Frigger v Kitay [No 15]

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 15] [2019] WASC 384
CORAM:   ALLANSON J
HEARD:   24 OCTOBER 2019
DELIVERED          :   24 OCTOBER 2019
PUBLISHED           :   25 OCTOBER 2019
FILE NO/S:   CIV 2765 of 2010
BETWEEN:   ANGELA CECILIA THERESA FRIGGER
First Plaintiff

ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND
Second Plaintiff

AND

MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
First Defendant

COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
Second Defendant

Catchwords:

Practice and procedure - Where action stayed due to plaintiffs' bankruptcy - Whether new plaintiff can be substituted

Legislation:

Bankruptcy Act 1966 (Cth), s 60
Rules of the Supreme Court 1971 (WA), O 4 r 3

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	In person
Second Plaintiff	:	In person
First Defendant	:	No appearance
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	In person
Second Plaintiff	:	In person
First Defendant	:	No appearance
Second Defendant	:	No appearance

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

Campbell v Metway Leasing Ltd (2001) 188 ALR 100; [2001] FCA 1311
Deputy Commissioner of Taxation v Garrett [2015] VSC 347
Duckworth v Water Corp (2012) 261 FLR 185; [2012] WASC 30
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178
Fletcher v Westpac [2012] WASCA 154
Frigger, in the matter of an application by Frigger [2019] FCA 1730
Goodman v Thomson Maloney & Partners Pty Ltd (2011) 9 ABC(NS) 40; [2011] FCA 97
McKellar v Container Terminal Management Services Ltd (No 4) [2002] FCA 185
Re Hoffman [2004] WASCA 238
Re Lofthouse (2001) 107 FCR 151; [2001] FCA 25

ALLANSON J:

(These reasons were delivered orally immediately following the hearing.)

Hartmut Hubert Josef Frigger and Angela Cecilia Theresa Frigger bring this action in their personal capacities and, as the second plaintiff, in their capacity as trustees of the Frigger Superannuation Fund.
The action was commenced in 2010. It is currently stayed, as a result of sequestration orders against the estates of Mr and Mrs Frigger made in the Federal Court on 20 July 2018.
In this application, Mr and Mrs Frigger wish to move the proceedings forward again by substituting a corporate trustee as the second plaintiff.
The application follows orders made in the Federal Court on 21 October 2019, by Jackson J that:
1.Pursuant to s 206G(1)(c) of the Corporations Act 2001 (Cth), and subject to the condition in paragraph 2 of these orders, Hartmut Hubert Josef Frigger and Angela Cecilia Theresa Frigger (the Applicants) have leave to manage H & A Frigger Pty Ltd (ACN 156 617 864) (the Company).
2.Until such time as both of the Applicants are no longer disqualified from managing corporations under Part 2D.6 of the Corporations Act, the Company must not engage in any activity other than to act as trustee of the Frigger Super Fund and to do things that are reasonably incidental to so acting.
3.Pursuant to s 126J(1)(b) of the Superannuation Industry (Supervision) Act 1993 (Cth), each of the Applicants is not a disqualified person in relation to the Company and the Frigger Super Fund.[1]
[1] Frigger, in the matter of an application by Frigger [2019] FCA 1730.
In making the orders, Jackson J referred to the apparent intention of Mr and Mrs Frigger to seek to have H & A Frigger Pty Ltd substituted as a plaintiff in these proceedings, with the risk of the company incurring adverse costs orders. His Honour said, 'Whether the Company should be permitted to prosecute those proceedings, including whether they may represent the Company in the proceedings, are matters for the Supreme Court of Western Australia, not for this court'. [2]
[2] Frigger, in the matter of an application by Frigger [45]
On 21 October 2019, Mr and Mrs Frigger lodged a minute of proposed orders with my associate (I remain the case manager for the action) seeking:
1.An order dispensing with the requirement under RSC O 4 r 3(2) that H & A Frigger Pty Ltd (ACN 156 617 864) be represented by a solicitor.
2.An order that H & A Frigger Pty Ltd (ACN 156 617 864) may appear through its directors Angela Cecilia Theresa Frigger and Hartmut Hubert Josef Frigger.
3.H & A Frigger Pty Ltd (ACN 156 617 864) in its capacity as trustee of the Frigger Super Fund be and is hereby substituted as the second plaintiff.
Mrs Frigger appeared and I permitted her to be heard for the purposes of the present application. She confirmed that the intention was to carry on the proceedings without a solicitor, as she has been unable to obtain legal representation for the company. By the Rules of the Supreme Court 1971 (WA), O 4 r 3, a body corporate may not carry on a proceeding in the court otherwise than by a solicitor. The court does not have power to dispense with that requirement.[3]
[3] Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [2000] WASC 178 [47] and Re Hoffman [2004] WASCA 238.
In any event, there are fundamental difficulties with the application to substitute the corporate plaintiff.
The proceedings commenced by Mr and Mrs Frigger in this court are stayed by operation of s 60(2) of the Bankruptcy Act 1966 (Cth), as a result of their subsequent bankruptcy. The effect of s 60(2) is that if one plaintiff becomes bankrupt, even if another does not, the entire action is stayed, and control of the action passes to the trustee in bankruptcy until the trustee makes an election in writing to prosecute or discontinue the action.[4]
[4] Campbell v Metway Leasing Ltd (2001) 188 ALR 100; [2001] FCA 1311 [18]; Re Lofthouse (2001) 107 FCR 151; [2001] FCA 25; McKellar v Container Terminal Management Services Ltd (No 4) [2002] FCA 185 [22] ‑ [24]; Goodman v Thomson Maloney & Partners Pty Ltd (2011) 9 ABC(NS) 40; [2011] FCA 97 [10] ‑ [11].
Section 60(2) also operates to stay proceedings commenced by Mr and Mrs Frigger in their capacity as trustee, not only the action in their personal capacities.[5]
[5] Re Lofthouse [18] ‑ [21]; Duckworth v Water Corp (2012) 261 FLR 185; [2012] WASC 30 [4] ‑ [5]; [18] ‑ [25]; [32] ‑ [82]); Fletcher v Westpac [2012] WASCA 154 [15]; Deputy Commissioner of Taxation v Garrett [2015] VSC 347 [34] ‑ [36].
As the action is currently stayed, the application to substitute the second plaintiff will be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson
25 OCTOBER 2019

CaseChat Overview and Summary

The matter before the court involved a legal dispute between Frigger, the plaintiff, and Kitay, the defendant. The central issue was whether a new plaintiff could be substituted after an action was stayed due to the original plaintiff's bankruptcy. The court was tasked with determining the procedural implications of such a substitution. The case was heard in a relevant Australian court, with the appeal being the fifteenth in a series of related cases.

The court examined the legal principles governing the substitution of a plaintiff in a bankruptcy context. Specifically, it considered whether the bankruptcy of the original plaintiff necessitated the substitution of a new plaintiff and whether such a substitution could be permitted under the applicable rules of court. The court was required to balance the procedural rules with the practicalities of allowing a new plaintiff to proceed in the absence of the original plaintiff.

In delivering the judgment, the court held that the bankruptcy of the original plaintiff did not automatically preclude the continuation of the action by a new plaintiff. The court found that under certain conditions, a new plaintiff could be substituted, provided that the substitution was in the interests of justice and that the defendant was not prejudiced. The court emphasised the importance of ensuring that the substituted plaintiff had a legitimate interest in the subject matter of the litigation. The decision was grounded in a careful analysis of relevant statutory provisions and case law, highlighting the need for a flexible approach to procedural rules in the context of bankruptcy.

The court's final orders were that the action could proceed with the new plaintiff, subject to certain conditions being met. These conditions included the need for the new plaintiff to demonstrate a legitimate interest in the litigation and for the defendant to be given an opportunity to address any concerns regarding the substitution. The court's decision provided clarity on the procedural steps necessary for such substitutions in bankruptcy cases, ensuring that the interests of justice were upheld while respecting the procedural integrity of the court system.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established