Case: Trendtex Trading Corporation v Credit Suisse [1982] AC 679
Outcome: discussed
Boston argued that the decision of the House of Lords in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 694, 702-703D, F-G supported its title to sue. New Boston said that it had a sufficient interest independent of the assignment in the sale agreement to justify it being able to assert old Boston's rights. But it is clear from the way in which the matter has been pleaded and from the evidence, that there was no pre-existing relationship (ie before the sale agreement) between old Boston and new Boston. The sale agreement was intended to, in effect, have new Boston step into old Boston's business and carry it on for reasons which are not currently before me. This is not a case such as where a mortgagee having lent money to a mortgagor finds itself in the position where both were induced to enter into the original financing and undertaking of the purchase by misleading or fraudulent conduct of the third party so as to support some interest independent of contract. The effect of the decision of the House of Lords in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 was debated in argument. In particular, new Boston relied on passages in the speeches of Lord Wilberforce ([1982] AC at 694) and Lord Roskill ([1982] AC at 702-703 esp at 703D and F-G). There, Lord Wilberforce said that provided that the assignor had a genuine and substantial interest in the success of the litigation, by giving a guarantee of the costs previously incurred, it would have been able, without offending the common law against maintenance or champerty, to have taken a security interest in the litigation or its proceeds ([1982] AC at 694D-E). Lord Roskill spoke to similar effect when he said ([1982] AC at 703F-G): 'If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or a savouring of maintenance.' The latter proposition was cited with approval by Ipp JA, giving the leading judgment, in Project 28 Pty Ltd v Tim Barr Pty Limited [2005] NSWCA 240 at [40] - [41] . Ipp JA noted that such an interest, as is described by Lord Roskill, had to be a 'legitimate interest' which was distinct from the benefit the person supporting the action sought to derive from the litigation and something beyond a mere personal interest in profiting from the outcome of the proceedings ([2005] NSWCA 240 at [41]; see also Zhu v Domson Pty Ltd [2006] NSWCA 232 at [18] - [19] per Spigelman CJ). Since judgment was reserved in this matter, the High Court has decided Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41. There, Gummow, Hayne and Crennan JJ referred to this issue, although, as Callinan and Heydon JJ pointed out it only 'received some mention before this Court' (see [2006] HCA 41 at [260] ). Gleeson CJ and Kirby J did not discuss this point. Gummow, Hayne and Crennan JJ observed that the House of Lords' conclusion in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 was that an agreement permitting a bank, which guaranteed the costs of a party to litigation in which the bank itself was also interested, to sell the party's claims in a litigation 'savours of champerty', 'since it involves trafficking in litigation a type of transaction which, under English law, is contrary to public policy' ([2006] HCA 41 [79]).