Frigger v Kitay
[2016] WASCA 204
•28 NOVEMBER 2016
FRIGGER -v- MERVYN JONATHON KITAY as liquidator of COMPUTER ACCOUNTING & TAX PTY LTD (in liq) [2016] WASCA 204
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 204 | |
| THE COURT OF APPEAL (WA) | 28/11/2016 | ||
| Case No: | CACV:62/2016 | 11 NOVEMBER 2016 | |
| Coram: | BUSS P MURPHY JA | 11/11/16 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Appellants' applications to vacate hearing and stay appeals dismissed Respondents' applications for security for costs allowed | ||
| B | |||
| PDF Version |
| Parties: | ANGELA FRIGGER ANGELA FRIGGER & HARTMUT FRIGGER as trustees for THE FRIGGER SUPER FUND HARTMUT FRIGGER MERVYN JONATHON KITAY as liquidator of COMPUTER ACCOUNTING & TAX PTY LTD (in liq) COMPUTER ACCOUNTING & TAX PTY LTD (in liq) |
Catchwords: | Appeals Practice and procedure Security for costs Turns on its own facts Appeals Practice and procedure Applications by appellants to vacate hearing and stay appeals Turns on own facts |
Legislation: | Nil |
Case References: | Frigger v Clavey Legal Pty Ltd [No 2] [2015] WASCA 258 Frigger v Kitay [2016] WASCA 173 Frigger v Mervyn Jonathon Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 12] [2016] WASC 241 Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92 Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63 Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : FRIGGER -v- MERVYN JONATHON KITAY as liquidator of COMPUTER ACCOUNTING & TAX PTY LTD (in liq) [2016] WASCA 204 CORAM : BUSS P
- MURPHY JA
- CACV 80 of 2016
- First Appellant
ANGELA FRIGGER & HARTMUT FRIGGER as trustees for THE FRIGGER SUPER FUND
Second Appellant
HARTMUT FRIGGER
Third Appellant
AND
MERVYN JONATHON KITAY as liquidator of COMPUTER ACCOUNTING & TAX PTY LTD (in liq)
First Respondent
COMPUTER ACCOUNTING & TAX PTY LTD (in liq)
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : ALLANSON J
Citation : FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 9] [2016] WASC 92
File No : CIV 2765 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : ALLANSON J
Citation : FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 12] [2016] WASC 241
File No : CIV 2765 of 2010
Catchwords:
Appeals - Practice and procedure - Security for costs - Turns on its own facts
Appeals - Practice and procedure - Applications by appellants to vacate hearing and stay appeals - Turns on own facts
Legislation:
Nil
Result:
Appellants' applications to vacate hearing and stay appeals dismissed
Respondents' applications for security for costs allowed
Category: B
Representation:
Counsel:
First Appellant : No appearance
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Mr D Lenhoff
Second Respondent : Mr D Lenhoff
Solicitors:
First Appellant : No appearance
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Holborn Lenhoff Massey
Second Respondent : Holborn Lenhoff Massey
Case(s) referred to in judgment(s):
Frigger v Clavey Legal Pty Ltd [No 2] [2015] WASCA 258
Frigger v Kitay [2016] WASCA 173
Frigger v Mervyn Jonathon Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 12] [2016] WASC 241
Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92
Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63
Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63 (S)
- REASONS OF THE COURT:
Introduction
1 These matters came before the court on 11 November 2016 to consider four applications in respect of two appeals against interlocutory decisions given in proceedings CIV 2765 of 2010 (primary proceedings). The primary proceedings involved Mr and Ms Frigger in their personal capacities and in their capacities as trustees for the Frigger Super Fund (collectively, the appellants), and Mr Kitay and Computer Accounting and Tax Pty Ltd (in liquidation) (collectively, the respondents). The appellants were given due notice of the hearing on 11 November 2016, however, they did not attend. Nevertheless, the appellants had filed affidavits and written submissions dealing with each of the applications heard that day.
2 The first application was filed 27 September 2016, and was made by the respondents for security for costs in CACV 62 of 2016. The second application was filed 5 October 2016 and was made by the respondents for security for costs in CACV 80 of 2016. Each of these applications was listed for hearing on 11 November 2016, pursuant to two registrar's notices to attend, each dated 13 October 2016.
3 The third and fourth applications were filed 17 October 2016 and were made by the appellants in CACV 62 of 2016 and in CACV 80 of 2016. By these two applications, the appellants sought orders vacating the 11 November 2016 hearing of the respondents' applications, and for the appeals commenced by the appellants to be stayed, pending certain challenges to the 'right and authority' of the respondents' solicitors to appear in the primary proceedings and in the appeals. On 19 October 2016, Buss P ordered that these applications be referred to the hearing on 11 November 2016.
4 On 11 November 2016, we dismissed the appellants' applications and, in relation to the respondents' applications, made orders for security for costs and other related orders. At the hearing we said that we would publish reasons. These are our reasons.
Background
CIV 2765 of 2010 - the primary proceedings
5 Each of the appeals relates to interlocutory decisions made by Allanson J in the primary proceedings. It is relevant to provide a brief background to these proceedings, in which the appellants were the plaintiffs and the respondents were the defendants.1
6 Ms Frigger commenced the primary proceedings on 4 November 2010 as the sole plaintiff against Mr Kitay, as the sole defendant. Mr Kitay was the liquidator of Computer Accounting & Tax Pty Ltd (CAT), of which Mr and Ms Frigger were the shareholders. CAT was the registered proprietor of two properties, 'the Armadale property' and 'the Perth property'. The other parties to the proceedings were added later.
7 The plaintiffs originally sought:
1. an order pursuant to s 78 of the Trustees Act 1962 (WA) that the Perth property and the Armadale property, vest in Mr and Ms Frigger in their capacity as trustees of the Frigger Super Fund;
2. a declaration pursuant to s 1321 of the Corporations Act 2001 (Cth) regarding interests in a term deposit at St George Bank; and
3. orders pursuant to s 1321 of the Corporations Act regarding the plaintiffs' entitlement to repayment of a taxing fee paid in other proceedings.
8 In the primary proceedings, the plaintiffs initially alleged that CAT and Mr and Ms Frigger were parties to an enforceable agreement under which Mr and Ms Frigger advanced funds, for the purchase of the Armadale Property and the Perth Property, as loans, subject to an agreement that the properties would later become assets of a trust. In subsequent amendments to their pleadings, the plaintiffs alleged that CAT holds the beneficial interest in each property on an express trust, and that the facts relied upon give rise to a Quistclose trust.
9 The defendants then brought a counterclaim, asserting a right of indemnity out of trust assets for any costs and liabilities incurred by CAT in its capacity as trustee.
CACV 62 of 2016
10 The appeal in CACV 62 of 2016 is against two decisions of Allanson J in the primary proceedings.
11 The first decision, dated 30 March 2016, related to respective applications by the plaintiffs and defendants in the primary proceedings for security for costs (Security for Costs Decision).2 The plaintiffs (Mr and Ms Frigger) applied to, in effect, 'top up' an earlier order for security for costs in their favour in the sum of $150,000, which was to be paid in three tranches and of which $100,000 had already been paid into court. The defendants (Mr Kitay, in his capacity as liquidator of CAT, and CAT) applied for security for estimated costs of $162,000. Allanson J rejected the plaintiffs' application. On the defendants' application, his Honour ordered that the plaintiffs provide security for costs in the amount of $80,000 to be paid into court by a fixed date. His Honour heard the parties as to the time that should be allowed, and subsequently ordered on 14 April 2016 that the security be paid into court by 20 April 2016, and that in the meantime all further proceedings in the matter be stayed.
12 In the second decision, dated 3 May 2016, Allanson J ordered that unless the security was paid into court by 10 June 2016, the plaintiffs' claims be dismissed and they be ordered to pay the defendants' costs of opposition to their claims, including reserved costs (Springing Order Decision).
13 On 27 May 2016, the plaintiffs applied to extend time to comply with this order.3 That application, however, was withdrawn on 28 June 2016, apparently because of the commencement of the appeal.4
CACV 80 of 2016
14 The appeal in CACV 80 of 2016 is against Allanson J's decision in the primary proceedings dated 15 August 2016 in Frigger v Mervyn Jonathon Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 12].5 This decision (Summary Judgment/Costs Decision) concerned:
(a) an application by the plaintiffs (Mr and Ms Frigger) for summary judgment dismissing the defendants' counterclaim; and
(b) an application by the defendants for the plaintiffs (Mr and Ms Frigger) to pay the costs of the plaintiffs' application dated 27 May 2016 to extend the time for compliance with the Springing Order Decision.
15 Allanson J found that the plaintiffs had not explained the reason for the lengthy delay in bringing their application for summary judgment and that there was very little utility in the application. He ordered that the plaintiffs' application for summary judgment not be heard.
16 With respect to the defendants' application for costs, Allanson J found that the plaintiffs' application dated 27 May 2016 was unreasonably brought and accordingly ordered that the plaintiffs pay the defendants' costs of the application until the application was withdrawn.
17 The appellants filed an appeal notice against the Summary Judgment/Costs Decisionon 29 August 2016.
Respondents' application in CACV 62 of 2016 for security for costs
18 On 27 September 2016, the respondents filed an application (the CACV 62 Security Application) for the following orders:
1. Within 14 days from the date of this order (or such other time as may be fixed by the Court), the Appellants do give security for the costs of the appeal in the sum of $30,000 by payment of that amount into Court.
2. The appeal be stayed pending payment by the Appellants into Court of the amount ordered as security for the Respondents' costs.
3. The appeal be dismissed in the event of the failure on the part of the Appellants to pay the amount ordered into Court within a time to be fixed.
4. The Appellants pay the First and Second Respondents' costs of this application.
19 On this same date, the respondents filed an affidavit sworn by David Abraham Lenhoff (Mr Lenhoff) on 27 September 2016 in support of the CACV 62 of 2016 Security Application.
20 On 17 October 2016, the appellants filed an affidavit sworn by Ms Frigger on 14 October 2016 in opposition to the CACV 62 of 2016 Security Application (Ms Frigger's Main Affidavit). As discussed below, this affidavit was also relied on in support of the appellants' application in CACV 62 of 2016 and CACV 80 of 2016 for the hearing on 11 November 2016 to be vacated, and for the appeals to be stayed.
21 On 21 October 2016, the respondents filed submissions in support of the CACV 62 Security Application.
22 On 7 November 2016, the appellants filed submissions in opposition to the CACV 62 Security Application. These submissions were also relied on in support of the appellants' application in CACV 62 of 2016 for the hearing on 11 November 2016 to be vacated, and for a stay of the appeal.
Respondents' application in CACV 80 of 2016 for security for costs
23 On 5 October 2016, the respondents filed an application (CACV 80 Security Application) for the following orders:
1. Within 14 days from the date of this order (or such other time as may be fixed by the Court), the Appellants do give security for the costs of the appeal in the sum of $25,000 by payment of that amount into Court.
2. The appeal be stayed pending payment by the Appellants into Court of the amount ordered as security for the Respondent's costs.
3. The appeal be dismissed in the event of the failure on the part of the Appellants to pay the amount ordered into Court within a time to be fixed.
4. The Appellants pay the First and Second Respondents' costs of this application.
24 On the same date, the respondents filed an affidavit sworn by Mr Lenhoff on 5 October 2016 in support of the CACV 80 Security Application.
25 On 17 October 2016, the appellants filed an affidavit sworn by Ms Frigger on 14 October 2016, in which the appellants sought to rely on Ms Frigger's Main Affidavit for the purpose of opposing the CACV 80 Security Application.
26 On 21 October 2016, the respondents filed submissions in support of the CACV 80 Security Application.
27 On 7 November 2016, the appellants filed submissions in opposition to the CACV 80 Security Application. These submissions were also relied on in support of the appellants' application in CACV 80 of 2016 for the hearing on 11 November 2016 to be vacated, and for a stay of the appeal.
Appellants' application to vacate the hearing on 11 November 2016 and for a stay of the appeals
28 On 17 October 2016, the appellants filed applications (Vacation/Stay Applications) in CACV 62 of 2016 and CACV 80 of 2016 seeking the following orders:
1. The hearing on 11 November 2016 be vacated.
2. The appeal be stayed pending the appellants' challenge in COR2/2010 to [the respondents' solicitors] right and authority to appear in CIV2765/2010 and this appeal.
3. Costs in the appeal.
29 On the same date, the appellants filed Ms Frigger's Main Affidavit and her other affidavit of 14 October 2016, which (as discussed above) were made in opposition to the respondents' security for costs applications and, according to par 3 of Ms Frigger's Main Affidavit, were also made in support of the Vacation/Stay Applications.
30 On 19 October 2016, Buss P ordered that the appellants' Vacation/Stay Applications be referred to the hearing on 11 November 2016.
31 On 24 October 2016, the appellants filed an affidavit sworn by Ms Frigger on 21 October 2016 in CACV 80 of 2016 in support of the Vacation/Stay Applications (Ms Frigger's Stay Affidavit). They also filed an affidavit sworn by Ms Frigger on 21 October 2016 in CACV 62 of 2016, in which Ms Frigger sought to rely on Ms Frigger's Stay Affidavit.
32 On 7 November 2016, the appellants filed submissions in opposition to the security for costs applications, which, as discussed above, were also made in support of the Vacation/Stay Applications.
Appeal Chronology in CACV 62 of 2016 - other matters
The notice of appeal and related matters
33 On 28 June 2016, the appellants filed an appeal notice against Allanson J's decisions in the primary proceedings dated '14 April 2016' and '5 May 2016'. The appeal notice included statements to the effect that:
(a) the last days for appealing were 28 April 2016 and 19 May 2016, and therefore an extension of time to appeal was needed; and
(b) leave to appeal was not needed.
34 On this same date, the appellants filed an affidavit sworn by Ms Frigger on 28 June 2016 in support of an application for an extension of time to commence the appeal.
35 On 30 June 2016, the appellants filed a service certificate.
36 On 7 July 2016, the respondents filed a notice of respondents' intention indicating that they intended to take part in the appeal and were not appealing the decisions under appeal.
37 On 3 August 2016, Registrar Bush ordered that the appellants 'file and serve an amended appeal notice to correct the dates of the decisions by 10 August 2016'.
38 On 4 August 2016, the appellants filed an amended appeal notice, indicating that they were appealing against Allanson J's Security for Costs Decision and the Springing Order Decision. According to the amended appeal notice, an extension of time to appeal was still needed.
39 On 15 August 2016, another amended appeal notice was filed. It is identical to the amended appeal notice filed on 4 August 2016, save that it names another party to the appeal, namely Angela Frigger and Hartmut Frigger as trustees of the Frigger superannuation fund.
The respondents' strike out application
40 On 7 September 2016, the respondents filed an application for the following orders:
1. The notice of appeal dated 4 August 2016 (but filed on 15 August 2016) be struck out;
2. The appeal be dismissed pursuant to rule 43(2)(g)(ii) of the Supreme Court (Court of Appeal) Rules 2005;
3. In the alternative, that any application for leave to appeal be set down for determination by the Court of Appeal separately and before the hearing of the appeal.
4. The First and Second Appellants pay the First and Second Respondents' costs of this application, and of the appeal, to be taxed.
41 On this same date, the respondents filed an affidavit sworn by Mr Lenhoff on 7 September 2016 in support of their application, and for the purpose of obtaining an order that the appellants pay the amount of $25,000 into court as security for the respondents' costs of the appeal.
42 On 13 September 2016, the respondents filed an affidavit sworn by Mr Lenhoff on 13 September 2016 in support of their application dated 7 September 2016. It replaced the affidavit of 7 September 2016. Its purpose was to support the application to strike out the appeal notice and dismiss the appeal or, alternatively, for the purpose of determining the issue of leave to appeal.
43 On 22 September 2016, Murphy JA ordered that, upon the respondents' application dated 7 September 2016:
1. Paragraphs 1, 2 and 4 are referred to the hearing of the appeal.
2. Paragraph 3 is dismissed.
The appellants' case and related matters
44 On 8 September 2016, the appellants filed an amended appellants' case.
45 In late September 2016, the appellants attempted to file the following documents:
1. a re-amended appellants' case dated 22 September 2016;
2. an application dated 22 September 2016 that the appellants have leave to rely on the re-amended appellants' case dated 22 September 2016, and that the appeal be heard on an expedited basis;
3. two Form 2 applications 'to reduce fee' dated 23 September 2016; and
4. an affidavit sworn by Ms Frigger on 28 September 2016 in support of their application to expedite the appeal.
46 It appears that these documents have not been accepted for filing.
47 On 29 September 2016, Registrar Bush ordered that:
the requirement for the respondents to file and serve a respondents' answer be suspended pending the outcome of the respondents' application for security for costs dated 27 September 2016.
Appeal Chronology in CACV 80 of 2016 - other matters
48 On 29 August 2016, the appellants filed an appeal notice against the Summary Judgment/Costs Decision of Allanson J dated 15 August 2016. The appeal notice stated, relevantly, that leave to appeal was not needed.
49 On 2 September 2016, the respondents filed a notice of respondents' intention, indicating that they intended to take part in the appeal and were not appealing the primary decision.
50 On 22 September 2016, the appellants attempted to file:
1. an appellants' case;
2. two form 2 applications to 'reduce fee case statement';
3. an application dated 22 September 2016 that the appeal be heard on an expedited basis; and
4. an affidavit sworn by Ms Frigger on 22 September 2016 in support of their application to expedite the appeal.
51 It appears that these documents have not been accepted for filing.
Ms Frigger's affidavits
Ms Frigger's Main Affidavit
52 In Ms Frigger's Main Affidavit, she refers to an 'interlocutory process for orders' in COR 2 of 2010 dated 30 September 2016 (Interlocutory Process). The document annexed to the affidavit, bearing the title 'interlocutory process for orders', has not been stamped with the court's seal. The Interlocutory Process states that the appellants are applying for the following orders:
1. The applicants have leave to rely on and refer to the Confidential Affidavit of Mr Kitay dated 5 January 2012 in a further affidavit to be filed in this application.
2. The Funding Agreement referred to in Order 3(a) of 17 January 2012 and all amendments with Hillcrest Litigation Services Limited be and is hereby terminated.
3. An order declaring that the Costs Agreement ('Costs Agreement') referred to in Order 3(b) of 17 January 2012 is not a costs agreement between [HLM] and CAT.
4. An order declaring that [HLM] and or David Abraham Lenhoff did not have authority to file Notice of Representation in CACV2765/2010 pursuant to the Costs Agreement and all appearances and documents filed on behalf of the defendants (respondents) are null and void.
5. An order declaring that [HLM] and or David Abraham Lenhoff did not have and do not have authority to act for CAT in CIV2765/2010, CACV120/2013, CACV62/2016 and CACV80/2016.
6. An order restraining [HLM] and or David Abraham Lenhoff from enforcing the cost order dated 3 May 2016 for $27,023 CIV2765/2010.
7. Pursuant to s 1324 Corporations Act 2001 and or s 15 Civil Judgements [sic] Enforcement Act 2004 an injunction restraining the respondents from enforcing the following costs orders in CIV2765/2010:
(a) 1 May 2013 $5,501.68
(b) 30 January 2014 $20,296.19
(c) 26 September 2014 $3,000.00
(d) 26 September 2014 $1,892.00
(e) 28 November 2014 $1,892.00
8. Pursuant to s 1324 Corporations Act 2001 and or s 15 Civil Judgements [sic] Enforcement Act 2004 an injunction restraining the respondents from enforcing the allocator of $7,387.97 in CACV120/2013.
9. Pursuant to s 1324 Corporations Act 2001 and or s 15 Civil Judgements [sic] Enforcement Act 2004 an injunction restraining the respondents from enforcing the allocator of $61,000.42 in this matter dated 6 July 2015.
10. An order declaring that David William John and Herbert Smith Freehills had no authority to act for the respondents in the sale of the Armadale Property and service station business.
11. An order declaring that the agreement dated 26 November 2015 between the applicants and respondents in relation to the sale of the Armadale Property and service station business is void ab initio.
12. Pursuant to s 1324 Corporations Act 2001 BankWest a division of Commonwealth Bank of Australia be and is hereby ordered to pay to the applicants as trustees of the Frigger Super Fund (ABN 99 602 844 956):
(a) Sale proceeds $1,178,275.47 of the Armadale Property being a segregated asset of Hartmut Frigger's allocated pension;
(b) Superannuation contribution of $1,463,000 made by the applicants to the Frigger Super Fund on 11 February 2016;
(c) All accrued interest on the proceeds referred to in paragraphs 10(a) and 10(b).
13. Pursuant to s 1324(10) Corporations Act 2001 Mervyn Jonathan Kitay pay to the applicants the difference between compound interest @ 8.5% on the amounts referred to in paragraph 11(a) and 10 (b) and the interest accrued pursuant to paragraph 11(c) from 11 February 2016.
14. Costs.
53 Ms Frigger also annexed to her Main Affidavit a document that was purportedly a litigation funding agreement dated 18 January 2012 in the primary proceedings between Hillcrest Litigation Services Ltd (Hillcrest) and Mr Kitay as liquidator of CAT (Funding Agreement). Ms Frigger deposed that cl 4(e) (which provides that Mr Kitay must sell any real property that he becomes beneficially entitled to as a result of the resolution of the primary proceedings) indicated that Mr Kitay's defence and counterclaim is beyond power and an abuse of power.
54 Ms Frigger's Main Affidavit also annexed a document described as 'Plaintiffs' Amended Minute of Orders' dated 26 August 2016 and prepared in relation to the primary proceedings (Inspection Application). Again, the Inspection Application does not bear the seal of the court. The Inspection Application refers to Mr and Ms Frigger seeking access in the primary proceedings to a confidential affidavit of Mr Kitay dated 5 January 2012 (Confidential Affidavit).
55 Ms Frigger's Main Affidavit also annexed an affidavit of Mr Kitay dated 26 July 2016, in which reference is made to Master Sanderson having ordered, in 2014, that Mr and Ms Frigger deliver up to the defendants all hard copies of the Confidential Affidavit and any annexures thereto. Mr Kitay's affidavit also refers to a claim for legal professional privilege over the Confidential Affidavit.
56 Ms Frigger also referred to certain costs awarded in favour of Mr Kitay in COR 2 of 2010, and said that these were the subject of challenge in the Interlocutory Process. She also referred to other costs which she said are 'subject of an interlocutory and permanent injunctions in WAD607/2015' in the Federal Court of Australia.
57 Ms Frigger deposed to her belief that at no time did the respondents' solicitors, Holborn Lenhoff Massey Barristers & Solicitors (HLM), have a retainer or authority to represent the respondents, and that all appearances and documents filed by HLM are a 'nullity'. Ms Frigger deposed that if declarations at pars 3 - 5 of the Interlocutory Process were made, the appeal would become otiose because 'the security for costs order and default judgment are a nullity and will be set aside'. Ms Frigger also requested, in the alternative, that this court order HLM and Mr Lenhoff 'to adduce any cost agreement between those entities and the respondents which have court approval under s 477(2B) [of the] Corporations Act 2001'.
58 Ms Frigger also referred to the respondents' defence and counterclaim in the primary proceedings. She stated that pursuant to the information obtained in the Confidential Affidavit to which she seeks access, the respondents 'have no prospect of success' in the primary proceedings.
59 Ms Frigger also stated that certain costs orders were obtained by the respondents by way of a collateral abuse of process, and she referred in that regard both to proceedings that have been commenced by the appellants in the Federal Court of Australia, and to the Confidential Affidavit.
60 Ms Frigger also stated that the costs orders that have been made against the appellants have been paid by 'reducing the Loan Account that exists between the appellants and CAT since 1997'. She stated that at present, there is 'a balance owing to my husband and me of approximately $3,700,000'. She annexed in that regard a document described as 'Schedule of Running Account - Computer Accounting & Tax Pty Ltd and Angela & Hartmut Frigger'. According to this document, CAT, which was wound up in insolvency in April 2010, has been incurring debts to Mr and Ms Frigger over the last six years in an amount in excess of $2.6 million.
61 Ms Frigger also said that she had 'refused' to comply with the orders made by the Court of Appeal in CACV 76 of 2008 in late 2009. She outlined what she said were the reasons for this refusal to comply with this court's orders.
62 Ms Frigger further referred to proceedings commenced by the appellants in the Federal Court of Australia in WAD 607 of 2015. She deposed in this regard:
27. In April 2015 for the first time I became aware of the reason this Honourable Court made the repayment orders in CACV76/2008. Attached and marked AF7 is a copy of Written Submissions prepared by Mr Lenhoff who counselled, aided and abetted Mr Campbell-Smith.
28. In WAD607/2015 Justice Barker docket manager commentedin open court thatthose Written Submissions are egregious. (emphasis added)
63 Ms Frigger also said that she and her husband had been the subject of a fraud perpetrated by the 'Banning group'.
64 Ms Frigger also annexed what she called a 'voluntary disclosure' of the appellants' superannuation fund, which she said she had lodged with the regulator, the Australian Taxation Office (ATO). She stated that on the basis of the Confidential Affidavit she believed that Mr Kitay had been involved in certain alleged improper conduct.
65 Ms Frigger also referred to certain mortgages over properties which were purchased 'for [their] children and a commercial property in Hobart', and said that the mortgages over those properties were 'bona fide'. Certain other evidence in that regard is referred to in [91] below.
66 She concluded that affidavit by stating:
In those circumstances, I believe that this appeal … is likely to be otiose and the appellants will seek to discontinue it following the resolution of:
(a) the Inspection Application;
(b) the Interlocutory Process;
(c) the ATO Voluntary Disclosure Investigation.
Ms Frigger's Stay Affidavit
67 Ms Frigger's Stay Affidavit included the following:
4. As previously indicated to this court in correspondence, my husband and I will not be in Perth on 11 November 2016. Attached and marked … is a copy of electronic airline tickets from and to Hobart. On our return to Perth we will travel to the south of Western Australia for a holiday with friends and will return on 20 November 2016. We are no longer able to obtain legal representation in Western Australia and we have insufficient funds to pay legal costs.
68 The travel itinerary shows that it was issued on 28 September 2016. The copy airline tickets indicated that the appellants were travelling from Melbourne to Hobart on 8 November 2016, and were returning from Hobart to Melbourne on 14 November 2016.
69 Ms Frigger also annexed an amended interlocutory process in COR 2 of 2010 dated 22 October 2016 (Amended Interlocutory Process). The Amended Interlocutory Process includes a range of additional orders, including orders to the effect that the respondents be:
restrained from entering into a cost agreement and or instructing [HLM] and or David Abraham Lenhoff and or Herbert Smith Freehills and or David William John and any other legal firm or solicitor from appearing and representing the respondents in CIV2765/2010, CACV62/2016 and CACV80/2016 until the resolution of this application. (emphasis added)
Ms Frigger's further affidavit
70 On 10 November 2016, the court received, by facsimile, what appeared to be a copy of a signed, but not witnessed, affidavit of Ms Frigger, which included the following statements:
3. On 9 November 2016 I received from the associate to Justice Barker [a] copy of the following documents:
(a) Orders dated 12 August 2016
(b) Portion of transcript of 12 August 2016
4. I refer to my previous affidavit dated 14 October 2016 filed in these applications and say my evidence in paragraph 28 was based on notes I had made during the exchange with His Honour Justice Barker which is now confirmed by the transcript now produced to the court.
5. As I am not in Perth at present, I will be unable to have this affidavit witnessed but will do so on my return to Perth.
71 Annexed was a sealed copy of an order of the Federal Court of Australia in the following terms:
Order
JUDGE: JUSTICE BARKER
DATE OF ORDER: 09 November 2016
WHERE MADE: Perth
The Court, having been apprised of a statement apparently made by the first named applicant, Mrs Frigger, in a proceeding in the Supreme Court of Western Australia, concerning what Justice Barker allegedly had said concerning Mr Lenhoff, solicitor, in the course of Justice Barker hearing submissions from Mrs Frigger at an interlocutory hearing on 12 August 2016 at 10.15 am, and in order to prevent any possible abuse of process of this Court, orders that:
1. The applicants forthwith file and serve an affidavit in the Supreme Court proceeding in which Mrs Frigger made the statement referred to above, annexing this order and pages 55 and 56 of the relevant transcript concerning what Justice Barker said, including the word 'egregious', which transcript has been supplied to the applicants for this purpose as well as to the other parties and to Mr Lenhoff.
72 Also annexed were pages 1 and 55 - 56 of the transcript of the hearing before Barker J on 12 August 2016.
73 It should be observed here that the annexed pages of the transcript do not record Barker J making the statements attributed to his Honour by Ms Frigger in par 28 of Ms Frigger's Main Affidavit (see [62] above).
The appellants' written submission in relation to the Vacation/Stay Application
74 The appellants contended that there were a number of 'overlapping' issues arising in relation to the primary proceedings, CACV 62 of 2016 and CACV 80 of 2016, which made it appropriate to grant the orders sought by the appellants in the Vacation/Stay Applications. The first 'overlapping' issue was said to be that HLM could not legally represent the respondents, having regard to the appellants' recent applications (the Interlocutory Process, the Amended Interlocutory Process and the Inspection Application) in COR 2 of 2010.
75 The second 'overlapping' issue appeared to be a contention to the effect that the appellants have good prospects of success in the primary proceedings, and that the respondents do not. The appellants also contended that there was no basis upon which Allanson J could have ordered security for costs against the appellants in circumstances where the appellants are owed $3.7 million by CAT. This included contentions that certain provisions of the Funding Agreement involved an abuse of power and contraventions of the Corporations Act, and that, moreover, Hillcrest is (it is alleged) insolvent.
76 The third 'overlapping' issue was said to be the fact that the ATO has commenced what the appellants have described as the 'ATO Voluntary Disclosure Investigation'. It is said that '[t]he respondents have contravened the Superannuation Industry (Supervision) Act 20016 [sic] and those contraventions are under investigation by the ATO'.
77 The fourth 'overlapping' issue was the contention that CAT owes the appellants $3.7 million. It was said, in effect, that this would be established once the appellants succeeded in their applications in the Interlocutory Process.
The hearing on 11 November 2016
78 As noted earlier, the appellants did not attend the hearing on 11 November 2016. It is appropriate to observe that there was no evidence before the court explaining why the appellants did not attend the hearing, other than the evidence that they had made arrangements to be in Tasmania at the time for which the hearing was scheduled. The purpose of their visit to Tasmania was not explained. There was no evidence that they could not have altered their arrangements, so as to be in Perth for 11 November 2016. No application was made for them to appear by telephone or video-link from Tasmania. Also, there had been no challenge to Buss P's orders of 19 October 2016 that the appellants' Vacation/Stay Applications be referred to the hearing on 11 November 2016.
79 Also in this context, it is pertinent to note the appellants' desultory prosecution of the appeals prior to 17 October 2016; the fact that the appellants had filed affidavits and written submissions in relation to all the applications; and the fact that the respondents' solicitors were not called on at the hearing to make oral submissions on substantive issues in relation to the security for costs applications, other than with respect to the question of the amount of security (which, as indicated later in these reasons, the court did not accept).
80 In all the circumstances, there was no proper basis for vacating the hearing on 11 November 2016. Insofar as the appellants sought to rely on the merits of their application for a stay of the appeals to justify their application to vacate the hearing of the respondents' applications for security for costs, for the reasons given below, the appellants' applications for a stay of the appeals had no merit.
The merits of appellants' Vacation/Stay applications
81 None of the matters relied on by the appellants provided any proper basis for adjourning the security for costs applications, or staying the appellants' appeals. The statements contained in Ms Frigger's affidavits were effectively that:
(a) the appellants have claims which they wish to litigate in the Interlocutory Process (and the Amended Interlocutory Process) which, if they were successful, would, they contend, render the appeals otiose;
(b) the appellants also have claims in the Federal Court of Australia which, if successful, may, or would, render the appeals otiose;
(c) CAT owes the appellants $3.7 million; and
(d) the appellants have made complaints about Mr Kitay to the ATO.
82 In relation to the first contention, much of the appellants' arguments centred upon the Confidential Affidavit. It is open to infer from Ms Frigger's Main Affidavit that she at one stage obtained a copy of this Confidential Affidavit, and was ordered by Master Sanderson to return all copies of it to Mr Kitay. In that event, it is not clear in what circumstances Ms Frigger obtained the Confidential Affidavit, and whether those circumstances might properly have any bearing on the attempted use of the information contained in the affidavit for the purposes of the appellants' applications before this court. In any event, the materials and assertions provided to the court by the appellants in the applications heard on 11 November 2016 provided no satisfactory basis for this court to view, let alone order disclosure of, the Confidential Affidavit (if and insofar as the appellants impliedly were inviting the court to make such an order).
83 More generally, in relation to the first and second contentions raised by the appellants referred to above, there was no admissible evidence which provided any reasonable basis for concluding that the new applications and litigation which the appellants have commenced have reasonable prospects of success. Even if there were admissible evidence in that regard, the applications in the Interlocutory Process (and the Amended Interlocutory Process) and the litigation in the Federal Court, are still in their infancy or, at least, appear to be some considerable distance from determination. In these circumstances, they provided no proper basis for staying the appeals or vacating the hearing of the security for costs applications in the appeals.
84 As to the third matter, there was no admissible evidence that the appellants are owed $3.7 million by CAT. In substance, the statements and schedule in Ms Frigger's affidavit involved bare assertions. The accounts of CAT were not adduced in evidence. Also, the suggestion that CAT, which was wound up in insolvency over six years ago, has incurred debts of more than $2.6 million to Mr and Ms Frigger in the meantime, casts serious doubt on the credibility of this evidence.
85 The fourth matter involved no more than a series of bare assertions, for which there was no credible evidence before this court.
86 Accordingly, the appellants' applications in both appeals dated 17 October 2016 were dismissed. Costs, as was appropriate in the circumstances, followed the event.
The security for costs applications - disposition
87 The respondents' evidence was to the effect that:
(a) the appellants are indebted to the respondents pursuant to certain costs orders in the primary proceedings totalling in excess of $32,000, which have remained unpaid since at least November 2014;
(b) the appellants are also indebted to the respondents for unpaid costs in a sum exceeding $7,000 in respect of appeal proceedings CACV 120 of 2013;
(c) the real properties registered in the appellants' names in Western Australia are subject to registered mortgages in favour of H & A Frigger Pty Ltd, of which the appellants are directors and the two shareholders are German residents;
(d) the respondents have been unable to enforce the costs orders against the appellants because of the encumbrances on the appellants' real property in favour of H & A Frigger Pty Ltd, and because of securities granted in favour of H & A Frigger Pty Ltd over motor vehicles owned by Mr and Ms Frigger;
(e) the appellants are indebted to the first respondent for costs in related matters; and
(f) the appellants are also indebted to HLM in the sum of approximately $27,000 in respect of a costs order in the primary proceedings in respect of an unsuccessful application by the appellants to restrain HLM from representing the respondents.7
88 Mr Lenhoff's affidavits also included an itemised estimate of the costs that may be incurred in opposing the appeals.
89 In relation to the mortgages of H & A Frigger Pty Ltd, the respondents also referred to the following findings and observations by Allanson J in the Security for Costs Decision:8
The plaintiffs are the directors of H & A Frigger Pty Ltd, but its two shares are owned by persons resident in Germany. Mrs Frigger told the court that the mortgages secure loans from people in Germany. There are no written loan agreements.
The evidence about the arrangements under which the properties are encumbered is sparse. In her affidavit filed in this application, dated 12 February 2015, Mrs Frigger explained the creation of the mortgages. She said that in 2012 and 2013 she and her husband assisted their children to purchase real estate. In 2014, they purchased a commercial property in the Frigger Super Fund, partly funded from borrowed funds. It was necessary to obtain overseas finance for those purchases. The mortgages registered against the real properties were bona fide to secure funds obtained overseas for the purchase of the properties (at [9] - [10]).
In her oral submissions, Mrs Frigger said that the borrowings 'came straight into our bank account in Australia from overseas. That's the best I can do at this stage. I haven't put it before you. I would have to search through numerous bank statements to find out when and where that money came through …' (ts 235 - 236). She agreed that there were bank statements evidencing over $4 million coming into the plaintiffs' bank account. Given the relatively short period over which these transactions occurred, I asked if the plaintiffs wanted the opportunity to file a further affidavit exhibiting that evidence, and made an order permitting them to do that within two weeks. The plaintiffs did not file any further evidence.
90 The appellants did not deny that there were outstanding costs orders in favour of the respondents. Rather, their contention was that if and when they are successful in the recent claims in the Interlocutory Process (and Amended Interlocutory Process), and in the Federal Court of Australia, the foundation for those costs orders will be undermined.
91 In relation to the failure to provide evidence of the moneys allegedly received from the alleged overseas loans, in respect of which the mortgages to H & A Frigger Pty Ltd were allegedly granted, Ms Frigger deposed in her Main Affidavit:
The bank statements which show international funds transfers were no longer available on the internet. As I did not know the dates of the transactions it was not possible for various banks to provide banks statements to comply with Allanson J's directions. (emphasis added)
92 Further, Ms Frigger said in her Stay Affidavit that the appellants 'have insufficient funds to pay legal costs'.
93 The principles in relation to security for costs have recently been stated in Frigger v Kitay.9 It is unnecessary to repeat them here.
94 In our opinion, this was an appropriate case, in all the circumstances, for orders for security to be made. The following matters were of particular relevance. First, the evidence as a whole indicated that Mr and Ms Frigger would be unlikely to be in a position to meet any adverse costs orders against them in the appeals. There was, nevertheless, no contention that a security for costs order would stifle the appeals. Secondly, the decisions of Allanson J that are the subject of the appeals were routine interlocutory decisions. One was for security for costs. The other was a case management decision precluding the hearing of an application by the appellants for summary judgment on the respondent's counterclaim in circumstances where the counterclaim had first been filed some five years earlier. In each case, leave to appeal is required. The need for appellate restraint is well known. Our preliminary (and necessarily provisional) view was that even if the appellants applied for leave to appeal (and their notices of appeal do not seek leave), it was unlikely that the applications for leave to appeal, or, if leave were granted, the appeals themselves, would enjoy reasonably good prospects of success. Thirdly, there was no material delay by the respondents in making the applications.
95 In relation to the quantum of security, having considered the estimates provided in the respondents' affidavits, and the nature of the appeals, it appeared to us that the amounts sought by the respondents for security were somewhat overstated. Nevertheless, we accepted that the appellants' appeals would likely range over a variety of matters, circumstances and proceedings, which would not ordinarily arise in relation to appeals from interlocutory orders of the kind under challenge. In all the circumstances, it appeared to us that a sum of $22,000 was a reasonable sum for security in CACV 62 of 2016, and $18,000 was a reasonable sum for security in CACV 80 of 2016.
96 In relation to the costs of the applications, the relevant principles were outlined in Frigger v Clavey Legal Pty Ltd [No 2].10 Having considered the materials, it appeared to us that the appellants had raised no real arguable basis for resisting the applications for security for costs, and that in all the circumstances, the appellants should pay the respondents' costs.
1 Unless otherwise stated, these facts are taken from Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92 (Frigger v Kitay [No 9]).
2Frigger v Kitay [No 9].
3Frigger v Mervyn Jonathon Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 12] [2016] WASC 241 [6].
4Frigger v Kitay [No 12] [7].
5Frigger v Kitay [No 12].
6 It is unclear whether the appellants were referring to the Superannuation Industry (Supervision) Act 1993 (Cth) in their written submissions in CACV 612 of 2016, par 17.
7 As to this, see Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63; and Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 10] [2016] WASC 63 (S)
8Frigger v Kitay [No 9] [34] - [36].
9Frigger v Kitay [2016] WASCA 173 [50] - [52].
10Frigger v Clavey Legal Pty Ltd [No 2] [2015] WASCA 258 [43] - [47].
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