FEDERAL COURT OF AUSTRALIA
Rafferty v Time 2000 West Pty Limited (No 5) [2010] FCA 873
Citation: Rafferty v Time 2000 West Pty Limited (No 5) [2010] FCA 873 Parties: PATRICK CAMPBELL RAFFERTY, SANTORA HOLDINGS PTY LIMITED ACN 128 467 550 and KARAVILLE HOLDINGS PTY LIMITED ACN 009 439 178 v TIME 2000 WEST PTY LIMITED ACN 127 893 270, TIME 2000 SYSTEMS (AUSTRALIA) PTY LIMITED ACN 127 853 614, TIME 2000 OPERATIONS (AUSTRALIA) PTY LIMITED ACN 128 700 541, EMBLETON LIMITED (A COMPANY INCORPORATED IN HONG KONG), STEPHEN GERARD DONOVAN and MADGWICKS File number: SAD 122 of 2008 Judge: BESANKO J Date of judgment: 17 August 2010 Catchwords: TRADE PRACTICES — application for relief under s 87 of the Trade Practices Act 1974 (Cth) — where fifth respondent was a natural person and second, third and fourth respondents corporations associated with him — where applicants entered into agreements with second to fifth respondents and paid moneys under those agreements to certain of the respondents — where respondents found to have contravened ss 51AD and 52 of the Trade Practices Act 1974 (Cth) — where fifth respondent ‘knowingly involved’ in the s 52 contravention under s 75B(1) of the Trade Practices Act 1974 (Cth) — where applicants did not prove an amount of loss or damage — where applicants entitled to order rescinding the agreements — whether respondents who had not received moneys under the agreements could be jointly and severally liable for payment of the moneys to the applicants under s 87
Held: applicants entitled to compensation for moneys paid under the agreements — fifth respondent owned and controlled corporate respondents — appropriate to treat second, fourth and fifth respondents as all having received the moneys — second, fourth and fifth respondents jointly and severally liable under s 87(2)(c) for repayment to the applicants of moneys paid under the agreements — alternatively same order could be made under s 87(1) to compensate applicants for loss or damage incurred in entering into agreements where applicants would not have entered into same but for the contravention — appropriate to make order because second to fifth respondents related parties who all benefited from applicants’ entry into agreements
COSTS — where applicants successful against second to fifth respondents and unsuccessful against sixth respondent — where second to fifth respondents had brought cross-claim against sixth respondent — where applicants later joined sixth respondent — where applicants could not have succeeded against sixth respondent if they had failed against second to fifth respondents — where second to fifth respondents did not suggest sixth respondent solely liable — where it was not necessary for the applicants to join the sixth respondent — whether Sanderson order should be made
Held: applicants not entitled to Sanderson order — applicants’ decision to join sixth respondent not unreasonable — nothing in conduct of second to fifth respondents made it reasonable that they should bear sixth respondent’s costs.
Legislation: Fair Trading Act 1999 (Vic) s 9
Federal Court of Australia Act
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- Case
- [2010] FCA 873
- Decision Date
CaseChat Overview and Summary
The court held that the applicants were entitled to compensation for the moneys paid under the agreements, as the fifth respondent was the owner and controller of the corporate respondents, and the corporate respondents were associated with the fifth respondent. The court found that it was appropriate to treat the second, fourth, and fifth respondents as having received the moneys, and that they were jointly and severally liable for repayment to the applicants under section 87(2)(c) of the Act. The court also held that a similar order could be made under section 87(1) to compensate the applicants for loss or damage incurred in entering into the agreements. The court found that the applicants were not entitled to a Sanderson order, as it was not necessary for the applicants to join the sixth respondent, and the second to fifth respondents did not suggest that the sixth respondent was solely liable.
The court ordered that the Heads of Agreement, the Joint Venture and Shareholders' Agreement, and the Rights Agreement be set aside. The first, second, fourth, and fifth respondents were jointly and severally liable to repay the applicants the moneys paid under the agreements, plus interest. The shares of Santora in Time 2000 West Pty Ltd were to be cancelled, and Rafferty was to resign as a director of Time 2000 West Pty Ltd upon payment by the respondents. The second and fourth respondents were to pay the applicants' costs, and the fifth respondent was to pay the applicants' costs after 31 August 2009. The applicants' claims against the sixth respondent were dismissed, and the applicants were to pay the costs of the sixth respondent. The cross-claim by the third respondent against the first applicant was dismissed, and the third respondent was to pay the first applicant's costs of the cross-claim. The cross-claim by the second to fifth respondents against the sixth respondent was dismissed, and the second to fifth respondents were to pay the costs of the sixth respondent in relation to the cross-claim.
Orders
Orders of the court
1. The Heads of Agreement referred to in paragraph 9 of the Applicants’ Further Amended Statement of Claim dated 19 January 2010, the Joint Venture and Shareholders’ Agreement referred to in paragraph 15 of the Further Amended Statement of Claim and the Rights Agreement referred to in paragraph 19 of the Further Amended Statement of Claim be set aside.
2. The applicants be repaid the following sums subject to and upon the terms of the orders set out hereinafter:
2.1 as to $200,000 to the first applicant (“Rafferty”);
2.2 as to $500,000 to Karaville Holdings Pty Limited (“Karaville”); and
2.3 as to $1,000,000 to Karaville.
3. The first, second, fourth and fifth respondents jointly and severally pay to the applicants the following moneys:
3.1 as to Rafferty, the sum of $200,000.00; and
3.2 as to Karaville, the sum of $1,500,000.00.
4. The first, second, fourth and fifth respondents pay the applicants interest of $416,111.29 in accordance with section 51A of the Federal Court of Australia Act 1976 (Cth) and Practice Note CM16.
5. Upon payment by the first, second, fourth and fifth respondents as provided in paragraphs 2, 3 and 4 above:
5.1 the shares of Santora in Time 2000 West Pty Limited be cancelled; and
5.2 Rafferty provide to Time 2000 West Pty Limited by its director, the fifth respondent, a notice of resignation as a director of Time 2000 West Pty Limited.
6. With respect to the costs of the applicants’ claims against the second to fifth respondents:
6.1 the second and fourth respondents pay those costs and after 30 January 2009 those costs be assessed on an indemnity basis; and
6.2 the fifth respondent pay those costs after 31 August 2009.
7. The applicants’ claims against the sixth respondent be dismissed.
8. The applicants pay the costs of the sixth respondent in relation to the claims by the applicants against the sixth respondent.
9. The cross-claim by the third respondent against the first applicant be dismissed and the third respondent pay the first applicant’s costs of the cross-claim.
10. The cross-claim by the second to fifth respondents against the sixth respondent be dismissed.
11. The second to fifth respondents pay the costs of the sixth respondent in relation to the cross-claim by the second to fifth respondents against the sixth respondent.
Note:
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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