Frigger, in the matter of Computer Accounting & Tax Pty Ltd (in Liq)
[2018] FCA 215
•1 March 2018
FEDERAL COURT OF AUSTRALIA
Frigger, in the matter of Computer Accounting & Tax Pty Ltd (in Liq) [2018] FCA 215
File number: WAD 674 of 2015 Judge: COLVIN J Date of judgment: 1 March 2018 Date of hearing: Determined on the papers Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: No Catchwords Number of paragraphs: 14 Counsel for the Plaintiffs: The Plaintiffs appeared in person Counsel for the Liquidator of Computer Accounting & Tax Pty Ltd (in liq): Mr D John Solicitor for the Liquidator of Computer Accounting & Tax Pty Ltd (in liq): Herbert Smith Freehills ORDERS
WAD 674 of 2015 IN THE MATTER OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQ) ACN 009 470 491
ANGELA CECILIA THERESA FRIGGER
First Plaintiff
HARTMUT HUBERT JOSEF FRIGGER
Second PlaintiffMERVYN JONATHAN KITAY, LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQ)
Other
JUDGE:
COLVIN J
DATE OF ORDER:
1 MARCH 2018
THE COURT ORDERS THAT:
1.The plaintiffs do pay the liquidator’s costs that are costs only of the claim to relief in the original application forthwith, to be taxed if not agreed.
2.The plaintiffs do file any written submissions in opposition to the application for security for costs on or before 9 March 2018.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
COLVIN J:
Mr and Mrs Frigger commenced these proceedings against Mr Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in Liq) (CAT) in November 2015. On 4 April 2016, orders were made by consent that these proceedings be adjourned pending the outcome of other proceedings brought by Mr and Mrs Frigger (WAD 607 Proceedings). A statement of claim was filed by Mr and Mrs Frigger in the WAD 607 Proceedings in October 2015.
On 13 November 2017, Mrs Frigger said that the consent order adjourning these proceedings until the WAD 607 proceedings were resolved had been “inconvenient” because its effect was that these proceedings were adjourned indefinitely. She said that when the consent order for an adjournment was made there was an application in the WAD 607 Proceedings for the statement of claim to be amended which was dismissed in March 2017. After that, leave to appeal that judgment had been sought and had been heard, but a decision had not been delivered. What was sought was the setting aside of the consent order so that this matter could be progressed.
Also, at that time, Mrs Frigger informed the Court that an amendment was sought to the originating process in these proceedings. The original application sought an order that the insolvent liquidation of CAT be stayed, alternatively an order that it be terminated. The proposed amended originating process sought, instead, orders removing Mr Kitay as Liquidator of CAT, the appointment of another liquidator and other orders, including orders that Mr Kitay pay certain amounts to CAT and that Mr Kitay was not entitled to legal costs in various proceedings.
As to the proposed amendment, Mrs Frigger explained that at the time the consent order was made on 4 April 2016, Mr and Mrs Frigger had already started to talk about the misconduct of Mr Kitay in submissions and the reason for seeking to raise the new claims by amendment, rather than by a new proceeding, was because evidence upon which Mr and Mrs Frigger relied to support the proposed amended application was already in these proceedings.
It appears from the transcript of the Court hearing in these proceedings on 13 November 2017 that Mrs Frigger maintained that the material that supported the proposed amended application had been provided in these proceedings on and after 4 April 2016.
On that occasion, the need for a statement of claim in respect of the new allegations and the need to provide for a foreshadowed application for security for costs by Mr Kitay as well as the prospect of an adverse costs order in respect of the amendment was raised. In the result, the Court directed the parties to confer.
On 5 December 2017, consent orders were made vacating the orders made on 4 April 2016 and giving leave to amend the originating process in the terms proposed by Mr and Mrs Frigger. It was also ordered that the matter proceed on pleadings and the statement of claim be filed within 7 days. Directions were also made concerning the application by Mr Kitay for security for costs. Finally, orders were made directing the parties to file written submissions in relation to (a) appropriate orders as to costs in light of the orders setting aside the order of 4 April 2016 and giving leave to amend; (b) when Mr Kitay must file submissions regarding security for costs and any consequent programming orders and (c) the time for filing of the defence of Mr Kitay. The orders provided for these matters to be determined on the papers. It is those matters which are the subject of these reasons.
COSTS
Mr and Mrs Frigger submit that the only order that should be made is an order for costs thrown away by reason of the amendment. They also say that costs prior to 4 April 2016 are relevant to the amended claim and therefore it would be inappropriate to order Mr and Mrs Frigger to pay all of the costs of Mr Kitay up until 4 April 2016.
For Mr Kitay, it is submitted that the liquidator is entitled to an order that the plaintiffs do pay his costs up to and including 4 April 2016 to be taxed if not agreed and to be paid forthwith (that is to say the assessment and payment of the costs should not abide the outcome in these proceedings).
As to the date of 4 April 2016, reliance is placed upon things that were said at the hearing on 18 November 2017. It is true that on that occasion Ms Frigger said that at the time the consent order was made on 4 April 2016, claims had been made by Mr and Mrs Frigger of misconduct. However, it was also apparent that Ms Frigger had not considered the extent to which the relief sought in the amended application would completely replace what had gone before. Further, in referring to the significance of 4 April 2016, the Court observed that it “may be a bright line” that separates what was strictly referrable to the relief sought in the amended application but no concluded view as to that matter was expressed.
In her written submissions, Mrs Frigger says that matters relevant to the amended application were raised before 4 April 2016.
In those circumstances, I uphold the submission for Mr Kitay that the amendment involves a complete abandonment of the whole case as previously advanced. Therefore, it is appropriate for those costs to be paid forthwith and if necessary for them to be taxed. There is no sense in which those costs should abide the event. The case as originally formulated is no longer pursued. The amended application is an entirely new claim. Allowing the new case to proceed by way of amendment is procedurally convenient, but should not affect the usual approach to costs where a party withdraws a claim. However, I am not prepared to find that none of the costs prior to 4 April 2016 related to consideration of allegations of misconduct which Mr and Mrs Frigger now seek to pursue. The taxation process, if required, can deal with that aspect. It will be for the taxing officer to consider which costs are only costs of the claim (now not pursued) that the liquidation should be brought to an end.
SUBMISSION REGARDING SECURITY FOR COSTS
As to the filing of submissions on the liquidator’s application for security for costs, I note that submissions in support of the application for security for costs were filed by Mr Kitay on 20 February 2018. In those circumstances, I propose to order that any submissions in opposition to the application for security be filed by Mr and Mrs Frigger by 9 March 2018.
TIMING OF DEFENCE
Mr and Mrs Frigger seek orders requiring Mr Kitay to file a defence. The application for security for costs seeks security prior to the filing of a defence. A requirement for the filing of a defence at this time would pre-empt the application for security. Therefore, I do not propose to order the filing of a defence. I have listed this matter together with other matters for a case management hearing on 16 March 2018 and the question of future directions as to the time for filing a defence can be considered at that time.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin. Associate:
Dated: 1 March 2018
0
0
0