FEDERAL COURT OF AUSTRALIA
G.E. Shaw & Associates (ACT) Pty Ltd v Narayan [2014] FCA 435
Citation: G.E. Shaw & Associates (ACT) Pty Ltd v Narayan [2014] FCA 435 Parties: G.E. SHAW & ASSOCIATES (ACT) PTY LTD (ACN 096 942 077; ABN 54 096 942 077) v ADI NARAYAN, AUSTRALISIA BOUTIQUE HOME DESIGN PTY LTD (ACN 136 399 061; ABN 136 399 061), PINAKIN RAMBHAI PATEL (& T/AS CONSTRUCTION SITE CLEANING SERVICES) (ABN 13 728 380 310), SANGITA BAHEN PATEL, UMESH WARAN PILLAY (& ALSO KNOWN AS SUMESH PILLAY) and SANGITA MANI PILLAY; PINAKIN RAMBHAI PATEL v ADI NARAYAN File number: ACD 75 of 2012 Judge: FOSTER J Date of judgment: 2 May 2014 Catchwords: AGENCY – whether a solicitor on the record in a proceeding continues to have ostensible authority to compromise claims made in that proceeding notwithstanding that his or her actual authority may have been qualified in some way unknown to the counter-party or its representatives Legislation: Constitution, s 76(ii)
Corporations Act 2001 (Cth)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 9(3)Cases cited: Crosby v Kelly (2012) 203 FCR 451 applied
G E Dal Pont, Law of Agency (Butterworths, 2001)
Date of hearing: 1 May 2014 Place: Canberra Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 74 Counsel for the Applicant (Respondent on the Interlocutory Application): Mr R Vivekananda Solicitor for the Applicant (Respondent on the Interlocutory Application): O'Connor Harris Counsel for the Fifth and Sixth Respondents (Applicants on the Interlocutory Application): Mr G Sharma appeared by leave
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
ACD 75 of 2012
BETWEEN: G.E. SHAW & ASSOCIATES (ACT) PTY LTD (ACN 096 942 077; ABN 54 096 942 077)
ApplicantAND: ADI NARAYAN
First RespondentAUSTRALISIA BOUTIQUE HOME DESIGN PTY LTD (ACN 136 399 061; ABN 136 399 061)
Fourth RespondentPINAKIN RAMBHAI PATEL (& T/AS CONSTRUCTION SITE CLEANING SERVICES) (ABN 13 728 380 310)
Fifth RespondentSANGITA BAHEN PATEL
Sixth RespondentUMESH WARAN PILLAY (& ALSO KNOWN AS SUMESH PILLAY)
Seventh RespondentSANGITA MANI PILLAY
Eighth RespondentAND BETWEEN: PINAKIN RAMBHAI PATEL
Cross-ClaimantAND: ADI NARAYAN
Cross-Respondent
JUDGE:
FOSTER J
DATE OF ORDER:
2 MAY 2014
WHERE MADE:
CANBERRA
THE COURT ORDERS THAT:
1.The Interlocutory Application filed by the fifth and sixth respondents (Pinakin Rambhai Patel and Sangita Bahen Patel) on 12 December 2013 be dismissed.
2.The fifth and sixth respondents pay the applicant’s costs of and incidental to the said Interlocutory Application.
3.The proceeding be listed for further directions at 9.15 am on 6 June 2014 before the A.C.T. List Judge.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
ACD 75 of 2012
BETWEEN: G.E. SHAW & ASSOCIATES (ACT) PTY LTD (ACN 096 942 077; ABN 54 096 942 077)
ApplicantAND: ADI NARAYAN
First RespondentAUSTRALISIA BOUTIQUE HOME DESIGN PTY LTD (ACN 136 399 061; ABN 136…
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- AGLC
- G.E. Shaw & Associates (ACT) Pty Ltd v Narayan [2014] FCA 435
- Case
- [2014] FCA 435
- Decision Date
CaseChat Overview and Summary
The case of G.E. Shaw & Associates (ACT) Pty Ltd v Narayan involves a construction company, Shaw Building Group Pty Ltd, that alleged that Adi Narayan, who was its Financial Controller, misappropriated a substantial sum of money. The company sought freezing orders against Narayan and others, which were granted by the Court. The company also sued the Patels, alleging that they had received funds from Narayan and had assisted in his misconduct. The Patels argued that the Court lacked jurisdiction to hear the case, but this argument was rejected by the Court. The Patels also sought to set aside consent orders that they had made with the company, alleging they were pressured by their own lawyers. This application was also dismissed.
The central legal issue in this case was whether the Court had jurisdiction to hear the claims made by Shaw Building Group Pty Ltd. The Patels argued that the claims were based on equitable principles and not federal law, and therefore the Court did not have jurisdiction. However, the Court rejected this argument, relying on the decision in Crosby v Kelly, which held that the Federal Court of Australia has original jurisdiction to hear matters that could have been brought in the Supreme Court of the Australian Capital Territory. Another issue was whether the Patels could set aside the consent orders they had made with the company. The Court held that the Patels' application to set aside the orders should be dismissed, as there was no evidence that the company or its lawyers knew about any pressure applied by the Patels' lawyers.
The Court held that it had jurisdiction to hear the claims made by Shaw Building Group Pty Ltd, as the claims could have been brought in the Supreme Court of the Australian Capital Territory. The Court also held that the Patels' application to set aside the consent orders should be dismissed, as there was no evidence that the company or its lawyers knew about any pressure applied by the Patels' lawyers. The Court found that the Patels had been given sufficient opportunity to seek legal advice and had made the consent orders voluntarily. The Court further held that the Patels' jurisdiction argument was misconceived, and that the reasoning in Crosby v Kelly applied to this case.
The Court dismissed the Patels' Interlocutory Application and ordered them to pay the company's costs of and incidental to the application. The proceeding was listed for further directions before the A.C.T. List Judge. The Court's decision confirms that the Federal Court of Australia has jurisdiction to hear claims that could have been brought in the Supreme Court of the Australian Capital Territory, and that parties cannot easily set aside consent orders without showing that there was some impropriety on the part of the other party.
The central legal issue in this case was whether the Court had jurisdiction to hear the claims made by Shaw Building Group Pty Ltd. The Patels argued that the claims were based on equitable principles and not federal law, and therefore the Court did not have jurisdiction. However, the Court rejected this argument, relying on the decision in Crosby v Kelly, which held that the Federal Court of Australia has original jurisdiction to hear matters that could have been brought in the Supreme Court of the Australian Capital Territory. Another issue was whether the Patels could set aside the consent orders they had made with the company. The Court held that the Patels' application to set aside the orders should be dismissed, as there was no evidence that the company or its lawyers knew about any pressure applied by the Patels' lawyers.
The Court held that it had jurisdiction to hear the claims made by Shaw Building Group Pty Ltd, as the claims could have been brought in the Supreme Court of the Australian Capital Territory. The Court also held that the Patels' application to set aside the consent orders should be dismissed, as there was no evidence that the company or its lawyers knew about any pressure applied by the Patels' lawyers. The Court found that the Patels had been given sufficient opportunity to seek legal advice and had made the consent orders voluntarily. The Court further held that the Patels' jurisdiction argument was misconceived, and that the reasoning in Crosby v Kelly applied to this case.
The Court dismissed the Patels' Interlocutory Application and ordered them to pay the company's costs of and incidental to the application. The proceeding was listed for further directions before the A.C.T. List Judge. The Court's decision confirms that the Federal Court of Australia has jurisdiction to hear claims that could have been brought in the Supreme Court of the Australian Capital Territory, and that parties cannot easily set aside consent orders without showing that there was some impropriety on the part of the other party.
Orders
Orders of the court
1. The Interlocutory Application filed by the fifth and sixth respondents (Pinakin Rambhai Patel and Sangita Bahen Patel) on 12 December 2013 be dismissed.
2. The fifth and sixth respondents pay the applicant’s costs of and incidental to the said Interlocutory Application.
3. The proceeding be listed for further directions at 9.15 am on 6 June 2014 before the A.C.T. List Judge.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
By these Reasons for Judgment, I determine the Interlocutory Application filed by the Patels on 12 December 2013. The Relevant Facts Shaw Building Group Pty Ltd (formerly called “G.E. Shaw & Associates (ACT) Pty Ltd”), the applicant in this proceeding, is a construction company operating in the Australian Capital Territory and surrounding regions. In about May 2012, executives of the applicant discovered that the first respondent, Adi Narayan, had misappropriated funds which were the property of the applicant. Mr Narayan had been employed by the applicant as its Financial Controller since May 2006. Between May and October 2012, as a result of investigations carried out by it in that period, the applicant uncovered most of the first respondent’s frauds. By mid-October 2012, the applicant believed that the total amount misappropriated by the first respondent was $987,005.08. By that time, the applicant also believed that the first respondent had paid across to friends and associates of him a significant part of the funds which he had misappropriated. Armed with a substantial body of evidence, on 15 October 2012, the applicant approached the Court ex parte. It sought freezing orders against Mr Narayan and against eight other persons. All of those persons were associates of Mr Narayan who, according to the applicant, had received some of the funds which he had misappropriated from the applicant. On 15 October 2012, I made freezing orders substantially in the terms sought against all respondents. Mr and Mrs Patel were named as the fifth and sixth respondents in the Originating Application filed by the applicant on 15 October 2012 and were made subject to the freezing orders which I made on 15 October 2012. Those freezing orders were subsequently extended against Mr and Mrs Patel (as well as against other respondents) from time to time. They remain in force post-judgment in modified form as against Mr and Mrs Patel. The applicant has alleged at all times since at least 15 October 2012 that Mr Patel received at least $390,387.28 in total and that Mrs Patel received $20,064.33 in total from the funds misappropriated by Mr Narayan from the applicant. The applicant originally claimed $390,387.28 from Mr Patel and $20,064.33 from Mrs Patel. In its Statement of Claim filed on 23 November 2012, the applicant increased its claim against Mr Patel to $394,511.62. The applicant’s case was that the fifth and sixth respondents had knowingly participated and assisted in Mr Narayan’s breaches of fiduciary and statutory duties owed to the applicant and had knowingly received some of the proceeds of those breaches. The claims against the fifth and sixth respondents were founded on general equitable principles and on the Corporations Act 2001 (Cth). By early August 2013, the applicant’s claims against all respondents other than Mr Narayan and the Patels had been resolved. As a result, the applicant has recouped a substantial part of its losses. The applicant’s claim against Mr Narayan remains unresolved. He is presently incarcerated, having been convicted of and sentenced for the misappropriation of funds which is at the heart of the present proceeding.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Mr Sharma did not make any submission to the effect that the applicant or its lawyers had any knowledge or inkling of the matters about which the Patels now complain concerning their dealings with their own lawyers in November 2013. The Patels’ case before me was that it is a sufficient basis for setting aside the Consent Orders and the relevant orders made by me on 22 November 2013 if I were to be satisfied that they had been unduly pressured by their own lawyers into authorising settlement of the applicant’s claims against them upon the terms embodied in the Consent Orders even though nobody on the applicant’s side of the record had any knowledge or even suspicion that this is what had occurred (if, in truth, such pressure was applied). I do not agree with this submission and I will explain why shortly.Decision In addition to arguing that they had been pressured by their own lawyers into settling the matter, the Patels filed a Written Submission on 4 March 2014 in which they submitted that this Court had no jurisdiction to deal with the claims made by the applicant in this proceeding. The proposition was that the applicant had failed to specify any basis upon which it could be said that the claims involved federal law and that, in truth, the claims were wholly based upon general principles of equity. It was then contended that, for those reasons, the Court had no jurisdiction to make the orders which were made on 22 November 2013. Mr Sharma relied upon that Written Submission but did not seek to amplify or develop it in oral argument. The Patels filed no other Written Submission despite being directed to do so. The Patels’ challenge to the jurisdiction of this Court must be rejected. It is misconceived. In Crosby v Kelly (2012) 203 FCR 451, Robertson J (with whom Bennett and Perram JJ agreed) held that s 9(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) confers original jurisdiction upon the Federal Court of Australia to hear and determine justiciable matters in which the Supreme Court of the Australian Capital Territory has jurisdiction otherwise than by reason directly of the law of the Commonwealth or of a State. In Crosby v Kelly, the Full Court held that this Court had original jurisdiction to hear and determine defamation proceedings which otherwise could have been instituted in the A.C.T. Section 9(3) was held to be a law made by the Commonwealth Parliament within the meaning of s 76(ii) of the Constitution and was held to pick up, as Commonwealth law, the jurisdiction of the Supreme Court of the A.C.T. to hear and determine defamation proceedings. On 15 February 2013, the High Court refused special leave to appeal from the full Court’s decision. In refusing special leave, the High Court (French CJ, Hayne and Crennan JJ) said that the reasoning of the Full Court was correct. The general equitable claims made by the applicant in the present proceeding are claims which could have been brought in the Supreme Court of the A.C.T. Therefore, even if there were no federal law claims involved in the present proceeding, the reasoning in Crosby v Kelly would lead me to reject the Patels’ jurisdiction argument.
Ratio Decidendi
Legal Principle Established
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