Rafferty v National Australia Bank Limited [2011] FCA 169

FEDERAL COURT OF AUSTRALIA

Rafferty v National Australia Bank Limited [2011] FCA 169 Citation: Rafferty v National Australia Bank Limited [2011] FCA 169

Parties: PATRICK CAMPBELL RAFFERTY, TIME 2000 WEST PTY LIMITED (ACN 127 893 270) and KARAVILLE HOLDINGS PTY LIMITED (ACN 009 439 178) v NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)

File number: SAD 206 of 2010

Judge: MANSFIELD J

Date of judgment: 28 February 2011

Catchwords: CORPORATIONS – Corporations Act 2001 (Cth) s 240 – matters for consideration – application for leave of the Court to approve compromise of proceedings

Date of hearing: 2 March 2011

Place: Adelaide

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 13

Counsel for the First and Third Applicants: J Cudmore

Solicitor for the First and Third Applicants: Cudmore Cusoff Knox

Counsel for the Respondent: L Calabrese

Solicitor for the Respondent: Finlaysons

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 206 of 2010

BETWEEN: PATRICK CAMPBELL RAFFERTY

First Applicant

TIME 2000 WEST PTY LIMITED (ACN 127 893 270)

Second Applicant

KARAVILLE HOLDINGS PTY LIMITED (ACN 009 439 178)

Third Applicant

AND: NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)

Respondent

JUDGE: MANSFIELD J DATE: 2 March 2011 PLACE: ADELAIDE

REASONS FOR RULING 1 This proceeding concerns the alleged wrongful application of funds of Time 2000 West Pty Limited (Time 2000) by National Australia Bank Limited (the Bank). Patrick Rafferty is one of the two directors of Time 2000, along with Stephen Gerard Donovan (Donovan). Companies respectively associated with Rafferty and Donovan were the shareholders in Time 2000. It is not necessary to explore in any detail the nature of the activities planned for Time 2000. It was, in general terms, a corporate vehicle for a joint enterprise. 2 There was a falling out between Rafferty and Donovan. It is also not necessary to explore the details. It has been the subject of separate proceedings: Rafferty v Time 2000 West Pty Ltd (No 4) [2010] FCA 725 and Rafferty v Time 2000 West Pty Ltd (No 5) [2010] FCA 873; (2010) 87 IPR 593. An appeal from those two decisions has recently been heard. Judgment has been reserved by the Full Court. 3 In the course of its operations, Time 2000 held significant funds in a bank account with the Bank. It is alleged in this proceeding that Donovan procured the Bank to pay certain of those funds to the account of Time 2000 Systems (Australia) Pty Ltd (Time Systems), an entity controlled by Donovan. It is further alleged that that payment in reduction of the balance of the monies held by the Bank on behalf of Time 2000 was not properly authorised by Time 2000 and took place without the consent of both directors of Time 2000 in circumstances where it had been arranged, and the Bank was on notice that, no further reduction of monies held on deposit on behalf of Time 2000 would be made without confirmation from both its directors. 4 Because of the shareholding in Time 2000 and its joint directorships, Rafferty has brought these proceedings in his own name as well as in the name of Time 2000. Donovan would not have authorised Time 2000 to do so. Rafferty seeks an order under ss 236(1) and 237(2) of the Corporations Act 2001 (Cth) (the Act) for leave to bring the proceedings on behalf of Time 2000, then as now, as well as for the primary relief referred to. In essence, through Time 2000, he seeks to have its bank account restored to the level it was before the contentious transfer. 5 The parties to the proceeding, but in particular Rafferty and the Bank, have agreed upon their resolution. Karaville Pty Ltd is an entity controlled by Rafferty, but is an incidental party for present purposes. Their agreement, as to its detailed terms, is confidential. I am informed that the agreement includes that the Bank will restore the account of Time 2000 to its credit level and status as it existed prior to the contentious transfer of funds to Time Systems. 6 That agreement having been reached, it is necessary for Rafferty formally to obtain an order under s 237(2) of the Act for leave to have brought the proceedings in the name of Time 2000, and then for an order under s 240 of the Act approving the proposed compromise which, once it is implemented, is apparently intended to lead to the discontinuance of this action. Hence, an order is sought under s 240 that leave be granted to the parties to discontinue, compromise or settle the within proceedings. Thereafter, the proposed order provides for a procedure whereby the proceedings will in due course be discontinued, or otherwise brought to an end.