(3) Hammerschlag J had "found that the only party capable of bringing the contract claim in the name of the partnership, was a receiver appointed to the Ezysend partnership" (amended written outline, paragraph 33 (d)).
121 The first two points are correct. It is also correct, as Yahoo submits, that Mr Gibson was a plaintiff and Mr Dwyer was a defendant when the claim was pleaded as one by the Ezysend partnership.
122 The submission falls down at the third point. Yahoo relies not on any judgment given by Hammerschlag, or on orders made by his Honour pursuant to any judgment, but on remarks by his Honour in the course of argument on 21 September 2007 (in the hearing referred to at [58] above).
123 His Honour pointed out (T12.12) that the relevant damage was that suffered by the partnership, and said (T12.20) that "[i]f the partnership sued for the damage, the money would come back into the partnership and he [Mr Gibson] would be made whole." The barrister sought to oppose this, by submitting that Mr Gibson's loss "is distinct from the loss of the partnership" (T12.24).
124 A little later on, Hammerschlag J reiterated that "[t]he partnership could sue for whatever damage is suffered" (T12.40). The barrister replied "[t]he short answer to that is both members of the partnership are already parties to the proceedings" (T12.43). Mr Studdy, who appeared then as before me for Yahoo, interjected "that the partnership is dissolved" (T12.45) Hammerschlag J then said that "[t]he receiver would have to sue. You would have to get a Court appointed receiver to sue" (T12.47).
125 It is not correct to say that observations made by a judge in the course of argument amount to a "finding" or conclusion. The adversary system of civil litigation, as it is practised today, includes the interchange of views between advocates and the court, in the course of which relevant issues are exposed and irrelevant issues are discarded. It is wrong to say that a judge, by expressing a view in the course of argument, is thereby "finding" or "holding" the point so expressed.
126 In this case, it seems to me, the point made by the barrister - that both members of the partnership were parties to the proceedings - was an answer to his Honour's point. During the subsistence of the partnership, the partners held the assets of the partnership in accordance with their respective shares. That situation did not change on dissolution. The fact that a receiver may be appointed to wind up a partnership does not mean that a receiver has to be appointed before the assets of the partnership can be got in and realised. There is no reason why the partners themselves could not get in and realise all the assets of the partnership, pay all of its liabilities, and distribute the proceeds among themselves without the intervention of any third party.
127 In this case, assuming for the moment that the benefit of the contract claim against Yahoo was an asset of the partnership, it remained an asset owned by Messrs Gibson and Dwyer after the partnership was dissolved. Messrs Gibson and Dwyer could have sued to enforce the claim. In that sense, each was a necessary party. But if one of them - in this case Mr Dwyer - did not wish to sue, it was open to the other - in this case Mr Gibson - to sue, provided that Mr Dwyer was joined as a defendant. The proceedings were regularly constituted, because all of those having an interest in the asset were parties, and would be bound by the outcome.
128 In those circumstances, I think that it was open to the plaintiffs to proceed as they did. It follows that I reject the submission that the claim was never sustainable in the circumstances in which it was advanced.
129 In this context, Yahoo relies also on its submissions relating to clause 10 and in relation to security for costs. As to the former: I refer to what I have said already. As to the latter: I will deal with this when considering Yahoo's submissions based on security.
The joint venture claim
130 Yahoo submits that the joint venture claim was never sustainable, and had no reasonable prospects of success, in the face of clause 14.5 of the agreement.
131 I recognise that clause 14.5 is a powerful obstacle to the joint venture claim (and Bergin J appears to have shared this view, because her Honour struck out this aspect of the claim). However, I note that the characterisation of an agreement, or more accurately of the relationship between the parties to an agreement established by that agreement, is a matter to be determined having regard to the substance and effect of all of the provisions of the agreement; and the parties' characterisation of their relationship may be disregarded in an appropriate case. Thus, for example, an agreement expressed to be one of licence may be found to be a lease: Radaich v Smith (1959) 101 CLR 209.
132 It is fair to say that neither the barrister or the solicitor appear to have turned their minds to the point that I have just made; and it is equally fair to say that, if the point had been raised before Bergin J, it did not find favour with her Honour. In those circumstances, I have to say that I do not really understand the basis on which the barrister and the solicitor advised or permitted Whyked to press the joint venture claim: particularly once GT had brought to their attention the problems flowing from clause 14.5 of the agreement (see GT's letter of 18 May 2006 to RMB, and the outline of Yahoo's submissions on the strike out application served on 23 May 2006).
The Trade Practices Act and misrepresentation claims by Whyked
133 Yahoo submits that those claims were never sustainable because Whyked's title to sue depended on the assignments, and the claims were not capable of being assigned.
134 I accept that, in respect of claims under the Trade Practices Act (and its statutory analogues) only the person who suffers loss by the relevant conduct can sue in respect of it. See (by way of example only) the decision of Lindgren J in National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514.
135 I do not think that the position is so clear in respect of tortious claims. Certainly, in Poulton v The Commonwealth (1953) 89 CLR 540, it was said that causes of action in tort are not assignable at law or in equity. See Fullagar J (at first instance) at 571; and see Williams, Webb and Kitto JJ (on appeal) at 602. What their Honours said was obiter, because all of them concluded that there had been no assignment or purported assignment. Nonetheless, I accept that courts of first instance should not generally regard themselves as at liberty to depart from the considered dicta of a majority in the High Court of Australia.
136 That having been said, things have moved on since 1953. I reviewed the situation (as at December 2004) in Rickard Constructions v Rickard Hails Moretti [2004] NSWSC 1041 at [42] and following. I concluded, on a review of the authorities to that time, that I could and should depart from the dicta in Poulton. An appeal from my decision was dismissed (Rickard Constructions v Rickard Hails Moretti Pty Ltd [2006] NSWCA 356), although the Court of Appeal did not consider what I had said in relation to the assignability of causes of action. I summarised my reasons at [53], and do not wish to repeat what I there said. I acknowledge that, since I gave my judgment in Rickard Constructions, the High Court of Australia has reinforced the point that it is not appropriate for an intermediate court of appeal to depart from "seriously considered dicta of a majority of" the High Court: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107 at 1140 [135]. I acknowledge that the point made by their Honours applies a fortiori to judges of first instance. Nonetheless, I think, the developments that I traced in Rickard Constructions at [42] and following justify what, otherwise, must be an unacceptable course.
137 Yahoo relied also on clause 14.7 of the agreement, prohibiting the assignment of rights under the agreement without consent. I do not think that any claim in contract based on assignment was necessarily doomed to fail because of cl 14.7. At the least, there is a question of construction as to whether cl 14.7 applies to an assignment (or purported assignment) of a cause of action for breach, where the assignment was made after the contract had come to an end by effluxion of time.
138 Thus, I do not accept that Whyked's case, insofar as it was based on assignment of a cause of action for misrepresentation, should have been perceived to have been hopeless.
139 I should note that this is one of the matters that the solicitor did discuss with the barrister, after receiving Yahoo's strike-out application and submissions in support. According to the solicitor, the barrister acknowledged that "there is some pretty heavy authority against us on the assignment point", but suggested some possible answers.
140 It is also worth noting that, on 1 June 2006 (the day before the strike-out application was listed for hearing) the solicitor and Mr Gibson had a telephone conference with the barrister in which, among other things, the barrister estimated Yahoo's prospects of success at "50/50", but noted as a "fallback position… that you and Michael Dwyer become the plaintiffs in the proceedings". Mr Gibson said that Mr Dwyer would be a plaintiff if he were indemnified for costs.
141 I have to say that I do not understand why the solicitor should have been required to make his own assessment of the issue, when the barrister, having apparently researched the relevant issues, had indicated that the solicitor's client had a "50/50" prospect of success. Nor do I understand why it was relevantly delinquent, by which I mean to call up s99(1)(a) of the Civil Procedure Act, for the solicitor to continue to run a case apparently having "50/50" prospects of success or failure.
The Trade Practices Act and misrepresentation claims by Ezysend
142 Yahoo submits that the claims were not sustainable and had no reasonable prospects of success. It relies upon its submission, which I have already rejected, that Hammerschlag J had "found that the only party capable of bringing the… claims in the name of the partnership, was a receiver appointed to the Ezysend partnership" (amended written outline para 36(b)(i)).
143 In this context, Yahoo relies also on the question of security for costs: a matter to which I shall turn in due course.
Trade Practices Act and misrepresentation claims by Mr Gibson
144 Again, Yahoo founds its attack on the supposed "finding" made by Hammerschlag J, although this time it refers more accurately "to a "statement by" his Honour (paragraph 37(a)).
145 For the reasons I have given, I accept that the claim was one belonging to the former partners. I conclude, however, that it was open to Mr Gibson to prosecute the claim in an action in which the other partner, Mr Dwyer, was a party.
146 In this context, Yahoo relies on the agreement that any proceeds recovered by Mr Gibson would be split among Whyked's shareholders in proportion to their holders. I have to say that I do not know why this makes the claim unmaintainable, although I accept that it is relevant in relation to security for costs: the topic to which I now turn.
Security for costs
147 Yahoo submits that it was relevantly improper or unreasonable for the solicitor to permit the proceedings to go forward, so that Yahoo would incur costs in defending them, in circumstances where it was apparent that neither Whyked nor those standing behind it had the ability to meet any substantial costs order that might be made against them, or to provide any substantial sum by way of security for costs.
148 I accept that Yahoo through GT raised the question of security for costs relatively soon after the summons and commercial list statement were served. It did so by GT's letter to RMB dated 9 May 2006. The issue was referred to in subsequent letters dated 16 May, 4 July and 6 July 2006. I accept also that: