Frigger v Mervyn Jonathon Kitay in His Capacity as Liquidator of Computer Accounting and Tax Pty Ltd (in Liquidation) [No 14]
[2017] WASC 120
•28 APRIL 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 14] [2017] WASC 120
CORAM: MARTINO J
HEARD: 29 SEPTEMBER 2016 & 30 JANUARY 2017
DELIVERED : 28 APRIL 2017
FILE NO/S: CIV 2765 of 2010
MATTER :Section 78 of the Trustees Act 1962 and Section 1321 of the Corporations Act 2001
BETWEEN: 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
PlaintiffsAND
MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
First DefendantCOMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
Second Defendant
FILE NO/S :COR 2 of 2010
MATTER :IN THE MATTER OF COMPUTER ACCOUNTING AND TAX PTY LTD (ACN 009 470 491) (In Liq)
EX PARTE
MERVYN JONATHAN KITAY in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (ACN 009 470 491) (In Liq) and COMPUTER ACCOUNTING AND TAX PTY LTD (In Liq)
Mr and Mrs Frigger
Catchwords:
Documents - Relevance - Legal professional privilege - Waiver
Legislation:
Nil
Result:
Applications to inspect confidential affidavit and attachments dismissed
Category: B
Representation:
CIV 2765 of 2010
Counsel:
Plaintiffs: In person
First Defendant : Mr D A Lenhoff
Second Defendant : Mr D A Lenhoff
Solicitors:
Plaintiffs: In person
First Defendant : Lenhoff & Associates
Second Defendant : Lenhoff & Associates
COR 2 of 2010
Counsel:
Mr and Mrs Frigger : In person (On 30 January 2017)
Liquidator: Mr D W John (On 30 January 2017)
Solicitors:
Mr and Mrs Frigger : In person
Liquidator: Herbert Smith Freehills
Case(s) referred to in judgment(s):
Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co [1882] 11 QBD 55
Frigger v Kitay [No 11] [2016] WASC 93
Frigger v Kitay [No 12] [2016] WASC 241
Frigger v Kitay [No 13] [2016] WASC 290
Frigger v Kitay [No 9] [2016] WASC 92
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [2013] WASC 229
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 2] [2013] WASC 394
Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 7] [2014] WASC 441
Gardiner v Irvine [1879] 4 Ex D 49
Hancock v Rinehart [2016] NSWC 12
McGrath Re HIH Insurance Ltd [2005] NSWSC 731
Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Re Computer Accounting and Tax Pty Ltd; Ex Parte Mervyn Jonathan Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 4] [2014] WASC 169
Rouse v IOOF Australia Trustees [1999] SASC 127
Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169
MARTINO J: By an application dated 30 September 2016 in COR 2 of 2010 Angela Frigger and Hartmut Frigger in their capacities as members of Computer Accounting & Tax Pty Ltd (in liq) seek several orders, the first order being an order that 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 the application. Mr and Mrs Frigger have filed amended and re‑amended applications since that application was filed, but the first order they seek has not changed.
In CIV 2765 of 2010 the plaintiffs have filed an amended minute of orders dated 26 August 2016 in which they seek access to the confidential affidavit of Mervyn Jonathan Kitay dated 5 January 2012 filed in COR 2 of 2010 and annexures to that affidavit.
At a directions hearing on 30 November 2016 I ordered that the application for the first order in the application filed in COR 2 of 2010 be heard at the same time as the application for inspection of documents in CIV 2765 of 2010 and listed the applications for hearing on 30 January 2017. At the hearing on 30 November 2016 counsel for the defendants in CIV 2765 of 2010 submitted that I should inspect Mr Kitay's affidavit of 5 January 2012. Mr and Mrs Frigger and counsel for Mr Kitay in COR 2 of 2010 had no objection to me doing so. I said that I would do so.
COR 2 of 2010
Action COR 2 of 2010 is an action in which Computer Accounting & Tax Pty Ltd (CAT) was ordered to be wound up.
Mr Kitay was appointed as a provisional liquidator of CAT on 21 January 2010. He was appointed liquidator of the company on 6 May 2010.
On 11 January 2012, in support of an application for orders under s 477(2B) of the Corporations Act 2001 (Cth), Mr Kitay filed the confidential affidavit sworn on 5 January 2012. Attached to the affidavit, among other things, were two detailed letters of advice regarding the prospects of a potential claim against Mr and Mrs Frigger, the directors of CAT. On 17 January 2012 Acting Master Chapman made the following orders on Mr Kitay's application under s 477(2B) of the Corporations Act:
1.The application be heard in closed court.
2.The Confidential Affidavit of Mervyn Kitay dated 5 January 2012 (Confidential Affidavit) and the annexures thereto remain in the court file in a sealed envelope marked 'confidential', such Confidential Affidavit not to be accessed by any person without order of this Honourable Court.
Acting Master Chapman also made orders giving Mr Kitay authorisation to enter into a litigation funding agreement.
On 26 June 2013 solicitors for Mr Kitay wrote to Mrs Frigger informing her that they intended to make an application for variation of the litigation funding agreement. On 4 July 2013 Mr Kitay applied for approval of a proposed variation of the litigation funding agreement. On 26 July 2013 McKechnie J made orders authorising the variation of the litigation funding agreement. At the hearing of the application on that day McKechnie J could not locate a copy of the confidential affidavit.
On 7 August 2013 in action CIV 2765 of 2010 Mrs Frigger filed an affidavit to which was she attached a copy of Mr Kitay's confidential affidavit. By an interlocutory process in action COR 2 of 2010 lodged on 25 November 2013 Mr Kitay sought orders in relation to the confidential affidavit. In an affidavit made on 14 February 2014 Mrs Frigger deposed that when she received the letter of 26 June 2013 from the solicitors for Mr Kitay informing her that they intended to make an application for variation of the litigation funding agreement she requested an opportunity to inspect the court file. The confidential affidavit was on the court file. She read it and requested a copy from the court staff. A copy was provided to her.
On 15 May 2014 Master Sanderson ordered that Mrs Frigger and Mr Frigger deliver up to Mr Kitay in his capacity as liquidator of CAT and to the company in liquidation all copies of Mr Kitay's confidential affidavit of 5 January 2012: Re Computer Accounting and Tax Pty Ltd; Ex Parte Mervyn Jonathan Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 4] [2014] WASC 169. The orders of the Master, as amended by consent on 22 May 2014 were:
1.Within 7 days of the date of this order, Angela Cecilia Theresa Frigger (Mrs Frigger) and Hartmut Frigger (Mr Frigger) do deliver up to the Applicants all hard copies of the Confidential Affidavit of Mervyn Jonathan Kitay sworn on 5 January 2012 and any of the annexures thereto, which was filed herein (Confidential Affidavit).
2.Within 7 days of the date of this order, Mr and Mrs Frigger do each provide a written statement to the solicitors of the Applicants:
(a)that they have not retained any copies of the Confidential Affidavit or any of the annexures thereto;
(b)that they have permanently deleted any electronic copies of the Confidential Affidavit and any of the annexures thereto in their possession;
(c)setting out each and every person, whether as solicitor, or counsel, or otherwise (Third Parties), to whom they have provided a copy of the Confidential Affidavit or any of the annexures thereto, whether in hard copy or electronically;
(d)confirming that they have had returned to them, for return to the Applicants, all copies of the Confidential Affidavit and any of the annexures thereto which were provided to Third Parties; and
(e)confirming that these Third Parties have confirmed to them in writing that they have permanently deleted any electronic copies of the Confidential Affidavit and any of the annexures thereto in their possession.
3.Any solicitors or counsel acting for Mr and Mrs Frigger who have had access to the Confidential Affidavit, or any of the annexures thereto, cease to act for Mr and Mrs Frigger in relation to Supreme Court proceedings CIV 2765 of 2010 unless they have the prior consent of Mervyn Jonathan Kitay.
4.Mr and Mrs Frigger be restrained from disclosing the contents of the Confidential Affdiavit or any of the annexures thereto to any person, including, any solicitor or counsel acting for them in the future.
5.Within 14 days of the date of this order, Mrs Frigger do file any submissions as to costs.
CIV 2765 of 2010
Action CIV 2765 of 2010 was commenced by originating summons on 4 November 2010. It is in the court's Commercial and Managed Cases List, managed by Allanson J. The history of the action and the claims made in it can be found in the reasons of Allanson J in Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [2013] WASC 229; Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 2] [2013] WASC 394; Frigger v Mervyn Jonathon Kitay in his Capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 7] [2014] WASC 441, Frigger v Kitay [No 9] [2016] WASC 92; Frigger v Kitay [No 11] [2016] WASC 93; Frigger v Kitay [No 12] [2016] WASC 241 and Frigger v Kitay [No 13] [2016] WASC 290.
Mr and Mrs Frigger are the shareholders in CAT. CAT is the registered proprietor of two properties which are described in the pleadings as the Armadale property and the Perth property.
Mrs Frigger commenced the action by an originating summons. However it has proceeded with pleadings, as if commenced by writ of summons. When Mrs Frigger commenced the action she was the only plaintiff and Mr Kitay was the only defendant. Subsequently Mrs Frigger and her husband 'in their capacities as trustees of the Frigger Super Fund' were added as second plaintiffs and Mr Frigger was added as a plaintiff in his personal capacity.
The plaintiffs initially alleged that CAT and Mr Frigger and Mrs Frigger were parties to an enforceable agreement under which Mr Frigger and Mrs Frigger advanced the funds for the purchase of the two properties as loans, subject to an agreement that the properties would later become assets of a trust. The plaintiffs have amended their pleadings to claim that CAT holds the properties on an express trust and they claim that the facts give rise to a Quistclose trust.
By an amended chamber summons filed on 5 July 2016 the plaintiffs amended their application for summary judgment to apply for the following order:
2.Pursuant RSC O26 r10 and s 125 Uniform Evidence Act and the findings of the Master in [2014] WASC 160 @ [20], the first defendant produce to the court letters of advice received by the first defendant from David John dated 26 August 2010 and 16 September 2010 and cost agreement between Holborn Lenhoff Massey and the first defendant dated early 2012.
On 18 July 2016 Allanson J ordered:
2.The defendants are to file a further affidavit of discovery relating to the documents subject of the orders of Master Sanderson made in 2014 by Friday 28 July 2016.
On 26 July 2016 the first and second plaintiffs filed a minute of orders seeking an order that client legal privilege did not exist over four documents and that the plaintiffs were entitled to rely on those documents in the action. The documents referred to in that minute were:
(a)Affidavit dated 5 January 2012 of first defendant filed in COR2/2010 marked "Confidential Affidavit";
(b)Letter from Mr David John to the first defendant dated in or about August 2010 attached to the Confidential Affidavit;
(c)Letter from Mr David John to the first defendant dated in or about September 2010 attached to the Confidential Affidavit;
(d)Cost agreement between the first defendant and Holborn Lenhoff Massey dated December 2011 or January 2012 in respect of this proceeding.
The application made in that minute was allocated to me for determination.
In support of their application Mr and Mrs Frigger have filed affidavits made by Mrs Frigger on 1 August 2016, 12 September 2016 and 15 September 2016.
They also filed an affidavit made by Mrs Frigger on 22 July 2016. In that affidavit Mrs Frigger purported to give evidence in detail as to the contents of the confidential affidavit of Mr Kitay made on 5 January 2012. On 29 September 2016 I ruled that by reason of the orders of Master Sanderson made on 15 May 2014 Mr and Mrs Frigger were not permitted to refer to the contents of the confidential affidavit and to do so would be scandalous as a breach of an order of the court. I ordered that Mrs Frigger's affidavit of 22 July 2016 be struck out and removed from the court file.
The affidavit of discovery made by Mr Kitay on 26 July 2016 pursuant to the order of Allanson J made 18 July 2016.
On 29 July 2016 Mr Kitay filed an affidavit made by him on 26 July 2016 verifying a list of documents. In that affidavit Mr Kitay deposed:
2On 18 July 2016, the defendants were ordered to file a further affidavit of discovery relating to the documents the subject of the orders of Master Sanderson made in 2014.
3On 15 May 2014, Master Sanderson ordered the plaintiffs to deliver up to the defendants all hardcopies of the Confidential Affidavit of Mervyn Jonathan Kitay sworn on 5 January 2012 and any annexures thereto.
4The list of seven documents produced to me and marked Attachment 'A' are the Confidential Affidavit and the annexures to that affidavit, being annexures 'MJK 6' to 'MJK 11' to the Confidential Affidavit.
5The 7 documents listed in Part 1A of Attachment A are documents which are in the possession, custody or power of the defendants.
6The defendants object to producing the documents in part 1A of Attachment A identified in Part 1B on the grounds stated in Part 1B.
Attachment A was in the form of Form 17 in sch 2 to the Rules of the Supreme Court 1971 (WA). In it Mr Kitay stated that pt 1A of the list listed the documents relating to the matters in question in the action in the possession, custody or power of the defendants and that pt 1B listed each of those documents listed in pt 1A that the defendants objected to producing and the grounds for objecting.
The seven documents listed in pt 1A were:
No Description of document Date 1 Text of confidential affidavit sworn by Mervyn Jonathon Kitay 5 January 2016 2 Funding Agreement between First Defendant and Hillcrest Litigation Services Ltd 2011 3 Costs agreement between Holborn Lenhoff Massey and First Defendant 15 December 2011 4 Letter from First Defendant to Holborn Lenhoff Massey 12 December 2011 5 Email from Cameron Eastwood to First Defendant 16 December 2011 6 Letter from Freehills to First Defendant 25 August 2010 7 Letter from Freehills to First Defendant 16 September 2010
Part 1A contained the following note:
NOTE: Numbers 2 – 7 in the List are exhibits 'MJK 6' to 'MJK 11' to the Confidential Affidavit (No. 1 in the List)
The grounds specified in pt 1B for all seven documents were:
Legal Professional Privilege
The directions hearing before me on 24 August 2016
The plaintiffs' application was before me for directions on 24 August 2016. At that directions hearing Mrs Frigger submitted that the claim for privilege in Kitay's affidavit was defective. She referred to Gardiner v Irvine [1879] 4 Ex D 49 and Schreuder v Murray [No 2] [2009] WASCA 145; (2009) 41 WAR 169.
In Schreuder v Murray [No 2] Buss JA said at [58] ‑ [63] that legal professional privilege is a rule of substantive law. The person claiming legal professional privilege must prove that the information or documents in question are privileged. A claim of legal professional privilege is not established conclusively by the use of a verbal formula. Order 26 r 4(2) of the Rules of the Supreme Court provides that if it is claimed that any documents are privileged from production the claim must be made in the list of documents made in compliance with O 26 r 1 and with a sufficient statement of the grounds of privilege. Buss JA quoted from Civil Procedure Western Australia [26.4.6] where the authors said that it is not sufficient merely to assert that the documents are privileged, which is a statement of law. The facts relied upon as giving rise to the privilege must be set out so the claim for privilege can be tested.
The assertion of legal professional privilege made in Mr Kitay's affidavit of 26 July 2016 was inadequate to establish that the documents were privileged from production as the facts relied upon as giving rise to the privilege were not set out.
At the directions hearing Mr Lenhoff, appearing for Mr Kitay, applied to file a further affidavit of discovery.
I made case management orders providing for the plaintiffs to file an amended minute of proposed orders, for the defendants to make available to me in a sealed envelope a copy of the confidential affidavit of the first defendant of 5 January 2012 and the attachments to that affidavit, for the first defendant to file a further affidavit of discovery in compliance with Allanson J's order and for affidavits and outlines of submissions. I listed the plaintiff's application for hearing before me on 29 September 2016.
The plaintiffs' amended minute of orders dated 26 August 2016
Pursuant to my case management orders on 24 August 2016 the plaintiffs filed an amended minute of orders dated 26 August 2016 which, without underlining and words struck through, is in the following terms:
On the grounds stated in the affidavits and submissions of the plaintiffs, the plaintiffs apply for the following orders:
1Pursuant to the orders dated 17 January 2012 in COR2/2010 the plaintiffs may have access to the confidential affidavit and annexures thereto of Mervyn Jonathan Kitay dated 5 January 2012 filed in that proceeding.
2An order declaring that client legal privilege does not exist over the following documents and the plaintiffs are entitled to rely on those documents in this proceeding:
(a)The documents discovered in the affidavit of discovery of Mervyn Jonathan Kitay dated 26 July 2016 and any replacement or amendments of such affidavit.
3The first defendant do provide copies of the discovered documents to the plaintiffs within 7 days of the order in paragraph 2 alternatively the first defendant give inspection of the documents to the plaintiffs at a convenient time.
4The plaintiffs are awarded the costs of the application.
The affidavit of discovery made by Mr Kitay on 31 August 2016
Mr Kitay filed a further affidavit, which was made by him on 31 August 2016. The list of seven documents which were the confidential affidavit made by Mr Kitay on 5 January 2012 and any annexures thereto was in Attachment C to that affidavit. In the affidavit of 31 August 2016 Mr Kitay deposed in paragraph 7 that the defendants objected to producing the documents in pt 1A of Attachment C on the grounds stated in pt 1B.
Like Attachment A to Mr Kitay's affidavit of 26 July 2016 Attachment C to his affidavit of 31 August 2016 was in the form of Form 17 in sch 2 to the Rules of the Supreme Court. Mr Kitay stated in it that pt 1A of the list listed the documents relating to the matters in question in the action in the possession, custody or power of the defendants and that pt 1B listed each of those documents listed in pt 1A that the defendants objected to producing and the grounds for objecting.
Part 1A listed the same seven documents as were in the corresponding section of Mr Kitay's affidavit of 26 July 2016, save that the date of document 1, the confidential affidavit sworn by Mervyn Kitay, was changed to 5 January 2012 and the description of document 3 was changed to: 'Costs agreement between Holborn Lenhoff Massey and the First Defendant in his capacity as liquidator of Computer Accounting & Tax (In Liquidation)'.
Part 1B contained the following grounds:
No Grounds for objecting to producing the document 1 Confidentiality Orders made in Supreme Court Action COR 2 of 2010 on 17 January 2012 and 15 May 2014. 2 Save for the redacted version of this document exhibited to the affidavit sworn by Mervyn Jonathan Kitay in these proceedings on 29 July 2013, this document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1). 3 This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1). 4 (a) Legal Professional Privilege being a letter addressed by the first defendant to his solicitors in anticipation of litigation, alternatively in the course of such litigation, which is, on its face, a communication of a professional nature touching upon the subject matter of the solicitor's engagement and in connection with such engagement;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1).
5 This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1). 6 (a) Legal Professional Privilege being a letter from solicitors engaged by the first defendant to provide legal services in the matter and containing confidential and sensitive legal advice with respect to the subject matter of this action;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1).
7 (a) Legal Professional Privilege being a letter from solicitors engaged by the first defendant to provide legal services in the matter and containing confidential and sensitive legal advice with respect to the subject matter of this action;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1).
The hearing before me on 29 September 2016
The plaintiffs' application was before me for hearing on 29 September 2016. Mr Lenhoff appeared for Mr Kitay at that hearing. Mr Lenhoff submitted that there was no reason why the plaintiffs would want some of the documents in Mr Kitay's list of seven documents. I pointed out that Mr Kitay had deposed that the documents in the list related to the matters in question in the action. Mr Lenhoff said that was an error. He requested an opportunity to file a further affidavit. After hearing submissions I made orders directing that the first defendant do file any further affidavit by 6 October 2016 and providing for the parties to file further submissions.
On 11 October 2016 Mr Kitay filed an affidavit verifying a list of documents made by him on 5 October 2016. In that affidavit Mr Kitay referred to and attached to the affidavit copies of the orders of Acting Master Chapman of 17 January 2012 (incorrectly referred to as 17 January 2016 in the affidavit) and of Master Sanderson made 15 May 2014. The copy of the order of Master Sanderson did not include the change to order 3 made by consent which enabled a legal practitioner who had access to the confidential affidavit to act for Mr and Mrs Frigger with the consent of Mr Kitay, but nothing turns on that omission. Annexure C to the affidavit was a modified form of Form 17 in sch 2 to the Rules of the Supreme Court.
In the documents in possession section of the form Mr Kitay stated:
Part 1A of this list lists 7 documents being the Confidential Affidavit and the 6 annexures to that affidavit (Annexures "MKJ 6" to "MKJ11").
He did not state that the documents were 'relating to the matters in question' in the action. Those words had been deleted from the form.
Part 1A listed the same seven documents as were in the corresponding section of Mr Kitay's affidavit of 31 August 2016.
Part 1B contained the following grounds:
No Grounds for objecting to producing the document 1 Confidentiality Orders made in Supreme Court Action COR 2 of 2010 on 17 January 2012 and 15 May 2014. 2 (a) Save for the redacted version of this document exhibited to the affidavit sworn by Mervyn Jonathan Kitay in these proceedings on 29 July 2013, this document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1);
(b) This document is in any event irrelevant as it has not been referred to in any of the pleadings or particulars to those pleadings in the matter.
3 (a) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1);
(b) This document is in any event irrelevant as it has not been referred to in any of the pleadings or particulars to those pleadings in the matter.
4 (a) Legal Professional Privilege being a letter addressed by the first defendant to his solicitors in anticipation of litigation, alternatively in the course of such litigation, which is, on its face, a communication of a professional nature touching upon the subject matter of the solicitor's engagement and in connection with such engagement;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1)
(c) This document is in any event irrelevant as it has not been referred to in any of the pleadings or particulars to those pleadings in the matter
5 (a) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1)
(b) This document is in any event irrelevant as it has not been referred to in any of the pleadings or particulars to those pleadings in the matter.
6 (a) Legal Professional Privilege being a letter from solicitors engaged by the first defendant to provide legal services in the matter and containing confidential and sensitive legal advice with respect to the subject matter of this action;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1).
7 (a) Legal Professional Privilege being a letter from solicitors engaged by the first defendant to provide legal services in the matter and containing confidential and sensitive legal advice with respect to the subject matter of this action;
(b) This document forms part of the confidential affidavit (document 1) and the subject of confidentiality orders as set out in the grounds for objecting to the production of the confidential affidavit (document 1).
Determination of the application for the first order sought by Mr and Mrs Frigger in their application in COR 2 of 2010
In support of their application for the first order sought by Mr and Mrs Frigger in COR 2 of 2010 Mrs Frigger has filed an outline of submissions which contains seven grounds in support of her application. I will deal with each of those grounds.
Ground 1 is that Mr and Mrs Frigger's interests have been affected by the orders made under s 477(2B) of the Corporations Act. As I have noted confidentiality orders were made by Acting Master Chapman and Master Sanderson made orders to give effect to Acting Master Chapman's confidentiality orders after a copy of the affidavit of Mr Kitay dated 5 January 2012 was provided to Mrs Frigger.
The making of the confidentiality orders of the kind made by Acting Master Chapman in the circumstances in which he made them is not unusual. There are good reasons for the making of such orders. Those reasons are the public interest in the proper administration of insolvent companies and the public interest in the due administration of justice: McGrath Re HIH Insurance Ltd [2005] NSWSC 731. The orders of the Acting Master authorising Mr Kitay to enter into a litigation funding agreement did not make any determination as to the outcome of the litigation contemplated by the litigation funding agreement. The fact that the order authorised Mr Kitay to enter into a litigation funding agreement does not provide any entitlement for parties to that litigation to have access to the affidavit the subject of the confidentiality order. I do not accept the submissions made in this ground.
Ground 2 is that there is no public interest in the insolvent administration of CAT because there are no creditors of the company. There is no substance to this submission. Master Sanderson has found that CAT is insolvent and ought to be wound up: Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93. There is a public interest in the proper administration of the winding up of the company. I do not accept the submissions made in this ground.
Ground 3 is that legal professional privilege has been waived by the submission made on 30 November 2016 by counsel for the defendants in CIV 2765 of 2010 that I should inspect Mr Kitay's affidavit of 5 January 2012.
In support of this ground Mr and Mrs Frigger rely upon the decision of Brereton J in Hancock v Rinehart [2016] NSWC 12. In my view the decision does not support the ground put forward by Mr and Mrs Frigger. In Hancock v Rinehart Brereton J held that a claim for privilege must be based on evidence, not solely on an invitation to inspect the documents. In my view an invitation to inspect documents which have been filed at the court cannot constitute a waiver of any privilege that attaches to those documents. I do not accept the submissions made in this ground.
Ground 4 is that a trustee cannot maintain legal professional privilege against the beneficiaries of the trust. Whether CAT holds assets as trustees for Mr and Mrs Frigger is disputed. It is yet to be determined in CIV 2765 of 2010. The fact that Mr and Mrs Frigger assert that they are the beneficial owners of property held by CAT does not mean that they are entitled to inspect documents over which CAT claims legal professional privilege. I do not accept the submissions made in this ground.
Ground 5 is an assertion that the dominant purpose of the communications between Mr Kitay and his legal advisors was not to obtain legal advice but to obtain litigation funding, ground 6 is an assertion that in Mr Kitay's affidavits he failed to give full and frank disclosure to the court and ground 7 is an assertion that privilege has been lost because letters of advice were used for the purposes of contraventions of the Corporations Act and the Superannuation Industry Supervision Act. In support of their claims Mr and Mrs Frigger make allegations which they have made as supporting claims for relief in CIV 2765 of 2010. That action is complex and ongoing. Those claims have not been determined in their favour. The fact that they are making the claims does not warrant me ordering that the confidential affidavit be produced for inspection.
I have inspected the confidential affidavit, including the annexures to the affidavit. In doing so I have followed the course taken by Lander J in Rouse v IOOF Australia Trustees [1999] SASC 127 where privileged material had been incorrectly made available to a party. There is nothing in my inspection of that material that leads me to conclude that these grounds have any merit. I do not accept the submissions made in these grounds.
I have dealt with each of the grounds raised by Mr and Mrs Frigger. For reasons that I have given I have decided that I will not make the first order that Mr and Mrs Frigger seek in their application in this action.
There is another reason why I would not make the orders sought by Mr and Mrs Frigger. As Master Sanderson said in Re Computer Accounting and Tax Pty Ltd; Ex Parte Mervyn Jonathan Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 4] at [20] the issue of inspection of the confidential affidavit in this action is based on a confidentiality order made by Acting Master Chapman, not on questions of privilege. Mr and Mrs Frigger have not established any basis to vary that order. The application for the first order in their application in COR 2 of 2010 will be dismissed.
Determination of the orders sought in the plaintiffs' minute of orders dated 26 August 2016 in CIV 2765 of 2010
As I have said Mr and Mrs Frigger have not established any basis to vary the confidentiality order made by Acting Master Chapman in COR 2 of 2010. The effect of that confidentiality order is that the plaintiffs are not permitted access to the body of the affidavit. However that does not dispose of the application made by the plaintiffs in this action in relation to the attachments to the affidavit. Those attachments predate the affidavit. As Master Sanderson said in Re Computer Accounting and Tax Pty Ltd; Ex Parte Mervyn Jonathan Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (in liq) [No 4] at [20] claims for privilege in relation to communications between the liquidator and his solicitors can be challenged and determined in proceedings other than COR 2 of 2010.
I have set out in these reasons the objections to production of the documents made in the affidavit of Mr Kitay made on 5 October 2016. As I have said I have inspected the documents.
Mr Kitay objects to the production for inspection of the documents which are annexures to the confidential affidavit on the grounds of relevance. The obligation to provide discovery of documents is an obligation to discover documents 'relating to any matters in question' in an action: O 26 r 1(1) Rules of the Supreme Court.
The application that I am determining has followed an unusual course. By their application made on 5 July 2016 the plaintiffs sought discovery of letters of advice and a costs agreement. On 18 July 2016 Allanson J ordered that the defendants file a further affidavit of discovery relating to the documents subject of the orders of Master Sanderson made in 2014. I do not understand Allanson J in making that order to have determined that those documents related to a matter in question in the action. I understand therefore that the issue of relevance remains to be determined by me, even though the documents are included in a list that was filed in accordance with Allanson J's order.
The test of whether a document relates to a matter in question in an action was explained in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co [1882] 11 QBD 55 (Brett LJ):
It seems to me that every document relates to matters in question in the action which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in words 'either directly or indirectly' because it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance its own case or to damage the case of its adversary, if it is a document which may fairly lead to a chain of inquiry, which may have either of those two consequences (63).
Documents 2, 3, 4 and 5 in the list of documents do not relate to any matter in question in this action. They relate to the terms of funding and costs agreements for this action.
Documents 6 and 7 do relate to matters in question in this action. The claim for legal professional privilege is soundly based. They are letters of advice from solicitors to their client. For reasons that I have given, that privilege has not been waived or lost.
The plaintiffs are not entitled to an order that the documents in the list of documents be made available for inspection. Their application will be dismissed.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: FRIGGER -v- MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION) [No 14] [2017] WASC 120 (S)
CORAM: MARTINO J
HEARD: ON THE PAPERS
DELIVERED : 21 JULY 2017
FILE NO/S: CIV 2765 of 2010
MATTER :Section 78 of the Trustees Act 1962 and Section 1321 of the Corporations Act 2001
BETWEEN: 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
PlaintiffsAND
MERVYN JONATHON KITAY IN HIS CAPACITY AS LIQUIDATOR OF COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
First DefendantCOMPUTER ACCOUNTING & TAX PTY LTD (IN LIQUIDATION)
Second Defendant
FILE NO/S :COR 2 of 2010
MATTER :IN THE MATTER OF COMPUTER ACCOUNTING AND TAX PTY LTD (ACN 009 470 491) (In Liq)
BETWEEN :MERVYN JONATHAN KITAY in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (ACN 009 470 491) (In Liq) and COMPUTER ACCOUNTING AND TAX PTY LTD (In Liq)
Mr and Mrs Frigger
Catchwords:
Costs - Appropriate costs order - Submissions that orders should be amended under the slip rule
Legislation:
Nil
Result:
Costs order made
Category: B
Representation:
CIV 2765 of 2010
Counsel:
Plaintiffs: No appearance
First Defendant : No appearance
Second Defendant : No appearance
Solicitors:
Plaintiffs: In person
First Defendant : Lenhoff & Associates
Second Defendant : Lenhoff & Associates
COR 2 of 2010
Counsel:
Mr and Mrs Frigger : No appearance
Liquidator: No appearance
Solicitors:
Mr and Mrs Frigger : In person
Liquidator: Herbert Smith Freehills
Case(s) referred to in judgment(s):
Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 14] [2017] WASC 120
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Idoport Pty Ltd v National Australia Bank [2005] NSWSC 752
James M'Cabe v The Governor & Company of the Bank of Ireland (1889) 14 App Cas 413
Martin v Earl Beauchamp (1883) 25 CH D 12
Naidoo v Williams [2008] WASCA 179; (2008) 37 WAR 516
MARTINO J: On 28 April 2017 I delivered my reasons for dismissing applications made by Mr and Mrs Frigger in two actions: Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 14] [2017] WASC 120. In CIV 2765 of 2010 the plaintiffs had filed an amended minute of orders dated 26 August 2016 in which they sought access to the confidential affidavit of Mervyn Jonathon Kitay dated 5 January 2012 filed in COR 2 of 2010 and annexures to that affidavit.
In COR 2 of 2010 Mrs and Mr Frigger in their capacities as members of Computer Accounting & Tax Pty Ltd (in liq) had applied for an order that they have leave to rely on and refer to the confidential affidavit of Mr Kitay and other orders. My decision dealt only with the application for leave to rely upon the affidavit of Mr Kitay.
On 27 April 2017 my Associate gave the parties notice that my decision would be delivered on 28 April 2017. Mr and Mrs Frigger did not attend court when I delivered my decision. In the morning of 28 April 2017 Mrs Frigger sent an email to my Associate in which she wrote:
Dear Associate
The writers already purchased tickets for a full-day function for a family celebration on Friday.
Unfortunately, we will not be able to attend today.
If there is to be an argument about costs, could that matter be reserved until we are able to attend.
Kind regards.
Angela Frigger
I delivered my decision on 28 April 2017 and made the following orders:
CIV/2765/2010:
1.The application by the plaintiffs for access to the Confidential Affidavit of Mervyn Jonathan Kitay dated 5 January 2012 and the annexures to that affidavit ('the application') is dismissed.
2.By 5 May 2012 [sic], Mr and Mrs Frigger do file and serve any submissions in response to the defendants' application for an order that the plaintiffs pay the defendants' costs of the application, including any reserved costs, to be taxed or agreed.
3.The defendants do file and serve any submissions that they wish to make in response to the plaintiffs' submissions on costs by 12 May 2017.
4.The application for costs be dealt with on the papers.
COR/2/2010:
1.The relief sought in Order 1 of the Amended Interlocutory Process dated 22 October 2016 (Application) is refused.
2.By 5 May 2017 Mr and Mrs Frigger do file and serve any submissions in response to the liquidator's application for the following orders:
(a)Mr and Mrs Frigger do forthwith pay the costs of the Liquidator and Computer Accounting and Tax Pty Ltd (In Liquidation) in relation to the application for the relief sought in Order 1 of the Application, including the reserved costs of the hearing on 20 November 2016, to be taxed if not agreed.
(b)The balance of the Application be stayed, pending the payment of the costs the subject of Order 2.
3.The liquidator do file and serve any submissions that he wishes to make in response to of Mr and Mrs Friggers' submissions on costs by 12 May 2017.
4.The liquidator's application for orders be dealt with on the papers.
CIV 2765 of 2010
The plaintiffs' submissions dated 4 May 2017
Mr and Mrs Frigger filed submissions dated 4 May 2017 pursuant to the directions I made on 28 April 2017.
In those submissions Mr and Mrs Frigger pointed out an error in my reasons at [39] when I said that in his affidavit of 5 October 2016 Mr Kitay had not said that the contents of the confidential affidavit and the annexures thereto did not relate to matters in question in the action. They sought the following orders:
(a)[2017] WASC 120 be set aside under the slip rule;
(b)the plaintiffs be given inspection of the Affidavit;
(c)the plaintiffs are awarded the costs of the application.
In relation to costs Mr and Mrs Frigger further submitted that if I rejected their earlier submissions that the costs order should be that the plaintiffs pay the costs of the hearing on 30 January 2017 only. They submitted that the hearings of 24 August 2016 and 29 September 2016 were adjourned to enable Mr Kitay to file further affidavits of discovery and that the plaintiffs should not have to pay for indulgences granted to Mr Kitay.
The plaintiffs' submissions dated 9 and 11 May 2017
Although the programming orders I made on 28 April 2017 provided only for the plaintiffs to file submissions by 5 May 2017 and for the defendants to file submissions by 12 May 2017 the plaintiffs filed further submissions on 9 and 11 May 2017.
In those submissions the plaintiffs sought to agitate issues outside of the directions that I made on 28 April 2017. They seek to raise issues as to what consequences should follow from accounts and statements that Mr Kitay has lodged with the Australian Securities & Investments Commission. In the submissions of 9 May 2017 the plaintiffs state that Allanson J had directed that there be conferral between the parties and that they would commence conferral with Mr Kitay.
On 15 May 2017 Mrs Frigger sent an email to my Associate requesting that no orders be made until the resolution of that conferral. On 22 June 2017 the solicitor for Mr Kitay sent an email to my Associate informing her that the conferral had failed and that there was no further impediment to orders being made by me.
The defendants' submissions dated 12 May 2017
In the defendants' submissions of 12 May 2017 filed pursuant to my directions of 28 April 2017 the defendants submitted that the following chronology is relevant to the question of costs:
18 July 2016 – special appointment before the Hon Justice Allanson, costs reserved;
24 August 2016 – directions hearing before me, costs fixed in the sum of $473 ordered to be in the cause of the application;
29 September 2016 – half day hearing before me, costs reserved;
30 November 2016 – directions hearing before me, costs reserved;
30 January 2017 – full day hearing before me, costs reserved;
28 April 2017 – reasons published and orders and directions made.
On behalf of the defendants it was submitted that the defendants were successful in opposing the application by the plaintiffs for access to the Confidential Affidavit. The defendants point to the usual rule that costs follow the event.
The defendants acknowledge that some costs may have been wasted by reason of the fact that the defendants sought leave and were permitted to file correcting affidavits of discovery. However the defendants contend that the costs which may have been wasted are minimal.
The defendants do not seek in this application any costs of the hearing on 18 July 2016 before Allanson J. That hearing concerned an application by the plaintiffs for summary judgment and the solicitor for the defendants is no longer able to determine what amount of time was spent at that hearing on the issue of summary judgment and what amount of time was spent on the issue of discovery of documents. The costs of the summary judgment application have been reserved to the trial.
The hearing on 24 August 2016 was a directions hearing. At that hearing the defendants were given leave to file a further affidavit of discovery and made other directions for the progress of the application. I ordered that the costs of that hearing on that day be in the cause of the application fixed at $473.
The application was listed to be heard on 29 September 2016. At the hearing on 29 September 2016 the defendants were again given leave to file and serve a further affidavit of discovery. The defendants accept that some time may have been wasted at that hearing by reason of the leave given to them to file and serve a further affidavit. They submit that the plaintiffs should be ordered to pay half of the defendants' costs of the hearing on 29 September 2016.
The defendants submit that there is no reason why the plaintiffs should not pay the costs of the directions hearing on 30 November 2016, the hearing of the application on 30 January 2017 and the attendance for the delivery of the decision on 28 April 2017.
The defendants submit that I should fix the costs of the application in the sum of $16,039 on the basis of costs itemised in a schedule which was annexed to their submissions.
Conclusion as to costs of application in CIV 2765 of 2010
As I have said in their submissions dated 4 May 2017 Mr and Mrs Frigger pointed out that there is an error in my reasons at [39]. Mr Kitay and they seek an order pursuant to the slip rule that my orders of 28 April 2017 be recalled. The defendants oppose the orders being recalled.
I do not consider that I should recall my orders of 28 April 2017. As I noted in [41] of my reasons the grounds of objection to production were put forward by Mr Kitay in Part 1B of his affidavit. The reasons for my decision in relation to the contents of the confidential affidavit were that the confidentiality order made by Acting Master Chapman meant that the plaintiffs are not permitted access to the body of the affidavit: [53] in relation to documents 2, 3, 4 and 5 my decision was based on relevance: [58] and my reasons for not ordering production of documents 6 and 7 were legal professional privilege: [59]. I do not consider that the error in my reasons at [39] alters my conclusions as to the result of the application.
Further, the matters raised in the plaintiffs' submissions of 9 and 11 May 2017 are not relevant to the issue on which my orders of 28 April 2017 specified that submissions be filed. I reject the submissions that I should review my orders.
The power to make a costs order comes from s 37 of the Supreme Court Act 1935 (WA) and that the discretion to award costs granted by O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA) is very wide. The only fetters to the exercise of the discretion are the restrictions contained in legislation or the Rules and the fact that the discretion must be exercised judicially: Naidoo v Williams [2008] WASCA 179; (2008) 37 WAR 516 [39].
As Le Miere J said in Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 [62] ‑ [64] although the court has a wide discretion to make what order as to costs the justice of the case requires, a proper and judicial exercise of that discretion will generally, although not always, involve applying, although not uncritically, the usual rule that costs follow the event. However there may be circumstances that warrant departure from that usual rule.
The defendants were successful in their opposition to the plaintiffs' application. In my view no additional costs were incurred by the defendants being given leave to file a further affidavit at the directions hearing on 24 August 2016. That was a directions hearing and directions were made at it. However additional costs were incurred by reason of the defendants being given leave to file a further affidavit at the hearing on 29 September 2016. As a result of the defendants being given that leave it was not possible to determine the plaintiffs' application at that hearing. I do not accept the defendants' submission that the plaintiff should pay half of the costs of the hearing on 29 September 2016. I do not consider that the plaintiffs should pay any of the costs of a hearing which was substantially wasted by reason of the defendants being given leave to file a further affidavit of discovery.
In the circumstances where the defendants have been successful in having the plaintiffs' application dismissed but the hearing on 29 September 2016 was substantially wasted by reason of the defendants being given leave to file a further affidavit, it is my view that the appropriate course is to order that the plaintiff's pay the defendants' costs of the application for access to the Confidential Affidavit, other than the costs of the hearings on 18 July 2016 and 29 September 2016.
I do not consider it appropriate to fix those costs. The sum claimed is reasonably large, the programming orders I made did not provide for the parties to make submissions as to the amount of costs and the plaintiffs have not done so. As this was a discrete matter I see no reason why the payment of costs should await the outcome of the action.
I order that the plaintiffs pay the defendants' costs of the plaintiffs' application for access to the Confidential Affidavit, other than the costs of the hearings on 18 July 2016 and 29 September 2016, to be taxed and paid forthwith.
COR 2 of 2010
Mr and Mrs Friggers' submissions dated 4 May 2017
Mr and Mrs Frigger filed submissions dated 4 May 2017 pursuant to the directions I made on 28 April 2017. In those submissions they repeated submissions that they had made in their submission of the same date in CIV 2765 of 2010 that I was wrong in aspects of my reasons for decision of 28 April 2017. They submit that no costs order should be made pending my decision 'in CIV 2765 of 2010 in relation to the slip rule'.
Mr and Mrs Frigger submitted that the liquidator is not entitled to separate costs in this matter in circumstances where the order sought by them in this action relies on the affidavit of discovery given by Mr Kitay in CIV 2765 of 2010, the issues of discovery and inspection are exactly the same in both actions, the defendants requested and obtained an order that both matters be heard at the same time, there was no need for the defendants to have separate legal representation by separate lawyers in one hearing, both defendants are insolvent, the interlocutory process is a matter which lasted for more than three months and Mr Kitay was required to obtain court approval pursuant to s 477(2B) of the Corporations Act 2001 (Cth) before he instructed Mr John, which Mr John had admitted had not occurred and that the costs of instructing Mr John were not necessary to be incurred.
Mr and Mrs Frigger submitted that the balance of the application should not be stayed pending the payment of the costs of the application. They submitted that their claim for damages in this action will undoubtedly be successful and Mr Kitay will be required to pay their costs. They submit that the claim by Mr John for payment of his costs immediately has an ulterior purpose and should not be permitted by the court. They submit that Mr Kitay holds approximately $3,300,000 in cash the property of Mr and Mrs Frigger and that they no longer earn business income and have been denied the use of the assets and income.
They submit that Mr Kitay's claims are unwinnable and that the interlocutory process should be resolved without delay.
Mr and Mrs Friggers' submissions dated 9 and 11 May 2017
In this action Mr and Mrs Frigger filed further submissions dated 9 and 11 May 2017 which are substantially the same as the submissions of those dates they filed in CIV 2765 of 2010.
Mr Kitay's submissions dated 11 May 2017
Mr Kitay submitted that the usual order for costs is that they follow the event. He referred to Practice Direction 4.7.1 and submitted that the costs should be paid forthwith and that it is appropriate for me to fix those costs. In a schedule to his submissions he quantifies his costs at $16,060.
If I do not fix the costs Mr Kitay undertakes to pursue the taxation promptly.
In relation to the order for the stay of the application until the costs are paid Mr Kitay points to the twenty orders sought by Mr and Mrs Frigger. He submits that the orders sought by them are unsustainable in this action and that the costs of opposing them will be significant. Mr Kitay points to other actions in which Mr and Mrs Frigger have not paid costs that have been awarded against them and to their statement in their submissions that they have been denied the use of assets and income so that their capacity to pay costs is uncertain. He submits that it would be an abuse of process or unfair on the liquidator for Mr and Mrs Frigger to be able to pursue the balance of the orders that they seek until the costs of their first application are paid and that the position is analogous to that arising in cases such as Idoport Pty Ltd v National Australia Bank [2005] NSWSC 752 [13].
Conclusion as to costs of application in COR 2 of 2010
I do not accept Mr and Mrs Friggers' submissions of 4 May 2017 that I review the orders I made under the slip rule. The error that I made in [39] of my reasons related only to the affidavit of discovery that was filed in CIV 2765 of 2010. It does not relate to COR 2 of 2010. As to their submissions of 9 and 11 May 2017 the issues that they raise are not relevant to the issues on which my orders of 28 April 2017 specified that submissions be filed. I reject the submissions that I should review my orders.
Section 477(2B) of the Corporations Act prohibits a liquidator, except with the approval of the court, of the committee of inspection or of a resolution of the creditors, entering into an agreement on the company's behalf if the term of the agreement may end or the obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance more than three months after the agreement is entered into. I do not accept that a liquidator instructing a legal practitioner to act for the liquidator on an application in the winding up action means that the liquidator has entered into an agreement on the company's behalf. Mr Kitay has instructed the legal practitioner to act for him. I am not satisfied that s 477(2B) of the Corporations Act has any bearing on the question of costs because Mr and Mrs Frigger have not satisfied me that in instructing solicitors to act for him Mr Kitay has entered into an agreement on the company's behalf.
Mr Kitay was successful in his opposition to Mr and Mrs Friggers' application in COR 2 of 2010. Mr and Mrs Frigger decided to bring their application in that action after they had brought their application in CIV 2765 of 2010. They were aware that Mr Kitay had separate representation in the two actions. The two actions deal with different matters. Both actions have long histories involving many issues. In my view rather than costs being increased by Mr Kitay having separate representation in the hearing of the two applications before me, it is likely that costs would have been increased if there had been one legal practitioner acting for Mr Kitay in both actions because that practitioner would have been required to become familiar with the history and issues that have arisen in an action with which that practitioner was not familiar.
In my view it is appropriate to order that Mr and Mrs Frigger pay the costs of the application for an order that they have leave to rely on and refer to the confidential affidavit of Mr Kitay
I do not consider it appropriate to fix those costs in this action, for the same reasons that I did not fix the costs in CIV 2765 of 2010.
In Idoport Pty Ltd v National Australia Bank [13] ‑ [14] Bergin J referred to Martin v Earl Beauchamp (1883) 25 CH D 12 and James M'Cabe v The Governor & Company of the Bank of Ireland (1889) 14 App Cas 413 which establish that where a plaintiff who has failed in one action commences another action the second action should be stayed until the costs of the first action have been paid.
At this stage the merits of Mr and Mrs Friggers' application for the balance of the orders that they seek in COR 2 of 2010 have not been considered. Whatever the merits of the application for those orders, Mr and Mrs Frigger do not seek the same orders that they sought in the first of the orders. I do not consider that the authorities referred to in Idoport Pty Ltd v National Australia Bank support the making of an order that the balance of the application be stayed until the costs of the application for the first order have been paid. The court has an inherent jurisdiction to prevent an abuse of its process, however as the merits of the application for the remaining orders has not been considered it is not appropriate at this stage to make any order in the exercise of that jurisdiction.
However as the first order sought by Mr and Mrs Frigger in their application in COR 2 of 2010 has been disposed of I consider it appropriate to order the payment of the costs of determining the application. I order that Mr and Mrs Frigger pay Mr Kitay's costs of the application for an order that they have leave to rely on and refer to the confidential affidavit of Mr Kitay, to be taxed and paid forthwith.
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