Frigger v Professional Services of Australia Pty Ltd - [2015] WASCA 3

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 3

CORAM: BUSS JA
MURPHY JA

HEARD: 19 NOVEMBER 2014

DELIVERED : 9 JANUARY 2015

FILE NO/S: CACV 118 of 2014

BETWEEN: ANGELA FRIGGER
First Appellant
HARTMUT FRIGGER
Second Appellant
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Respondent
DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN 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 7] [2014] WASC 360
File No  :CIV 2265 of 2006

Catchwords:

Application for stay of primary proceedings pending disposition of the appeal - Application for order that appeal be struck out on basis that it has no prospect of success - Application for security for costs

Legislation:

Corporations Act 2001 (Cth), s 471B
Rules of the Supreme Court 1971 (WA), O 18 r 6(2), O 18 r 7(2)
Supreme Court (Court of Appeal) Rules 2005 (WA), pt 1 r 3, pt 5 r 44(1)
Supreme Court Act 1935 (WA), s 60(1)(f)

Result:

The appellants' application for a stay dismissed
The respondents' application to strike out the appeal dismissed
The respondents' application for security for costs allowed

Category: B

Representation:

Counsel:

First Appellant              :     In person
Second Appellant          :     In person
First Respondent           :     Mr T R Stephenson
Second Respondent       :     Mr T R 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):

Ailakis v Olivero [2013] WASCA 91
Allmark v Mossensons (a firm) [2006] WASCA 127
Boksmati v Girgis Nominees (WA) Pty Ltd [2014] WASCA 101
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360
Dodds v Kennedy [2011] WASCA 32
Eatts v Dawson [1990] FCA 158; (1990) 21 FCR 166
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168
REASONS OF THE COURT:

Introduction

On 19 November 2014, the court had before it three applications. One was an application by the appellants for a stay of the primary proceedings pending the disposition of the appeal. The second was an application by the respondents for an order that the appeal be struck out on the basis that it had no prospect of success. The third was an application by the respondents, in the alternative to their strike‑out application, for orders that the appellants provide security for costs.
After hearing the applications, the court dismissed the appellants' application for a stay; dismissed the respondents' application to strike out; and made an order for security for costs together with consequential orders. The court said that it would provide its reasons subsequently. These are those reasons.

The appeal and the stay application

The appellants filed an application on 2 October 2014, together with an affidavit by the first appellant (Mrs Frigger) in support, seeking an application for a stay of the whole of the proceedings in the primary court pending resolution of their appeal against a decision of Simmonds J dated 16 September 2014 in which his Honour dismissed the appellants' application to be joined as parties to the primary proceedings: Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360.
The appeal notice was received in the court registry on 17 September 2014, although not filed until 22 September 2014, when the relevant fee was paid (Supreme Court (Court of Appeal) Rules 2005 (WA), pt 1 r 3 - definition of 'file').
The notice of appeal stated that leave to appeal was not required.
On 2 October 2014, a document described as 'amended appeal notice' was filed. It added reference to a decision by Simmonds J on 15 September 2014. It also added reference to other matters in the 'decisions details' which do not appear to have been the subject of separate decisions by Simmonds J.
There is no court record to which we were referred or which we have seen to indicate that there was a decision made by Simmonds J on 15 September 2014.
The amended document also stated that leave to appeal was not required.
The appellants contended that the orders of Simmonds J on 16 September 2014 were not interlocutory and leave to appeal was not required under s 60(1)(f) of the Supreme Court Act 1935 (WA). Although as a preliminary view the correctness of that proposition is doubtful (cf Eatts v Dawson [1990] FCA 158; (1990) 21 FCR 166, 169), that matter need not be resolved for present purposes.
On 29 October 2014, the court ordered the appellants to file and serve an outline of submissions in support of their stay application by 7 November 2014. The respondent was ordered to file and serve responsive submissions by 14 November 2014.
The appellants did not comply with the court's orders dated 29 October 2014. There has been no satisfactory explanation for the delay and the reasons advanced for the delay in the affidavit referred to below provide no proper basis for non‑compliance with the court's orders.
On 17 November 2014, the appellants provided a further affidavit by Mrs Frigger, although it was not filed, said to be in support of the application for the stay. The further affidavit, dated 14 November 2014, annexes what is said to be a draft appellants' case. This document contains a ground of appeal in the following terms:
Ground one:
1.Having found that the appellants met the test of direct effect @ [54], His Honour erred in law in the exercise of his discretion because he held the following factors do not justify the joinder of the appellants:
1.1His Honour's orders of 18 February 2011 will result in 'proper costs orders being made'; @ [57],
1.2The appellants' Proposed Orders No [7], [10], and [12] are the only orders that will not be addressed pursuant to the orders of 18 February 2011 @ [58];
but failed to properly consider the following relevant factors as practical matters which ought to justify the appellants' joinder:
1.3There is no prejudice to the respondents/defendants in the late application because the respondents/defendants waited 3 years to progress their minutes or orders dated February 2011 and only did so after the appellants['] application for joinder.
1.4The learned Judge's orders of 18 February 2011 result in a successful plaintiff being denied its right to apply for legal and enforcement cost orders and only being allowed to 'defend' against cost orders sought by the unsuccessful respondents/defendants;
1.5The appellants' Proposed Orders No [1], [2], [3], [4], [5], [8], [9], [11], as well as the orders identified by His Honour in paragraph 1.2 above, are not addressed in the respondents' minute of orders dated February 2011;
1.6The appellants are unable to participate and defend against further costs orders sought by the respondents/defendants and other non‑parties in circumstances where the successful plaintiff is under the control of a liquidator who refuses to defend the plaintiff against those costs orders;
1.7The appellants as equity creditors having retained collateral in the legal and enforcement costs will be unable to progress to assessment and enforcement of costs in circumstances where the liquidator has refused/failed to do so since his appointment in January 2010 because the quantification of costs owed to the plaintiff/appellants are against the interests of the liquidator's appointers, being the respondents/defendants.
1.8Without the appellants' intervention, CIV 2265/2006 will never be finally resolved.
In par 15 of Mrs Frigger's affidavit of 14 November 2014, she deposed in effect that the appellants had not paid costs which had been ordered against them. She said:
[That was] because the respondents still owe the plaintiff [CAT] for two PSSO's [presumably property seizure and sales orders] dated 25 September 2009, which are attached and marked 'AF 8' and 'AF 9'. According to my calculations there remains an amount of $45,549.00.
The documents referred to in that paragraph were not annexed to the affidavit. Nor were her calculations, or the basis for them, set out.

The primary judge's decision

The appellants had applied to be joined as parties to the primary proceedings. Simmonds J rejected their application.
In his reasons for judgment, Simmonds J recited, in summary, the relevant events. They were as follows. The primary proceedings involved an action for damages by CAT against the respondents. His Honour had given judgment for CAT and awarded damages. On 6 May 2009, he made costs orders. On 23 October 2009, the Court of Appeal overturned the damages award and substantially reduced the amount awarded. Costs orders were made by the Court of Appeal on 7 December 2009. The costs orders of the trial made by Simmonds J on 6 May 2009 were set aside.
CAT was ordered to repay to the respondents a substantial part of the amount paid by the respondents. CAT subsequently went into liquidation.
On 18 February 2011, Simmonds J gave leave to the respondents pursuant to s 471B of the Corporations Act 2001 (Cth) to proceed against CAT in connection with claims for costs against CAT in terms of the respondents' two minutes filed 3 February 2011, one of which was dated 2 February 2011. (In these reasons we will refer to the one not dated 2 February 2011 as the '3 February minute', and the one dated 2 February 2011 as the '2 February minute'.) The 3 February minute related to certain freezing orders which had been made in the primary proceedings. The 2 February minute concerned the respondents' claims in respect of the costs of the primary proceedings in lieu of the orders of 6 May 2009 that had been set aside following the appeal. In relation to those matters, Simmonds J, with the consent of CAT's liquidator, had also granted leave to Mrs Frigger, on 18 February 2011, to conduct the defence of those claims against CAT. Leave was given on the condition that the appellants appoint solicitors for that purpose.
Simmonds J said with respect to O 18 r 7(2) of the Rules of the Supreme Court 1971 (WA), that there was evidence of a charge bearing the date 10 September 2009 between the appellants and CAT. His Honour found that the charge operated on 'costs owing and payable to [CAT]' and, in effect, that there were no costs upon which the charge could then presently operate [30] ‑ [35]. Accordingly, his Honour held that O 18 r 7(2) had no relevant application. (His Honour's findings with respect to O 18 r 7(2) are not challenged in this appeal.)
His Honour further said, with respect to O 18 r 6(2), that the appellants' position as the only shareholders of CAT would not give them sufficient interest to be joined as a party. He assumed, without deciding, that they did, however, have sufficient interest by virtue of them being 'third‑party payers of the costs of the litigation' [42]. His Honour nevertheless concluded that the appellants had not satisfied him that he should exercise his discretion to permit the joinder. His Honour said:
For this purpose, I note that the Friggers seek to be joined at a very late stage of the proceedings indeed. Further, as a practical matter, it would seem that their interest in proper costs orders being made in CIV 2265 of 2006 is one which their appointment of and power to instruct a legal representative for CAT pursuant to the orders I made on 18 February 2011 is capable of addressing. It appears to me that combination of circumstances would tend to make this a case suitable for the exercise of the discretion, notwithstanding the exceptional character of the exercise of such discretion as described in Southern Cross Pipelines [57]. (emphasis added)
The words emphasised in the preceding passage must mean, in context, 'suitable for the exercise of the discretion against joinder'.
In response to a submission by the appellants that the orders of 18 February 2011 would not cover certain costs issues which the appellants wished to agitate, his Honour said that only three matters, described in pars 7, 10 and 12 in the appellants' Proposed Minute of Orders concerning costs (Appellants' Minute) (a copy of which is annexure AF 3 to Ms Frigger's affidavit of 17 November 2014) appeared to be clearly outside of the proceedings to which the orders of 18 February 2011 related [58] ‑ [60]. His Honour said that as a practical matter those three items did not justify the joinder of the appellants at that late stage of the proceedings [61].

The appellants' Proposed Minute of Orders concerning costs (Appellants' Minute)

The Appellants' Minute referred to by the primary judge was dated 1 September 2014. It was headed 'Minute of proposed costs orders of the action'. It was filed in CIV 2265 of 2006, ie, the primary proceedings. It stated that it was prepared by Peter J Griffin & Co Solicitors. Mr Griffin of that firm is the solicitor instructed by the appellants to represent CAT pursuant to Simmonds J's orders of 18 February 2011.
The appellants' contended in this court, in support of their application for a stay and in resisting the respondents' applications, that items 1, 2, 3, 4, 5, 6, 8, 9 and 11 of the Appellants' Minute would not be 'addressed' by Simmonds J's orders of 18 February 2011, and that his Honour had erred in considering that they would. The correctness of these assertions was stated rather than demonstrated. Nor is the correctness of the appellants' assertion readily apparent from a preliminary review of the (potentially) relevant materials summarised in the Schedule to these reasons, which have been obtained from the primary court file (as to which, see [29] ‑ [30] below).

The involvement of Mr Griffin and the events subsequent to the decision under appeal

There were hearings before Simmonds J in relation to costs on 19 and 23 September 2014 and 6 October 2014.
The respondents' solicitor in his affidavit filed on 31 October 2014 (the 'solicitor's affidavit') deposed:
On 4 September 2014 Mr Griffin appeared at the directions hearing and stated to Justice Simmonds that he represented CAT pursuant to the Order of 18 February 2011. He subsequently filed a Notice of Address for Service in that capacity dated 9 September 2014… He then filed and served on my office written submissions on behalf of CAT dated 16 September 2014 in relation to the costs applications. I am informed by [counsel] … that Mr Griffin also appeared for CAT on instructions from Mrs Frigger before Justice Simmonds to argue the costs applications on 19 September and 6 October 2014 at which time the decision in regards [to] the costs applications was reserved … Further, Mrs Frigger attended the hearing on 6 October 2014 and was seen to engage in discussions with Mr Griffin (presumably to instruct him) at various times during that hearing and he made comments to the bench in accordance with her instructions at that hearing (par 11).
In her affidavit of 14 November 2014, Mrs Frigger deposed, in effect, that she had been unable to give 'full and proper instructions' to Mr Griffin. She also said that she was 'unaware' as to what oral submissions were made by the respondents 'on two further hearings' (presumably the hearings on 23 September and 6 October 2014) before Simmonds J. She asserted that there was 'a real risk that oral submissions were made that was [sic] either false and/or contrary to the appellants' direct interest'.
Mrs Frigger also said that the appellants would be unable to make submissions in relation to an amended chamber summons dated 11 September 2014, filed by the respondents, a copy of which was annexure 'AF 6' to Mrs Frigger's affidavit of 14 November 2014.
The court was informed by counsel for the respondents that Simmonds J, in dealing with various costs applications following his decision not to allow the appellants to be joined as parties to the primary proceedings, had heard submissions from Mr Griffin in relation to matters the subject of the Appellants' Minute (14 November 2014, ts 23 ‑ 24). The court was also informed by the respondents, in effect, that Simmonds J had also given directions concerning submissions by Mr Griffin in relation to the amended chamber summons dated 11 September 2014 (19 November 2014, ts 35 ‑ 36). These matters were not accepted by the appellants. The court indicated that it would examine for itself the transcript and the court file in relation to the hearings on 19 and 23 September 2014 and 6 October 2014.
It is convenient to note here that having looked at the primary court file and the transcripts of the hearings on 19 and 23 September and 6 October 2014, it is difficult to establish, at least from this distance and unaided by specific submissions in that regard, the precise scope and content of the materials before Simmonds J in relation to those hearings. The arguably relevant materials available to Simmonds J, corresponding to the paragraphs of the Appellants' Minute, would appear to include those set out in column 2 of the Schedule to these reasons. As noted in the Schedule, it appears that in relation to the hearings before Simmonds J, the 2 February minute and the 3 February minute were consolidated into a composite minute dated 27 August 2014, and filed 29 August 2014, which was headed 'Defendants' Minute of Proposed Costs Orders for Special Appointment 19 September 2014 at 10.00 am'.
The court file does, however, indicate that Simmonds J made orders on 19 September 2014 in relation to the amended chamber summons dated 11 September 2014. Those orders included orders to the effect that the amended chamber summons and submissions in support be served on Peter J Griffin & Co. It also provided:
Any written submissions in response by Computer Accounting and Tax Pty Ltd and its liquidator through Peter J Griffin & Co acting on instructions of Mr and Mrs Frigger be filed and served by 7 November 2014.
It is also convenient to note there that Mrs Frigger's assertion to the effect that she was 'unaware' of what Mr Griffin had said in oral submissions cannot be given any real weight, as she should have made inquiries. Also, to the extent that she said she was unable to give Mr Griffin proper instructions, that is not objectively a matter that can weigh in her favour in the current application. Time should have been found for proper instructions to be given. Her assertion that there was a risk that the respondents' submissions would be 'false' is merely speculation.

Stay - relevant principles

The principles relevant to a stay of enforcement were stated by Pullin JA in Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 as follows [21] ‑ [22]:
The application for a suspension order is made under s 15 of the Civil Judgments Enforcement Act 2004 (WA). Alternatively, the court has power under its rules to grant an interim order in the form of a stay of execution pending the hearing of the appeal.
…
Both under s 15 and in an application for a stay, the principles are as follows:
(a)The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
(b)It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement.
(c)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
(d)If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
(e)Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted: Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308.

In relation to the merits of the appeal, it is convenient to recall the relevant principles of appellate review. They were referred to, for example, in Dodds v Kennedy [2011] WASCA 32 [4] ‑ [5]:
In Gronow v Gronow [1979] HCA 63; (1979) 144 CLR 513, 534 - 535 Aickin J said:
'Those principles have been stated in this court on many occasions and are not in doubt. It is sufficient to refer to such cases as House v The King, Evans v Bartlam, Storie v Storie and Lovell v Lovell. Two short passages make the position clear. In House v The King [(1936) 55 CLR 499 at 504 - 505] Dixon, Evatt and McTiernan JJ said:
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
In Lovell v Lovell [(1950) 81 CLR 513 at 519] Latham CJ said:
"But when the appellate tribunal is considering questions of weight it should not regard itself as being in the same position as the learned trial judge. In the absence of exclusion of relevant considerations or the admission of irrelevant considerations an appellate tribunal should not set aside an order made in the exercise of a judicial discretion (as to which see Sharpe v Wakefield [[1891] AC 173 at 179]) unless the failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion actually entrusted to the court. The words used by their Lordships in the House of Lords in this connection are not always easy to apply, but they ought not to be read as denying the long established principle (which, indeed, is expressly recognized in the cases in the House of Lords) that on an appeal from an order founded upon the exercise of a discretion the appellate tribunal has no right to substitute its discretion for the discretion entrusted to the primary tribunal." (citations omitted)'
See also Gronow v Gronow per Stephen J (519 - 520) and Mason & Wilson JJ (525); Mallett v Mallett [1984] HCA 21; (1984) 156 CLR 605, 614; Monteleone v Owners of the Old Soap Factory [2007] WASCA 79 [36].
Moreover, special restraint must be exercised when the interlocutory order under appeal is one concerning practice and procedure: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177; Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290 [27]; In re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318, 323; Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201, 212 - 213.

Stay - appellants' arguments

The appellants' submissions in support of a stay included submissions to the effect that:
•the appeal will be rendered nugatory if a stay is not granted;
•the respondents had not alleged that they would suffer any prejudice from a stay;
•the respondents had delayed in claiming costs; and
•the following circumstances amounted to special and exceptional circumstances in favour of exercising the discretion to order a stay:
(a)a successful plaintiff is denied its right to apply for legal and enforcement costs following a 12-day trial and substantial award of damages;
(b)the appellants' direct interests will be adversely affected without their joinder;
(c)the court below is unable to effectually and completely determine all matters in dispute without the appellants' joinder;
(d)the successful plaintiff and the appellants are unable to have the legal and enforcement costs assessed and enforced; and
(e)there is a real risk that either wrong costs orders will be made, further or alternatively, that all costs orders to which the successful plaintiff is entitled will not be made.

Stay - disposition

This is a matter in which even if the appellants had established that a stay would render the appeal nugatory, it was not appropriate to make orders for a stay of the primary proceedings for the reasons which follow.
The appellants did not show any proper basis for staying the whole of the primary proceedings pending the resolution of their appeal. Even if the appellants had an arguable claim to be joined as parties for the purposes of dealing with questions concerning costs orders against, or in favour of, CAT, such an arguable claim could not justify their joinder, for all purposes, to the primary proceedings. Accordingly, the application for a stay of the whole of the proceedings went beyond what could properly be justified, even if the primary judge had erred as alleged in the ground of appeal.
Also, assuming that the appellants had an arguable claim with respect to joinder in relation to costs matters concerning CAT, a preliminary view of the ground of appeal and submissions in support would indicate that the appellants may well not enjoy good prospects of success. The ground of appeal appears to contend, in effect, that the judge erred in the exercise of his discretion because he did not give sufficient weight to particular matters, and that he made an error of fact. Questions of weight are, however, generally speaking, for the judge, in respect of which appellate interference is generally restricted - see [34] above. Insofar as it is alleged that the judge erred in fact in considering that only items 7, 10 and 12 appeared to go beyond the matters the subject of his orders of 18 February 2011, as indicated earlier, that matter was more asserted than demonstrated in the present application. Also, if the primary decision were interlocutory (which on a provisional view it is), the appeal would fail because leave has not been sought. Further, even if leave had been sought, the matters referred to in [36] below in connection with the respondents' strike‑out application would appear to raise potential obstacles for the appellants.
Further, the grant of the stay of the whole proceedings would result in significant prejudice to the respondents. There is uncontested evidence to the effect (par 13 of the solicitor's affidavit) that the appellants are indebted to the respondents in an amount in excess of $32,000 in respect of unpaid taxed costs in the primary proceedings. A stay of the proceedings pending the resolution of the appeal would, in effect, amount to a backdoor stay of the enforcement of those particular costs orders.
In relation to the appellants' contention that the respondents delayed in seeking costs, an explanation was given for the delay in an affidavit by Mr Eastwood, solicitor for the respondents, dated 8 July 2014 at par 3. That affidavit was an annexure to the solicitor's affidavit (annexure 4). That explanation is not unreasonable and may be accepted.
Further, much of the appellants' submissions were directed to the proposition that CAT would be denied a proper opportunity to assert its own claims in relation to costs in connection with the Appellants' Minute, and would be deprived of an opportunity to deal with the respondents' amended chamber summons dated 11 September 2014, referred to in [28] above. As noted earlier, the correctness of that submission was not demonstrated on the applications before us on 19 November 2014. Further, the submission would appear, at least on a provisional view of it, to be incorrect in relation to the amended chamber summons dated 11 September 2014. None of the matters referred to in (a) ‑ (e) of [35] above were adequately established.
Having considered all the materials and arguments, in all the circumstances, it was our view that this was not an appropriate case to order a stay of the primary proceedings, even if the appellants had established that absent a stay, the appeal would be rendered nugatory. The appellants' application for a stay dated 2 October 2014 was accordingly dismissed.
In any event, the appellants had not demonstrated that the appeal would necessarily be rendered nugatory if there were not a stay. By 19 November 2014 (when the application was determined, although the position appears to be no different as at the date of writing these reasons for judgment), Simmonds J had not granted the respondents' applications with respect to costs against CAT; he had accordingly not made any orders, let alone any orders which the appellants might regard as adverse to their interests; it could not be assumed that any orders Simmonds J might make would be unfavourable to CAT or the interests of the appellants; and if ultimately Simmonds J were to make any costs orders adverse to CAT or the appellants' legitimate interests, that would ordinarily be the appropriate time to consider any question of a stay, including whether there should be any terms attached to a stay, such as payment into court.
We would add that if and insofar as CAT had any additional claims for costs against the respondents, there is evidence to the effect that the liquidator of CAT has not been put in funds by the appellants, or any other creditors of the company, to pursue such claims (annexure 4 of the solicitor's affidavit, page 25). This matter also tends to confirm that this was not an appropriate case to order a stay of the primary proceedings. However, the conclusion reached in [42] above is not dependent upon that observation.

The application for security for costs, or to strike out appeal

On 31 October 2014, the respondents filed an application for orders that the appeal to be struck out, or in the alternative, for the appellants to pay into court a sum for security for costs of the appeal. The application was supported by the solicitor's affidavit. On 3 November 2014, the court ordered the respondents to file and serve submissions in support by 7 November 2014 and ordered that the appellants were to file and serve responsive submissions by 14 November 2014. The respondents filed submissions within the terms of the court's orders. The appellants' opposition to the application for security for costs emerged by their affidavit of 14 November 2014.
The solicitor's affidavit annexed certain searches which indicated that:
(a) a company called H & A Frigger Pty Ltd was registered on 2 April 2012 with $2 paid up capital. The appellants were the directors and shareholders of that company at the time;
(b)on 4 April 2014, the shares in the company were transferred to Wolfgang and Helga Popitz of Olsberg, Germany;
(c)after the transfer of the shares, the appellants remained as directors of H & A Frigger Pty Ltd; and
(d)on 7 April 2014, the appellants caused mortgages to be registered in favour of H & A Frigger Pty Ltd over certain parcels of land registered in their name.
The solicitor's affidavit also annexed a letter from the appellants to the associate of Allanson J in another matter, which stated that:
[T]he [appellants] advise the court that it is their intention to leave Australia in mid‑March 2015 and request that the trial of [those] proceedings be listed prior to that time.
It is convenient to note here that the appellants had objected to certain words and sentences in the solicitor's affidavit in pars 1 ‑ 4, 6, 14 and 15. Having considered the objections, none were upheld save to the following extent. The last sentence in par 6 of the affidavit was essentially non‑probative and argumentative, and was accordingly struck out. Further, in par 14, the words 'what may be' and 'bogus' were struck out on the basis that they were argumentative in nature. The appellants' other objections did not go to the admissibility of the evidence but, in effect, the appellants' contentions that the evidence was not accurate or reliable. Accordingly, the appellants' other objections were disallowed.
The appellants' submission that their letter to the associate to Allanson J was subject to an implied undertaking of confidentiality, was rejected. Their letter was a communication, in effect, to the judge, created for the purpose of persuading the judge to act in a particular way in relation to programming matters in that litigation. It was plainly not the subject of an implied undertaking as to confidentiality.
There was no affidavit material provided by the appellants explaining or otherwise dealing with the evidence referred to in [46] ‑ [47] above.
This court has power under pt 5 r 44(1) of the Supreme Court (Court of Appeal) Rules, read with pt 1 r 3, to order security for costs. The relevant principles concerning an application for security in the Court of Appeal were referred to by Pullin JA in Ailakis v Olivero [2013] WASCA 91:
Special circumstances do not have to be shown under the Court of Appeal Rules … the provision applying in the Court of Appeal does not require special circumstances and there is no prohibition on making an order for security 'merely' on account of the poverty of the plaintiff, or the likely inability of the plaintiff to pay any costs which may be awarded against him.
Thus, under the Court of Appeal Rules, a decision regarding an application for security for costs will be made after assembling all of the relevant factors and giving such weight as is appropriate to those factors before coming to a decision. The factors which are often considered are set out in Carol Farrell by her next friend Ronald Charles Waugh v Royal Kings Park Tennis Club (Incorporated) [2007] WASCA 173 [32], and summarised by Newnes AJA in Willoughby v Clayton Utz [2008] WASCA 93 [14] as follows:
'It is, of course, impossible to state exhaustively the factors which are relevant to the exercise of the discretion but some of the relevant factors are:
(a)the appellant's prospects of success on the appeal;
(b)the appellant's capacity to pay any costs ordered against him or her, that being an important consideration but not a conclusive one; a court will not order security against an individual appellant solely on the grounds of impecuniosity;
(c)whether an order for security would frustrate a possibly genuine appeal;
(d)whether some other person stands to benefit from the appeal if the appellant is successful, where that person has not offered to provide security or to indemnify the appellant in respect of any costs for which the appellant may become liable to the respondent;
(e)any delay by the respondent in bringing the application for security.'
In addition, it is relevant that on an application for security for costs in an appeal as opposed to an application made in relation to proceedings in the General Division, the respondent has the benefit of a judgment enforceable against the appellant. When doing justice between the parties, that is one of the factors to be taken into account. The poverty of the appellant or the inability of the appellant to pay costs will be a factor relevant to the exercise of the court's discretion. In fact, it will usually be the factor prompting the application in the first place [11] ‑ [13].
The appellants' non‑compliance with an earlier relevant costs order in favour of the respondents, at least to the extent that the non‑compliance is not adequately explained, is also a relevant consideration: Boksmati v Girgis Nominees (WA) Pty Ltd [2014] WASCA 101 [53(d)].
The risk that the appellants will be out of the jurisdiction at the time of the enforcement of any costs orders against them in the appeal is also a relevant consideration.
Having considered all the materials and the parties' arguments, we considered that this was a matter in which it would be appropriate to order security, principally for the following reasons. First, there is the evidence that the appellants intend to leave Australia in mid‑March for Germany. Even if the appeal were heard before then, there is a real risk that final orders in the appeal would not be made until after the appellants had left Australia. We were not addressed on matters such as whether and to what extent there were reciprocal rights of enforcement of judgments as between Germany and Australia. Nevertheless, it is sufficient to observe, for present purposes, that there would be a real risk, if the appeal were unsuccessful, that the respondents would at least have additional difficulty and would incur additional costs, in enforcing any orders against the appellants after they had left the jurisdiction. Secondly, the evidence referred to in [46] above, indicates that the appellants have taken steps which have the effect, and it is open to infer were done with the intent, of putting assets out of the reach of unsecured creditors. Thirdly, there was evidence that the appellants have failed to pay substantial amounts in costs orders against them since the Court of Appeal overturned the primary judge's decision on quantum. The appellants' contention that those costs were not paid because, it is alleged, the respondents owe certain moneys to CAT does not provide a reasonable explanation for the non‑payment of costs ordered against them personally.
The respondents sought security for costs in the sum of (approximately) $30,000. The appellants in oral submissions indicated that any order for security ought not be beyond about half that amount. Taking a very broad view of the matter and the likelihood that the appeal may raise for consideration a rather long and convoluted history concerning costs matters, we were of the view that a sum of $18,000 should be ordered for security.
In relation to the respondents' application to strike out the appeal, if the decision appealed from is interlocutory, the appeal would fail at the first hurdle, because leave to appeal is not sought. Even if leave were sought, a question would likely arise as to whether the appellants would suffer substantial injustice if the decision were left unreversed: Allmark v Mossensons (a firm) [2006] WASCA 127 [26]. On a preliminary view of it, that might entail the appellants showing by admissible and probative evidence (involving more than mere assertion), that the assumptions upon which Simmonds J acted, namely that the appellants had paid CAT's costs of litigation to that point and were under a continuing obligation to pay any future costs (primary reasons [42]), were correct. The question of whether the liquidator has, in any event, been put in funds, and if not why not, might also be relevant in this context. However, we were not persuaded that the ground of appeal itself had no reasonable prospect of success, and despite the absence of an application for leave and any potential difficulties associated with the question of leave if it had been sought, we were ultimately not persuaded that the appeal was so hopeless that it should be dismissed summarily at this point.

Schedule

Appellants' Proposed Minute of Orders	Primary Court Materials potentially relevant to Appellants' Proposed Minute of Orders
Par 1: reinstatement of the following orders of 6 May 2009	• Defendants' (ie respondents') submissions filed 29/08/14* par 7
(a) Order 1	(a) Defendants' 02/02/11 Minute Order 1
(b) Order 2	(b) Defendants' submissions 29/08/14 pars 19 ‑ 22
(c) Order 3	(c) Defendants' 02/02/11 Minute Order 2
(d) Order 4	(d) Defendants' 02/02/11 Minute Order 3
(e) Order 5	(e) Defendants' 02/02/11 Minute Order 4
(f) Order 6	(f) Defendants' 02/02/11 Minute Order 5
(g) Order 7(a) ‑ (d)	(g) Defendants' submissions 29/08/14 pars 23 ‑ 30
(h) Order 8(a) ‑ (d), (f)	(h) Defendants' submissions 29/08/14 pars 23 ‑ 30
(i) Order 11	(i) Defendants' submissions 29/08/14 par 7
Par 2: costs in relation to the local court during the period 17 September 2003 to the date of transfer to the District Court	• Defendants' submissions 29/08/14 par 2 • Plaintiffs' submissions 16/09/14 pars 18 ‑ 19 • 23/09/14, ts 3375 ‑ 3376 • Defendants' submissions 29/08/14 par 7; 06/05/09 Order 9

Appellants' Proposed Minute of Orders	Primary Court Materials potentially relevant to Appellants' Proposed Minute of Orders
Par 3: no order as to costs in relation to the plaintiff proving its head of damage for loss of opportunity	• Defendants' 02/02/11 Minute Order 1
Par 4: costs in relation to enforcing the freezing orders of 08/01/08	• Defendants' 02/02/11 Minute order 5(b) • Defendants' submissions 29/08/14 par 7; 06/05/09 Order 6
Par 5: enforcement costs for the appointment and administration of receiver over one 50% share in Banning Holdings Pty Ltd	• Defendants' 03/02/11 Minute Order 7 • Plaintiffs' submissions 16/09/14 pars 61 ‑ 63
Par 6: costs in relation to freezing orders of 08/01/08, including reserved costs and including costs from the defendants' applications in this regard over various dates in 2008 ‑ 2009	• Defendants' 03/02/11 Minute Orders 3 ‑ 4, 7 ‑ 8, 14 ‑ 15 • Defendants' submissions 29/08/14 par 3 • First and second defendants' submissions 25/08/14 pars 15, 23 ‑ 25, 30, 38, 42, 46ff
Par 7: costs in relation to a court ordered mediation	• Defendants' 02/02/11 Minute Order 1 - costs of the action
Par 8: costs in relation to the sale of one share in Banning Holdings Pty Ltd	• Defendants' 03/02/11 Minute Orders 7 ‑ 8 • First and second defendants' submissions 26/08/14 par 22 ‑ 30
Par 9: costs in relation to an application for special costs	• Defendants' 02/02/11 Minute Order 6 • Defendants' submissions 29/08/14 pars 31 ‑ 32 • Defendants' submissions 29/08/14 par 7; 06/05/09 Order 9

Appellants' Proposed Minute of Orders	Primary Court Materials potentially relevant to Appellants' Proposed Minute of Orders
Par 10: costs in relation to taxation of bill of costs	• Defendants' 02/02/11 Minute Order 7
Par 11: costs in relation to an application for freezing orders by the defendants against the plaintiffs 'dated 4 December 2009 which application was discontinued by the defendants [sic]'	*Computer Accounting and Tax Pty Ltd v Professional Services of Australia [No 3]* [2010] WASC 2 (S)
Par 12: costs of the defendants' application to appoint a liquidator 'which application was discontinued/dismissed on 16 December 2009'	• Mrs Frigger's affidavit dated 15/12/09 in relation to CAT being put into voluntary liquidation • Simmonds J orders 16 December 2009 • *Computer Accounting and Tax Pty Ltd v Professional Services of Australia [No 3]* [2010] WASC 2 (S)

* The defendants' submissions filed 29 August 2014 (but dated 27 August 2014) refer, inter alia, to a defendants' minute dated 29 August 2014 headed 'Defendants' Minute of Proposed Costs Orders for Special Appointment 19 September 2014 at 10.00 am'. This minute appears to be a consolidation of the 2 February minute and the 3 February minute (see [30] of these reasons for judgment).