Fried v National Australia Bank Limited [2001] FCA 907

FEDERAL COURT OF AUSTRALIA

Fried v National Australia Bank Limited [2001] FCA 907

BANKING AND FINANCIAL INSTITUTIONS – banker and customer – wrongful debit of bank account – customer a firm – four partners listed as authorised signatories – non-listed partner effected withdrawal on firm account held in trust for named beneficiary – misappropriated funds – whether bank liable to restore funds – terms of contract between firm and bank – variation of contract – letter from managing partner adding further authorised signatories – whether effective to vary contract – effect of legislation relating to reporting of financial transactions – whether withdrawal authorised – whether fraudulent partner had actual authority to make withdrawals – ostensible authority – whether bank relied on representation of authority – whether bank knew of absence of actual authority – ratification and adoption – whether withdrawals ratified by firm or client beneficiary – whether full knowledge of all material circumstances – estoppel – duties of customer – whether customer owed bank a duty to inform it of unauthorised withdrawals – election – pursuit of alternative claims – settlement – whether election where claim settled but no judgment entered PARTNERSHIP – agency – actual authority – withdrawal of trust funds by partner – ostensibly for investment in tax scheme – tax scheme a sham – funds misappropriated – firm had authority to effect withdrawals for transfer to investments – whether withdrawal authorised – whether for the purpose of the business of the partnership – ostensible authority – representation – whether firm represented partner had authority – whether withdrawal instructions presented as part of firm's ordinary banking round – whether bank relied on representation – whether bank knew of absence of actual authority – whether in signing withdrawal forms partner carried on in the usual way business of the kind carried on by the firm CONTRACT – interpretation – deed of assignment of listed assets – letters purporting to repay loans listed in deed of assignment – whether letters mistakenly prepared – whether loans extinguished by letters – whether deed effective to assign claim for wrongful debit EQUITY – trusts – rights of beneficiaries – trustee unwilling to sue – whether beneficiary can sue – whether trustee must be unable to sue – whether special circumstances required – whether distinction between common law and equitable claims