Mearns v Australian Litigation Fund Pty Ltd & Anor

REASONS FOR JUDGMENT THE COURT

1. On 25 August 2003 Willoughby Community Pre-School Inc. obtained judgment against Robyn Haydn Mearns in the District Court of New South Wales for a sum in excess of $430,000.
2. On 16 September 2003 Ms Mearns was served with a bankruptcy notice issued by the Pre-School out of the Federal Magistrates Court. By failing to comply with the notice Ms Mearns committed an act of bankruptcy. On 18 December 2003 the Pre-School petitioned the Federal Magistrates Court for a sequestration order against the estate of Ms Mearns.
3. On 6 April 2004 the Pre-School and Australian Litigation Fund Pty Ltd entered into a deed described as a 'Deed of Assignment of Debt'. Clause 2 of the Deed contained the following provisions: "2.1 Assignment of the Debt by the Assignor In consideration of these presents and in the consideration of the payment of the Assignment Sum, the Assignor hereby transfers and assigns to the Assignee, free from all encumbrances, with effect from the Assignment Date all right, title and interest in and to the Judgment Debt. 2.2 Acceptance of Assignment The Assignee accepts the assignment under clause 2.1. 2.3 Notices of Assignment The Assignor must contemporaneously with execution of this Deed execute and deliver to the Assignor two undated (2) originals of the executed Assignment Notice. The Assignor irrevocably authorises the Assignee to date and send by ordinary post (or any other means the Assignee deems fit) the executed Assignment Notice to the Debtor on or after the Assignment Date."
4. On or after 7 December 2004 the following 'Notice of Assignment' was served on Ms Mearns: "Notice of Assignment TO: Robyn Haydn Mearns 92 Artarmon Road, Artarmon, NSW 2064 This Notice of Assignment is Schedule 1 to a Deed of Assignment ("Deed") entered into by Willoughby Community Preschool Inc NSW Y1327732 as the Assignor and Australian Litigation Fund Pty Ltd ACN 078 747 092 as the Assignee. The debt referred to in this Notice of Assignment arises from the orders of the District Court of New South Wales made on 25 August 2003. On that day it was ordered by the Court that you are to pay to Willoughby Community Preschool Inc. the sum of $431,759.86. Annexure 1 to the Deed (attached) is a copy of the judgment dated 25 August 2003. NOW TAKE NOTICE that Willoughby Community Preschool Inc has, under the Deed, assigned and transferred to Australian Litigation Fund Pty Ltd, all right title and interest in and to the Judgment Debt together with your indebtedness to pay under the Judgment Debt (being the sum of $431,759.86 plus interest accruing from the date of 25 August 2003 and costs) and you are irrevocably directed to pay those amounts to Australian Litigation Fund Pty Ltd or as it may otherwise direct. TAKE FURTHER NOTICE that only Australian Litigation Fund Pty Ltd can give a good and valid discharge of the Judgment Debt. Dated: 7 December 2004" The Notice of Assignment was executed under seal by the Pre-School.