Customer (together with the notice referred to in Clause 4.1.2 (2)) a letter substantially in the terms of Annexure A2 ("the Letter").

2.2.4.2 Provided that the Assignee is satisfied as to the creditworthiness of the relevant Customer and that such Customer shall duly sign and return to the Assignee the duplicate of the Letter, then the Assignee will calculate the Consideration for the relevant Class B Loan Agreements in the same manner as provided in Item 4(a) and such Consideration will be paid or applied in accordance with the provisions of this Agreement.

2.2.4.3 If the relevant Customer does not duly sign and return to the Assignee the duplicate of the Letter or if the Assignee is for any reason not satisfied with the creditworthiness of that Customer or with the documentation in respect of the relevant Class B Loan Agreement then:

upon receipt from the Customer of all or any moneys in respect of payments falling due in June 1991 and June 1992 the Assignee shall be entitled to deduct from the moneys received a collection fee equal to ten percent (10%) thereof and shall promptly account to the Assignor for the remaining ninety percent (90%) of those moneys less any legal or enforcement expenses relating to the collection of those moneys;

if the payments falling due in June 1991 and June 1992 are duly and punctually paid to the Assignee by the Customer then the Assignee may in its absolute discretion calculate the Consideration for the present value of the relevant Class B Loan Agreement in the manner provided in Item 4(a) and such Consideration shall be paid or applied in accordance with the provisions of this Agreement;

if the Assignee in its absolute discretion decides not to calculate the Consideration as provided in Clause 2.2.4.2 or if the payments falling due in June 1991 and July 1992 are not duly punctually paid by the Customer to the Assignee then the Assignee shall re-assign the related Class B Loan Agreement and any relevant Security to the Assignor for the consideration of ONE DOLLAR ($1.00) and thereupon the Assignee shall be released from any obligation to pay any further amount of Consideration in respect of that Class B Loan Agreement."

(a) immediate unconditional notice of the assignment to each debtor,

(b) the absolute right of the appellant to receive payment under the assigned loan agreements, subject only to a duty to account for payments received,

(c) the reassignment of some of the debts in certain circumstances as the result of which payment of the consideration for them would never be made, and

(d) later payment of the consideration in those cases where the set criteria were met,

the two implications defined above are strongly made out.

The only construction that can be given to these in combination is that the absolute assignments of this class of loan agreement were to take place at once without any condition requiring antecedent payment of the consideration by the appellant. It is true that there are further provisions for reassignment to the assignor in some cases, such as this one, where the debtor defaults; but that is an arrangement between the assignor and the appellant for the later disposal of the chose in that event and does not affect the unconditional nature of the original assignment.

It was of course open to the assignor and the appellant to do this, that is, to exclude one class of loan agreement from the general provision that provided for assignment conditional on payment of the consideration, and to provide that there should be an unconditional assignment of the debts within this special class.

They seem to have done this, though not in direct terms. As a matter of construction, the intention to do so is expressed strongly by implication and there is no good reason why that implication should not be recognised and given effect. There can be no countervailing force to be found in the balance of the document, for the parties, recognising no doubt the degree of the departure of cl. 2.2.4 from the general scheme of the transaction, made it clear that within its own limited area the clause was to prevail over all other terms of the agreement. Indeed, this precaution confirms the existence of such a difference, so the construction of the clause should not be influenced by the general provision in cl. 2.1 for conditional assignments.

The two clauses cannot be read together. The terms of cl. 2.2.4.3 clearly postpone payment of the consideration and treat it generally in a way totally unrelated to the prescription of cl. 2.1.

The result is that, despite the absence of any direct statement to that effect, on the proper construction of cl. 2.2.4 the parties agreed to unconditional assignments of Class B loan agreements which were to take effect in law at once.

For these reasons I would hold that the appeal be allowed with costs, that the orders below be set aside, and that the application for dismissal of the action be dismissed with costs.