Frigger v Lean
[2015] WASC 125
•10 APRIL 2015
FRIGGER -v- LEAN [2015] WASC 125
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 125 | |
| 10/04/2015 | |||
| Case No: | CIV:2408/2014 | 2 APRIL 2015 | |
| Coram: | MITCHELL J | 2/04/15 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Proceedings permanently stayed | ||
| B | |||
| PDF Version |
| Parties: | ANGELA FRIGGER HARTMUT FRIGGER GRAEME TREVOR LEAN |
Catchwords: | Abuse of process Application to permanently stay proceedings Claim based on substantially the same facts as previous unsuccessful claim Turns on own facts |
Legislation: | Nil |
Case References: | Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 6] [2014] WASC 105 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 Frigger v Campbell-Smith [2010] WASC 353 Frigger v Lean [2012] WASCA 66 Huntingdale Village Pty Ltd (Receivers and Managers appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] (2009) 26 1 ALR 179; [2009] WASCA 183 Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
HARTMUT FRIGGER
Second Plaintiff
AND
GRAEME TREVOR LEAN
Defendant
Catchwords:
Abuse of process - Application to permanently stay proceedings - Claim based on substantially the same facts as previous unsuccessful claim - Turns on own facts
Legislation:
Nil
Result:
Proceedings permanently stayed
Category: B
Representation:
Counsel:
First Plaintiff : In person
Second Plaintiff : No appearance
Defendant : Mr J Healy
Solicitors:
First Plaintiff : In person
Second Plaintiff : In person
Defendant : DLA Piper Australia
Case(s) referred to in judgment(s):
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 6] [2014] WASC 105
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Frigger v Campbell-Smith [2010] WASC 353
Frigger v Lean [2012] WASCA 66
Huntingdale Village Pty Ltd (Receivers and Managers appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] (2009) 26 1 ALR 179; [2009] WASCA 183
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4
1 MITCHELL J: In these proceedings the plaintiffs are seeking to recover loss and damages arising from an alleged breach of contract by the defendant. These proceedings are the latest iteration in a long series of actions arising out of a dispute between the plaintiffs' associated company Computer Accounting and Tax Pty Ltd (CAT) and Martin Banning and his associated company Professional Services Australia Pty Ltd (PSA)in respect of the purchase of a service station in Armadale in 2000.
2 The defendant seeks various relief by way of his amended chamber summons dated 10 February 2015. For the following reasons, I agree with that part of the defendant's application and submissions which contend that the current proceedings should be permanently stayed as an abuse of process of the court.
Background
3 The facts which are pleaded in the statement of claim are not in contention for the purposes of this application, and are broadly consistent with facts found in a number of judgments of this court in relation to proceedings involving the plaintiffs or their associated companies. I outline the basic facts below.
4 On 9 July 2008, in Supreme Court proceedings CIV 2265 of 2006, CAT was awarded a judgment including interest of $1,106,027 plus post-judgment interest and costs against PSA and Mr Banning in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (July 2008 Judgment). The judgment sum was not immediately paid.
5 On 21 November 2008, CAT applied for, and obtained, orders pursuant to s 86 of the Civil Judgments Enforcement Act 2004 (WA) (Act) appointing the defendant as receiver over one 50% share (Share) owned by Mr Banning in Banning Holdings Pty Ltd (Banning Holdings).
6 A transfer of the Share to the defendant was registered in the register of members of Banning Holdings on or about 16 December 2008. It is pleaded that the defendant, as registered shareholder, was a party bound by the constitution of Banning Holdings.
7 Although this was not always known to the defendant, at all material times the Memorandum and Articles of Association of Banning Holdings Pty Ltd provided as follows:
Article 22: 'The directors may decline to register any transfer without giving any reason therefor.'
Article 22A: 'No shares in the capital of the company shall be sold or transferred unless and until the right of pre-emption hereinafter conferred have been followed'.
8 The defendant advertised the Share for sale in The West Australian newspaper on 10 February 2009 and invited expressions of interest.
9 On 27 February 2009, the defendant held a meeting for parties interested in purchasing the Share and provided that meeting with certain information in relation to the Share.
10 The defendant received four written offers to purchase the Share, including an offer to purchase the Share for $730,000 from the plaintiffs.
11 On 10 March 2009, the defendant entered into a binding written agreement with the plaintiffs for the sale and purchase of the Share for $730,000.
12 The plaintiffs paid the defendant a deposit of $20,000 on 10 March 2009.
13 On 25 March 2009, the plaintiffs paid the defendant the sum of $710,000, being the balance of the consideration payable under their agreement made on 10 March 2009.
14 The plaintiffs plead that, on or about 25 March 2009 at a court-ordered mediation in CIV 2265 of 2006, the defendant urged the plaintiffs not to accept an offer on behalf of CAT made by the judgment debtors of $1,325,000 because the defendant advised the plaintiffs that CAT and the plaintiffs would be in a better financial position if they continued with the Share purchase.
15 At no time did the defendant disclose the existence of any of the articles referred to above. I understand the defendant's position to be that this was because he was not aware of the articles.
16 On 27 March 2009, the defendant executed a share transfer form for transfer of the Share to the plaintiffs. However, the directors of Banning Holdings refused to register the transfer, relying on the articles to which I have referred.
17 On 27 March 2009, the defendant refunded the amount of $710,000 to the plaintiffs and informed them that settlement of the agreement for sale and purchase of the Share would be deferred.
18 From 10 March 2009 until 21 January 2011, the defendant held the plaintiffs' deposit of $20,000 on the grounds that he considered the sale agreement to be on foot.
19 On 30 March 2009, the defendant provided the plaintiffs with a copy of an email from his solicitor, Mr Francois Carles, in which Mr Carles stated that:
We maintain our view that it is now appropriate for the Friggers to bring a court application under separate proceedings to compel the directors to register the share transfer.
20 On 22 May 2009, the plaintiffs requested the defendant to take the steps necessary to comply with the provisions of the memorandum and articles quoted above. It is alleged that the defendant did not take those steps.
21 The plaintiffs commenced proceedings CIV 1727 of 2009 against Mr Campbell-Smith, who has been described in submissions as either the director of Banning Holdings or the executor of Mr Banning's estate, to compel the registration of the transfer of Share.
22 On 23 October 2009, judgment in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2](2009) 26 1 ALR 179; [2009] WASCA 183 (July 2009 Judgment) was delivered. The consequence of that judgment was that the quantum of damages awarded to CAT against PSA and Mr Banning was substantially reduced to $424,449.
23 As at October 2009, CAT had recovered in excess of $424,449 and consequently it was unnecessary to proceed with the sale of the Share in order to satisfy the judgment debt owed to CAT.
24 On 2 December 2010, Kenneth Martin J delivered judgment in CIV 1727 of 2009, being Frigger v Campbell-Smith[2010] WASC 353 (December 2010 Judgment). Justice Kenneth Martin ordered a stay of the proceedings. There was some dispute between the parties as to whether a claim for enforcement of the contract was ever made in these proceedings. It is unnecessary for me to resolve that dispute as it is accepted by both parties that, by the time Kenneth Martin J ordered a stay of these proceedings, there was no extant contractual claim made by the plaintiff against the defendant in the proceedings.
CIV 2265 of 2014
25 On 28 March 2014, Simmonds J delivered his decision in CIV 2265 of 2014, being Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 6][2014] WASC 105 (March 2014 Judgment). This decision concerned a claim by the plaintiffs for compensation from the defendant for losses they claimed to have suffered resulting from irregularities in the carrying out of the order pursuant to s 105 of the Act (March 2014 Judgment [70]). The 'irregularities' alleged were as follows (March 2014 Judgment [136]):
1. offering to sell the Share without first having identified the limitations in the Articles of Association of Banning Holdings represented by Article 22 and Article 22A;
2. failing to comply with Article 22A;
3. failing to obtain the directions of the court before contracting to sell the Share, or failing to make the contract subject to such directions;
4. contracting to sell the Share where, as circumstances transpired, the plaintiffs were unable to obtain the Share registered in their names;
5. promoting the participation of the plaintiffs in the proceedings in CIV 1727 of 2009 to obtain the registration of the Share in their names in which he was initially a co-plaintiff who then became a defendant; and
6. being a co-plaintiff or being otherwise involved in the proceedings in CIV 1727 of 2009 without first obtaining the directions of the court.
26 In the March 2014 Judgment, Simmonds J found that the plaintiffs had failed to establish any of the 'irregularities' by the defendant in connection with the making or carrying out of the order under the Act which would warrant the Court exercising its discretion to cure such irregularity.
27 Simmonds J further held that, even if the plaintiffs had established an irregularity in the defendant's enforcement of the receivership order, he would have declined to exercise the discretion under s 105 of the Act to cure any such irregularity because the plaintiffs had a contractual relationship with the defendant. That is, an order under the Act was not 'needed to correct the irregularity' because the contractual relationship between the defendant and the plaintiffs would provide an entitlement to claim such a remedy (see, eg, March 2014 Judgment [206]).
28 It was also alleged in those proceedings by the plaintiffs that the defendant had breached a duty of care owed to them by the defendant (March 2014 Judgment [70]). Further submissions were directed to that issue after closing submissions had been made, when the attention of the parties and the court was drawn to the decision in Huntingdale Village Pty Ltd (Receivers and Managers appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352. The claim of a breach of duty of care appears ultimately to have been abandoned by the plaintiffs after consideration of that decision (March 2014 Judgment [137]).
Abuse of process
29 In Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 [4] - [11], Buss JA summarised the law concerning the power of this court to prevent its procedures being abused, in terms with which I agree. As Buss JA noted at [5], what constitutes an abuse of process is incapable of being described exhaustively.
30 However, as Buss JA also noted at [6], the High Court has stated that at least one of three characteristics will be apparent in many cases of abuse of process, namely:
1. the court's processes being invoked for an illegitimate or collateral purpose;
2. the use of the court's procedures being unjustifiably oppressive to a party; or
3. the use of a court's procedures bringing the administration of justice into disrepute.
31 Buss JA identified a number of propositions in Sheraz [8] - [20] concerning the nature of abuse of process, namely:
1. Inherent or implied power exists to prevent misuse of its procedures in a manner which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation or would bring the administration of justice into disrepute among right-thinking people.
2. Abuse of process extends to proceedings that are seriously and unfairly burdensome, prejudicial or damaging or productive of serious and unjustifiable trouble and harassment.
3. Categories of abuse are not closed and the court may exercise its power as and when administration of justice demands.
4. An abuse of process may arise where there are successive proceedings which cause or are likely to cause improper vexation or oppression.
5. It would be a scandal to the administration of justice if a litigant were to be permitted by changing the form of the proceedings to set up the same case again in circumstances where the same question had previously been disposed of.
6. A court may invoke principles of an abuse of process to prevent attempts to litigate an issue which should have been litigated in earlier proceedings, as well as to prevent attempts to re-litigate an issue which has, in substance, been litigated and determined in earlier proceedings.
7. The focus in applying the principles of abuse of process is on matters of substance and not form.
Abuse of process in this case
32 The defendant does not seek to advance a proposition that the cause of action now sought to be maintained in these proceedings merged into the March 2014 Judgment. However, the defendant does contend that the commencement of these proceedings is an abuse of the process of this court, in that it is an attempt to make a claim in later proceedings based wholly or substantially on the facts of an unsuccessful claim made by the plaintiffs in CIV 2265 of 2006.
33 The defendant submits that the only discernible difference between these proceedings and the proceedings in CIV 2265 of 2006 is that the alleged breaches in the current action are framed as breaches of Banning Holdings' constitution and director's duties, or breach of contract, as opposed to an irregularity under s 104 and s 105 of the Act.
34 In her submission, Ms Frigger said that the claim was, in fact, purely contractual, which I accept, but the defendant's point that the claim is based on the same facts remains.
35 The defendant contends that the similarity of the alleged breaches in the two proceedings is illustrated by the table at par 24 of their submissions:
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36 The defendant also points out that the loss and damage which is the subject of the current proceedings and CIV 2265 of 2006 is identical, which he says is illustrated by the table at par 34 of the defendant's submissions:
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2009 plus interest from date of payment to 24 October 2011 of $6903.73 |
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In an amount to be determined in respect of costs ordered to be paid by the applicants to the respondent in respect of action C1V 1727 of 2009 |
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37 I accept these submissions made by the defendant, and accept that the pursuit of the present proceedings is an abuse of process of the court. The plaintiff, Ms Frigger, accepts that the facts on which the claims were based were the same and that the relief sought in the current proceedings was also sought in CIV 2265 of 2006 in respect of the same loss.
38 In my view, this is a classic case of plaintiffs who have failed in their claim for compensation in one set of proceedings seeking to make a claim based wholly or substantially on the facts of their earlier unsuccessful claim in respect of the same alleged loss.
39 I accept the defendant's submissions that the first plaintiff's affidavit, sworn 3 March 2015, provides no explanation as to why the current damages claims could not have been, and were not, raised in CIV 2265 of 2006. I accept their submissions that the inference which ought to be drawn is that the current proceedings have been commenced because the plaintiffs failed in their application in CIV 2265 of 2006 and now wish to raise a claim which ought to have been raised in those proceedings if it was to be brought. In my view, the plaintiffs' current contractual claim could and should have been made in the earlier proceedings.
40 The plaintiffs point to various statements in the March 2014 Judgment which note a possible contractual claim by the plaintiffs. In my view however, those observations do not assist the plaintiffs. Those observations indicated why the claim which the plaintiffs made in CIV 2265 of 2006 may have failed if a relevant 'irregularity' had been established (which the plaintiffs had failed to do). These observations do not explain why the current claim was not, or could not have been, made in the earlier proceedings.
41 There are some passages in Simmonds J's judgment which might be read to suggest that the plaintiffs might still have such a contractual claim (see, eg, March 2014 Judgment [217], [228]). That suggestion arises by the use of the present tense in those paragraphs. I do not read Simmonds J as determining whether a claim could still be made in new proceedings by the use of the present tense. That was not a matter which Simmonds J had any reason to decide.
42 Further, the comments about the plaintiffs' contractual rights did not form the ultimate basis on which Simmonds J determined the earlier proceedings. In the March 2014 Judgment, Simmonds J found that there was no irregularity in terms of allegations 1 - 5, and that irregularity 6 did not warrant the making of any order under s 105 of the Act. It was, therefore, unnecessary for him to form a final position in relation to the other issues (5 - 7) identified by Simmonds J (March 2014 Judgment [224]).
43 The plaintiffs' application in CIV 2265 of 2006 was a substantial proceeding with a number of interlocutory steps and hearings over five days, which are described in the March 2014 Judgment. Those proceedings must have imposed a very substantial burden upon the defendant. In my view, it would be unfair and unjustifiably oppressive on the defendant to require him to again litigate the same issues in the current proceedings, after being put through the previous ordeal. To impose the burden of litigation on the defendant again would also, in my view, bring the administration of justice into disrepute.
44 The attempt by the plaintiffs to re-litigate their claim on a different juristic basis must also be understood in the context of other proceedings in which the plaintiffs have been involved. These include the proceedings leading to the December 2010 Judgment and Frigger v Lean[2012] WASCA 66. I acknowledge that Simmonds J rejected the argument that the two decisions just cited rendered the claim in CIV 2265 of 2006 an abuse of process (March 2014 Judgment [118]), and the defendant does not seek to challenge that conclusion in the present proceedings. However, that earlier litigation forms a relevant part of the litigious background against which the oppressive nature of the current proceedings must be addressed.
45 The claim which was dealt with by Simmonds J in the March 2014 Judgment was a claim that was made by the plaintiffs. The first plaintiff submitted that the plaintiffs were not a party to proceedings in CIV 2265 of 2006 in substance. However, it was clear that Simmonds J was dealing with a claim made by the plaintiffs and not CAT in the March 2014 Judgment.
46 It is also relevant to note that arguments about the contractual relations between the plaintiffs and defendant and the remedies available were addressed to, and considered by, Kenneth Martin J in the December 2010 Judgment, which are summarised in the March 2014 Judgment [204] - [217]. As I have noted, the contractual claim was not pleaded at that time and was not the subject of the stay granted by his Honour (December 2010 Judgment [102]). However, those arguments do form part of the background of litigation and indicate another occasion on which the defendant was required to deal with arguments of the kind now sought to be advanced in these proceedings.
47 In considering the substantial justice of the case, it is also relevant to note that the plaintiffs obtained the benefit of the contract for the purchase of the Share as part of the execution of the July 2008 Judgment debt, owed to a company controlled by the plaintiffs. The quantum of the judgment was reduced on appeal, and the remaining judgment debt has been satisfied by other means. The plaintiffs were only able to obtain the claimed contractual rights through an error made by this court in the assessment of damages in the July 2008 Judgment, and their procuring use by CAT of the court's enforcement processes which were not, in fact, required in order to satisfy the July 2008 Judgment debt as reduced on appeal. In my view, the plaintiffs do seek to take advantage of that error in these proceedings. It is hard to perceive any real practical injustice which will flow from an order which precludes the plaintiff from now pursuing claimed rights obtained in those circumstances, which they have failed to claim in the course of the lengthy and dogged pursuit of their interests to which the defendant has already been subject.
48 In all of the above circumstances, I accept the defendant's submissions that the current proceedings are an abuse of process and should be permanently stayed.
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