Jennings v Credit Corp Australia Pty Ltd

(a) there was no evidence or alternatively insufficient evidence to enable a finding to be reached that there had been an assignment of the debt to Bousdale Pty Limited ("Bousdale"", subsequently re-named Credit Corp Australia Pty Limited having ACN 002 841 821); and

(b) the Magistrate's determination was erroneous in law because he did not hold that the rights of an equitable assignee are only as against the equitable assignor and not as against the debtor; accordingly that no action was commenced within time by any entity entitled to legal ownership of the debt, and any action on the debt became time barred in July 1991. 7 The Respondent, Credit Corp Australia Pty Limited ACN 056 664 183, claiming as assignee from Citicorp Person to Person Financial Services Pty Limited, seeks to uphold the Magistrate's determination as against the Appellant's contentions above. The Respondent therefore relies inter alia upon Weddell v Pearce (supra), whilst the Appellant contends that it was wrongly decided and in any event should not be followed here having regard to the terms of s63 of the Limitation Act 1969 (NSW).

SALIENT FACTS 8 The Appellant has set out a chronology which save where specifically indicated, under the events of 5 December 1985, can be treated as agreed; I set it out below: CHRONOLOGY 22.10.82 Mortgage between Ms Jennings and Person to Person Financial Services Pty Ltd (ACN 004 212 051). 28.2.83 Person to Person Financial Services Pty Ltd changes its name to Citicorp Person to Person Financial Services Pty Ltd. 3.9.84 Citicorp Person to Person Financial Services Pty Ltd changes its name to Citicorp Finance Pty Ltd. 26.7.85 Goods realised. 5.12.85 Citicorp Finance Pty Ltd assigns rights on "Borrowers" accounts to Bousdale Pty Ltd ACN 002 841 821, it being in dispute as to whether the assignment in terms or effect applied to the relevant indebtedness. 11.8.88 Bousdale Pty Ltd changes its name to Credit Corp Australia Pty Ltd. 25.7.91 Statement of Liquidated Claim filed - plaintiff was Credit Corp Australia Pty Ltd as assignee from Citicorp Person to Person Financial Services Pty Ltd. 26.7.91 Limitation period expired 24.9.92 Credit Corp Australia Pty Ltd (Receiver & Manager Appointed) (ACN 002 841 821) assigns debts to Havran Pty Ltd (ACN 056 664 183). 28.10.92 Earliest possible date of notice to Ms Jennings of assignment agreement between Citicorp Finance Pty Ltd and Bousdale Pty Ltd; this is not now in dispute. 28.4.93 Statement of Liquidated Claim served on Ms Jennings. 10.6.94 Havran Pty Ltd changed its name to Credit Corp Australia Pty Ltd ACN 056 664 183. 13.1.98 Notice of assignment of debts from Credit Corp Australia (Receiver & Manager Appointed) to Havran Pty Ltd. 9.12.98 Order substituting "Credit Corp Australia Pty Ltd ACN 056 664 183 as assignee from Citicorp Person to Person Financial Services" for "Credit Corp Australia as Assignee from Citicorp Person to Person Financial Services" as plaintiff.

Stated Case - the legal issues 9 The two questions the subject of the stated case can be dealt with under the headings "Evidence of Assignment" and "The application of s63 of the Limitation Act 1969 (NSW)". I take these in turn.

Evidence of Assignment 10 No issue was taken by the Respondent that the Appellant's contention grounding the stated case went beyond the scope of s101 of the Justices Act, 1902 (NSW). This is insofar as it might be argued otherwise that the first contention, so far as it dealt with insufficiency of evidence, was not strictly a question of law. It is however open to a court dealing with a stated case to deal not only with a question of law but also, to the extent that an ultimate question of fact must be determined in order to reach that legal conclusion, that ultimate question of fact, An ultimate fact is distinct from evidentiary facts from which the ultimate fact is determined. 11 Furthermore, the construction of an instrument (the Assignment Agreement) is, as Davidson J said in the Australian Gaslight Co v The Valuer General (1940) 40 SR(NSW) 126 at 147, always a question of law. Here the stated case turns upon the proper construction of the Assignment Agreement dated 5 December 1985 between Citicorp Finance Pty Limited and Bousdale (as it was then called). If, as I conclude, it is ambiguous, then recourse must be had to its surrounding circumstances or factual matrix to determine its effect. 12 As to the no evidence for assignment contention, it is well-settled that provided such a no evidence argument is not merely colourable, but enjoys a real possibility of success, it does constitute a question of law as may properly be the subject of a stated case; see Lombardo v Federal Commissioner of Taxation (1979) 28 ALR 574 at 578 per Bowen CJ. I am satisfied that this no evidence argument is not colourable and is a question of law. 13 Context here is important. The Magistrate was determining the matter as an interlocutory application by notice of motion. He had to decide whether to permit substitution of the claimed ultimate assignee, Credit Corp Australia Pty Limited ACN 056 664 183, as plaintiff. He was thus only deciding the matter on a prima facie basis. He was doing so in circumstances where final determination of the relevant issues at trial would permit that matter to be re-canvassed in light of fuller evidence, if warranted. 14 In reviewing the Magistrate's determination, I am bound by well-settled authority not to disturb the Magistrate's interlocutory finding if the inference he draws leading to his conclusion is capable of being supported by the facts before him or by legitimate inference therefrom. For reasons elaborated below, I am satisfied it is so capable. 15 I start with the documentation. It is clear enough from the Assignment Agreement that there is no express reference to the relevant debt. Rather what is assigned are numerous accounts receivable referred to in Recital A as the "Loss Recovery Ledger" and "arising from the business in New South Wales of members of the Citicorp Group of lending money under various types of loan hiring and lease agreements relating to the provision of consumer finance. …..". 16 Recital A refers to all "the agreements between a member of the Citicorp Group and Borrowers [as earlier defined] which give rise to the Loss Recovery Ledger" as being "summarised in the First Schedule hereto". It is common ground that there is no first schedule to that agreement. 17 Recital B refers to the total face value of the Loss Recovery Ledger as being "not precisely ascertainable but is currently estimated to be $15,141,000 representing approximately 5,449 accounts". 18 The operative provision of the agreement commences following Recital C as follows: "In consideration of the amount of $2,787,300-00 (Australian currency) payable by Bousdale to Citicorp at 1 Margaret Street Sydney Citicorp as beneficial and absolute owner free from encumbrances of the Loss Recovery Ledger HEREBY ASSIGNS AND TRANSFERS ABSOLUTELY unto Bousdale all its rights title benefit and interest in and to and due or to become due from the same and the full benefits rights and obligations under the relevant agreements …"

19 Clause 5 provides that Bousdale agrees, "at its expense to forward to all Borrowers a Notice of Assignment in a form acceptable to him which is to be signed ….. by the Citicorp Group at the request of Bousdale on or before 3rd December 1987 …"

It concededly failed to do so by that date so far as Louise Jennings was concerned. 20 This agreement, which is hardly a model of precision, has thus to be read against its factual matrix or surrounding circumstances to ascertain its reach so far as the Appellant's debt was concerned. 21 Before the Magistrate was an affidavit of Mr Geoffrey John Templeton of 3 December 1998 who describes himself as the Authorised Officer for the assignee to the Plaintiff being Credit Corp Australia Pty Limited as assignee from Citicorp Person to Person Financial Services Pty Ltd. He states, "from my own knowledge and reference to business records I verily believe that …… (d) Citicorp Finance Pty Limited ACN 004 212 051 on 5 December 1985 assigned all its beneficial rights and entitlement in the debt herein to Bousdale Pty Limited ACN 002 841 821."

22 Then in Annexure "E-3", KPMG Peat Marwick on behalf of Creditcorp Australia Pty Limited (Receiver & Manager appointed) purports to give notice to Louise Jennings of an assignment from Creditcorp Australia Pty Limited to Havran Pty Limited ACN 056 664 183 (now known as Creditcorp Australia Pty Limited). In the second paragraph Mr Horne the Receiver and Manager of Creditcorp Australia Pty Limited of KPMG Peat Marwick stares: "I understand from company records that this debt was previously assigned from Citicorp Finance Pty Limited to Creditcorp Australia Pty Ltd (formerly Bousdale Pty Limited) on 5 December 1985, notice of which may have been given to you on or about 20 September 1992."

23 The latter is of course the relevant assignment for present purposes. 24 In cross-examination before the Magistrate on 22 October 1998, (T, 6.18-.35) the following questions and answers ensue: "Q. In your affidavits you have indicated that in paragraph 2 that from your own knowledge and reference to business records you believe that, and in (a) you say on 21 October 1982 the Defendant entered into a personal loan agreement with the company that's there named and you annex what you understand is the wrong document? A. Yes. Q. What was the business record that you relied upon or what was the knowledge that you relied upon to make that statement? A. While the business records contained in the file that was handed over to us by Citicorp and then Credit Corp, the first Credit Corp. Q. And the documents that were in that file now a part of the file which you produced to us to-day. A. Yes."

25 Then follows reference to a document dated 22 October 1982 being a mortgage which is attached to the affidavit of Mr Patrick Maloney of 11 August 1998 (DX2) also before the Magistrate as Annexure F and being on the face of it a mortgage from Person to Person Financial Services Pty Limited to Louise Jennings. 26 The mortgage is of course not the same date as the Memorandum of Loan dated 21 October 1982 but the day after and inferentially part of the same transaction. It was evidently not produced because the witness as later cross-examination indicates, had various files which related to the Jennings' proceedings upon which counsel for Louise Jennings cross-examined Mr Templeton. The Citicorp computer records evidently showed that the loan was entered into on 21 October 1982 (T, 8.25-.30). 27 The Magistrate in his judgment of 9 December 1998 states, "the court also has the evidence of Mr Templeton, who provided a sworn affidavit as to the assignment of the debt. He was not challenged on that evidence." 28 The truth of the matter revealed by the transcript, was that he was challenged by Mr Lockhart, indeed vigorously. But it was certainly open to the Magistrate having regard to the totality of evidence before him to conclude in this interlocutory context, that there were indeed business records which sufficiently identified the relevant debt as being included in the description of that which was assigned. 29 Accordingly, I would not conclude that there was "no evidence" before the Magistrate to enable the finding he made that there had been an assignment of the debt to Bousdale Pty Limited. I am further satisfied that there was sufficient evidence to enable that finding to be reached by the Magistrate in the interlocutory context in which he was engaged.

The application of s63 of the Limitation Act 1969 (NSW) 30 The Appellant's argument starts with the indubitable proposition that as at the date that the limitation period expired on 26 July 1991, the legal interest in the debt or chose in action remained with the assignor, Citicorp Finance Pty Limited. It had not passed to Bousdale Pty Limited which was merely an equitable assignee, notice not having been given under s12 of the Conveyancing Act 1919 (NSW) by that date. Such notice to the debtor is required in writing:

(a) for the acquisition by the equitable assignee of the legal estate, and

(b) to determine priority as between competing equitable assigns; Marchant v Morton Down & Co [1901] 2 KB 829 at 831 and more generally Meagher Gummow and Lehane "Equity Doctrines & Remedies" 3rd edition (Butterworths, 1992) paras 609 and following and paras 801 and following.

But a subsequent assign giving the first notice obtains no priority over earlier assigns unless without notice of them and unless that subsequent assign gave value. 31 The Appellant then correctly contends that the interests of an equitable assignee are different from the interests of a legal owner of a chose in action. The legal owner whilst remaining such, is still entitled to enforce rights against the debtor, though as assignor holding the benefit of that enforcement for the assignee. 32 It is then contended that the Respondent as equitable assign only had rights against the assignor and not against the debtor. Yet the Respondent took none of the steps available to effectuate its rights, giving notice only after the limitation period expired. Thus the equitable assignee should ordinarily join the assignor either as plaintiff, if the assignor consents, or, if he does not, as defendant: Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1 (HL), Holt v Heatherfield Trust Ltd [1942] 2 KB 1; Weddell v J A Pearce & Major cf Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101 at 127-9; [1964] 1 All ER 216 at 235-6 (Roskill J), which Scott J in Weddell's case declined to follow ([1987] 3 All ER at 637); also Pincus v Ord Minnett Ltd (SC (Vic), Hedigan J, 5 May 1994, unreported). 33 In the absence of such an order to join the assignor, the Appellant contends that an equitable assignee has no standing to enforce the legal contractual right vested in the equitable assignee. This is because the action brought by the equitable assignee alone is a nullity, incapable of stopping time from running for limitation purposes. The Respondent joins issue with the Appellant on that proposition. 34 The rationale for requiring the legal assignor to be joined is severalfold. First the debtor, deprived of notice of the assignment, should be protected against equities by way of set off or otherwise, as between debtor and assignor which arose prior to receipt of notice of the assignment or arose after but are sufficiently closely connected with a transaction pre-dating notice; see W J Gough Company Charges 2nd edition (Butterworths, 1996) at 281-90 and the cases there cited. 35 Then there is the real risk of duplication of claims both from the legal assignor and any competing assignees. Take firstly a claim by the legal assignor. The debtor may unwittingly pay the assignor and then face a claim from the equitable assignee who is able to give notice and get in the legal estate. Then there is potential for claim by any other assignee, who may become a legal assignee by giving the first notice and paying value thus gaining priority; see generally Meagher Gummow and Lehane (supra) at para 6.103; and Performing Right Society v London Theatre of Varieties Ltd [1924] AC 1 at 14, 19, 20 and 30, referred to in Weddell v Pearce at 633-5. Giles J in Showa Shoji Australia Pty Limited v Oceanic Life Ltd (1994) 34 NSWLR 548 at 561 concluded that an equitable assignee of an option could not exercise it. This was because as was said in Warner Bros v Rollgreen Ltd [1976] QB 430 the equitable assignee of the option may never become the legal assignee able to enforce against the grantor of the option. This is so though, as between assignor and assignee, the assignee's title is complete in equity (pace Denning LJ in Warner Bros at 442-3). 36 Thus says the Appellant, Bousdale (and the assignor) have neither of them given notice of the assignment to the debtor prior to the expiry of the Statute of Limitations so as to convert Bousdale to a legal assignee. Bousdale likewise failed within the limitation period (or at all) to join the legal owner in the absence of that notice. Therefore, it follows that the Respondent is now statute barred notwithstanding the subsequent acquisition of a legal interest by virtue of the later giving of notice, as that came after the limitation period had expired. 37 The critical question needs to be stated with some precision. It is whether the Statement of Liquidated Claim filed by the then equitable assignee on 25 July 1991, one day before the limitation period expired, then constituted, within the meaning of s63(2) of the Limitation Act 1969 (NSW): "An action ….. brought on the cause of action."

By "then constituted", I intend also to comprehend this possibility. That, consistent with the Local Court Rules for civil claims, later getting in of the legal estate had retroactive effect to the date of filing, though it occurred outside the limitation period. 38 The cause of action, for purposes of s63(2), is "a cause of action to recovery any debt damages or other money". 39 The question has been framed in terms of asking whether the action commenced by an equitable assignee without jointing the assignor is (or is not) "a nullity". Thus Scott J in Weddell v Pearce at 41 concludes: "In my judgment, therefore, it is clearly established that an action commenced by an equitable assignee without joining the assignor is not a nullity. It may be liable to be stayed until the proper parties have been joined, but it is not a nullity." 40 I would prefer to test the matter by analysing the nature of the defect in the Respondent's Statement of Liquidated Claim and then determining its consequences for the status of that claim in the context of the relevant rules as applicable to a Local Court dealing with a civil claim. It is only by so doing that one can answer the question whether, in the events that happened, "an action is brought on the cause of action" within the meaning of s63(2) of the Limitation Act 1969 (NSW), so as to be protected from extinguishment as statute barred. The analysis therefore requires consideration of the status of the equitable assignee's writ or claim. This is in circumstances where the debtor had not at any time moved to set the writ aside or stay the action, such that it might be said to be voidable but not void, as in the case of judicial review setting aside a determination for breach of rules of natural justice. In that analogous context, courts now generally favour a "relative" concept of invalidity. This allows courts to hold that a decision is "void ab initio", as if it had never been made, but only once a competent court declares that it was so made in breach of rules of natural justice. But even after avoidance the cases confirm that such a decision has practical and even legal effect, like the smile on the cheshire cat, lingering after the cat has vanished See Lewis Carroll: Alice's Adventures in Wonderland Ch 6: "I've often seen a cat without a grin", says Alice. "But a grin without a cat, that's the most curious thing I've ever seen in all my life."; see Aronson & Dyer "Judicial Review of Administrative Action" (LBC, 1996) at 485 and for a good example of such judicial treatment Forbes v Trotting Club (NSW) (1979) 143 CLR 242 at 277. The present case is stronger; there never was any setting aside nor even an application to do so on this ground before the legal estate was got in. There was simply resistance to the Plaintiff's substitution application when made after the legal estate was acquired and after a further assignment. 41 If the matter be considered purely in terms of procedural enforcement, the basis for any absolutist notion of voidness is clearly not made out; there are clearly exceptions to the bar on an equitable assignee enforcing against the debtor. The starting point is as Windeyer J put it in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 29-30:

"The assignor (the creditor) as legal owner, the debtor and any assignees of other parts of the debt were all necessary parties, so that all the obligations of the debtor and the rights of all persons interested in the fund might be established by the decree. This was the rule of the Chancery Court. It is still the law: see Performing Right Society Ltd v London Theatre of Varieties Ltd [1924] AC 1 at 14, 20, 30-31."

42 But the Court of Appeal in Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 at 11,518 that is not the invariable position, for: "….. this is a rule of procedure which may be dispensed with; see William Brandt's Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454 at 462.

They go on to quote the judgment of Blackburn J in National Mutual Life Nominees Ltd v National Capital Development Commission (1975) 6 ACTR 1 at 7-8: "The requirement that the assignor's name be added as co-plaintiff in an action by the assignee against the debtor was (at any rate in England) so much a formality that if the assignor did not consent, he could be joined as a defendant: E M Bowden's Patents Syndicate Ltd v Herbert Smith & Co [1904] 2 Ch 86 per Warrington J at 91. If the defendant did not take the point that the assignor was not joined as co-plaintiff, the court could ignore the non-joinder: William Brandt's Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454 per Lord MacNaghten at 462; [1904-7] All ER Rep 345."

43 The context in which Lord MacNaghten made his observations are different from the present case. But they throw light upon the nature of proceedings which suffer from the defect of not joining the assignor where the proceedings are brought by the equitable assignee. In William Brandt's Sons & Co v Dunlop Rubber Co Ltd [1905] AC 454 the issue was whether the debtor (Dunlops) had received sufficient notice to make it liable to pay again, it having already paid the assignor, not the assignee. The debtor "disclaimed any wish to have [the assignor] present" (per Lord MacNaghten at 462). That may be invoked to distinguish the facts from those presently before me, for here the debtor did not so disclaim. But neither did the occasion arise where she might have disclaimed. She appears not at any stage to have either sought to set aside the proceedings as improperly constituted or short of that to stay them. The point of invalidity now arises after the legal estate was acquired by the equitable assignee and then only obliquely, in the context of the Respondent's interlocutory application to substitute the current name on the writ and the debtor's opposition to that. Thus, if it could be said that the original proceedings were vulnerable to such action to set aside, they never were set aside. They existed, and continue to exist, as extant proceedings capable of being permitted. This is so, though until the legal estate was got in, they were subject to being stayed on the ground of the non-joinder of the legal assignor. 44 Proceedings by an equitable assignee seeking some form of interlocutory injunction would not ordinarily be dismissed, but rather stayed. Indeed in Performing Right Society Ltd v London Theatre of Varieties Ltd (supra) the Court of Appeal did not dismiss the improperly constituted action of the equitable assignee of a copyright. Rather it gave the Plaintiff leave to amend its writ and subsequent pleadings by adding the legal owner as co-plaintiff, the House of Lords upholding that view of the matter. Thus Viscount Cave LC at 14: "That an equitable owner may commence proceedings alone, and may obtain interim protection in the form of an interlocutory injunction is not in doubt; but it was always the rule of the Court of Chancery, and is I think, the rule of the Supreme Court, that, in general , when a person has only an equitable right in the thing demanded, the person having the legal right to demand it must in due course be made a party to the action ….." [emphasis added]

45 That passage reinforces the proposition that such improperly constituted proceedings are not a nullity. For how otherwise could they ground an application for interlocutory relief, or be merely stayed pending the addition of the assignor as a party, or be not even stayed if waived by the debtor? 46 Nor could it be said that because a Local Court lacks the power to grant equitable relief, interim or otherwise, that the potential for interim relief could not have arisen (though in the events that happened, it appears unlikely any such application was made). As Ritchie's Supreme Court Practice at [9956] makes clear interim injunctive relief can be obtained indirectly: "…. if an equitable matter arises in the District Court outside the court's jurisdiction, then the proper procedure is either to apply to remove the proceedings into the Supreme Court or to adjourn the District Court proceedings so that the party raising the matter can apply to the Supreme Court. The same comment would apply if equitable matters arose in a Magistrate's court." [emphasis added]

47 The Local Court Rules for civil claims have a further significance on the facts here. Part 16 r4 provides in sub-paragraph (4) as follows: "Where, on or after the date of filing a statement of claim, the plaintiff is or becomes entitled to sue in any capacity, the court may order that the plaintiff have leave to make an amendment having the effect that the plaintiff sues in that capacity."

48 Sub-paragraph (5A) of Pt 16 r4 provides in that case that: "An amendment made pursuant to an order made under this rule shall, unless the court otherwise orders, relate back to the date of filing of the statement of claim."

Importantly Pt 16 r4 is premised on the basis that "any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the Statement of Claim by making the amendment mentioned in any of sub-rules (3), (4) and (5)".

49 While it is true that the present Respondent has not sought such an order in those precise terms, it could readily have done so. But in any event the order for substitution has equivalent effect. Thus if the Plaintiff were to apply for such an order, on the basis that it had become entitled to sue in a further capacity, namely that of legal assignee, by virtue of the earlier notice, such an application could be expected ordinarily to be allowed. There is no demonstrated prejudice to the Defendant debtor, who has not been required to pay twice and, knows to whom she must pay. 50 Indeed the situation is analogous to proceedings commenced by an agent without authority. In circumstances where proceedings have been commenced in the name of the principal by an agent without the authority of the principal, and where the absence of authority may be remedied by a proper authority subsequently being given, the institution of the proceedings is not a nullity in any sense. To misquote Lewis Carroll, the cheshire cat remains, smile intact. Rather the bringing of the action is capable of ratification and such ratification too relates back to the institution of the proceedings. Provided the proceedings are commenced prior to the expiry of the limitation period, ratification after the expiry of that period is valid, as the ratification takes effect from the commencement of the proceedings and not from the date of ratification: Dillon v Baltic Shipping Co ("The Mikhail Lermontov No. 2") (SC(NSW), Carruthers J, 28 May 1993, unreported) and see also Omega Estates Pty Ltd v Ganke (1962) 80 WN(NSW) 1218. 51 Furthermore, while the joinder of the assignor would have added an additional party, so as to bring into play Pt 6 r11(3) of the Local Courts (Civil Claims) Rules with the result that the amendment is taken to be the date of the filing of the statement of claim amended, that rule does not apply in respect of an amendment made under Pt 16 r4(3) (Drinan v Hickey (1987) 11 NSWLR 744 and, by parity of reasoning, Pt 16 r4(4). See also Fernance v Nominal Defendant (1989) 17 NSWLR 710 per Gleeson CJ in relation to the equivalent provisions of Pt 8 of Supreme Court Rules. Here, the equitable assignee has at no point sought to join the assignor, so that issue simply does not arise. 52 As was said by Rogers J in Australia & New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286, regarding the comparable provision of Pt 20 r4 of Supreme Court Rules, it is the rules of court which determine when an action is taken to be brought for limitation purposes. It is not the limitation statute, which itself is a procedural not substantive law; McKain v R W Miller & Co (SA) Pty Ltd (1991) 174 CLR 1. Thus in permitting a cross-claim to be amended and thereby pursuant to Pt 20 r4 causing the amendment to take effect from the time of the original pleading, he pointed out there was no inconsistency between the (Commonwealth) limitation statute and the relevant court rule (at 295): "The rule accepts fully the dictate of the Commonwealth legislation that proceedings should be commenced within three years from accrual of the cause of action. The rule deals merely with a procedural matter which, as a matter of law, then has an impact on what is to be taken as the date of commencement of proceedings. The two regulatory provisions operate in different fields and are therefore not inconsistent."

53 I turn now to the second proposition, affirmed in Long Leys Co Pty Ltd v Silkdale Pty Limited (supra), that the earlier rule of procedure says nothing as to the validity of a demand for payment by the equitable assignee of a debt. Here, the NSW Court of Appeal (at 11,518) concluded that at the very least there was a triable issue as to whether a demand (in that case made by an equitable assignee of a mortgage), must be ineffective, in accordance with the reasoning of the English Court of Appeal in Warner Bros Records Inc v Rollgreen Ltd (supra). The New South Wales Court of Appeal went no further than to say that summary judgment was therefore to be set aside in order to have the matter tried in the ordinary way. At 11,518 Sheller JA it referred to the two propositions in these terms. "One is procedural spawned on the need to protect the defendant from repeated claims. The second is more fundamental. The right of an equitable assignee of a chose in action being one against the assignor rather than the debtor, the equitable assignee cannot exercise a contractual right against the debtor."

54 In truth, the propositions cannot co-exist if the latter proposition be expressed in absolute terms. Thus it is clear that procedural rule does for some purposes give the equitable assignee rights against the debtor; in particular to obtain interim relief or where the debtor waives the right for the legal assignor to be present. In that sense there is a false dichotomy between procedural and substantive. For within the interstices of that accommodating procedure, substantive law is secreted, in the form of these two exceptions. In each case the equitable assignee exercises a contractual right against the debtor. Nonetheless the second proposition has in its absolute form been adopted in at least one New Zealand case. In Mountain Road No. (9) v Michael Edgley Corporation Pty Ltd [1999] 1 NZLR 335 at 345 the New Zealand Court of Appeal concludes, "…. notice to the person liable is required before an assignee (whether legal or equitable) can enforce the cause of action assigned", basing the conclusion on Warner Bros Records Inc v Rollgreen Ltd. 55 To the direct contrary however is a decision of the Queensland Court of Appeal, Thomas v National Australia Bank Ltd (SC No. 237 of 1996, 21 December 1999, unreported). The principal judgment was written by Pincus JA who declined to follow the New Zealand Court of Appeal. He pointed out that there are authorities tending both ways but considered that the weight of authority so far as Australia is concerned favoured the appellant. He cites in support Dixon J in Comptroller of Stamps (Vict) v Howard Smith (1936) 54 CLR 614 at 622, though Dixon J was there dealing with a bilateral situation where there was no third party directly involved analogous to the debtor: "….. communication to the trustee or person in whom the legal title of the property is vested is not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him in respect of the assignment and in order to preserve priorities."

56 That authority in turn is relied upon by Meagher Gummow and Lehane at [686] for the proposition that "….. there can be an effective assignment of a debt, or of an interest under a trust, without notice to the debtor or trustee. That notice is important to bind the debtor or trustee and for the purpose of retaining priority …. but is not necessary to the validity of the assignment …."

57 Enigmatically, Meagher Gummow and Lehane add, "the decision of the Court of Appeal in Warner Bros v Rollgreen [1976] QB 430, …. should not be taken as stating a contrary view."

58 As Pincus JA points out, Warner Bros v Rollgreen clearly does state a contrary view, though one in direct opposition to the reasoning he preferred in Weddell v Pearce & Major.

SUMMING UP 59 The procedural rule protecting the Defendant from repeated claims admits of sufficient exception to render less than absolute the substantive proposition that an equitable assignee cannot exercise a contractual right against the debtor, correct though that may be when it comes to exercising an option. In limited circumstances, interlocutory relief being one of them, the equitable assign can enforce rights against the debtor. 60 It is therefore clear enough that an action brought by the equitable assignee of a debt against a debtor, never set aside at the suit of the debtor, could not be a nullity. Rather it is "an action ….. brought on the cause of action", for purposes of s63(2) of the Limitation Act 1969 (NSW) which interrupts time running for limitation purposes. Even if the action were capable of being set aside, that cannot alter its character as continuing to fit that description, at least so long as not so set aside. Indeed had the debtor sought to set aside the Plaintiff's action, it would have been more appropriately stayed in the first instance, not set aside, to enable the assignor to be joined, whose consent to do so could be anticipated from the Assignment Agreement. 61 But even apart from those reasons, the relevant Local Court Rules, which define for limitation purposes when an action is brought, here operate with retroactive effect, even if the action otherwise failed to stop time running when first brought. The order for substitution presupposes both assignments have been effected and confirms their outcome, in terms of the identity of the Plaintiff. The getting in of the legal estate after the limitation period had expired thus permits the substitution order. This when made operates retroactively by force of Pt 16 r4, to the date of the original statement of claim, like the ratification of an agency, notwithstanding that the limitation period has expired.

OVERALL CONCLUSION 62 There was no error in point of law on the Magistrate's part in concluding that there was sufficient evidence to enable a finding to be reached that there had been an assignment of the debt to Bousdale Pty Limited. There was likewise no error of law in his concluding that the Local Court proceedings commenced by Bousdale (in its new name Credit Corp Australia Pty Limited) in July 1991 were not a nullity and were not statute barred by virtue of the Limitation Act 1969 (NSW). 63 Costs prima facie should follow the event and be awarded to the Respondent though I give leave to the parties to address me on this if they wish. 64 I direct the matter to come back before me within fourteen days for this purpose.

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