Frigger v Kitay (Liquidator)

Case [2020] FCA 482

FEDERAL COURT OF AUSTRALIA

Frigger v Kitay (Liquidator) [2020] FCA 482

File number: WAD 549 of 2019
Judge: COLVIN J
Date of judgment: 15 April 2020
Catchwords:

CORPORATIONS - application by plaintiff for orders to effect transfer of property to superannuation fund and for damages - where plaintiff is bankrupt member of fund - where corporate trustee of fund unable to obtain legal representation - whether there are special circumstances which permit plaintiff in capacity as beneficiary of fund to bring application - where no lack of willingness shown on part of trustee to bring application - whether reasonable basis upon which Court should exercise discretion to make orders under s 90-15 of Insolvency Practice Schedule (Corporations) - application dismissed

BANKRUPTCY AND INSOLVENCY - where claim by bankrupts as former trustees of fund has been stayed by operation of s 60 of the Bankruptcy Act 1966 (Cth) - where counterclaim still on foot by liquidator of company claimed to be former trustee of fund - effect of statutory stay on counterclaim - effect of statutory stay on claims by new trustee of the fund

PRACTICE AND PROCEDURE - where claims the subject of present application concern same issues raised by plaintiff in ongoing proceedings in Supreme Court - whether proceedings should be dismissed as abuse of process
Legislation:

Bankruptcy Act 1966 (Cth) s 60

Insolvency Practice Schedule (Corporations) ss 90‑15, 90‑20

Trustees Act 1962 (WA) s 10

Federal Court Rules 2011 (Cth)
Cases cited:

Alexander v Perpetual Trustees WA Limited [2004] HCA 7; (2004) 216 CLR 109

Aurel Forras Pty Ltd v Graham Karp Developments [1975] VR 202

Berryman v Zurich Australia Ltd [2016] WASC 196

Carna Group Pty Ltd v The Griffin Coal Mining Company [2019] FCA 1276

Century Insurance Ltd (in provisional liq) v The New Zealand Guardian Trust Ltd [1997] FCA 1020

Duckworth v Water Corporation [2012] WASC 30

Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306

Freeman v Joiner [2005] FCAFC 149

Fried v National Australia Bank Limited [2001] FCA 907; (2001) 111 FCR 322

Frigger v Banning (No 8) [2019] FCA 1319

Frigger v Banning (No 9) [2019] FCA 1611

Frigger v Kitay [No 15] [2019] WASC 384

Frigger v Trenfield (No 2) [2019] FCA 2009

Frigger v Trenfield [2019] FCA 1746

Frigger; in the matter of an application by Frigger [2019] FCA 1730

Garrett v Commissioner of Taxation [2015] FCA 665; (2015) 233 FCR 226

Hayim v Citibank NA [1987] AC 730

Henry v Henry [1996] HCA 51; (1996) 185 CLR 571

Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 56

Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366

McDonnell & East Ltd v McGregor [1936] HCA 28; (1936) 56 CLR 50

Mercedes Holdings Pty Limited v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450

Nugawela v Deputy Commissioner of Taxation [2018] FCA 1457

Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289

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Details
AGLC
Frigger v Kitay (Liquidator) [2020] FCA 482
Case
[2020] FCA 482
Decision Date

CaseChat Overview and Summary

The case of Frigger v Kitay (Liquidator) was heard in the Federal Court of Australia. Mrs Frigger, a bankrupt member of a superannuation fund, sought orders to transfer property to the fund and for damages. The corporate trustee of the fund was unable to obtain legal representation, and Mrs Frigger sought to bring the application in her capacity as a beneficiary. The court was required to determine whether there were special circumstances permitting this and whether the court should exercise its discretion under the Insolvency Practice Schedule. The court also considered the effect of a statutory stay on a counterclaim by the liquidator of a company, which had been stayed by the Bankruptcy Act 1966, and the claims by a new trustee of the fund. Finally, the court examined whether the proceedings should be dismissed as an abuse of process, given they concerned the same issues raised in ongoing proceedings in the Supreme Court.

The court found that the proceedings were vexatious and oppressive, with no reasonable basis for Mrs Frigger's claims. The court concluded that there were no special circumstances permitting Mrs Frigger to bring the application in her capacity as a beneficiary, as there was no demonstrated lack of willingness on the part of the trustee to bring the application. The court also found that the statutory stay under the Bankruptcy Act 1966 applied to the counterclaim, but did not affect the claims by the new trustee. The court held that the proceedings were an abuse of process, given they concerned the same issues as the ongoing proceedings in the Supreme Court.

The court dismissed the application and ordered that Mrs Frigger pay the costs of the application. The court reserved liberty for Mrs Frigger to apply within 21 days to vary the costs order, provided she filed an outline of submissions specifying the different costs order sought and the contentions advanced as to why that order should be made.

The orders made by the court were as follows: the application was dismissed; the plaintiff was ordered to pay the defendant's costs of the application, to be assessed if not agreed; and the plaintiff was granted liberty to apply within 14 days to vary the terms of the second order. Entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The application be dismissed.

2. The plaintiff do pay the defendant's costs of the application to be assessed if not agreed.

3. There be liberty to the plaintiff to apply within 14 days to vary the terms of order 2.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In the circumstances, the present proceedings are vexatious and oppressive.Conclusion and appropriate orders For the above reasons, it has been demonstrated that there is no reasonable basis for the claims that Mrs Frigger seeks to advance. Therefore, the appropriate order is for the application to be dismissed. Further, if I had concluded that there was a reasonable basis for the claims then it would have been appropriate for there to be a permanent stay of these proceedings on the basis that they are an abuse of process. No submissions were advanced by the parties concerning appropriate cost orders. There is no material before me to suggest that costs should not follow the event. In those circumstances, I propose to order that Mrs Frigger do pay the costs of the application but I will reserve liberty to Mrs Frigger to apply within 21 days to vary those orders. Any such application should be made by filing an outline of submissions specifying the different costs order that is sought and the contentions advanced as to why that order should be made.

Ratio Decidendi

Legal Principle Established

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