Frigger v Professional Services of Australia Pty Ltd
[2015] WASCA 167
•28 AUGUST 2015
FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [2015] WASCA 167
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASCA 167 | |
| THE COURT OF APPEAL (WA) | 28/08/2015 | ||
| Case No: | CACV:100/2015 | 7 AUGUST 2015 | |
| Coram: | BUSS JA MURPHY JA | 7/08/15 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave to appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | ANGELA FRIGGER HARTMUT FRIGGER PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD DONALD CAMPBELL-SMITH as Executor for the Estate of MARTIN PAUL BANNING |
Catchwords: | Practice and procedure Application to commence an appeal by a non-party to the primary decision Leave purportedly sought under s 471C of the Corporations Act 2001 (Cth) No power Discretionary reasons not to grant application in any event |
Legislation: | Corporations Act 2001 (Cth), s 471C |
Case References: | Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360 Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166 Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3 Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69 Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 Witness v Marsden [2000] NSWCA 52; (2000) 49 NSWLR 429 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [2015] WASCA 167 CORAM : BUSS JA
- MURPHY JA
- First Appellant
HARTMUT FRIGGER
Second Appellant
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Respondent
DONALD CAMPBELL-SMITH as Executor for the Estate of MARTIN PAUL BANNING
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : SIMMONDS J
Citation : COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 8] [2015] WASC 166
File No : CIV 2265 of 2006
Catchwords:
Practice and procedure - Application to commence an appeal by a non-party to the primary decision - Leave purportedly sought under s 471C of the Corporations Act 2001 (Cth) - No power - Discretionary reasons not to grant application in any event
Legislation:
Corporations Act 2001 (Cth), s 471C
Result:
Application for leave to appeal dismissed
Category: B
Representation:
Counsel:
First Appellant : In person
Second Appellant : In person
First Respondent : Mr T Stephenson
Second Respondent : Mr T Stephenson
Solicitors:
First Appellant : In person
Second Appellant : In person
First Respondent : Eastwood Sweeney Law
Second Respondent : Eastwood Sweeney Law
Case(s) referred to in judgment(s):
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166
Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3
Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69
Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S)
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Witness v Marsden [2000] NSWCA 52; (2000) 49 NSWLR 429
- REASONS OF THE COURT:
1 The applicants (Mr and Mrs Frigger) applied, pursuant to s 471C of the Corporations Act 2001 (Cth) for leave to commence an appeal against a decision of Simmonds J, published 8 June 2015: Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8]1 (the primary decision).
2 We dismissed the application on 7 August 2015, and said we would publish our reasons. These are our reasons.
Background
3 Mr and Mrs Frigger were not parties to the primary decision. The parties to that decision were the parties in the litigation to which that decision related - CIV 2265 of 2006. In that litigation (relevantly, for present purposes), Computer Accounting and Tax Pty Ltd (in liq) (CAT) was the plaintiff; Professional Services of Australia Pty Ltd (PSA) was the first defendant; and Donald Campbell-Smith as executor of the estate of Martin Paul Banning (Banning Estate) was the second defendant.
4 In these reasons, PSA and Banning Estate will be referred to collectively as 'the defendants'.
5 The history of the litigation in CIV 2265 of 2006 up to 2010 included, relevantly, that:2
(a) Simmonds J, as the trial judge, awarded damages in favour of CAT against the defendants in a sum exceeding $960,000 plus interest;
(b) there was an appeal by the defendants to the Court of Appeal against that decision;
(c) the defendants' appeal was successful to the extent, inter alia, that the defendants succeeded in reducing the award of damages, and that certain costs orders made by Simmonds J on 6 May 2009 were set aside;3
(d) the defendants had applied for a stay of the orders made by Simmonds J pending the determination of the appeal, but the stay application was refused with the result that the defendants paid CAT the judgment sum in excess of $1.1 million; and
(e) following the judgment of the Court of Appeal, CAT was, in effect, obliged to repay the defendants an amount in excess of $800,000, but did not do so (the $800,000 debt).
6 The non-payment of the $800,000 debt was the subject of a statutory demand against CAT. There was no application to set aside the statutory demand. CAT was presumed to be insolvent and no evidence was led on the winding up application of CAT which displaced the presumption of insolvency. Accordingly, CAT was wound up in insolvency by order of the court on 6 May 2010.4 Mr and Mrs Frigger had appeared, through solicitors, as directors of CAT on the hearing of the application to wind up CAT. In the master's reasons for decision, the learned master said:5
Thirdly, and perhaps most importantly, the investigations by Mr Kitay [the provisional liquidator of CAT] indicate [that CAT] is insolvent. No elaborate examination ofMr Kitay's evidence is necessary. [CAT] is indebted to [PSA/Banning Estate] in an amount of over $800,000. It does not have the capacity to make that payment. It is therefore not able to meet its debts as and when they fall due and it is prima facie insolvent.
In opposition to this application Mrs Frigger filed two affidavits, the first sworn 3 March 2010 and the second sworn 27 April 2010. In both affidavits Mrs Frigger pointedly fails to address Mr Kitay's claim she has refused to produce the books and records of [CAT] and has failed to complete a [sworn] report as to activities. That does not go to the question of whether or not [CAT] is insolvent. It does, however, raise questions as to Mrs Frigger's bona fides.
Given the position of [CAT] the only way that Mrs Frigger's evidence could establish [that CAT] is solvent would be for her and her husband to personally undertake they would meet the debts of [CAT] as and when they fell due. No such undertaking is found in either affidavit. Mrs Frigger does maintain she and her husband have sufficient assets to meet the debts of [CAT], but they do not undertake to make payment of those debts.
…
Much of the material in Mrs Frigger's affidavits is irrelevant to the questions at issue. It seems rather more directed to the question of what assets a liquidator may be able to recover from Mr and Mrs Frigger during the course of a liquidation. There is simply no evidence which would justify a conclusion [that CAT] can meet its debts as and when they fall due. The presumption of insolvency has not been displaced.
- There was no appeal against the master's decision.
The primary decision published 8 June 2015
7 The primary decision concerns certain costs orders sought by the defendants against CAT in CIV 2265 of 2006 in relation to:
(a) the costs issues remitted to the primary judge for determination following the Court of Appeal's decision to reduce the award of damages, referred to in [..(c)] above;6 and
(b) other proposed costs orders.
8 In relation to the first category of costs orders, the primary judge observed:7
Orders were made on the appeal in PSA[No 2] WASCA (S) [21] that included, materially for my purposes, the following:
8. The costs orders made on 6 May 2009 by the trial judge be set aside and the question of the costs of the trial be remitted to the trial judge for reconsideration in light of the reasons of this court.
It may be noted that the remitter described is for 'the costs of the trial'. It may further be noted from Appendix 1 that my May 2009 costs orders include, but extend beyond, 'the costs of the trial'. I consider that the effect of the orders made on the appeal is that either all of the proceedings the subject of my May 2009 costs orders were the subject of the remitter; or, to the extent that they were not, orders as to costs remain to be made on the proceedings in question.
9 The primary judge referred to these costs orders in his decision as 'the proposed costs orders in place of my May 2009 costs orders'.8 For present purposes, we will refer to them as 'remitter costs orders'.
10 The primary judge referred to the second category of costs orders as 'the other proposed costs orders'.9 We will refer to them in the same way.
11 The remitter costs orders, and the other proposed costs orders, were the subject of a minute of proposed orders by the defendants, which the judge described as 'the defendants' Minute'.10 We will also use that term.
12 Proposed costs orders 1 - 8 of the defendants' Minute related to the remitter costs orders.11 Proposed orders 9 - 24 of the defendants' Minute related to the other proposed costs orders.12
13 His Honour addressed the remitter costs orders in [23] - [92] of the primary decision, and the other proposed costs orders in [93] - [231] of the primary decision.
14 The hearing before Simmonds J took place on 19 and 23 September 2014 and 6 October 2014. CAT was represented by Mr P J Griffin of Peter J Griffin & Co.
15 Mr Griffin appeared on behalf of CAT pursuant, in effect, to leave given to Mrs Frigger by Simmonds J on 18 February 2011, with the consent of CAT's liquidator, to conduct (on behalf of CAT) the defence of claims for costs against CAT made by the defendants referred to in certain minutes of order13 which were consolidated into the defendants' Minute. Leave was given on condition that Mrs Frigger appoint solicitors for that purpose.14 We will call this the '2011 Frigger leave order'. The 2011 Frigger leave order led to Mr Griffin's engagement.
16 Mr and Mrs Frigger applied to Simmonds J, subsequent to the 2011 Frigger leave order, for leave to have themselves joined as parties to the primary proceedings, CIV 2265 of 2006, ostensibly for the purpose of dealing with costs orders against CAT.15 That application was refused in light of the earlier 2011 Frigger leave order.16 Mr and Mrs Frigger appealed against that decision (the joinder decision).17 That appeal (joinder appeal) is yet to be heard. However, in an interlocutory application for a stay by Mr and Mrs Frigger of Simmonds J's orders refusing their joinder, this court declined the stay, including on the basis that a preliminary review of the ground of appeal and submissions indicated that 'the appellants may well not enjoy good prospects of success'.18
17 As noted earlier, Mr and Mrs Frigger rely upon s 471C of the Corporations Act for leave to commence the appeal against a decision to which they are not a party.
18 The affidavit in support of the application for leave to commence the appeal was sworn by Mrs Frigger on 23 June 2015. It states, relevantly:
LEAVE TO COMMENCE APPEAL AGAINST COST ORDERS OF 8 JUNE 2015
4. On 12 June 2015 I filed a notice of appeal against the costs orders of Justice Simmonds made on 8 June 2015 …
5. On 12 June 2015 I received an email from the registrar advising that the notice could not be accepted for filing …
6. Attached and marked 'AF3' is a copy of a draft case statement to support the appeal against cost orders made by Justice Simmonds on 8 June 2015.
7. The current liquidator of CAT has refused to take any part in any of the unresolved litigation that CAT was involved in for fear of an adverse cost order against him personally, although we made numerous offers of finance to pay legal fees as well as $850,000 for the purposes of the liquidation of CAT. Attached and marked 'AF4' are copies of the offers made by the appellants personally and by their lawyers on their behalf.
8. At no time since his appointment on 21 January 2010 has the current liquidator of CAT taken any proceeding to set aside the Fixed Charge.
9. I believe that it would be more efficient use of the court time for the two appeals to be heard together and for fairer costs orders to be made by this Honourable Court without the necessity of returning to the trial judge.
19 The documents attached as annexure 'AF 4' referred to in par 7 of the affidavit were various documents ranging in dates between 21 January 2010 and 1 June 2010. None of the materials annexed cover the period after the grant of the 2011 Frigger leave order. Also, the evidence as to the motivation imputed to the liquidator of CAT is speculative in form.
20 Paragraph 8 of the affidavit referred to a 'Fixed Charge'. The charge was not annexed.
21 Section 471C of the Corporations Act appears in div 1A of pt 5.4B of the Corporations Act. Division 1A provides:
471 Effect on creditors and contributories
An order for winding up a company operates in favour of all the creditors and contributories of the company as if it had been made on the joint application of all the creditors and contributories.
471A Powers of other officers suspended during winding up
(1) While a company is being wound up in insolvency or by the Court, a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company.
(1A) Subsection (1) does not apply to the extent that the performance or exercise, or purported performance or exercise, is:
(a) as a liquidator appointed for the purposes of the winding up; or
(b) as an administrator appointed for the purposes of an administration of the company beginning after the winding up order was made; or
(c) with the liquidator's written approval; or
(d) with the approval of the Court.
Note: A defendant bears an evidential burden in relation to the matters in subsection (1A), see subsection 13.3(3) of the Criminal Code .
(2) While a provisional liquidator of a company is acting, a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company.
(2A) Subsection (2) does not apply to the extent that the performance or exercise, or purported performance or exercise, is:
(a) as a provisional liquidator of the company; or
(b) as an administrator appointed for the purposes of an administration of the company beginning after the provisional liquidator was appointed; or
(c) with the provisional liquidator's written approval; or
(d) with the approval of the Court.
Note: A defendant bears an evidential burden in relation to the matters in subsection (2A), see subsection 13.3(3) of the Criminal Code .
(2B) An offence based on subsection (1) or (2) is an offence of strict liability.
Note: For strict liability , see section 6.1 of the Criminal Code .
(3) This section does not remove an officer of a company from office.
(4) For the purposes of this section, a person is not an officer of a company merely because he or she is a receiver and manager, appointed under a power contained in an instrument, of property of the company.
471B Stay of proceedings and suspension of enforcement process
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
471C Secured creditor's rights not affected
Nothing in section 471A or 471B affects a secured creditor's right to realise or otherwise deal with the security interest.
23 The application for leave to appeal, purportedly under s 471C of the Corporations Act, was dismissed for that reason.
24 In written submissions and orally at the hearing, Mr and Mrs Frigger also sought to rely additionally upon various authorities concerning leave to appeal unrelated to s 471C of the Corporations Act. For example, the applicants referred to the observations of Heydon JA (as his Honour then was) in Witness v Marsden:19
The plaintiff referred to Cuthbertson v Mayor, Aldermen and Citizens of the City of Hobart (1921) 30 CLR 16 at 25 where Knox CJ and Starke J said:
'Under the practice which exists in England "parties to" an action and all persons served with matters of judgment may appeal without leave. But a person not a party to the proceedings cannot appeal from an order or judgment except by leave of the Court ... Leave to appeal is given as a rule if the person applying though not a party to the proceedings might properly have been one. "The test is, could or could not the applicant by possibility be made a party to the action by service" ... The appellate jurisdiction of the High Court is not identical with that of the Court of Appeal in England, but we see no reason to doubt the jurisdiction of this Court to act in accordance with that practice, or the expediency of doing so, in relation to appeals from the Supreme Courts of the States.'
Their Honours do not appear to have been propounding an exhaustive test for leave to appeal. The test propounded, in any event, must give way to the structure of legislation and rules within which the court in question works: rights of appeal depend on statute, not common law. The Supreme Court of New South Wales is in part controlled by Pt 37 r 8, as expounded by authority since the time of Cuthbertson's case. Section 101 of the Supreme Court Act and equivalent provisions in other jurisdictions are construed in the light of more generous standing tests such as whether persons are 'aggrieved' or 'sufficiently interested'. (original emphasis)
25 Even accepting that to be the test,20 we considered that we would not exercise any discretion in favour of the applicants for the following reasons.
26 First, Mr and Mrs Frigger submitted in effect that they are 'aggrieved' or 'sufficiently interested', in the orders made pursuant to the primary decision, to warrant the grant of leave to appeal. In this regard, Mr and Mrs Frigger submitted that Simmonds J found, at [43] of the joinder decision, that the applicants were 'directly affected by the costs of the action'.21 That submission is wrong. At [43] of the joinder decision, Simmonds J said he would proceed on the basis set out in [42] of his reasons. In [42] of his reasons, Simmonds J made it plain that he was not deciding whether any costs orders would have a direct effect on Mr and Mrs Frigger, but would nevertheless proceed on that basis (in their favour) for the purposes of the disposition of their application.
27 Secondly, the proper appellant is CAT and the time for filing an appeal by CAT has expired. There was no evidence that Mr and Mrs Frigger either sought and obtained the consent of the liquidator of CAT to bring the application, or put the liquidator in funds to consider whether it was in the interests of creditors to bring an appeal.
28 Thirdly, if Mr and Mrs Frigger were successful in the joinder appeal, an outcome for which they would presumably contend is that the primary decision should be set aside in any event for non-joinder of proper parties. Any final orders to that effect on that appeal would render the proposed appeal herein otiose.
29 Fourthly, if leave were to be given to Mr and Mrs Frigger to appeal the primary decision, and if the joinder appeal were ultimately dismissed, the grant of leave would effectively circumvent the proper disposition of the joinder appeal, as it would give Mr and Mrs Frigger a right to agitate the costs issues against CAT on appeal, when (if the joinder appeal were dismissed) they had no right to be heard on those matters in the first instance.
Conclusion
30 Mr and Mrs Frigger's application dated 23 June 2015 for leave to appeal was accordingly dismissed. The application also sought to adduce additional evidence on the appeal if leave were granted to commence an appeal. For the foregoing reasons, leave was not granted.
Costs
31 Finally, there was a question of costs which were sought by counsel for the respondents. It was in the context that the form of the application was ex parte, and the registrar's notice to attend was not sent to the respondents' solicitors, although counsel said that his solicitors had been served with some limited papers by Mr and Mrs Frigger. The respondents did not file any affidavits or written submissions. Counsel was not invited to and did not make any oral submissions at the hearing. Had the court formed the view after hearing from Mr and Mrs Frigger that the application had any prima facie merit, the court would likely have required a full set of papers to be served on the respondents and made the usual directions for affidavits and submissions in response. However, none of that was necessary. We considered that in all the circumstances there should be no order as to costs.
1Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166.
2 The history, outlined in this paragraph, is conveniently collected in, and taken from, Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69 [4], [6], [8], [11] - [13].
3 See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183.
4Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 [4], [5], [13], [20], [21].
5Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 [17] - [29].
6Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 (PSA [No 2]); Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd[No 2] [2009] WASCA 183 (S)[21].
7 Primary decision [14] - [15].
8 Primary decision [5].
9 Primary decision [6].
10 Primary decision [19].
11 Primary decision [19].
12 Primary decision [20].
13 See Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3 [18].
14Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360 [23]; Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3 [18].
15Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360; Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3.
16Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360; Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3.
17 Appeal CACV 118 of 2014.
18Frigger v Professional Services of Australia Pty Ltd [2015] WASC 3 [38].
19Witness v Marsden [2000] NSWCA 52; (2000) 49 NSWLR 429 [81].
20 cf Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540 [74].
21 Applicants' written submissions 06/08/15 par 10.
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