Frigger v Holbrook - [2015] WASC 469

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FRIGGER -v- HOLBROOK [2015] WASC 469

CORAM: MITCHELL J

HEARD: 30 NOVEMBER 2015

DELIVERED : 30 NOVEMBER 2015

PUBLISHED : 4 DECEMBER 2015

FILE NO/S: CIV 1846 of 2015

BETWEEN: ANGELA FRIGGER
First Plaintiff
HARTMUT FRIGGER
Second Plaintiff
AND
KIM DAVID HOLBROOK
Defendant

Catchwords:

Practice and procedure - Application to set aside notice of discontinuance as an abuse of process - Imminent hearing of defendant’s application for summary judgment

Legislation:

Rules of the Supreme Court 1971 (WA), O 23 r 2

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff                  :     No appearance
Second Plaintiff             :     No appearance
Defendant:     Mr J C Vaughan SC

Solicitors:

First Plaintiff                  :     In person
Second Plaintiff             :     In person
Defendant:     Hotchkin Hanly Lawyers

Case(s) referred to in judgment(s):

Blossomtree Pty Ltd v Brunswick NL (1991) 4 WAR 480
Casthano v Brown & Root (UK) Ltd [1981] AC 557
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (1997) 18 WAR 334
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Packer v Meagher [1984] 3 NSWLR 487
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179
Re Peat Resources of Australia Ltd; ex parte Pollock [2004] WASCA 122; (2004) 181 FLR 454
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93
MITCHELL J:
(This judgment was delivered extemporaneously and has been edited from the court's record of the decision.)

This is the defendant's application by chamber summons of 27 November 2015 for an order that a notice of discontinuance, filed by the plaintiffs on 27 November 2015, be set aside as an abuse of process. If that application succeeds, it will be necessary to deal with the plaintiffs' application to transfer these proceedings to the Federal Court of Australia.

Procedural background

The plaintiffs commenced these proceedings against the defendant by the issue of a writ of summons from this court on 4 June 2015. On 24 June 2015, the defendant applied by chamber summons for summary judgment, alternatively to strike out the statement of claim indorsed on the writ.
On 15 September 2015, Mrs Frigger provided the plaintiffs' unavailable dates for the hearing of the summary judgment application. On the same day the defendant's summary judgment application was listed for hearing before the master on 19 November 2015.
Various programming orders were made, and the plaintiffs failed to comply with many of those orders.
On 2 October 2015, the plaintiffs wrote to the master indicating that they may wish to rely on findings in associated proceedings pending in the Court of Appeal.
On 8 October 2015, the master made a springing order to the effect that judgment would be entered for the defendant if the plaintiffs did not file responsive affidavits and submissions in relation to the summary judgment application by 14 October 2015.
On 14 October 2015, the plaintiffs filed their responsive submissions and affidavit, together with an amended statement of claim in the proceedings. On 21 October 2015 the defendant amended his chamber summons to refer to the amended statement of claim.
On 20 October 2015, the plaintiffs commenced proceedings WAD 607/2015 in the Western Australia Registry of the Federal Court of Australia (Federal Court proceedings). The respondents to the Federal Court proceedings are Sandra Banning, Donald Campbell‑Smith, Professional Services of Australia Pty Ltd (PSA) and Banning Holdings Ltd.
On 28 October 2015, the plaintiffs wrote to the acting master's associate attaching a copy of the application in the Federal Court and seeking directions for these proceedings to be transferred to the Federal Court.
On 10 November 2015, Mrs Frigger, purportedly on behalf of both plaintiffs, applied by chamber summons for the transfer of these proceedings to the Federal Court of Australia. The chamber summons also sought an order that the transfer application be heard prior to the defendant's summary judgment application. The only basis for the transfer application disclosed in Mrs Frigger's supporting affidavit was a commonality of issues said to require determination in these proceedings and the Federal Court proceedings.
On 16 November 2015, Mrs Frigger wrote to the master's associate inquiring as to whether the hearing of the summary judgment application would be vacated pending the resolution of the transfer application. She received a response indicating that she would need to apply for an adjournment of the hearing on 19 November 2015.
On 18 November 2015, the plaintiff filed an application requesting an adjournment of the hearing of the summary judgment application listed for the following day. She attached a certificate from Dr Scurry of the Reynolds Road Medical Centre of the same date, indicating that Mrs Frigger was 'medically unfit from 18/11/15 until 20/11/15 inclusive'. The certificate did not specify what Mrs Frigger was unfit for, or give any indication of the cause of that unfitness.
Also on 18 November 2015, the master's associate emailed the parties advising that the hearing listed for the following day had been vacated, and the summary judgment application relisted on 1 December 2015 - that is, tomorrow. The associate also indicated that a listings officer was trying to have the transfer application listed before a judge.
On 25 November 2015, the plaintiffs wrote a letter to the master's associate, indicating that they challenged the master's jurisdiction to hear the summary judgment application before their transfer application was determined. The letter said '[a]ccordingly, the plaintiffs are not available for the hearing on 1 December 2015'. The letter did not indicate that the plaintiffs were unavailable on that date for any other reason.
Also on 25 November 2015, my associate emailed the parties indicating that the transfer application had been listed before me on 30 November 2015 - that is, today. The email indicated that the summary judgment application remained listed before the master on 1 December 2015, subject to the outcome of the transfer application. On the same day Mrs Frigger sent an email indicating that she was not available on either 30 November or 1 December 2015. She indicated that she was suffering from 'extreme stress and poor health at present, and will obtain a further medical certificate'. Later on the same day the master's associate emailed the parties indicating that if Mrs Frigger was in poor health and unable to attend court for the summary judgment application, she would need to provide a doctor's certificate to the master by the following day. My associate advised that if Mrs Frigger sought to adjourn the transfer application she would need to make an appropriate application supported by affidavit.
On Thursday 26 November 2015, the plaintiffs wrote to the defendant's solicitors indicating:
The plaintiffs are not willing to risk their application for transfer being dismissed and your client's application for summary judgment being upheld by judicial officers of the Supreme Court who have previously displayed actual bias against the plaintiffs, and are currently engaging in such conduct.
Accordingly, the plaintiffs request the defendant to sign the attached consent order by 12 noon 27 November 2015, failing which the plaintiffs will file a Notice of Discontinuance and seek to join your clients to the proceedings on foot in the Federal Court.
The attached minute of consent orders provided for the proceedings to be transferred to the Federal Court.
Although this letter was headed 'without prejudice save as to costs', I am not satisfied that it was a genuine attempt to settle a dispute which attracts privilege. I accept counsel for the defendant's submission that the letter was no more than an ultimatum, and is admissible in these proceedings.
On 27 November 2015, the defendant's solicitors wrote to the plaintiffs indicating that, if a notice of discontinuance were filed, an application to set aside the notice as an abuse of the process of the court would be made at the hearing on 30 November 2015. The letter indicated that defendant would seek to proceed with the application even if the plaintiffs did not attend the hearing on 30 November 2015.
At 1.11 pm on 27 November 2015, Mrs Frigger emailed a notice of discontinuance of these proceedings, signed by both plaintiffs, to the master's associate and my associate. The notice of discontinuance was filed in the court on the same day.
Also on 27 November 2015, the defendant filed an application to set aside the notice of discontinuance as an abuse of the process of the court. Notice of that application, with copies of the supporting affidavits, was served on the plaintiffs by email at 4.50 pm on 27 November 2015. At 5.20 pm that day the defendant's solicitor sent an email advising that the matter remained listed on the published court list.
At 2.29 pm on Saturday 28 November 2015, Mrs Frigger emailed my associate and the master's associate a medical certificate signed by Dr Singh certifying Mrs Frigger to be medically unfit from 28 November 2015 until 12 December 2015 inclusive.
The plaintiffs did not appear when the matter was called on this morning, after my associate called the matter through the precincts of the court.

The plaintiffs' claims in these proceedings and the Federal Court proceedings

Before turning to deal with the matters requiring my decision today, I will outline the plaintiff's pleaded case in these proceedings and its relationship to the case pleaded in the Federal Court proceedings.
The genesis of what has proved to be a very large volume of litigation in this court is an agreement between the a company associated with the plaintiffs, Computer Accounting and Tax Pty Ltd (CAT) and Martin Banning (now deceased) and his company PSA in respect of the purchase of a service station in Armadale in 2000.
On 9 July 2008 in proceedings CIV 2265 of 2006, CAT was awarded judgment against Mr Banning and PSA in the sum of $1,106,027.[1] On 21 November 2008, CAT obtained orders appointing a receiver over one 50% share held by Mr Banning in Banning Holdings. On 10 March 2009 the receiver entered into an agreement with the plaintiffs for them to purchase the share for $710,000. A share transfer form was executed but the directors of Banning Holdings refused to register the transfer, with the result that the purchase price for the share was refunded to the plaintiffs. On 23 October 2009, the Court of Appeal allowed an appeal by PSA and reduced the quantum of damages awarded to CAT to $424,449.[2]
[1] Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133.
[2] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd[No 2] [2009] WASCA 183; (2009) 261 ALR 179.
In the present proceedings the plaintiffs claim to be the assignee of CAT in relation to 'the fruits of the litigation in Supreme Court action CIV 2265/2006' and to be creditors of PSA and Mr Banning's estate. They plead that the defendant was the administrator of PSA from about 27 November 2008, and the deed administrator of a Deed of Company Administration (DOCA) for the benefit of the creditors of PSA from 20 March 2009.
The plaintiffs plead that the DOCA established a fund which was an asset of the defendant, provided for Banning Holdings to pay sufficient funds to the defendant, and provided for the plaintiffs to be paid $1,172,388.91 (Judgment Sum) on or before 30 April 2009. It is pleaded that the DOCA would automatically terminate if the Judgment Sum and other amounts were not paid by 30 August 2009, and provided for any reduction in the Judgment Sum on appeal to be repaid to Banning Holdings. It is pleaded that the DOCA provided for the plaintiffs to retain money received prior to termination. The plaintiffs allege that the DOCA was executed in order to frustrate the enforcement of the court's orders in CIV 2265 of 2006.
The plaintiffs plead that, on or about 2 and 9 June 2009, Banning Holdings delivered cheques totalling $1,165,661.54 to CAT's solicitor, which is said by the plaintiffs to be an underpayment of $6,727.37. They allege that the DOCA automatically terminated on 30 August 2009 when payments to other creditors of PSA were not made and the balance of $6,727.37 was not paid to CAT. The plaintiffs plead that they, as creditors of PSA by assignment from CAT, were entitled to retain the money CAT had received under the DOCA.
The plaintiffs plead that, on 23 October 2009, Donald Campbell‑Smith, as director of PSA and executor of Mr Banning's estate, instructed PSA's solicitors to file submissions and draft orders in the appeal proceedings. It is pleaded that the orders and submissions 'were false, were contrary to, and breached the statutory effect of the DOCA'. In essence the alleged falsity appears to relate to the acceptance that PSA was entitled to repayment following the appeal decision reducing the award of damages to CAT. It is pleaded that the submissions and draft orders were a fraud on the court and that the defendant assisted PSA and Mr Campbell‑Smith to commit a fraud on the court, in essence by failing to advise PSA's solicitors that the submissions and draft orders were contrary to the terms and effect of the DOCA.
It is also pleaded that the defendant instructed his solicitor to write to PSA's solicitor giving the defendant's consent to an application for freezing orders over property registered in the name of CAT, an application for the appointment of a liquidator to CAT and the issue of a statutory demand to CAT in the amount of $800,917. It is pleaded that those applications were made for collateral purposes. It is pleaded that the plaintiffs suffered damage by the Court of Appeal making orders on 16 December 2009, by the making of freezing orders and the liquidation of CAT.
The plaintiffs allege that the defendant's conduct described above involved managing the business affairs and property of PSA in a way prejudicial to the interests of the plaintiffs, breached fiduciary obligations said to be owed by the defendant to the plaintiffs, breached his statutory duties as an officer of PSA and breached his duties and contractual obligations pursuant to the DOCA.
The Federal Court proceedings allege similar facts, and plead that the respondents to that application gave instructions to PSA's solicitors to file the submissions and draft orders in order to enable the application for freezing orders, application for appointment of a liquidator and statutory demand to be made for collateral purposes.

Whether the court should deal with the application today

I accept the submissions of counsel for the defendant that it is appropriate to proceed with the defendant's application to set aside the notice of discontinuance and, if that succeeds, the plaintiffs' transfer application, today.
The plaintiffs have not adduced any admissible evidence of Mrs Frigger's current incapacity. The medical certificate is entirely unspecific, and Mrs Frigger has, by taking the steps I have described in these proceedings, demonstrated an existing capacity to manage her legal affairs. In a context where there is some evidence of Mrs Frigger having obtained professional legal services, there is no evidence as to why a solicitor or counsel could not have been briefed to attend today. There is no material suggesting that Mr Frigger was incapable of attending court today. The inference which I draw from the procedural history I have described is that the plaintiffs have been doing whatever they can to avoid the hearing of the defendant's summary judgment application taking place tomorrow. The issue of Mrs Frigger's illness was raised only after the plaintiffs had reason to apprehend that other steps they had taken to avoid the hearing might not succeed. In that context, an emailed non-specific medical certificate does not provide a sufficient basis for adjourning the defendant's application to set aside the notice of discontinuance.
I am satisfied that the plaintiffs were aware of this hearing, having been notified by an email sent to an address which appears to be regularly used by Mrs Frigger.

Application to set aside the notice of discontinuance

Order 23 r 2(1) of the Rules of the Supreme Court 1971 (WA) enables a plaintiff, at any time before receipt of the defendant's defence, to discontinue proceedings such as the present without leave. The effect of a written notice under r 2(1) is to bring the proceedings to an end, and entitle the defendant to tax his costs of the proceedings without further order.
The defendant applies to set aside the notice of discontinuance as an abuse of the process of the court.
The defendant contends that the notice of discontinuance is being used to conclude the present proceedings in an effort to deny the court jurisdiction to make orders adverse to the plaintiffs on the transfer and summary judgment applications. That is, the defendant submits that the plaintiffs have discontinued the present action to avoid the risk that the plaintiffs' transfer application may fail and the defendant's summary judgment application may succeed. The defendant also apprehends that the plaintiffs may either commence new proceedings in the Federal Court or seek to join the defendant to the existing Federal Court proceedings, although he says that this possibility is not a necessary element of his abuse of process argument.
It is not generally an abuse of process for a plaintiff to discontinue proceedings, merely to be able to bring the same proceeding later in circumstances where the plaintiff believes that there may be a greater prospect of success.[3] However, the exercise of the statutory right to discontinue without leave may constitute an abuse of process in some circumstances.[4] I agree with the observations of Owen J[5] that the courts should be reluctant to deny a plaintiff the result of reliance on a statutory right and would only intervene in exceptional circumstances.
[3] Re Peat Resources of Australia Ltd; ex parte Pollock [2004] WASCA 122; (2004) 181 FLR 454 [62].
[4] See Blossomtree Pty Ltd v BrunswickNL (1991) 4 WAR 480, 487 ‑ 488.
[5] Blossomtree (489).
The fact a plaintiff discontinues a proceeding to avoid a potential judgment against it in the proceedings does not appear to me, without more, to constitute an abuse of the process of the court. By providing for a plaintiff to discontinue immediately after receiving the defence, the rule contemplates that a plaintiff may seek to abandon a case which might not succeed in order to avoid the adverse consequences (including an adverse judgment) which may follow from pursuing the matter. To discontinue an action for this purpose is authorised by the Rules.
The defendant relies on the decision of the House of Lords in Casthano v Brown & Root (UK) Ltd,[6] which provides an illustration of a case where discontinuing proceedings may be an abuse of process. In that case Lord Scarman, with whom other members of the House agreed, expressed the principle in the following terms:
The court has inherent power to prevent a party from obtaining by the use of its process a collateral advantage which it would be unjust for him to retain: and termination of process can, like any other step in the process, be so used. I agree, therefore, with Parker J and Lord Denning MR that service of a notice of discontinuance without leave, though it complies with the rules, can be an abuse of process of the court.
Was it, then, in the circumstances of this case, an abuse? In my judgment, it was. A sensible test is that which both the judge and Lord Denning MR applied. Suppose leave had been required (as it would have been, if the notice had been served 24 hours later), would the court have granted unconditional leave? It is inconceivable that the court would have allowed a plaintiff, who had secured interim payments and an admission of liability by proceeding in the English court, to discontinue his action in order to improve his chances in a foreign suit without being put upon terms, which could well include not only repayment of the moneys received but an undertaking not to issue a second writ in England (571 - 572).
[6] Casthano v Brown & Root (UK) Ltd [1981] AC 557.

The vice in Castanho was obtaining a collateral advantage by the use of the court's process. In Castanho, the collateral advantage was an admission of liability and interim payments. In the present case, it has not been suggested that the plaintiffs have obtained any collateral advantage in bringing the proceedings.
Counsel for the defendant relied on that part of the reasons in Castanho which pose the test of whether unconditional leave to discontinue would have been granted if sought. That test might be appropriate in a case where a collateral advantage has been obtained. However, I do not accept that, in other kinds of case, any discontinuance without leave will necessarily constitute an abuse of the court's process merely because conditions might have been imposed if leave had been required and sought.
The other decision on which the defendant relied was Packer v Meagher.[7] That case was referred to with approval by Owen J in Blossomtree and the Full Court of this court in Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd.[8] However, that case also involved the plaintiff using the court's process to obtain a collateral advantage. In Packer the whole of the defamation proceedings were found to have been used for a collateral purpose, which included defaming Mr Meagher in a statement of claim and deliberately publishing the contents of that statement of claim. In the present case it is not been suggested that the plaintiffs commenced the proceedings for a collateral purpose or have obtained some collateral advantage in doing so. The concept of abuse of process in the relevant context was described by Hunt J in the following terms:
The legal process of a court is being abused when it is being used to exert pressure to effect an object not within the scope of the process; or where it is used for a purpose other than that for which the proceedings are properly designed and exist; or where the plaintiff in those proceedings is seeking some collateral advantage beyond what the law offers (492). (citations omitted)
[7] Packer v Meagher [1984] 3 NSWLR 487.
[8] Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (1997) 18 WAR 334, 344.
None of those elements have been established in the present case.
Nor do I consider the discontinuance of the proceedings at this stage to be so manifestly unfair to the defendant that it will bring the administration of justice into disrepute.[9] The defendant is entitled to tax his costs in the proceedings without further order. Any unfairness in leaving the defendant burdened with the difference between his actual and taxed costs could be addressed by an application for indemnity costs. If proceedings are commenced in the Federal Court then that court has a summary disposal procedure. While the defendant would no doubt like to have the matter resolved by being successful on his summary judgment application, his frustration at being denied that potential opportunity does not itself amount to unfairness which characterises the discontinuance of the current proceedings as an abuse of process.
[9] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93 [8].
Further, the issue of abuse is not to be resolved on the assumption that the defendant's undetermined summary judgment application would necessarily succeed. It might well be an abuse of process if, for example, the plaintiffs filed a notice of discontinuance after the master announced his decision to grant summary judgment but before an order was made. However, the position is different when a plaintiff discontinues before the determination of the merits of his or her case.
Given the circumstances in which these proceedings have been discontinued, it might (I do not say will) constitute an abuse of process to commence new proceedings in precisely the same terms, at least without satisfying judgment for costs in these proceedings. Whether that will be so is not a question requiring an immediate answer. If new proceedings were commenced, whether they were an abuse of process would be a question for the Federal Court. At this stage, I am only concerned with whether the filing of the notice of discontinuance is an abuse of the process of this court.
I accept the defendant's submission that, as a matter of fact, the plaintiffs have filed the notice of discontinuance to avoid the possibility of the defendant's summary judgment application, listed for tomorrow, succeeding. However, I am not satisfied that this purpose, without more, makes the termination of these proceedings an abuse of the process of this court. I would therefore dismiss the defendant's application to set aside the notice of discontinuance as an abuse of the process of this court.

Transfer application

It is unnecessary for me to determine the transfer application, as the proceedings have been concluded by the notice of discontinuance.

Orders

I would make orders waiving the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA), and abridging the time for service of the chamber summons. I would order that the defendant's application to set aside the notice of discontinuance filed on 27 November 2015 be dismissed.