Frigger v Mervyn Jonathon Kitay in His Capacity as Liquidator of Computer Accounting and Tax Pty Ltd (in Liquidation) [No 12]
[2016] WASC 241
•15 AUGUST 2016
FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 12] [2016] WASC 241
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 241 | |
| Case No: | CIV:2765/2010 | 18 JULY 2016 | |
| Coram: | ALLANSON J | 15/08/16 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs to pay defendants' costs of plaintiffs' application for extension of time to comply with springing order until the time of withdrawal Order that the application for summary judgment not be heard | ||
| B | |||
| PDF Version |
| Parties: | ANGELA CECILIA THERESA FRIGGER ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND HARTMUT HUBERT JOSEF FRIGGER MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) |
Catchwords: | Practice and procedure Costs where application withdrawn before hearing Turns on own facts Practice and procedure Application for summary judgment Whether leave required for application Delay in bringing application Overall interests of justice and objects of case management Order an application not be heard Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 4A r 2(2)(f), O 16 r 1 |
Case References: | Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- ANGELA CECILIA THERESA FRIGGER AND HARTMUT FRIGGER IN THEIR CAPACITIES AS TRUSTEES OF THE FRIGGER SUPERANNUATION FUND
HARTMUT HUBERT JOSEF FRIGGER
Plaintiffs
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Practice and procedure - Costs where application withdrawn before hearing - Turns on own facts
Practice and procedure - Application for summary judgment - Whether leave required for application - Delay in bringing application - Overall interests of justice and objects of case management - Order an application not be heard - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 4A r 2(2)(f), O 16 r 1
Result:
Plaintiffs to pay defendants' costs of plaintiffs' application for extension of time to comply with springing order until the time of withdrawal
Order that the application for summary judgment not be heard
Category: B
Representation:
Counsel:
Plaintiffs : In person
First Defendant : Mr D A Lenhoff
Second Defendant : Mr D A Lenhoff
Solicitors:
Plaintiffs : In person
First Defendant : Holborn Lenhoff Massey
Second Defendant : Holborn Lenhoff Massey
Case(s) referred to in judgment(s):
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92
1 ALLANSON J: Mr and Mrs Frigger are the plaintiffs and defendants by counterclaim. They have applied for summary judgment on the counterclaim. The application was by summons, dated 9 June 2016, and supported by an affidavit of Mrs Frigger sworn the same date. Mrs Frigger also made submissions on behalf of the plaintiffs.
2 In these brief reasons, I will not set out the history and nature of the matter, which have been summarised in several earlier decisions of this court. See for example Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) [No 9] [2016] WASC 92.
3 On 17 June 2016 I directed that the matter be listed for hearing, to be confined to two matters: an application for leave to apply for summary judgment, and an application by the plaintiffs to extend time to comply with an order for security for costs and to lift a stay pending the giving of security. The hearing was deliberately limited to avoid the cost of preparation for and determining an application for summary judgment which, on preliminary consideration, was likely to be both fact intensive and complex. This was in circumstances where the application was brought over five years after the filing of the counterclaim and was for judgment on part only of the counterclaim.
4 On 5 July 2016, the plaintiffs filed a document headed 'Plaintiffs' Amended Chamber Summons for Summary Judgment against First Defendant pursuant to RSC O16 r 1(1)'. The relief sought in the amended application goes beyond summary judgment on the counterclaim.
The extension of time
5 On 3 May 2016, following failure by the plaintiffs to comply with an order for payment into court of $80,000 as security for costs of their claim, the court ordered that the plaintiffs' claim be dismissed unless the plaintiffs gave security by 10 June 2016.
6 On 27 May 2016, the plaintiffs applied to extend time to comply with the orders of 3 May. The application was supported by an affidavit sworn that day. That application had not been heard by 10 June 2016, but the defendants took no steps to enter judgment. On 17 June 2016, I listed the application for hearing. On 24 June 2016, the defendants filed an answering affidavit.
7 In correspondence to the court, dated 28 June 2016, the plaintiffs withdrew their application, apparently because they have appealed from the orders to give security and the springing order. The defendants then asked the court to make an order that the application to extend time be dismissed. Because of the terms of the correspondence, on 1 July 2016 I made an order that the application be withdrawn. The plaintiffs still took no steps to preserve their position pending determination of the appeal. On 5 July 2016, on application by the defendants, judgment was entered for the defendants on the plaintiffs' claim. As a result, judgment has been entered for the defendants on the plaintiffs' claims for:
1. an order pursuant to s 78 of the Trustees Act 1962 (WA) that land situated at 140 Edward Street (the Perth property) and land situated at 269 South Western Highway Armadale (the Armadale property) vest in Mr Frigger and Mrs Frigger in their capacity as trustees of the Frigger Super Fund;
2. a declaration pursuant to s 1321 of the Corporations Act 2001 (Cth) that the defendants have no right, title or interest in a term deposit at Saint George Bank, or any interest in respect of it, and orders consequential on that declaration; and
3. orders regarding Mrs Frigger's entitlement to repayment of a taxing fee paid in other proceedings.
8 The defendants now apply for costs of the plaintiffs' application to extend time. They submit that while the application was withdrawn and not determined on its merits, it was not reasonably brought and not withdrawn at a reasonable time.
9 Although the application to extend time was brought at an appropriate time, there are other features of it which, in my opinion, lead to the conclusion that it was unreasonably brought. While it is generally undesirable in an application of this kind to enter into consideration of the merits, this application on its face was without foundation.
10 The plaintiffs sought an extension under which the security was to be paid in two tranches - both of them after the first defendant (liquidator) paid $1,463,000 to the plaintiffs from the sale of the service station business carried out on the Armadale property. Whether the business and the proceeds of its sale are the property of the plaintiffs or the property of Computer Accounting & Tax, and within the control of the liquidator, is one of the issues to be decided in the action. It was not reasonable to seek deferment of the payment of security until after that payment by the liquidator - that, in effect, would defer the payment of security until after the determination of the action. It was also unreasonable, in my opinion, when considered against the findings I made regarding the assets of the plaintiffs when I considered the application for security.
11 The plaintiffs did not withdraw the application until after the defendants had filed an affidavit in response. The plaintiffs should pay the defendants costs to that time.
12 The counterclaim remains to be determined. I have previously observed that the multiplication of issues in these proceedings has been in the counterclaim and defence to counterclaim, and there is substantial overlap of issues between claim and counterclaim. Many of the issues between the parties remain to be decided. But the matter now proceeds on the basis that the claim has been dismissed.
The application for leave
13 The present application does not fall squarely within the rules of court: the action was commenced by originating summons but is proceeding as if commenced by writ; the applicants are defendants to the counterclaim and seek summary judgment on the counterclaim. The time within which a defendant is to bring an application for summary judgment under O 16 r 1(1) is not literally applicable.
14 The court must, however, maintain control of its own processes. Even if this is not a matter that requires leave under O 16 r 1(1), the plaintiffs should satisfy the court that over five years into the action it is appropriate to consider an application for summary judgment. Pursuant to O4A r 2(2)(f), a case manager may direct that an interlocutory application not be heard. The plaintiffs should explain why they have delayed so long in bringing the application and satisfy the court that hearing and determining the application would best ensure the attainment of the objects set out in O1 r 4A and 4B. In my opinion, this requires the plaintiffs to explain the delay.
15 The plaintiffs commenced these proceedings by originating summons dated 3 November 2010. The counterclaim was first filed in May 2011. It then included the plea that certain transactions were unfair preferences. The application for summary judgment was brought more than five years after that plea was first made.
16 An application for summary judgment by a defendant must be supported by an affidavit setting out the facts on which the application is based: O 16 r 1(2). The plaintiffs rely on the affidavit of Mrs Frigger, dated 9 June 2016. It deals in turn with different components of the counterclaim.
17 First, pars 5 to 9 deal with the claim for the Perth and Armadale properties. The plaintiffs assert that they believe they have a good defence to the counterclaim, based in particular on documents evidencing declarations of trust over the properties in 2009 and earlier documents showing the intention that Computer Accounting & Tax Pty Ltd would hold the land as trustee of the Frigger Super Fund.
18 The second part of the application is dealt with in pars 10 and 11 of the affidavit, and concerns funds in a term deposit with ING Bank. Mrs Frigger says the deposit was opened in her name as trustee of the Frigger Super Fund, and annexes some documents evidencing withdrawal of funds from an account in her name on 2 January 2008 and deposit in the term deposit (also in her name).
19 The third part of the affidavit concerns a litigation agreement between Computer Accounting & Tax and Mrs Frigger, regarding the litigation by the company against Professional Services Australia Pty Ltd and Martin Paul Banning. Mrs Frigger states that the judgment sum was assigned to her pursuant to the terms of the litigation agreement. She further states that in April 2014, she gave notice to the company repossessing assets secured by a fixed charge.
20 Finally, Mrs Frigger attaches a copy of a running account between the company and Mr and Mrs Frigger. Mrs Frigger is an accountant and prepared the running account and other documents for the company. Mrs Frigger asserts that the two properties and the judgment sum are transactions that form part of a single transaction in that running account. The affidavit also attaches profit and loss statements for Computer Accounting & Tax for the financial years ending 30 June 1998 through to 30 June 2010. The statements have been adjusted in handwriting by Mrs Frigger to reflect the effect of a determination by the Australian Tax Office in 2011 regarding the treatment of income earned by Mr Frigger. I do not read the attached determination in the way advanced by Mrs Frigger, but that question was not explored at the hearing. In any event, the proper treatment of Mr Frigger's income affects amounts in the account, but not the general assertion that there is a running account, the balance of which the plaintiffs are entitled to set off against any claims by the company pursuant to Corporations Act s 553C. For the purposes of the defendants' plea relating to unfair preferences, the plaintiffs will rely upon s 588FA(3), regarding transactions that are part of a continuing business relationship (the running account).
Delay
21 In pars 5 and 6, Mrs Frigger seeks to refer to legal advice given by Mr David John, then the solicitor for Mr Kitay, in relation to the prospects of a claim by the liquidator for the Perth and Armadale properties. Those letters of advice, and the fact that the plaintiffs were unable to rely on them earlier, are the only reason put forward in the affidavit to explain the gross delay in seeking summary judgment: par 5.
22 The plaintiffs have applied for discovery of those letters and other documents. The documents have not to date been specifically identified in an affidavit of discovery, with privilege claimed for them. As a practical measure, I ordered the defendants to file a further affidavit of discovery. Should privilege be claimed for the letters, as I expect it will, the procedures in O 26 r 9 will provide the framework for that claim to be determined. I have not heard submissions on privilege. No evidence had been put before the court to date that would support a finding that privilege does not arise because the letters were a communication in furtherance of an illegal or improper purpose. Having regard to the nature of the issues likely to arise on a challenge to privilege, it is preferable for that to be dealt with by another judge.
23 For present purposes it is unnecessary to consider the question of the legal advice. With one exception, the matters relied on by the plaintiffs as providing a defence to the counterclaim are matters known to them or available to them from the commencement of these proceedings. The one exception is the giving of notices of repossession under the charge. Those notices were given in April 2014, although the existence of the charge itself was known to the plaintiffs from the outset.
24 In these circumstances, there is no explanation for the delay of many years in seeking summary determination. At the hearing, the plaintiffs sought to rely on delay in progress of the claim as itself a reason for now having the matter determined summarily. The plaintiffs referred to particular matters which had been delayed, including inspection of documents and issue of subpoenas.
25 Despite the failure to satisfactorily explain why this application was only brought more than five years into the proceedings, I have considered whether the interests of justice and the objects set out in O 1 r 4B would nonetheless call for leave to be given.
26 In par 23 of her affidavit Mrs Frigger deposes that the plaintiffs believe they have a good defence to the claims 'that the Properties, the ING term deposit and the Judgment Sum are unfair preferences'. In correspondence to my associate, copied to the defendants, on 15 June 2016, the plaintiffs stated that the application 'is only for the first defendant's counterclaim for four transactions alleging unfair preferences'. In submissions at the hearing on 17 June 2016, when this application was programmed, Mrs Frigger confirmed that the application related to part only of the counterclaim, being the unfair preference claim.
27 The unfair preference claim is one of a number of alternative bases on which the defendants challenge specified acts and transactions. As a result, summary determination of that part of the claim may not have the effect of either hastening or shortening the proceedings.
28 The cost of continuing to a contested application is out of proportion to its possible utility to the proceedings. This application has been another of many interlocutory disputes which have impeded any progress in the proceedings.
29 In the hearing of the application, the plaintiffs sought to rely on an amended application which they say extends the application for summary judgment to the whole of the counterclaim. The plaintiffs sought to extend the application for summary judgment to the whole of the counterclaim on a range of grounds which, with respect, were not clearly articulated. The documents put forward in the supporting affidavit are incomplete (sometimes only extracts from documents). The accounting material requires some explanation, possibly by way of expert evidence.
30 It is not, in my opinion, conducive to summary determination on affidavit evidence in the manner contended for by the plaintiffs.
31 In the circumstances, having regard to the unexplained delay and the very limited utility of the application, I am satisfied that it should not proceed. If leave is required, I would refuse leave. Alternatively, pursuant to O 4A r 2(2)(f), I direct that the application for summary judgment not be heard.
32 For these reasons I will order that the application for summary judgment not be heard.
33 The next step in the proceedings is likely to be an application to determine the claim of privilege in the defendants' legal advice. That application will need to be determined by another judge.
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