FEDERAL COURT OF AUSTRALIA
Frigger v Banning (No 3) [2017] FCA 221
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- AGLC
- Frigger v Banning (No 3) [2017] FCA 221
- Case
- [2017] FCA 221
- Decision Date
CaseChat Overview and Summary
In Frigger v Banning (No 3), the applicants sought to amend their originating application and statement of claim in a proceeding related to litigation involving directors and members of a company, CAT. The applicants aimed to assert claims against respondents who were previously involved in litigation with CAT over the ownership of a property and associated business. The court had to decide whether the proposed amendments were permissible under the rules of court and if they would lead to an abuse of process.
The applicants argued that they were entitled to the proceeds from a judgment awarded to CAT against the respondents for misleading and deceptive conduct. They claimed that they were the beneficial owners of the judgment under a contract for litigation and a fixed charge registered over the judgment. The applicants sought to use the current proceedings to make new findings on the ownership of the property and business, which had already been determined in separate litigation. The court found that allowing the amendments would result in the applicants using the current proceeding to attack orders made in a separate proceeding, which would be an abuse of process.
The court reasoned that the applicants' claims were not supported by the facts or the law. The applicants were not parties to the original litigation and had no beneficial entitlement to the judgment in favour of CAT. The proposed amendments were deemed to be embarrassing, as they were evasive and obscured the real questions in controversy. The court concluded that the applicants were attempting to relitigate issues that had already been decided and that allowing the amendments would lead to an abuse of process.
The court dismissed the applicants' application to amend their originating application and statement of claim. It also dismissed the application to restrain lawyers from acting for the respondents, finding that the applicants were using the current proceedings to attack orders made in separate litigation. The court ordered that the costs of the respondents be taxed and paid forthwith and scheduled a case management hearing to manage the proceeding.
The final orders of the court were that the application for an order permitting the applicants to file the proposed substituted statement of claim be dismissed, the application for an order to restrain lawyers from acting be dismissed, the costs of the first to fourth respondents of these two applications be taxed and paid forthwith, and the matter otherwise be listed for a case management hearing on 22 March 2017 at 10:15am.
The applicants argued that they were entitled to the proceeds from a judgment awarded to CAT against the respondents for misleading and deceptive conduct. They claimed that they were the beneficial owners of the judgment under a contract for litigation and a fixed charge registered over the judgment. The applicants sought to use the current proceedings to make new findings on the ownership of the property and business, which had already been determined in separate litigation. The court found that allowing the amendments would result in the applicants using the current proceeding to attack orders made in a separate proceeding, which would be an abuse of process.
The court reasoned that the applicants' claims were not supported by the facts or the law. The applicants were not parties to the original litigation and had no beneficial entitlement to the judgment in favour of CAT. The proposed amendments were deemed to be embarrassing, as they were evasive and obscured the real questions in controversy. The court concluded that the applicants were attempting to relitigate issues that had already been decided and that allowing the amendments would lead to an abuse of process.
The court dismissed the applicants' application to amend their originating application and statement of claim. It also dismissed the application to restrain lawyers from acting for the respondents, finding that the applicants were using the current proceedings to attack orders made in separate litigation. The court ordered that the costs of the respondents be taxed and paid forthwith and scheduled a case management hearing to manage the proceeding.
The final orders of the court were that the application for an order permitting the applicants to file the proposed substituted statement of claim be dismissed, the application for an order to restrain lawyers from acting be dismissed, the costs of the first to fourth respondents of these two applications be taxed and paid forthwith, and the matter otherwise be listed for a case management hearing on 22 March 2017 at 10:15am.
Orders
Orders of the court
1. The application for an order permitting the applicants to file the proposed substituted statement of claim be dismissed.
2. The application for an order to restrain lawyers from acting be dismissed.
3. The costs of the first to fourth respondents of these two applications be taxed and paid forthwith.
4. The matter otherwise be listed for a case management hearing on 22 March 2017 at 10:15am.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
I will adopt these same topic headings in dealing with the amendment applications before me, to which I now turn.The “foundational facts” pleadings Paragraphs 6 to 19 of the proposed substituted statement of claim state:6) The Applicants (‘Mr & Mrs Frigger’):a) Were at all material times directors and members of CAT;b) Executed a contract for litigation with CAT (‘the Litigation Contract’) dated 1 September 2003 for the purposes of issuing a writ against PSA and Martin Paul Banning for losses resulting from misleading and deceptive conduct in the purchase of real estate at 269 South Western Highway Armadale registered in CAT’s name the purchase price of which was paid by Mr & Mrs Frigger. Pursuant to the Litigation Contract Mr & Mrs Frigger are the beneficial owners of the judgments in CIV2265/2006.c) Executed a Fixed Charge with CAT on or about 10 September 2009 securing inter alia the fruits of the litigation referred to in paragraph 6(b) which Charge was registered with Australian Securities and Investments Commission on or about 23 October 2009 and which migrated to the Personal Properties Securities Register (‘PPSR’) as a Specific Security Agreement (‘SSA’) having an Allotted number 20112210122618.7) On or about 9 July 2008 CAT was awarded damages, costs and interest against PSA and Martin Paul Banning (the Defendants) in Supreme Court of WA [2008] WASC 133 (the Original Judgment).8) The Defendants failed and or refused to pay the Original Judgment to CAT in circumstances where the respondents had combined net assets of approximately $5,000,000.9) The DOCA was executed on 20 March 2009 pursuant to Part 5.3A the Act for the purposes of administering the business, property and affairs of PSA so as to result inter alia in a better return to PSA’s creditors than would result from an immediate winding up.10) By their execution of the DOCA the respondents were bound by s 444G not to use their powers under the Act that was inconsistent with the terms of the DOCA.11) The relevant terms of the amended DOCA dated June 2009 are:a) Clause 5.1.1: On or before 30 August 2009 Banning Holdings Pty Ltd would pay CAT $1,172,388.91 which amount was defined as ‘Judgment Sum’ under Definition and Interpretation;b) Clause 5.1.3: CAT’s taxed costs (‘the Taxed Costs’) would be paid from the proceeds of the sale of PSA’s property at 11 Lacey Street, Perth.c) Clause 5.2: the DOCA would automatically terminate if the amounts payable were not paid by 30 April 2009 (‘the Date’);d) Clause 6.1.3: if the Judgment Sum is reduced on Appeal, then the excess Judgment Sum plus interest is to be repaid to BH immediately being an amount of $770,924.70;e) Clause 6.3: if the payment obligations of the parties are not finalised but the DOCA terminates, any funds received by the Creditors prior to the termination shall be retained by those parties.f) Clause 6.13: Notwithstanding anything contained in the DOCA appearing to the contrary, any payments made to CAT shall be without prejudice to the rights of PSA and Mr Banning in the Appeal. Any reduction in the Original Judgment resulting from the Appeal may be set-off against any other amount which would be payable pursuant to the DOCA including the Taxed Costs.Mr and Mrs Friggers’ rights 12) In the circumstances of the matters in paragraphs 6, 7 and 14:a) Pursuant to s 19(2) PPSA on registration of Fixed Charge on 23 October 2009 Mrs & Mrs Frigger’s security interest attached to the collateral in theAssets named in the schedule to the Fixed Charge including the Original Judgment.b) Pursuant to s 20(1)(b)(i) PPSA Mr & Mrs Frigger’s security interest in the Original Judgment became enforceable against third parties including the respondents by reason of possession of collateral.c) Mr & Mrs Frigger are creditors in the DOCA being assignees of the debts payable under the DOCA pursuant to s 444D(1) the Act and pursuant to the definition of ‘creditor’ are parties who are permitted assigns in clause 1.2 in the DOCA and pursuant to the matters in paragraph 14;d) are ‘other interested parties’ whose substantial economic interests are at stake pursuant to s 447A(4)(f) the Act and are persons whose interests have been or would be affected by the conduct of the respondents pursuant to s 1324(1) the Act:i) Taxed Costs in CIV2265/2006 secured by the Fixed Charge payable by the Defendants to Mr & Mrs Frigger;ii) Respondents to the Freezing Orders in CIV2265/2006 with losses particularised in paragraph 53 and 54;iii) Parties in COR2/2010 pursuant to Frigger -v- Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 @ [27] with losses particularised in paragraph 53 and 54;iv) Parties in CIV2265/06 and COR2/2010 for the purposes of the tort of collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26 and caused loss and damage particularised in paragraph 53 and 54;v) Persons who have suffered substantial damage to their reputation resulting from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26;vi) Persons who have suffered substantial credit damage and are unable to obtain loans in Australia from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26;vii) Persons who have suffered substantial mental harm and stress resulting from the matters in this statement of claim from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26.13) On or about 2 and 9 June 2009 Banning Holdings Pty Ltd delivered to CAT’s solicitor Stokes & Associates two cheques in the total amount of $1,165,661.54 in purported compliance with clause 5.1.1 DOCA leaving an amount of $6,727.37 unpaid.14) Pursuant to the Litigation Contract CAT assigned the cheques referred to in paragraph 13 to Mr & Mrs Frigger and all benefits liabilities and rights under the DOCA were transferred to Mr & Mrs Frigger and became effectual in law.15) On 2 June 2009 CAT lodged a bill of costs for taxation in an amount of $701,000 which bill has never been assessed.16) Pursuant to clause 5.2.1 the DOCA automatically terminated on 30 August 2009 when the payments to two other creditors and the balance of the Original Judgment $6,727.37 had not been made:ParticularsIn [2012] WASC 444 @ [16] Simmonds J found that no further amendments had been made to the DOCA other than the amendments contained in the June Version17)In the circumstances of the automatic termination of the DOCA on 30 August 2009:a) pursuant to clause 6.3 the Creditors including Mr & Mrs Frigger were entitled to retain the funds paid under the DOCA;b) Pursuant to clause 6.13 any reduction in the Original Judgment would be applied to the Taxed Costs;c) By clause 6.1.3 any remainder after the Taxed Costs was to be repaid to BH if, which is denied, clause 6.3 was of no effect.18) Notwithstanding the automatic termination of the DOCA on 30 August 2009 pursuant to s 445H the Act the termination did not affect the previous operation of the DOCA.19) Pursuant to the doctrine of finality in litigation Mr & Mrs Frigger were entitled to take all necessary steps to finalise the litigation with the Defendants in the most cost effective manner as quickly as possible.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
I accept that Mrs Frigger (with whom Mr Frigger did not disagree) gave evidence at the trial of CIV 2265 of 2006 in November and December 2007 (see headnote of Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (the original decision) to the effect that the Frigger Super Fund was not the owner of the property at 269 South West Highway (beneficially or otherwise) and that it was owned by CAT in its own right. I also accept that, as the evidence given by the applicants was under sustained attack during the trial, the trial judge (Simmonds J) summarised it at length at [51]-[77] of his reasons and ultimately found, at [88]-[89], that the evidence established that CAT had purchased the assets in its own right and not for the Frigger Super Fund. The issue of whether the property at 269 South West Highway and its associated business was owned by the applicants or CAT was also the subject of CIV 2765 of 2010 between the applicants and the liquidator of CAT in the Supreme Court of Western Australia. I consider it is an abuse of process for these proceedings to be used as a basis for fresh findings as to those issues when the proper parties to the actual controversy (the Friggers and the liquidator) are not before the Court and are indeed engaged in litigation elsewhere on the same issues; a matter of which the applicants are well aware given my recent decision in Kitay, in the matter of Computer Accounting & Tax Pty Ltd (in liq) [2016] FCA 720. Additionally where, as here, a case is being set up again by the applicants in a different form or forum seeking a different result where the issue has already been determined to the contrary, it also constitutes an abuse. See, for example, Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 at [4]-[11]; Idoport v National Australia Bank Ltd [2006] NSWCA 202 at [107], [110] and [119]. Accordingly, leave to plead in that manner should be refused. It is not in dispute that judgment was given in the original decision to CAT against Mr Martin Banning and Professional Services of Australia Pty Ltd (PSA) in July 2008. It was not, however, given in favour of Mrs and Mr Frigger, and they were not then, and never have been, parties to that action. There are no proper material facts pleaded in the proposed substituted statement of claim, nor is there any evidence put forward by the Friggers to show that they can claim any beneficial entitlement to the ownership of the original decision in favour of CAT pursuant to the litigation contract or at all. The mere execution of even a fixed charge on 10 September 2009 could not have had that effect (see para 6(c) of the proposed substituted statement of claim). Where a statement of claim does not reveal how a cause of action arises and the defendants are prejudiced in pleading their defence, particulars would ordinarily be ordered before any defence is required. See Selangor United Rubber Estates Ltd v Cradock [1965] Ch 896 at 901. Pleas would also be liable to be struck out as embarrassing where they are evasive or obscure the real questions in controversy, or ambiguous or not reasonably intelligible. See Hart‑Roach v Public Trustee unrep. WASC lib. no. 980044; Kidd v Artus t/as Downings Legal [2013] WASC 264 at [26] (Allanson J). I consider the pleas here are embarrassing.
Ratio Decidendi
Legal Principle Established
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