Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5]
[2012] WASC 382
•16 OCTOBER 2012
COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 5] [2012] WASC 382
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 382 | |
| Case No: | CIV:2265/2006 | 30 & 31 AUGUST 2012 | |
| Coram: | SIMMONDS J | 16/10/12 | |
| 38 | Judgment Part: | 1 of 1 | |
| Result: | Application by way of claim for compensation dismissed Orders for discharge of undertakings to be made | ||
| B | |||
| PDF Version |
| Parties: | COMPUTER ACCOUNTING AND TAX PTY LTD PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING |
Catchwords: | Practice and procedure Freezing orders under O 52A following what is now Consolidated Practice Direction 9.6.1.1 Application for enforcement of undertakings for the purposes of such orders by way claim for compensation Applications for discharge of those undertakings Principles applicable Whether it could be shown orders ought not to have been made by reference to related proceedings not involving same parties Whether findings in such proceedings binding as judgments in rem Whether necessary to show such findings binding Whether excessive delay in bringing application for compensation Whether prima facie case of damage caused by making of orders shown Construction of undertakings |
Legislation: | Corporations Act 2001 (Cth), s 447A, s 471B, s 588FA, s 588FC, s 588FE, s 1321 Property Law Act 1969 (WA), s 89 Rules of the Supreme Court 1971 (WA), O 83 Trustees Act 1968 (WA), s 78, s 85 |
Case References: | Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249 Blair v Curran (1939) 62 CLR 464 Burden v Ainsworth [2004] NSWCA 3; (2004) 59 NSWLR 506 Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 Columbia Pictures Industries Inc v Robinson [1987] Ch 38 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284 Ex parte Hall; In re Wood (1883) 23 Ch D 644 Flinn v Flinn [1999] VSCA 134 Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 Indoor Holdings Pty Ltd v Bennett [No 2] [2010] WASC 307 Lazarus-Barlow v Regent Estates Company Ltd [1949] 2 KB 465 Macchia v The Public Trustee [2008] WASCA 241 Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213 Metropolitan Properties Pty Ltd v Caltex Petroleum Pty Ltd [1999] WASC 153 Newcomen v Coulson (1878) 7 Ch D 764 Norilya Minerals Pty Ltd v Ireland (1994) 12 WAR 485 Novello v James (1854) 5 De GM & G 876; (1854) 43 ER 1111 PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437 Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113 Project Development Co Ltd SA v KMK Securities Ltd [1982] 1 WLR 1470 Ramsay v Pigram (1968) 118 CLR 271 Smith v Day (1882) 21 Ch D 421 Ushers Brewery Ltd v PS King & Co (Finance) Ltd [1972] Ch 148 Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING
Second Defendant
Catchwords:
Practice and procedure - Freezing orders under O 52A following what is now Consolidated Practice Direction 9.6.1.1 - Application for enforcement of undertakings for the purposes of such orders by way claim for compensation - Applications for discharge of those undertakings - Principles applicable - Whether it could be shown orders ought not to have been made by reference to related proceedings not involving same parties - Whether findings in such proceedings binding as judgments in rem - Whether necessary to show such findings binding - Whether excessive delay in bringing application for compensation - Whether prima facie case of damage caused by making of orders shown - Construction of undertakings
(Page 2)
Legislation:
Corporations Act 2001 (Cth), s 447A, s 471B, s 588FA, s 588FC, s 588FE, s 1321
Property Law Act 1969 (WA), s 89
Rules of the Supreme Court 1971 (WA), O 83
Trustees Act 1968 (WA), s 78, s 85
Result:
Application by way of claim for compensation dismissed
Orders for discharge of undertakings to be made
Category: B
Representation:
Counsel:
Plaintiff : No appearance
First Defendant : Mr T R Stephenson
Second Defendant : Mr T R Stephenson
Mrs A C T Frigger &
Mr H H J Frigger : Mr S K Shepherd
Mr K D Holbrook : Mr J C Vaughan
Solicitors:
Plaintiff : No appearance
First Defendant : Eastwood Sweeney Law
Second Defendant : Eastwood Sweeney Law
Mrs A C T Frigger &
Mr H H J Frigger : David Thompson
Mr K D Holbrook : Hotchkin Hanly
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Case(s) referred to in judgment(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249
Blair v Curran (1939) 62 CLR 464
Burden v Ainsworth [2004] NSWCA 3; (2004) 59 NSWLR 506
Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545
Columbia Pictures Industries Inc v Robinson [1987] Ch 38
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S)
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284
Ex parte Hall; In re Wood (1883) 23 Ch D 644
Flinn v Flinn [1999] VSCA 134
Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103
Indoor Holdings Pty Ltd v Bennett [No 2] [2010] WASC 307
Lazarus-Barlow v Regent Estates Company Ltd [1949] 2 KB 465
Macchia v The Public Trustee [2008] WASCA 241
Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213
Metropolitan Properties Pty Ltd v Caltex Petroleum Pty Ltd [1999] WASC 153
Newcomen v Coulson (1878) 7 Ch D 764
Norilya Minerals Pty Ltd v Ireland (1994) 12 WAR 485
Novello v James (1854) 5 De GM & G 876; (1854) 43 ER 1111
PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437
Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113
Project Development Co Ltd SA v KMK Securities Ltd [1982] 1 WLR 1470
Ramsay v Pigram (1968) 118 CLR 271
Smith v Day (1882) 21 Ch D 421
Ushers Brewery Ltd v PS King & Co (Finance) Ltd [1972] Ch 148
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
(Page 4)
- SIMMONDS J:
Introduction
1 This is my determination of an application by way of claim for compensation (the present claim for compensation) under undertakings (the undertakings) given for the purposes of freezing and ancillary orders (the freezing and ancillary orders) I had made. The freezing and ancillary orders, or rather their successors, are now discharged.
2 This is also my determination of applications by persons who gave the undertakings that they be discharged (the applications for discharge of the undertakings).
3 It will shortly be seen that the present claim for compensation may perhaps be better described as an application for enforcement of the undertakings. See for this description Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545, 1551 - 1552 (Neill LJ), 1557 - 1558 (Peter Gibson LJ), see also 1554 (Mann LJ, agreeing with both Neill & Peter Gibson LJJ). I will continue to refer to the present claim as a claim for compensation as those were the terms used in much of the hearing before me. I use the qualifier 'present' as there was a previous application for compensation by the applicants, as will become apparent.
4 I should also note that the appropriateness of the word 'discharge' in the phrase 'discharge of an undertaking', in relation to discharged freezing and ancillary orders, might be questioned. Rather than discharge, 'release' from the undertakings appears to be what is sought, in the sense that the court would declare its intention not to enforce the undertakings. See for the use of 'release' Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177 - 178 (Gibbs CJ, Aickin, Wilson & Brennan JJ). That appears to be the way the order for discharge of an undertaking in Metropolitan Properties Pty Ltd v Caltex Petroleum Pty Ltd [1999] WASC 153 (Heenan J) was understood by Le Miere J in Indoor Holdings Pty Ltd v Bennett [No 2] [2010] WASC 307 [35]. However, I will continue to refer to the application for discharge of the undertakings in those terms as they were the ones used in the hearings before me.
5 Pursuant to programming orders I had made, the present claim for compensation and the applications for discharge of the undertakings were to be heard with an application for termination of a deed of company arrangement (the application to terminate the DOCA) brought in separate
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- proceedings, COR 205 of 2011. One of the respondents to the present claim for compensation is the administrator of the deed of company arrangement (the DOCA) and is the applicant for discharge of one of the undertakings. At the hearing before me all of the parties to the application to terminate the DOCA sought an adjournment pending the determination of the applications for discharge of the undertakings. I granted that adjournment. However, there were at the hearing before me some exchanges I had with counsel concerning the application to terminate the DOCA. I will say more about those exchanges at the end of these reasons.
6 In the balance of these reasons I proceed first to provide sufficient of the background to the present claim for compensation and the applications for discharge of the undertakings to introduce the next parts of these reasons. The first of those parts deals with the nature of the present claim for compensation and applications for discharge of the undertakings and the papers before me in relation to them. The next of those parts deals with the principles applicable to those applications and applies those principles. I then say something in brief about the exchanges I had on the application to terminate the DOCA. The final part of these reasons is my conclusion and call for orders.
Background: generally
7 Most of the background that follows is taken from my decision on applications for costs orders, including a claim for costs by way of compensation under the undertakings (the previous claim for compensation), in relation to the freezing and ancillary orders. That decision is Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) (CAT [No 3] WASC (S)).
8 I introduce the reproduction of the relevant paragraphs from CAT [No 3] WASC (S) by introducing a number of the terms used in those paragraphs.
9 The freezing and ancillary orders are referred to in CAT [No 3] WASC (S) as 'the defendants' freezing and ancillary orders', to distinguish them from freezing orders in this matter obtained by the applicants for the present claim for compensation. In these reasons I do not need so to distinguish them.
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10 The remainder of the terms used in those paragraphs I reproduce from CAT [No 3] WASC (S) not defined in the paragraphs so reproduced are in [2] as follows:
The persons against whom the defendants' freezing and ancillary orders were made are Angela Cecilia Theresa Frigger (Mrs Frigger) and Hartmut Hubert Josef Frigger (Mr Frigger) (together, the Friggers). The Friggers at all material times have been the directors and have been shareholders of Computer Accounting and Tax Pty Ltd (CAT). CAT is a company now in liquidation, by orders to wind the company up in insolvency. The parties who obtained the defendants' freezing and ancillary orders, and who applied for the orders to wind up CAT in insolvency, were Professional Services of Australia Pty Ltd (PSA), a company which at the time those orders were obtained was [and still is] a company subject to a deed of company arrangement [the DOCA]; and Donald Campbell-Smith (Mr Campbell-Smith) as executor of the estate of the late Martin Paul Banning (Mr Banning) (together, the defendants). The person who provided an undertaking against whom the Friggers also seek costs orders is Kim David Holbrook (Mr Holbrook). Mr Holbrook at the time of providing the undertaking was [and still is] the administrator under [the DOCA].
11 The Friggers are making the present claim for compensation.
12 The undertaking provided by Mr Holbrook referred to was for the purposes of the freezing and ancillary orders (the undertaking of Mr Holbrook). He is the applicant for the discharge of the undertaking of Mr Holbrook.
13 There was one other undertaking provided for the purposes of the freezing and ancillary orders. That undertaking was provided by Donald Campbell-Smith (the undertaking of Mr Campbell-Smith). He is the applicant for the discharge of the undertaking of Mr Campbell-Smith.
14 Otherwise the terms defined in the following paragraphs from CAT [No 3] WASC (S) are used in the same way in these reasons.
15 I turn now to those paragraphs, and other background.
Background: up to the making of the freezing and ancillary orders
16 In CAT [No 3] WASC (S) I describe this background as follows [10] - [20], [22] - [26] and [28]:
CIV 2265 of 2006 was an action for damages by CAT against PSA and Mr Banning for loss incurred in CAT's purchase of a property in Armadale (the Armadale property) as a result of misleading or deceptive conduct, negligence and deceit.
(Page 7)
- On 9 July 2008 following trial in the action I gave judgment for the CAT, for the reasons in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (CAT WASC 2008), and I ordered that PSA and Mr Banning pay the judgment sum there described (the judgment sum).
On 8 September 2008 Mr Banning died. By Mr Banning's last will Mr Campbell-Smith was appointed his executor.
On 17 November 2008 administrators were appointed for PSA, and on 27 November 2008 Mr Holbrook was appointed administrator of the company.
On 20 March 2009 PSA and Mr Holbrook, among others, executed a deed of company arrangement (the DOCA). By the terms of the DOCA Mr Holbrook was appointed the administrator of the DOCA. …
On 6 May 2009, for the reasons in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) (CAT WASC 2008 (S)), I made costs orders, including special costs orders, in relation to the proceedings in CIV 2265 of 2006.
In or about June 2009 CAT was paid $1,165,661.54 as the judgment sum. No question of completion of the taxation of costs had then arisen.
By a deed of charge dated 10 September 2009 (the deed of charge) CAT charged among other property the judgment sum in favour of the Friggers to secure loans, present and future, capital gains and equity assigned to them, up to a limit of $2,000,000.
On 23 October 2009 the decision in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (PSA [No 2] WASCA) was delivered on the appeal against the decision in CAT WASC 2008. PSA [No 2] WASCA was the reasons for concluding the appeal should be allowed and that part of my decision awarding CAT damages should be set aside while the damages I awarded in another respect should be reduced, with a corresponding reduction in interest. Orders were then made, including setting aside the judgment in CAT WASC 2008 and ordering the payment out of court of the sum of $38,000 to the appellants' solicitors.
On the same date, 23 October 2009, the deed of charge was registered.
By application filed 3 December 2009, the defendants applied under Rules of the Supreme Court 1971 (WA)O 52A for freezing and ancillary orders against CAT and the Friggers (the defendants' application for freezing and ancillary orders). Those orders are based on the court's previous practice of issuing orders of the Mareva kind, so named for Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213: Kendall C and Curthoys J, LexisNexis, Civil Procedure in Western
(Page 8)
- Australia, vol 1 (Service: 118) [52A.0.2]. The application for freezing and ancillary orders provided for the orders sought to have effect to a return date, on which there would be a further hearing in respect of those orders.
...
The ancillary orders applied for against CAT were for it to file an affidavit listing all of its assets and liabilities and in particular what had become of the money paid to it in satisfaction of the judgment following on CAT WASC 2008; and to provide copies of the most recent financial statements of CAT showing details of any loan accounts owing to the Friggers.
The ancillary orders applied for against the Friggers were for them to file an affidavit deposing to the consideration given by them in support of any loan account claimed to be owing to them by CAT, and what had become of any amounts paid to them by CAT in diminution of any such loan account since 23 October 2009.
The freezing orders applied for against CAT were to prohibit it removing from Australia or in any way disposing of, dealing with or diminishing the value of any of its assets up to the unencumbered value of $850,000. CAT's assets for this purpose were defined as including among other listed assets ones it held in trust for others; properties (collectively, the land assets), being land at 140 Edward Street and 46 Pier Street in Perth, apparently the subject of Certificate of Title Volume 1280 Folio 878 (the Edward and Pier Street properties) and land at 296 South Western Highway in Armadale, being the subject of Certificate of Title Volume 1913 Folio 146 (the Armadale property); and money in the trust account of any solicitor acting for CAT (the trust account monies).
The freezing orders applied for against the Friggers were to prohibit them taking any steps to enforce the payment to them of any amount claimed to be owing to them by CAT pursuant to the deed of charge.
On 7 December 2009 the Court of Appeal delivered its reasons for, and the terms of, further orders following from PSA [No 2] WASCA, in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) (PSA [No 2] WASCA (S)).
...
Subsequently, special leave to appeal against the decision in PSA [No 2] WASCA was applied for to the High Court.
17 I turn now to the making of the freezing and ancillary orders.
Background: the making of the freezing and ancillary orders
18 In CAT [No 3] WASC (S) I describe this background as follows [29] - [37]:
(Page 9)
- On 10 December 2009 the defendants' application for freezing and ancillary orders was heard. At the hearing CAT was not represented while Mrs Frigger appeared for herself and Mr Frigger. PSA and Mr Campbell-Smith sought the making of freezing and ancillary orders against the Friggers only.
As to the restraints on the Friggers, the case for PSA and Mr Campbell-Smith was rested principally on preserving from action by the Friggers by way of enforcement of their deed of charge or dealing with the land assets or the trust account monies what were at least potential assets of CAT, in circumstances where such action would adversely affect CAT's ability to meet its liability under the orders on the appeal.
At the end of the hearing I gave oral reasons for deciding that freezing and ancillary orders should be made against the Friggers. Those reasons as edited were published on 8 January 2010 as Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (CAT [No 3] WASC 2010).
In outline, I concluded that the making of freezing and ancillary orders was appropriate by reference to [the Rules of the Supreme Court 1971 (WA) (RSC)] O 52A r 5(5)(b): see CAT [No 3] WASC [18] and [33]. I also concluded that the making of the orders was also appropriate by reference to O 52A r 5(5)(a): see CAT [No 3] WASC [33]. I reached those conclusions by reference to the registration of the deed of charge coinciding with the publication of PSA [No 2] WASCA (S),as well as evidence of the transfer for a nominal consideration to a superannuation fund of which the Friggers were beneficiaries (the Frigger Superannuation Fund) of the land assets of which CAT then became trustee, together with evidence pointing towards the insolvency of CAT that was of three kinds. They were evidence as to the debt under the deed of charge, evidence as to the beneficial interests in the land assets and evidence from Mrs Frigger herself as to doubts she had entertained as to CAT's solvency following the delivery of the decision in PSA [No 2] WASCA. See CAT [No 3] WASC 2010 [12], [13], [18], [16], [17], [19] - [21] and [31] - [33].
I noted that there was a lack of detailed information upon which PSA and Mr Campbell-Smith could rely as to the financial condition of CAT, while detailed information was not required for the purpose of the freezing orders: see CAT [No 3] WASC 2010 [23]. At the same time that lack was reflected in the character of the ancillary orders sought, and the time limited character of the freezing orders sought: see [24]. I noted that during the hearing on 10 December 2009 the ancillary orders had been restricted to the Friggers, as questions hung over whether or not CAT had been placed into a members' voluntary liquidation under a resolution of the members to that effect of 3 December 2009; and, if not, whether there would be any such liquidation. Those questions arose as it was not clear that the consent of the liquidator prior to appointment demanded by Corporations Act 2001 (Cth) s 532(9) had in fact been obtained, and because there had been no declaration of solvency put before the meeting
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- of the members as required for a members' voluntary liquidation by Corporations Act s 9 'members' voluntary winding up' and 'creditors' voluntary winding up': see [35] - [36].
I also noted that an undertaking as to damages had only been proffered from Mr Campbell-Smith. None was proffered by PSA. I concluded that it would be appropriate that both parties seeking the benefit of the defendants' freezing and ancillary orders provide undertakings, even if, as counsel for the applicants had put to me, it was expected that only Mr Campbell-Smith would ultimately be in a position, or would ultimately be expected, to meet the undertaking: see CAT [No 3] WASC 2010 [63].
On 12 December 2009 a resolution for a members' voluntary winding up of CAT and the appointment of a liquidator, Glenn Douglas Trinick (Mr Trinick), was passed, replacing the earlier resolution of 3 December 2009 to those effects, and with a declaration of solvency having been provided at the later meeting.
On 16 December 2009 there was a hearing before me at which the final form of the orders to be made on the defendants' application for freezing and ancillary orders was settled. At the hearing PSA and Mr Campbell-Smith were represented by counsel and Mrs Frigger and Mr Trinick appeared in person. The orders in that form, the defendants' freezing and ancillary orders, were to have effect until 22 January 2010, when there was to be a further hearing in respect of the orders (the First Return Date), subject to any earlier discharge.
The defendants' freezing and ancillary orders were principally as follows:
'ANCILLARY ORDERS
7. By no later than Wednesday 20 January 2010:-
(a) Angela Cecilia Theresa Frigger and Hartmut Frigger (Mr & Mrs Frigger) shall file an affidavit deposing to:-
(i) all assets of whatever nature the Plaintiff owns or holds whether within or outside Australia, and, where the Plaintiff holds the same in trust for any person or persons and if so for whom, to separately identify the assets which are held for each trust;
(ii) all liabilities the Plaintiff owes to any person and the amount of those liabilities at the date of swearing the affidavit, and, including the details of any mortgages,
- charges or other encumbrances to which any assets are subject);
- (iii) in particular, what has become of the money paid to the Plaintiff in satisfaction of the judgment in CIV 2265 of 2006; and
(iv) provide copies of the most recent financial statements of the Plaintiff showing the details of any loan accounts owing to Mr & Mrs Frigger.
- (b) Mr & Mrs Frigger shall file an affidavit deposing to:-
(i) the consideration given by them to the present date in support of any loan account claimed to be owing to them by the Plaintiff; and
(ii) what has become of any amounts paid to them by the Plaintiff in diminution of any such loan account since 10 September 2009.
- FREEZING OF ASSETS
8. Mr & Mrs Frigger must not take any steps to enforce the payment to them of any amount claimed to be owing to them by the Plaintiff pursuant to a Deed of Charge dated 10 September 2009 or otherwise.
9. Mr & Mrs Frigger must not take any steps to replace the Plaintiff as trustee of any trust in which the Plaintiff is presently the trustee.
10. Mr & Mrs Frigger must not take any steps to deal with or diminish the value of any of the following assets:-
(a) the properties known as 140 Edward Street and 46 Pier Street in Perth, and, 296 South Western Highway, Armadale in the State of Western Australia, or, if any have been sold, the net proceeds of the sale;
(b) any money in the trust account of any solicitor acting for the Plaintiff, but, in particular Chris Stokes & Associates; but
- (c) nothing in Order 10(b) hereof shall be taken to prevent the use of the money therein referred to pay the reasonable legal expenses of the Plaintiff.
- 11. The Plaintiff and the First and Second Defendants may agree in writing to variation to this Order. In that case the Plaintiff and the First and Second Defendants must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the Plaintiff and the First and Second Defendants, and, the Court may order that this Order be varied accordingly.
12. This order will cease to have effect if the Plaintiff:-
(a) pays the sum of $850,000 into Court; or
(b) pays that sum into a joint bank account in the name of the Plaintiff's solicitor and the solicitor for the First and Second Defendants as agreed in writing between them; or
(c) provides security in that sum by a method agreed in writing with the First and Second Defendants to be held subject to the order of the Court.
(d) Any such payment and any such security will not provide the First and Second Defendants with any priority over the Plaintiff's other creditors in the event of its insolvency.'
The Second Defendant in his capacity as executor in the estate of the late Martin Paul Banning undertakes to the Court that he will pay to any party restrained or affected by the restraints imposed by this freezing order, or of any interim continuation thereof, such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court, or in accordance with such directions as the Court may make and to be paid in such manner as the Court may direct.
20 The undertaking of Mr Holbrook in its final form is in the following terms:
The Administrator of the First Defendant undertakes to the Court that he will pay to any party restrained or affected by the restraints imposed by this freezing order, or of any interim continuation thereof, such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court, or in accordance with such directions as the Court may make and to be
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- paid in such manner as the Court may direct, subject to the compensation that may be payable pursuant to the undertaking given herein being limited to the value of the assets of the First Defendant including for this purpose the assets held by it for the purposes of the Deed of Company Arrangement.
21 I turn now to events following the making of the freezing and ancillary orders up to the making of the orders for the discharge of their successors.
Background: up to the making of the discharge orders
22 Following the making of the freezing and ancillary orders there were a number of hearings in these proceedings culminating in one at which orders were made for the discharge of the successors to the freezing and ancillary orders. The freezing and ancillary orders, as to the ancillary orders, were not discharged as they had ceased to have effect. The freezing and ancillary orders, as to the freezing orders, were as a result of those hearings extended and varied (the extended freezing orders as varied, or 'the defendants' extended freezing orders as varied' as they are referred to in CAT [No 3] WASC (S)).
23 Those hearings in the proceedings for the freezing and ancillary orders are described in CAT [No 3] WASC (S) [41] - [59]. It is not necessary to reproduce those paragraphs here.
24 Finally, at a hearing on 7 July 2010 I made orders that the extended freezing orders as varied were to be discharged effective 14 July 2010. Those orders were by consent. See CAT [No 3] WASC (S) [59]. It was not in contest before me that there was no final hearing as to the merits of the case for the making of the freezing and ancillary orders or their successors and there is not to be one.
25 It should be noted that during the period of those hearings Mr Trinick was replaced by a provisional liquidator appointed for CAT. That replacement and appointment was by orders I made on 22 January 2010. The replacement was Mr Mervyn Jonathan Kitay (Mr Kitay). See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38. On 22 January 2010 I dismissed an application by the Friggers to dismiss the provisional liquidator without replacing him. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113.
26 Finally, on 6 May 2010 Master Sanderson delivered his reasons for determining that CAT should be wound up in insolvency and a liquidator
(Page 14)
- in insolvency for CAT (the liquidator) appointed. See Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93. An appeal was made against the orders of Master Sanderson, but only as to a part of his costs orders. On 3 June 2011 the Court of Appeal delivered its reasons for granting leave to appeal and allowing the appeal in part. See Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103.
27 It will be seen from reasons below that the commencement by the Friggers of proceedings in another matter, CIV 2765 of 2010, to which CAT through the liquidator is a party, and the nature of those proceedings, are of significance to the submissions for the Friggers in the present proceedings before me in CIV 2265 of 2006.
28 I turn now to events following the orders for the discharge of the extended freezing orders as varied up to my determination of applications for costs orders in the proceedings for the freezing and ancillary orders.
Background: subsequent events
29 At the hearing of 7 July 2010, and at a number of further hearings in the proceedings for the freezing and ancillary orders, culminating in hearings on 13 and 14 October 2010 of applications for the costs of the freezing and ancillary orders and their successors, matters to do with those costs were addressed. One of those applications was the previous claim for compensation, by the Friggers, under the undertaking of Mr Holbrook.
30 Following the hearings of 13 and 14 October 2012 the Friggers applied for leave to adduce further evidence. For the reasons in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284 (CAT [No 4] WASC 284) I decided I would not grant that leave.
31 On 9 March 2012 I delivered the reasons for my decision on the various applications for costs addressed at the hearings on 13 and 14 October 2010. Those reasons were published as CAT [No 3] WASC (S).
32 In broad terms my conclusions as far as they are relevant to the present proceedings before me were these.
33 There should be no order for the costs of the proceedings for the freezing and ancillary orders, in favour of the Friggers or in favour of the applicants for the freezing and ancillary orders, as there had been no final
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- determination of the merits of the application for those orders, and it was not shown, either that there was no reasonably arguable basis for the conduct of either side in bringing or defending against those proceedings, as the case may be, or that I could be confident it was 'almost certain' the other side would have succeeded had the matter been fully argued. Further, the previous claim for compensation should be dismissed as the undertaking of Mr Holbrook did not reach an award to compensate for costs of proceedings for the purposes of which the undertaking was given. I should add that in the present proceedings before me it was not put to me that there was any material difference between the undertaking of Mr Holbrook and the undertaking of Mr Campbell-Smith in that respect.
The present claim for compensation and the applications for discharge of the undertakings
34 I describe in brief the terms of these applications, leaving aside applications for costs orders.
35 By chamber summons filed 23 December 2011 Mr Holbrook applied for the discharge of the undertaking of Mr Holbrook.
36 By a minute of orders provided to the court on 23 January 2012 Mr Campbell-Smith applied for leave to proceed with respect to applications to discharge the undertaking of Mr Holbrook and the discharge of the undertaking of Mr Campbell-Smith. I should indicate that the parties treated this application as including one for the discharge of the undertaking of Mr Campbell-Smith.
37 I was informed in the written submissions for PSA and Mr Campbell-Smith dated March 2012, returned to below, that the liquidator of CAT had been notified of the proceedings before me and the liquidator had not indicated any wish to participate in them, while the liquidator had indicated he would abide their outcome. To the extent leave was necessary for any party to proceed with the proceedings before me, on the present claim for compensation or the applications for discharge of the undertakings, I would grant such leave, under Corporations Act 2001 (Cth) s 471B.
38 Finally, by chamber summons filed 1 March 2012, as amended by an amended chamber summons filed 11 May 2012, the Friggers, as well as their children, Jessica Ann Frigger and Michael Jonathon Frigger (the children), applied for orders that the applicants are persons restrained or affected by the freezing and ancillary orders and are entitled to enforce them 'as to damages'; and an inquiry as to damages suffered by the
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- applicants by reason of complying with the freezing and ancillary orders. At the hearing before me counsel for the Friggers confirmed that there was no claim for compensation maintained by the children.
39 For the purposes of the hearing before me of the present claim for compensation and the applications for discharge of the undertakings I was provided with the following papers for the parties, the Friggers, Mr Holbrook, PSA and Mr Campbell-Smith.
40 For the Friggers, I was provided with two sets of written submissions and three affidavits in support sworn by Mrs Frigger.
41 One set of written submissions, apparently prepared by the Friggers when they were self-represented, was dated 19 January 2012 (dated '2011' in error) (the written submissions of the Friggers of 19 January 2012); the other set of written submissions was dated 29 August 2012.
42 The affidavits of Mrs Frigger were those sworn 8 February 2012 (the affidavit of Mrs Frigger of 8 February 2012), of 1 March 2012 (the affidavit of Mrs Frigger of 1 March 2012) and of 27 August 2012 (the affidavit of Mrs Frigger of 27 August 2012). As a result of objections at the hearing before me to certain parts of these affidavits, a number of paragraphs or parts of paragraphs in each were ruled inadmissible. In addition, as a result of objections made at the hearing before me, a further affidavit of Mrs Frigger, sworn 30 August 2012, was ruled inadmissible in whole.
43 For Mr Holbrook I was provided with two sets of written submissions and one affidavit.
44 One set of written submissions was on the present claim for compensation and was dated 18 June 2012; the other set of written submissions was on the application to discharge the undertaking of Mr Holbrook and was dated 3 April 2012.
45 The affidavit of Mr Holbrook was sworn 16 December 2011.
46 For PSA and Mr Campbell-Smith I was provided with one set of written submissions and two affidavits sworn by Mr Campbell-Smith.
47 The set of written submissions was dated 'March 2012' and filed on 3 March 2012.
48 The affidavits of Mr Campbell-Smith were one sworn 15 February 2012 and another sworn 2 March 2012.
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49 I should add that by originating process filed 23 December 2011 in COR 205 of 2011 Mr Holbrook, in his capacity as deed administrator of PSA and naming PSA as first defendant and Banning Holdings Pty Ltd as second defendant, applied inter alia for an order that, subject to the undertaking of Mr Holbrook being discharged, the DOCA be terminated (the application to terminate the DOCA). As I have previously indicated the hearing of the application to terminate the DOCA, which was programmed to be heard with the present claim for compensation and with the applications for discharge of the undertakings, was adjourned. However, as I have also indicated, certain matters to do with that application were addressed at the present hearing before me. As I further indicated, I return to those matters at the end of these reasons.
50 I turn now to consider the applicable principles and their application in this case.
The applicable principles and their application
51 It was not in contest that the enforcement of an undertaking, as an obligation owed to the court, not to the parties, is a matter of discretion. That discretion is enlivened by it being established the orders ought not to have been granted. See Cheltenham (1551) (Neill LJ), a case on Mareva orders relying on principles from authorities on undertakings for the purposes of interlocutory injunctions, while noting some differences as between the two contexts. None of the differences there referred to are material to me. On Mareva orders, see below.
52 Where further proceedings between the parties are discontinued, and thus there will be no final determination of the merits and therefore of whether or not the orders ought to have been granted (putting aside the case of orders obtained by wrongful conduct), that of itself does not show the orders ought not to have been granted. See Indoor Holdings [36] (an interlocutory injunction case). As I have indicated, in CAT [No 3] WASC (S) I determined that the discharge of the extended freezing orders as varied, and thus of the proceedings for freezing and ancillary orders (costs orders aside), in the circumstances, did not indicate orders ought not to have been granted. To the contrary I determined as I have already indicated that it was not shown to me on the material I was referred to that there was no reasonably arguable basis for the conduct of PSA and Mr Campbell-Smith in bringing the proceedings for the freezing and ancillary orders against the Friggers; nor was it evident to me on that material that it was 'almost certain' that the Friggers would have succeeded in their case against the freezing and ancillary orders, had the
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- matter been fully argued. See [85] - [113]. The decision in CAT [No 3] WASC (S) is, I was told, presently under appeal. However, it was not suggested to me that those findings were of no significance in these proceedings before me or contestable in them pending the determination of that appeal. In particular, no suggestion was made to me that there was new material now before me to indicate such findings were no longer appropriate.
53 On that basis it might be suggested that orders for the discharge of the undertakings might be made. See Metropolitan Properties [13] - [15] (Heenan J), referred to in Indoor Holdings [35]. At the same time, of course, those findings were not that the freezing and ancillary orders ought to have been made. However, on Metropolitan Properties,that finding is not required for undertakings of the kind sought to be discharged in this case to be discharged.
54 It is also the case that where orders of a freezing order, or Mareva (Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213), kind are discharged before the main action between the parties there are a number of possible actions the court can take. These include not only discharging the undertakings made for the purposes of the orders or enforcing those undertakings, but also adjourning the application for the enforcement of the undertakings until conclusion of the trial of the main action or further order. See Cheltenham (1551 - 1552) (Neill LJ), (1557 - 1558) (Peter Gibson LJ). There is conflicting authority on whether or not the court could in such circumstances order an inquiry but direct that the question of liability be determined at the hearing of the inquiry. See Cheltenham (1557) (Peter Gibson LJ), compare (1552) (Neill LJ).
55 It is well established that a determination at trial that the basis on which the orders were made was not made out may be invoked to show that the orders ought not to have been made. See Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249, 322 - 323 (Mason J, citing authority); and see Cheltenham (1557) (Peter Gibson LJ), referring to Ushers Brewery Ltd v PS King & Co (Finance) Ltd [1972] Ch 148.
56 Therefore it is unlikely that the court would enforce the undertaking so as to determine the liability of the person providing the undertaking before the resolution of the main action, at least if the basis on which the orders were made will be in issue in the trial: cf Cheltenham (1557, 1560) (Peter Gibson LJ), (1553 - 1554) (Neill LJ).
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57 It may be accepted that the court may enforce a suitably worded undertaking, even if freezing orders were not wrongly made, for the benefit of innocent third parties. See Biscoe PM, Freezing and Search Orders: Marevaand Anton PillerOrders (2nd ed, 2008) [4.7]. Although counsel for the Friggers appeared at one point to contend that the Friggers were innocent third parties, I cannot agree, for the reasons I gave in CAT [No 3] WASC (S) [78].
58 It cannot be contested that there is no main action in the sense used in Metropolitan Properties, Indoor Holdings and Cheltenham pending between the parties, the Friggers, PSA and Mr Campbell-Smith. I leave aside Mr Holbrook, as in my view he would be seen to be a privy of PSA for the purpose of the proceedings for the freezing and ancillary orders, in the sense I describe below for the purposes of the doctrine of issue estoppel.
59 However, counsel for the Friggers put to me as I understood him that there are proceedings related to the freezing and ancillary order proceedings which will address issues on the basis of which the freezing and ancillary orders were made. Although neither PSA nor Mr Campbell-Smith is a party to those other proceedings, they should be treated as the main action for present purposes so as to warrant the court either making orders for an inquiry but saving to the hearing of the inquiry the question of liability, or at least adjourning the determination of whether or not the undertakings should be enforced to after the determination of those other proceedings. Counsel for the Friggers appeared to indicate he only pressed the latter option.
60 I turn now to describe those other proceedings, the sense in which they are related to the proceedings for the freezing and ancillary orders and whether or not they should be treated as the main action for my purposes.
The proceedings in CIV 2765 of 2010
61 On 4 November 2010 those proceedings were commenced by the Friggers in their own right and as trustees of the Frigger Superannuation Fund against Mr Kitay and CAT (in liquidation). By the amended statement of claim dated 2 May 2011 the Friggers claim, among other things, vesting orders under Trustees Act 1968 (WA) s 78, that the land assets (referred to in the proceedings for the freezing and ancillary orders as potential assets of CAT (see CAT [No 3] WASC (S) [30], reproduced above)), vest in Mrs Frigger or Mr Frigger, as the case may be. By that amended statement of claim the Friggers also seek orders under
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- Corporations Act s 1321(1) declaring that the right to recover the term deposit which is referred to in the proceedings for the freezing and ancillary order as part of the monies representing the potential assets of CAT (see [30]) is the property of the Friggers in their own right.
62 By the defence and counterclaim in CIV 2765 of 2010 dated 23 May 2011 the defendants deny that the plaintiffs are entitled to any of the relief sought and seek declarations inter alia that the land assets and the term deposit are assets of CAT in its own right and orders that certain payments or transfers to the Friggers or to them and the children were unfair preferences within the meaning of Corporations Act s 588FA; insolvent transactions with the meaning of s 588FC; voidable transactions with the meaning of s 588FE; or transactions to defraud creditors in breach of Property Law Act 1969 (WA) s 89.
63 It was not in contest before me that the proceedings in CIV 2765 of 2010 thereby went to matters relevant to issues addressed in the proceedings for the grant of the freezing and ancillary orders as the basis for granting them. It was also not in contest before me that the proceedings in CIV 2765 of 2010 were brought by the Friggers in significant part at least to resolve those issues in favour of propositions that, had they been established in the proceedings for the freezing and ancillary orders, would have at least tended to show that those orders ought not to have been made. In that sense I accept that the proceedings in CIV 2765 of 2010 are related to the proceedings for the freezing and ancillary orders.
64 Further, it may be noted that as to the counterclaim for Mr Kitay and CAT, through its liquidator, the proceedings in CIV 2765 of 2010 were of a kind the possibility of which counsel for PSA and Mr Campbell-Smith had indicated, during the proceedings for the freezing and ancillary orders that occurred after the appointment of the liquidator in insolvency, might remove any possible reason for the extended freezing orders as varied. See CAT [No 3] WASC (S) [57], [59]. Indeed, counsel for PSA and Mr Campbell-Smith had earlier in those proceedings, at a hearing on 22 January 2010, stated that after the liquidator's predecessor, the provisional liquidator, had 'come to grips with whatever he needs to', the position might be arrived such that the 'need for continuation of the freezing orders would then fall away' [43] (quoting from the transcript of those hearings).
65 However, the applicants for the freezing and ancillary orders, PSA and Mr Campbell-Smith, are not, as has been indicated, parties to
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- CIV 2765 of 2010, and there was no indication in the hearings referred to that they would be joined as parties to any of the proceedings in which the provisional liquidator or the liquidator was involved and which counsel for PSA and Mr Campbell-Smith might be taken to have suggested were possible. Nor was it put to me that they were liable to be joined in CIV 2765 of 2010 or in any of those other proceedings.
66 I consider below whether PSA or Mr Campbell-Smith could be considered privies of the liquidator for the purposes of any issue estoppel arising out of CIV 2765 of 2010.
67 That last matter aside, as well as that of judgments in rem, which I also reach below, it cannot be doubted that the general rule applicable to findings in CIV 2765 of 2010 so far as PSA and Mr Campbell-Smith are concerned is that described in Flinn v Flinn [1999] VSCA 134 [4] (Brooking, Charles & Batt JJA):
The general rule is, not only that the non-party is not bound by findings made in the litigation, but that they may not even be used as evidence of the facts found. To this general rule there are exceptions which enable findings made in litigation to be used against someone who was not a party to that litigation for the purposes of a summary procedure. Specifically, it has been laid down in England by the Court of Appeal that on an application against a non-party seeking an order for the costs of the litigation the applicant may in an appropriate case be permitted to rely on evidence given and facts found in the litigation: Symphony Group Plc v Hodgson [1994] QB 179. In that case Balcombe LJ said at 193:
'The procedure for the determination of costs is a summary procedure, not necessarily subject to all the rules that would apply in an action. Thus, subject to any relevant statutory exceptions, judicial findings are inadmissible as evidence of the facts upon which they were based in proceedings between one of the parties to the original proceedings and a stranger: see Hollington v F Hewthorn & Co Ltd [1943] KB 587; Cross on Evidence, 7th ed (1990), p100-p101. Yet in the summary procedure for the determination of the liability of a solicitor to pay the costs of an action to which he was not a party, the judge's findings of fact may be admissible: see Brendon v Spiro [1938] 1 KB 176, 192, cited with approval by this court in Bahai v Rashidian [1985] 1 WLR 1337 1343D, 1345H. This departure from basic principles can only be justified if the connection of the non-party with the original proceedings was so close that he will not suffer any injustice by allowing this exception to the general rule.'
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- exception there described. That it is not such a procedure is undoubtedly correct, in my view. The present claim for compensation is not a claim in CIV 2765 of 2010.
69 Counsel for the Friggers appeared to acknowledge that there was no basis in issue estoppel on which PSA and Mr Campbell-Smith, and I took it Mr Holbrook, might be bound by the findings in CIV 2765 of 2010. I agree. See Blair v Curran (1939) 62 CLR 464, 531 - 532 (Dixon J).
70 However, somewhat confusingly, counsel for the Friggers appeared to suggest that PSA and Mr Campbell-Smith might be considered to be privies of the liquidator. No authority was cited for any such suggestion. Nor have I been able to find any such authority. I accept, on the authority I will shortly reach, that, for example, Mr Holbrook is a privy of PSA for the purposes of its involvement in the proceedings for the freezing and ancillary orders. But it is not apparent to me that it can be said that in CIV 2765 of 2010 PSA and Mr Campbell-Smith, let alone Mr Holbrook, are claiming under or through the liquidator. This is the 'basic requirement' for a party to be a privy in interest that is referred to in Ramsay v Pigram (1968) 118 CLR 271, 279 (Barwick CJ); see also Heydon JD, Cross on Evidence (8th Aust ed, 2010) [5055]. It seems to me that neither PSA nor Mr Campbell-Smith can be said to be so claiming as neither could be said to have left to the liquidator the determination of whether and on what grounds to impugn which transactions between CAT and the Friggers in respect of, or the particular interest of CAT in, land assets and other property on the basis of which the freezing and ancillary orders were sought. I am of that view, given the 'suggestive' character of much of the case for the making of the freezing and ancillary orders, calling for the ancillary orders and for further examination, in a further hearing or hearings, of that case, where no such examination occurred before the extended freezing orders as varied were discharged. See CAT [No 3] WASC (S) [32] - [33], reproduced above; and see CAT [No 3] WASC (S) [14], [46].
71 I accept arguendo that PSA and Mr Campbell-Smith might have, as was suggested by counsel for the Friggers, remedies under Corporations Act s 1321(1) in respect of decisions by the liquidator in respect of matters the subject of CIV 2765 of 2010. But it is not apparent to me how this would affect PSA's and Mr Campbell-Smith's position to assert their own claims in respect of impugning transactions between CAT and the Friggers in respect of, or the particular interest of CAT in, land assets and other property I have referred to. Such claims might be made under Property Law Act s 89.
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72 Counsel for the Friggers suggested that the court might consolidate CIV 2265 of 2006 with the proceedings in CIV 2765 of 2010 under Rules of the Supreme Court 1971 (WA) O 83. Alternatively, he suggested, an order could be made for the present proceedings before me to be heard after the determination of CIV 2765 of 2010. However, it was not evident to me that any of these would be an appropriate course of action where the extended freezing orders as varied had been discharged.
73 It might therefore be suggested that there is no question of treating the findings in CIV 2765 of 2010 as determining whether or not the freezing and ancillary orders ought to have been made. Accepting that, I would conclude that CIV 2765 of 2010 should not be treated as the main action for the purposes of determining whether the discretion to enforce the undertakings is enlivened.
74 I put aside for this purpose any question of a determination of a question of law by a court of higher authority with a bearing on whether or not the freezing and ancillary orders ought to have been made. See Novello v James (1854) 5 De GM & G 876; (1854) 43 ER 1111, referred to in Ansett (322 - 323) (Mason J). No suggestion was made to me that any such determination could be pointed to in this case before the determination of the appeal against CAT [No 3] WASC (S).
75 However, counsel for the Friggers sought to meet the conclusion I would arrive at, in two ways.
76 The first way was to meet that part of the conclusion that rests on the proposition that only if the findings in CIV 2765 of 2010 in relevant respects are binding on PSA and Mr Campbell-Smith could that action be treated as the main action here. Counsel sought to do this by submitting that in fact the matter was one of discretion, which might be exercised at least in favour of deferring the decision whether to enforce the undertakings until after the determination of the proceedings in CIV 2765 of 2010.
77 The other way counsel for the Friggers sought to meet the conclusion I would arrive at was to submit that in fact the findings in CIV 2765 of 2010 in relevant respects were binding on PSA and Mr Campbell-Smith, because they would be part of a judgment in rem.
78 As to the first way counsel for the Friggers put forward, I note he appeared to submit, taking up a suggestion I put to him for his response, that even if there were no question of the findings in CIV 2765 of 2010 in relevant respects binding PSA and Mr Campbell-Smith, a determination
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- of issues in proceedings such as those might found a legitimate sense in a party like the Friggers that the freezing and ancillary orders ought not to have been made. This might be sufficient for the court to exercise its discretion to enforce the undertakings.
79 No authority was cited for this proposition and I could find none. Nor do I consider it possible to accede to that proposition. At most the result and findings in CIV 2765 of 2010, assuming they were not binding on PSA and Mr Campbell-Smith, might show that as the applicants for the freezing and ancillary orders they would have faced difficulties securing or maintaining such orders. However, unless their consent to the discharge of the extended freezing orders as varied showed their surrender to the Friggers, that result and those findings would not show the orders ought not to have been made. See on a surrender to the other side as a basis for enforcement of an undertaking notwithstanding that there had been no determination of the issues in the main action Newcomen v Coulson (1878) 7 Ch D 764, referred to in Indoor Holdings [36]. That consent in this case would not show surrender, given the findings in CAT [No 3] WASC (S) as to whether or not it had been shown in those proceedings that there was no reasonably arguable basis for the conduct of PSA and Mr Campbell-Smith bringing and maintaining the proceedings for the freezing and ancillary orders, and as to whether or not it had been shown that it was 'almost certain' the Friggers would have succeeded in their case against the freezing and ancillary orders had the matter been fully argued. Further, without more it could not be shown here, where the liquidator, a person not shown to be a person not independent of PSA and Mr Campbell-Smith, had seen fit to seek findings which might show were they binding in the present proceedings there were good grounds for the making of the freezing and ancillary orders.
80 Counsel for the Friggers appeared to put a closely related submission to the one just considered, founded on the court's discretion to prevent abuse of its process. As I understood him, he submitted that the court could in the exercise of that discretion in a hearing after the determination of CIV 2765 of 2010 prevent PSA and Mr Campbell-Smith putting up a case in CIV 2265 of 2006 inconsistent with findings in CIV 2765 of 2010 that would tend to show the freezing and ancillary orders ought not to have been made.
81 However, I consider that that discretion would not be enlivened in such an eventuality. On my understanding of Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, cited to me by counsel for the Friggers, I do not consider that the court would prevent any attempt by PSA and
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- Mr Campbell-Smith to put up such a case. Unlike Walton there would be no question of the same or similar issues being re-litigated at the suit of the same parties (PSA and Mr Campbell-Smith) as had been parties or privies to parties to CIV 2765 of 2010. See also Macchia v The Public Trustee [2008] WASCA 241.
82 As to the second way counsel for the Friggers sought to meet the conclusion I would arrive at, by his submission that the result and relevant findings in CIV 2765 of 2010 would be binding on PSA and Mr Campbell-Smith as a judgment in rem, it is of course the case that 'a judgment of a court of competent jurisdiction determining the status or the disposition of a thing, as distinct from a particular interest in it of a party to the litigation', being a judgment in rem, is 'conclusive evidence for and against all persons whether parties, privies or strangers, of the matters actually decided': Lazarus-Barlow v Regent Estates Company Ltd [1949] 2 KB 465, 475 (Evershed LJ), quoted in Cross on Evidence (8th Aust ed) [5015]; and see also PE Bakers Pty Ltd v Yehuda (1988) 15 NSWLR 437, 442 (Hope JA, Samuels & McHugh JJA agreeing) (giving examples, including declaratory judgments).
83 However, I am of the view the relevant findings in CIV 2765 of 2010 would not be so binding, for the following reasons.
84 I accept without finally deciding that the orders the Friggers seek and the declarations Mr Kitay and CAT through its liquidator seek in CIV 2765 of 2010 would be judgments in rem. Further, to the extent the basis of any such orders or declarations is the determination of the validity or otherwise of certain dispositions by CAT to the Friggers, or the acquisition of interests by them, in either case as identified in CIV 2765 of 2010, I accept arguendo that that determination is capable of operating as a judgment in rem.
85 However, it seems to me that those judgments would not be capable of operating as to judgments in rem as to all matters that as against all the world, including PSA and Mr Campbell-Smith, might go to impugn the interest of the Friggers in the land assets or other property and go to show that CAT had an interest in them at the relevant time, and thus the freezing and ancillary orders could not be shown as ones that ought not to have been made.
86 I find authority for these propositions in Burden v Ainsworth [2004] NSWCA 3; (2004) 59 NSWLR 506, which is a leading authority on what
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- is meant by a judgment in rem. See Handley KR, Spencer Bower & Handley: Res Judicata (4th ed, 2009) [10.04].
87 Burden was an appeal in a defamation case. The New South Wales Licensing Court had determined that a company should be granted a poker machine dealer's licence based on a finding that a particular person was a fit and proper person to be interested in or associated with that company. The question in Burden was whether that finding was a determination as to the status of the person which was a judgment operating in rem. That question was answered no, for the reasons in Burden [18] - [22] (Ipp JA, Sheller & Giles JJA agreeing), as follows, referring at first to the submission for counsel that the answer was yes:
He submitted that, as the fitness of the respondent to be interested in or associated with Ainsworth Game Technology was a specific issue raised by the grounds of objection relied on by the objectors - and the subject of a finding by the Licensing Court - the finding of fitness operated in rem and was conclusive against the world.
This argument loses sight of the basic rule expressed by Blackburn J in Castrique v Imrie (1870) LR 4 HL 414 at 434, namely:
'A judgment in an English Court is not conclusive as to anything but the point decided.'
An example given by his Lordship well illustrates the rule. He explained (at 434):
'[A] judgment of conviction on an indictment for forging a bill of exchange, though conclusive as to the prisoner being a convicted felon, is not only not conclusive, but is not even admissible evidence of the forgery in an action on the bill, though the conviction must have proceeded on the ground that the bill was forged.'
Hollington v F Hewthorn & Co Ltd [1943] KB 587 is to the same effect. Goddard LJ, in delivering the judgment of the Court of Appeal, referred (at 596) to the Duchess of Kingston's Case (1776) 2 Sm LC 644 (13th ed (1929)) where the general rule was said to be that a judgment of the court is not to be used to the prejudice of strangers. His Lordship then stated:
'This is true, not only of convictions, but also of judgments in civil actions. If given between the same parties they are conclusive, but not against anyone who was not a party.'
He went on to say (at 596 to 597):
'A judgment, however, is conclusive as against all persons of the existence of the state of things which it actually affects when the
- existence of that state is a fact in issue. Thus, if A sues B, alleging that owing to B's negligence he has been held liable to pay [X pounds] to C, the judgment obtained by C is conclusive as to the amount of damages that A had to pay C, but it is not evidence that B was negligent … '
- The only relevant order the Licensing Court made on 25 June 2001 was that granting a poker machine dealer's licence to Ainsworth Game Technology. The finding as to the fitness of the respondent that it made in the course of its judgment was not an order of the court. Only the order of the court constitutes a judgment in rem. The finding does not.
Thus, the judgment of the Licensing Court is conclusive as to the fact that Ainsworth Game Technology held a poker machine dealer's licence. It is not, however, conclusive as to whether the appellant was a fit and proper person to be interested in or associated with the holder of a poker machines dealer's licence (or a company licensed in relation to poker machines, or to have a financial interest in a company licensed to be an approved amusement device dealer - these being the additional pleaded imputations). Nor is it conclusive as to the differently framed contextual implications.
88 Counsel for the person submitted that the finding as to that person being a fit and proper person was a finding as to status. The court in Burden rejected that submission for the reasons appearing at [24] - [27]:
The proposition that the finding that the appellant was a fit and proper person to be interested in or associated with the holder of such a licence was a finding as to 'status' misconceives the meaning of status as this term was used in Washington H Soul, Pattinson & Co Ltd v Ogilvy [(1954) 55 SR (NSW) 143].
According to Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, 3rd ed (1996) at 234, the status of a person or thing is 'the jural relation of the person, or thing, to the world generally'. The authorities amply support this definition. In Daniel v Daniel (1906) 4 CLR 563, at 566, Griffith CJ said:
'Without pretending to give an exhaustive definition, I apprehend that the term 'status' means something of this sort: a condition attached by law to a person which confers or affects or limits a legal capacity of exercising some power that under other circumstances he could not or could exercise without restriction. That definition, as I have said, may not be exhaustive, but it indicates, at any rate, the sort of thing that is meant.'
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- In Niboyet v Niboyet (1878) 4 PD 1 at 11 Brett LJ said:
'The status of an individual, used as a legal term, means the legal position of the individual in or with regard to the rest of a community.'
In the Ampthill Peerage Case [1976] 2 WLR 77 at 794; [1976] 2 All ER 411 at 424, Lord Simon of Glaisdale said:
'Status means the condition of belonging to a class and society to which the law ascribes peculiar rights and duties, capacities and incapacities.'
Harvey v R [1901] AC 601 illustrates the point. An order had been made by a Master in Lunacy appointing Mrs Harvey to receive the income of her husband Mr Harvey's property, and authorising her to apply such income for the maintenance of herself, Mr Harvey and their child. The order contained a recital in the following terms (at 605):
'"[I]t having been established to my satisfaction that [Mr Harvey] is of unsound mind and is incapable of managing his affairs".'
Lord Lindley, in delivering the judgment of the Privy Council, said (at 611) that orders in Lunacy were 'not conclusive evidence of anything except their own existence'. Thus, the fact that Mrs Harvey had been so appointed took effect as a judgment in rem, it being a judgment as to her status as having authority to receive the income from her husband's property and to apply it as ordered. On the other hand, the finding that Mr Harvey was of unsound mind and was incapable of managing his own affairs was not a finding as to status, and was not conclusive.
By parity of reasoning, the order granting Ainsworth Game Technology a poker machines dealer's licence was an order as to the status of Ainsworth Game Technology. That is because the order declared the jural relation of Ainsworth Game Technology - as the holder of such a licence - to the world. On the other hand, the finding that the respondent was a fit and proper person to be interested in or associated with the holder of such a licence did not determine the legal position of the respondent in or with regard to the rest of the world. It did not result in the law ascribing particular rights and duties to the respondent. It was not a finding as to status.
89 Similarly in this case, in my view a conclusion in CIV 2765 of 2010 that the vesting orders the Friggers seek in that action should be made is at most only determinative of their jural relations to the world as stated in Trustees Act s 85, which does not go whether or not the freezing and ancillary orders ought to have been made, while a determination in those proceedings that the declaration the Friggers seek as to the term deposit should be made does not go to the grounds for making that declaration. In
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- my view the matter is even clearer in respect of a determination that Mr Kitay and CAT were not entitled to any of the declarations they seek in their counterclaim.
90 On this analysis I consider that those determinations would not be capable of operating as to judgments in rem as to all matters that as against all the world, including PSA and Mr Campbell-Smith, might go to impugn the interest of the Friggers in the land assets or other property and go to show that CAT had an interest in them at the relevant time, and thus that the freezing and ancillary orders ought not to have been made.
91 It follows in my view that I should not treat CIV 2765 of 2010 as warranting the court making an order for an inquiry but saving to the hearing of the inquiry the question of liability on the undertakings, or at least adjourning the determination of whether or not the undertakings should be enforced to the determination of CIV 2765 of 2010.
92 It further follows in my view that this is a case in which I am in a position to determine that the undertakings should not be enforced, and that the appropriate order is a discharge of those undertakings in the sense I described earlier.
93 However, it seems to me that it is at least arguable that there should be a saving to any such order, for any liability to compensate an innocent third party. While it is not apparent to me that there are any such in a position to claim compensation, or indeed that any such saving was made to the order for discharge in Metropolitan Properties, I will hear from the parties as to that matter.
94 My conclusions mean that it is not necessary for me to consider the two other bases on which for Mr Holbrook and Mr Campbell-Smith it was submitted I should discharge the undertakings. However, substantial submissions and argument before me were addressed to those bases. I consider I should deal with them. I turn to them now.
Other bases on which it was said the undertakings should be discharged
95 For Mr Holbrook and Mr Campbell-Smith it was submitted, as I understood the matter, that those two other bases, individually, together or in combination with the matter of whether the freezing and ancillary orders ought not to have been made, showed that the only party with a possible claim, the Friggers, had not made a claim which could found the orders the Friggers sought. That not only defeated that claim, but meant that the undertakings should be discharged.
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96 It was not challenged before me that if those other bases or either of them were made out then orders for the discharge of the undertakings might properly be made. I consider that it would indeed be the case that a discharge would be appropriate in such a case, on the basis the undertakings would have been shown to serve no useful purpose. However, I have already indicated why I consider I need to hear from the parties as to whether a saving from a discharge of the undertakings might properly be made for liability on a claim by innocent third parties. That saving might be appropriate in this context also.
97 The first of the two bases relied upon for Mr Holbrook and Mr Campbell-Smith was that the present claim for compensation should be refused in the exercise of the court's discretion because of the unexplained delay in making that claim. The other of the two bases was that the Friggers had not established a prima facie case that they had sustained damage by reason of the freezing and ancillary orders. I deal with those bases in that order.
Delay
98 For Mr Holbrook and Mr Campbell-Smith the delay was identified in the period between the discharge of the extended freezing orders as varied, on 14 July 2010, and, as I understood the submissions for them, no earlier than the date of the programming orders, which I made on 30 April 2012, to permit the Friggers to amend their application by chamber summons dated 1 March 2012 by which the present claim for compensation was made. It appeared to be contended that the chamber summons dated 1 March 2012 could not be relied upon by the Friggers as it had not been properly served, at least on Mr Holbrook. It also appeared to be contended that the Friggers could not rely upon the written submissions of the Friggers of 19 January 2012 in which they set out submissions in support of their claim for 'damages under injunctions' and 'for compensation'. On the basis of those submissions the period of the delay was put as 21 months.
99 For the purposes of considering the present basis, I accept without deciding that the delay in question was one of at least 21 months.
100 There is strong authority that a delay in applying to enforce a claim for compensation under an undertaking may justify the court in refusing enforcement of the undertaking. See Newcomen (765 - 766) (Malins VC: 11 months after discontinuance of action 'during which negotiation probably went on' not such delay); Smith v Day (1882) 21 Ch D 421, 426 (Jessel MR: eight months after dismissal of main action 'too long'), 427
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- (Brett LJ: claim should be brought within a 'reasonable time'), and 430 (Cotton LJ: not so long a delay as 'of itself' to be 'fatal to the application'; but delay 'unexplained'); Ex parte Hall; In re Wood (1883) 23 Ch D 644, 650, 651 - 652 (Baggallay LJ: delay of nearly four years after case against claimant failed; delay not accounted for; claim should fail), 652 (Cotton LJ: delay 'entirely unexplained', 'so unreasonable' that undertaking should not be enforced), 653 (Bowen LJ: 'marvellous' that appellant 'if he had any real claim to damages' would not have brought it before 'more than three and a half years' had elapsed); and see Ansett (261) (Aickin J, referring to first and third of these authorities; not considered by members of the High Court upholding his decision).
101 I note that these authorities do not appear to stipulate that the other side has to show prejudice from delay. Such a showing is of course required for the defeat of an equitable claim by laches not amounting to acquiescence. See Meagher RP, Heydon JD and Leeming MJ, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (4th ed, 2002) [36-020]. If prejudice is necessary, I consider it can be shown at least as to Mr Holbrook, as counsel for him put to me, in the inability of Mr Holbrook and PSA to bring about the termination of the DOCA, and, as to both Mr Holbrook and Mr Campbell-Smith, in their need to apply for the discharge of their undertakings. Those matters were not contested before me.
102 For Mr Holbrook and Mr Campbell-Smith reliance was placed on the fact the present claim for compensation was not made earlier than the dates referred to, notwithstanding two matters. One was the indications in an email from Mrs Frigger to Mr Holbrook of 21 May 2010 (before the discharge of the extended freezing orders as varied) of a claim she might make when she asked if he was 'in a position' to pay the damages described in the email, apparently under the undertaking of Mr Holbrook as one 'against damages … resulting from [the] freezing orders'. The other matter was Mrs Frigger's email of 26 September 2011 to the solicitors for Mr Holbrook, apparently the result of a letter from the liquidator to those solicitors, in which Mrs Frigger states she puts the solicitors for Mr Holbrook 'on preliminary notice' that the Friggers '(including the other members of the Frigger [Superannuation] Fund, being [the children])' had claims 'for losses in their retirement fund due to the freezing orders' which 'cannot be quantified until a claim under the Trustees Act against the liquidator is finalised'.
103 I consider that, notwithstanding submissions to the contrary from counsel for Mr Holbrook, there is indeed evidence before me as to the
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- reasons why there might have been the delay of 21 months referred to. That evidence is the emails referred to and the written submissions of the Friggers of 19 January 2012. Those emails might be seen to point to an attempt to gain a response to assertions as to loss the Friggers would seek to claim, while the written submissions of the Friggers of 19 January 2012 might be seen to point to further formulation of the claim.
104 I should note that in light of the written submissions of the Friggers of 19 January 2012 I cannot accept what appears to have been put to me by counsel for the Friggers, that they should be seen as having delayed making the present claim for compensation until the fate of the previous claim for compensation had been determined. That determination was of course CAT [No 3] WASC (S), delivered some two months later.
105 I consider that, while the delay here considered as one of 21 months was indeed long, it is sufficiently explained by the matters I have described. In the exercise of my discretion I would not withhold enforcement of the undertakings on account of that delay.
106 I turn now to the matter of whether or not I have been shown a prima facie case of damage.
A prima facie case of damage
107 It was accepted before me that a claimant for compensation under an undertaking must show, 'by evidence, or by inference from evidence, a prima facie case both that the grant of the injunction was a cause of his damage and that but for it he would not have suffered that damage': Ansett (320) (Stephen J); and see Ex parte Hall (650) (Baggallay LJ). I take this requirement to be one that should be satisfied before any inquiry as to damage is ordered, including one without any determination of liability pending the determination of a main action.
108 It appears to have been common ground before me that, on the affidavit of Mrs Frigger of 8 February 2012, the affidavit of Mrs Frigger of 1 March 2012 and the affidavit of Mrs Frigger of 27 August 2012 there are four heads of damage relied upon for the purposes of the present claim for compensation.
109 One head was put as costs occasioned by the making of the freezing and ancillary orders that would not be allowed on a taxation of costs. Of course, a claim for costs that might otherwise be allowed as the costs of the proceedings for the making of the freezing and ancillary orders could not be made consistently with the determination of the previous claim for
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- compensation in CAT [No 3] WASC (S), so long as that determination stood.
110 However, it seems to me none of the damage under this head is for damage caused by the freezing and ancillary orders. It is rather damage sustained as a result of the proceedings for the freezing and ancillary orders themselves, in the sense that it appears these costs were incurred as a response to those proceedings, as opposed to resulting from the imposition of the restraints by the freezing orders or the requirement by the ancillary orders. See for that distinction Ansett (311) (Barwick CJ), (312 - 313) (Gibbs J), (318, 320) (Stephen J), (324 - 325) (Mason J).
111 The terms of the undertakings, in both cases as ones to 'pay to any party restrained or affected by the restraintsimposed by this freezing order … compensation' (emphasis added) in my view do not lead to the conclusion that the distinction is inapposite here. If anything, in my view those terms lead to the opposite conclusion, that the distinction is apposite. I leave aside the question whether or not the language is apt to cover damage from complying with the requirements of the ancillary orders.
112 The distinction may be seen particularly clearly in a respect apparent from some of the costs items in the evidence to which I was referred under this head. These items are for costs incurred after the date of the discharge of the extended freezing orders as varied. The items appear to be ones going to the hearings in relation to the costs of the proceedings for the freezing and ancillary orders. See for example the affidavit of Mrs Frigger of 1 March 2012 par 33 item 4. It is difficult to see how such costs could be seen as resulting from the imposition of the restraints and requirements under the freezing and ancillary orders where those restraints and requirements had ceased some months previously.
113 The distinction may be seen particularly clearly in another respect. Counsel for the Friggers referred me to the submissions for PSA and Mr Campbell-Smith described by him as submissions in relation to the costs of the proceedings for the freezing and ancillary orders. These submissions it was said referred to allegations of possible impropriety in the conduct of the Friggers in causing dealings by CAT, allegations which were part of the case for the making of the freezing and ancillary orders. I took counsel's purpose in referring me to these matters as being that of showing me the reasonableness of costs incurred by the Friggers in responding to the making of the freezing and ancillary orders as they had. However, it seems to me that such response is in fact to be seen as to the
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- proceedings resting on such a case, not damage resulting from the imposition of the restraints or requirements under the freezing and ancillary orders.
114 The authorities of Norilya Minerals Pty Ltd v Ireland (1994) 12 WAR 485 (Kennedy J), referring to Project Development Co Ltd SA v KMK Securities Ltd [1982] 1 WLR 1470 (Parker J), cited to me by counsel for the Friggers, do not lead me to a different conclusion as to the application of the distinction to the first head of damage. Those authorities both concern liability to innocent third parties for the costs, on an indemnity basis, for intervention in proceedings to vary Mareva orders. The basis for those decisions appears to be the exercise of the costs discretion, not the discretion to enforce any undertaking given in those proceedings. True it is that both authorities recognise the 'logic' of granting the innocent third party its expenses. However, that does not go to the distinction recognised in Ansett, let alone the position of a third party who is not an innocent third party. That last is the position for the Friggers as I have indicated.
115 I should add that counsel for the Friggers pressed on me that, unlike Ansett, there was no main action here, and that the distinction in Ansett should be seen against that background. Where there was no main action, he submitted, the kinds of damage relied upon under this head should be seen as relating to the freezing and ancillary orders made. In any event, the distinction made could not, he further submitted, on the reasons in Ansett of the other members of the High Court than Mason J, be understood in terms of the distinction I have identified with that authority. That distinction, as he stated, is between the costs of compliance with the order and the costs of the proceedings.
116 On the pages from Ansett I referred to above I cannot accept that there is a difference between the views of the other members of the court and Mason J as submitted. Nor can I accept the first point counsel sought to make. I cannot accept it for the reasons having to do with the terms of the distinction in all of the judgments and the terms of the undertakings themselves.
117 The second head of damage was put by counsel for the Friggers as personal costs to Mrs Frigger which represent loss of income from her accounting practice resulting from her involvement in the proceedings for the freezing and ancillary orders. I was referred to the affidavit of Mrs Frigger of 1 March 2012 and the affidavit of Mrs Frigger of
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- 27 August 2012 as the evidence in this regard. I understood this loss did not include any under the first head.
118 I consider this head is not for loss or damage caused by the freezing and ancillary orders in the same way the previous head is not for such damage. I repeat my previous reasons. If anything, the matter is even clearer for this head, in my view.
119 The third head was put by counsel for the Friggers as distress, embarrassment and damage to reputation suffered by Mr and Mrs Frigger as a result of the making of the freezing and ancillary orders. I was referred to the affidavit of Mrs Frigger of 27 August 2012 as the evidence in this regard. I note in passing this appears to be the only evidence of damage to Mr Frigger.
120 However, the evidence in relation to this head does not it seems to me show a prima facie case that the imposition of the restraints or requirements under the freezing and ancillary orders was a cause of the damage in question. It may be granted the making of the orders caused loss of the kind referred to 'in the eyes' of the persons and authorities listed, as the affidavit of Mrs Frigger of 27 August 2012 states. I further accept arguendo that this form of damage is recoverable as compensation on the enforcement of an undertaking. However, it is not evident to me from that evidence how compliance with the restraints or requirements prima facie produced that loss or damage, as opposed to that loss or damage being a consequence of the Friggers' involvement in the proceedings for the freezing and ancillary orders which culminated in the orders being made and maintained.
121 The fourth and final head was put by counsel for the Friggers as aggravated and exemplary damages for certain conduct of a solicitor for PSA in relation to the proceedings for the freezing and ancillary orders. It may be noted there is no corresponding conduct referred to in respect of Mr Holbrook. I was referred to the affidavit of Mrs Frigger of 8 February 2012 as the evidence in respect of the conduct relied upon. I do not consider I need to go further into that evidence other than to say that at most, if accepted (as I do, for present purposes only), it is of matters that may go to show the capacity of the Friggers to defend against the proceedings for the freezing and ancillary orders may have been interfered with.
122 I immediately note that whether these matters have been established is in strong contest, as is evident from CAT [No 4] WASC 284. I do not
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- consider I need to return to that contest, both as I am concerned only to see whether or not a prima facie case has been established, and for the reasons which will shortly become apparent.
123 I accept that aggravated or exemplary damages may be obtained in the enforcement of an undertaking in freezing and ancillary order proceedings. See Columbia Pictures Industries Inc v Robinson [1987] Ch 38, 87 (Scott J), a case of enforcement of a cross-undertaking in relation to what were found to be improperly obtained and enforced Anton Piller and Mareva orders. However, as that authority indicates, and the terms of the undertaking of Mr Holbrook and the undertaking of Mr Campbell-Smith confirm, the damages obtainable are 'primarily compensatory' (87). Circumstances of aggravation may result in an increased level of such damages. However, it is necessary to show some 'compensatory element' in the damages to be awarded (87). For the reasons given earlier, no prima facie case of loss or damage has been shown which would satisfy that requirement. Therefore, I consider that no occasion for an award of aggravated or exemplary damages arises on the evidence before me.
124 Therefore it follows that I would conclude that, while the delay in making the present application for compensation is not such as to warrant me in the exercise of my discretion refusing to enforce the undertakings, no prima facie case of loss or damage has been shown on the evidence before me or inference from it.
125 On that basis I would refuse enforcement of the undertakings. On that basis, I would make orders for the discharge of the undertakings, subject perhaps to the qualification for the rights of innocent third parties I referred to above.
126 I turn now to deal briefly with the application for the termination of the DOCA to the extent that application was gone into before me at the present hearing.
The application to terminate the DOCA
127 As I indicated at the start of these reasons, this application was to be heard with the application for discharge of the undertakings and the present application for compensation. However, the application to terminate the DOCA was adjourned by the consent of the applicant, Mr Holbrook, and of the other parties to the application, PSA and Banning Holdings. However, at the hearing I raised a number of matters with counsel for the parties, and counsel raised one matter with me. I
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- consider it is useful to record those matters here. It is useful because all but one of these matters are likely to be addressed at the hearing of the application for the termination of the DOCA, which will likely occur on or not long after the delivery of these reasons.
128 I note that for the applicant Mr Holbrook I was provided with written submissions dated 3 April 2012 in support of the application to terminate the DOCA and a minute of proposed orders handed up at the hearing before me on 31 August 2012. I was also provided with affidavits of Mr Holbrook in support of the application to terminate the DOCA, sworn 16 December 2011 (the affidavit of Mr Holbrook of 16 December 2011) and sworn 28 May 2012. I appear to have no other papers with respect to the application to terminate the DOCA, save for a minute of proposed orders from Banning Holdings, PSA and Mr Campbell-Smith dated 'August 2012' (the minute of proposed orders from Banning Holdings, PSA and Mr Campbell-Smith) also handed up at that hearing.
129 The matters I raised at the hearing before me on 31 August 2012 were four.
130 One matter was the source of the power to terminate the DOCA prospectively, which is what is sought. The application is not to set the DOCA aside ab initio, the matter with which it appeared that the authorities cited to me were concerned. Counsel will address me on this matter at the eventual hearing of the application to terminate the DOCA. However, it seems likely Corporations Act s 447A is sufficient.
131 Another matter I raised was what creditors of PSA which were referred to at the hearing as pre-administration creditors, and what creditors of PSA which were referred to at the hearing as post-administration creditors, were those of whose interests I needed to take account. Again, counsel will further address me on this matter at the eventual hearing of the application to terminate the DOCA.
132 Another matter I raised was the position of the liquidator in relation to the application to terminate the DOCA. My attention was directed to the affidavit of Mr Holbrook of 16 December 2011 annexing a letter dated 22 September 2011 from the liquidator to the solicitors for Mr Holbrook indicating he was aware of the proceedings before me and would abide their result. On that basis, I consider that the position is clearly established in a way which does not require further concern for the position of the liquidator in relation to the application for the termination of the DOCA.
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133 Another matter I raised was the need, if any, for notification of the application to terminate the DOCA to parties to the DOCA not parties to the application. Counsel will further address me on this matter at the eventual hearing of the application to terminate the DOCA.
134 Apart from correction of typographical errors in the minute of proposed orders from Banning Holdings, PSA and Mr Campbell-Smith, both counsel for Mr Holbrook and counsel for PSA and Banning Holdings raised with me the matter of a retention fund for Mr Holbrook as a condition of the termination of the DOCA as well as the determination of its amount, and the remuneration of Mr Holbrook and the determination of its amount. I understood the parties to be likely to engage in conferral in an effort to resolve any remaining differences between them on these accounts. Those matters would also fall to be addressed at the eventual hearing of the application to terminate the DOCA.
Conclusion and orders
135 For the reasons I have given, I would dismiss the present claim for compensation and make orders for discharge of the undertakings.
136 However, I will need to hear from the parties as to what savings, if any, from those discharge orders should be made.
137 I will also need to hear from the parties as to other detail of the orders as well as what orders I should make as to the costs of the applications before me so disposed of.
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