WorkCover Queensland v Amaca Pty Limited (No 2) [2011] QSC 358

Justice Boddice was asked to determine whether an assignment of a personal injuries action was valid.

The circumstances of the assignment sought to be relied on stem from WorkCover seeking to recover the statutory benefit pursuant to s.207B of the Workers’ Compensation and Rehabilitation Act 2003 (Qld), after the plaintiff deceased, when proceedings had been commenced whilst the plaintiff was alive, but not served. There had been no judgment or compromise. The plaintiff’s purpose in commencing his claim was designed to protect his General Damages and compensation entitlements.

In order to overcome the hurdle of the wording of s.207B an assignment of the right of action was taken from the estate of the late plaintiff.

Against this context Justice Boddice considered whether there could be an assignment of a personal injuries action and whether there was a substantial and/or commercial interest by WorkCover in taking that assignment.

Ultimately, his Honour held “no” on the basis there was no pre-existing legal right at the relevant time:

[21] The applicability of the Trendtex principle to Queensland was expressly considered by Mullins J in Vangale Pty Ltd (in liq) v Kumagai Gumi Co Ltd.[28] In dismissing an application for summary judgment, Mullins J stated:

“[70] The rationale for the unassignability of a bare right of action was that it was objectionable on the grounds of maintenance: Brownton Ltd v Edward Moore Inbucon Ltd [1985] 3 All ER 499, 505. The authorities commencing with Trendtex have changed the laws relating to maintenance and champerty and provided a basis on which an assignment of a right to claim damages for breach of contract or tort which is not coupled with a right of property can be justified. In view of these developments, it is wrong to rely on the statement in Poulton v Commonwealth to the effect that the right of action for the tort was incapable of assignment either at law or in equity, when the assignee in that case did not have a pre-existing genuine substantial or commercial interest in the cause of action that was assigned and the case was also decided before the modern developments in the law of negligence: Beatty v Brashs Pty Ltd at 215. The analysis in First City Corporation Ltd v Downsview Nominees Ltd and Beatty v Brashs Pty Ltd for not drawing any distinction between rights of action in tort and contract in applying the principles of Trendtex is compelling.”

[22] A similar conclusion was reached by McDougall J in Rickard Constructions & Anor v Rickard Hails Moretti & Ors.[29] After noting the various authorities which had applied Trendtex, and those which had declined to do so, McDougall J considered whether it was open, having regard to the obiter remarks in Poulton, to find that the test in Trendtex also applied to the assignment of actions in tort. His Honour concluded:

“53 If it were necessary for me to reach a concluded view, it would be that I am at liberty to depart, and should depart, from the dicta of the High Court in Poulton. I have come to this view for a number of reasons:

(1) Their Honours were doing no more than identifying the law as it then stood. It was unnecessary for them to decide whether the principle that they identified should be applied to the facts of the case before them (because, as they said, there was in fact no assignment).

(2) In terms, what their Honours said applies only to an assignment of a cause of action in tort.

(3) Their Honours did not consider (because they did not need to consider) whether there were any exceptions to the rule. Trendtex does not deny the rule; it establishes that there is an exception, at least in relation to causes of action in contract, where the assignee has the requisite interest to support the assignment.

(4) The rule is at base a reflection of the policy of the common law against maintenance. The content of that policy, and its application, change from time to time. It is a likely that a re-examination of the rule, in the light of changing social, commercial and economic conditions, will indicate exceptions that had not existed, or had not been perceived, in earlier times.

(5) I therefore regard it as open to me to have regard to the analysis of the policy considerations in Trendtex and Giles (and in cases in England that follow them), and to the recognition of those changed, or revealed, policy considerations in decisions in this country.”

[23] McDougall J saw no reason to draw a distinction between the assignment of causes of action in contract and in tort. Applying the Trendtex test, McDougall J was satisfied that the plaintiff had no interest sufficient to justify the assignment. McDougall J noted that if he were wrong in thinking that Trendtex applied, the same result would be reached, at least in respect of the assigned claims in tort, by application of the dicta in Poulton.[30]

[24] Like Mullins J, I find the reasoning in Beatty, and the subsequent reasoning in Rickard, compelling. If assignments of causes of action in contract may now be validly made where the assignee has the requisite genuine interest, there is no good reason why a distinction should be drawn in respect of the assignment of actions in tort. This is particularly so where, as here, the assignment was of causes of action for damages for personal injuries in both contract and tort, based on the same facts. There is also no reason to create a distinction between actions in tort claiming damages for personal injuries. As was observed in Beatty, the need for the requisite genuine interest would render the assignment of such actions invalid as an assignee of such a cause of action would be unable to establish that interest.

[25] In reaching that conclusion, I have had regard to the observations of Selway J in Deloitte Touche Tohmatsu v Cridlands Pty Ltd[31] that there are broader public policy issues involved in the assignment of causes of action for personal claims in tort, particularly, their tendency to impose a requirement that a party give particular and specified evidence in court. Those concerns were valid in Deloitte as the particular Deed under consideration was found to have a tendency to require the giving of particular and specified evidence. As such, it specifically involved unlawful maintenance and was in breach of public policy.[32]

[26] However, in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd, when considering Trendtex, albeit in the context of an appeal against a finding that litigation funding arrangements in representative proceedings were against public policy,[33] Gummow, Hayne and Crennan JJ, after noting that the order for a stay in Trendtex was not based upon considerations of public policy concerning maintenance or champerty,[34] questioned why fears that evidence may be suppressed or witnesses suborned would not be adequately addressed by equity doctrines of abuse of process or other procedural or substantive court processes.[35]

[27] WorkCover contends that it has the requisite genuine interest in the assignment of Rourke’s causes of action for damages for personal injuries. The basis for this contention is that WorkCover is granted a right of statutory indemnity by s 207B of the 2003 Act. WorkCover accepts it is unable to take advantage of that right of indemnity in the particular circumstances of this case because whilst Rourke had commenced proceedings, he did not serve those proceedings, and there had been no subsequent settlement of those proceedings. However, WorkCover submits the existence of statutory indemnities under s 207B of the 2003 Act supports its claim that it has a genuine and substantial interest in the success of Rourke’s claim, or a genuine commercial interest in its reinforcement.

[28] The respondent accepts that in different circumstances WorkCover would have had a statutory right of indemnity. However, it submits that that fact does not satisfy the test as the requirements of a genuine interest must be an existing legitimate interest supporting the action, distinct from the benefit derived from the assignment.[36]

[29] The need for the genuine and substantial, or commercial, interest to be pre-existing was expressly recognised by Mullins J in Vangale.[37] Further, in Scholle Industries Pty Ltd v AEP Industries (NZ) Ltd,[38] White J said:

“Subsequent authority has illustrated the variety of circumstances in which a genuine commercial interest may exist. A substantial creditor of the assignor, a sole shareholder who was the guarantor of the overdraft of the assignor, and a defendant who had paid money into court to satisfy a plaintiff’s claim and who had taken an assignment of the plaintiff’s cause of action against a co-defendant have each been held to have an interest amounting to a genuine commercial interest sufficient to sustain an assignment. But in all cases in which it has been held that the assignee had a genuine commercial interest in taking the assignment, that interest has existed independently of, and prior to, the assignment itself. That is to say, the interest of the assignee in the subject matter of the assignment was distinct from the benefit which it sought to derive from it.”

[30] To be a genuine substantial or commercial interest within the principles enunciated in Trendtex, there must be an interest which already exists, and which receives ancillary support from the assignment.[39] The interests contended for by WorkCover do not satisfy that test. Its claim is not akin to a right of subrogation. WorkCover was given a statutory right of indemnity under the 2003 Act only in specified circumstances. Those circumstances are not satisfied in the present case. WorkCover has no pre-existing interest. It seeks to create an interest by an assignment. Such an interest does not satisfy the test of a genuine substantial or commercial interest.

[31] This conclusion renders it unnecessary to finally determine whether it is open to this Court, to depart from the dicta in Poulton. If it had been necessary to determine that issue, I would, for the reasons advanced by Mullins J and McDougall J, have concluded that I was at liberty to do so.

Conclusion

[32] If the principles enunciated in Trendtex are to be applied to assignments of causes of action for damages for personal injury, this assignment does not satisfy the prerequisite that WorkCover have a genuine substantial or commercial interest in the assignment. Accordingly, the assignment is invalid. Alternatively, if the dicta in Poulton continues to operate, an assignment of a cause of action in tort for personal injuries is not valid.

[33] The separate question is answered “no”.

Brisbane Barrister – David Cormack

NB: The decision was set aside on appeal: WorkCover Queensland v AMACA Pty Limited [2012] QCA 240

 

Related Posts

Recent Comments

    Categories