Frigger v Professional Services of Australia Pty Ltd [No 2]
[2023] WASC 246
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 2] [2023] WASC 246
CORAM: ARCHER J
HEARD: 30 JUNE 2023
DELIVERED : 30 JUNE 2023
FILE NO/S: CIV 1309 of 2021
BETWEEN: ANGELA CECELIA THERESA FRIGGER
First Plaintiff
HARTMUT HUBERT JOSEF FRIGGER
Second Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
SANDRA MAY BANNING
Second Defendant
DAVID ABRAHAM LENHOFF
Third Defendant
TIMOTHY RICHARD STEPHENSON
Fourth Defendant
CAMERON VICTOR EASTWOOD
Fifth Defendant
Catchwords:
Application for stay of taxation of costs following summary judgment - Appeal against summary judgment dismissed - Alleged abuse of process - Allegation of fraud - New proceedings commenced alleging fraud - No basis upon which to stay the taxation
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| First Plaintiff | : | In person |
| Second Plaintiff | : | In person |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | S Ringrose |
| Fourth Defendant | : | J Singh |
| Fifth Defendant | : | S Popperwell |
Solicitors:
| First Plaintiff | : | In person |
| Second Plaintiff | : | In person |
| First Defendant | : | K G Sorensen |
| Second Defendant | : | K G Sorensen |
| Third Defendant | : | Jackson McDonald |
| Fourth Defendant | : | Barry Nilsson Lawyers (WA) |
| Fifth Defendant | : | Popperwell & Co |
Case(s) referred to in decision(s):
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Frigger v Lean [2015] WASC 125
Frigger v Professional Services of Australia Pty Ltd [2022] FCA 1477
Frigger v Professional Services of Australia Pty Ltd [2022] WASCA 119
Green v Fairfax Media Publications Pty Ltd [No 3] [2021] WASC 7
Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423
Kitay v Frigger [2022] WASC 284
Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121
Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASCA 208
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4
Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287
ARCHER J:
(This judgment was delivered extemporaneously on 30 June 2023 and has been edited to correct matters of language, add formatting, and include complete references.)
Introduction
By amended chamber summons, the plaintiffs seek that the taxation of the defendants' bills of costs be stayed, pursuant to the court's inherent jurisdiction to prevent abuse of process, pending the resolution of action CIV 1644/2023.
I will refer to the proceedings sought to be stayed as the '2021 Proceedings'. I will refer to the proceedings in CIV 1644/2023 as the '2023 Proceedings'.
Relevant history
A detailed summary of the genesis of the 2021 Proceedings, and related litigation, is set out in the annexure to the Court of Appeal's decision in Frigger v Professional Services of Australia Pty Ltd [2022] WASCA 119 (Court of Appeal decision).[1]
[1] See also Court of Appeal decision [3] ‑ [5].
The 2021 Proceedings were commenced by the plaintiffs. On 6 May 2022, Master Sanderson upheld the defendants' application for summary judgment and ordered the plaintiffs to pay the defendants' costs (Summary Judgment Decision).
The plaintiffs appealed against the Summary Judgment Decision.
Ground 1 of the appeal was (emphasis added):[2]
[2] Court of Appeal decision [12].
1.The Master erred in law by summarily dismissing the appellants' claims which order was consequent on numerous errors of fact and law in reasons dated 6 May 2022:
1.1The respondents committed fraud on the court by preparing and adducing two fraudulent versions of Professional Services of Australia Pty Ltd's memorandum of association, one of which contained forged signatures of the original subscribers;
1.2The Master was aware of the fraud but excluded it from his reasons;
1.3The reasons misconstrue facts pleaded in the Amended Statement of Claim;
1.4The reasons mischaracterise causes of action;
1.5The reasons misapply bankruptcy law to the mischaracterised causes of action;
1.6The reasons misconstrue when causes of action were first ascertained or ascertainable and consequently misapply statute of limitations.
The third to fifth respondents (the third to fifth defendants in these proceedings) applied for security for costs in respect of the appeal. On 26 August 2022, the Court of Appeal ordered that, by 16 September 2022, the appellants pay into court, by way of security for costs of the third to fifth respondents, the sum of $50,000, and that the appeal be stayed pending payment into court of such security.
The sum was not paid into court by the deadline.
In late September 2022, the third to fifth respondents filed applications seeking that the appeal be dismissed due to the appellants' failure to pay the sum into court as required. The appellants did not oppose the dismissal, but sought that it be dismissed with no orders as to costs. The appellants claimed that there was a supervening event which made the appeal useless. The supervening event was said to be the decision of Hill J in Kitay v Frigger [2022] WASC 284.[3]
[3] Appellants Submissions filed 12 October 2022 in CACV 55 of 2022 [2] ‑ [4].
On 21 October 2022, the appeal was dismissed, and the appellants were ordered to pay the third to fifth respondents' costs of the appeal. The Court of Appeal said:[4]
The appellants effectively invited the court to make an order dismissing the whole appeal, including against the first and second respondents on the basis that they believed the appeal had become inutile. It is unnecessary to say anything about the correctness of that view as to the utility of the appeal. The appellants oppose the cost order being made against them in respect of the third, fourth, and fifth respondents costs in circumstances where there has been no final argument on merits and where they contend there is a supervening event, being the delivery of Hill J reasons in Kitay v Frigger [2022] WASC 284.
We are not persuaded that there is anything in Hill J's decisions or the appellants' submissions that provide any proper basis for departing from the usual approach of requiring the appellant to pay the respondent's costs.
[4] ts 34.
Following the dismissal of the appeal, various steps were taken in relation to the assessment of the costs of the defendants in the 2021 Proceedings. The first step was the filing of a bill of costs by the fifth defendant on 18 January 2023. Subsequently, the third and fourth defendants filed their bills of costs. The plaintiffs filed objections. The taxation of the fifth defendant's costs was listed for 1 June 2023. On 15 May 2023, orders were made programming the taxation of the fourth defendant's costs.
The plaintiffs' application for a stay
On 22 May 2023, the plaintiffs filed an application for orders that the taxations of the defendants' bills of costs in the 2021 Proceedings be permanently stayed 'pursuant to RSC O 59 r 8'. In the supporting affidavit, Ms Frigger asserted that the defendants knowingly obtained the Summary Judgment Decision by fraudulently adducing false evidence.[5]
[5] Affidavit of Angela Frigger filed 22 May 2023 (Frigger May Affidavit) [10]. And see the Plaintiffs' Submissions filed 23 June 2023 [3].
Although the application was not expressly limited to the third to fifth defendants, it appears to have been interpreted as being so limited by all parties. No doubt this is because, at this stage, only the third to fifth defendants have lodged bills of costs. For the balance of these reasons, I will refer to the third to fifth defendants as the 'defendants'.
On 15 June 2023, I held a directions hearing in this matter. Among other things, I asked Ms Frigger to clarify the basis of her claim. Ms Frigger advised that she sought a stay in the inherent jurisdiction of the court on the basis that there was fraud underlying the proceedings that preceded the summary judgment hearing, such that the Summary Judgment Decision was tainted as was any application to tax costs.[6]
[6] ts 191.
On 23 June 2023, Ms Frigger filed an amended chamber summons, amending the jurisdictional basis upon which she sought the stay to the inherent jurisdiction of the court to prevent an abuse of process.
Ms Frigger also filed an affidavit and submissions in support of the amended stay application. Annexed to the affidavit was a copy of the writ in the 2023 Proceedings. The writ alleges fraud by the defendants in relation to the existence of the first defendant.
It was apparent from the plaintiffs' written submissions that, despite the terms of the amended chamber summons, they were not seeking a stay on the basis of an abuse of process. Rather, they were contending that the proceedings should be stayed because they have commenced the 2023 Proceedings. Such a stay is not based on an abuse of process. Rather, the court considers whether a stay should be granted, as a matter of discretion, in circumstances where there are two proceedings involving common issues.
The plaintiffs confirmed in their oral submissions that they sought a discretionary stay on the basis that there are now two proceedings. I will accordingly treat the plaintiffs' submissions as (again) amending the basis of the application, to seek a stay on that basis.
The defendants oppose the application for a stay.
None of the defendants submit that I do not have the jurisdiction to deal with the application. As I would dismiss it in any event, it is unnecessary to consider this further.[7]
[7] But see Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423.
The alleged fraud
It is unnecessary for the purposes of this application to set out in detail the plaintiffs' allegations of fraud. It is sufficient to note the following.
The plaintiffs' overarching contention is that, as a matter of fact and law, the first defendant never actually came into existence. They contend, in effect, that the other defendants knew this, concealed this, and conducted litigation on behalf of the first defendant despite knowing that it did not exist.
The plaintiffs submit that there is evidence to support their allegations of fraud. They assert, in particular, the following.
First, they allege that a lawyer acting for the first and second defendants swore an affidavit purporting to annex a copy of the memorandum and articles of association of the first defendant, and gave false evidence about it. The plaintiffs allege that the lawyer contradicted that evidence in cross‑examination in Federal Court proceedings (as to who gave him the documents), and that his evidence was further shown to be false by an affidavit sworn by the second defendant (as to when she had seen the company documents, where they were held, and that she had been told that they were only accessed after the document purporting to be a copy of the memorandum and articles of association was annexed to the lawyer's affidavit). They further allege that the lawyer's evidence that the second defendant was a director has also been shown to be false.
Second, they allege that the signature of one of the original subscribers to the memorandum was forged. They allege there is an affidavit from one of the original subscribers saying this. They allege that the second defendant and her lawyer gave the court an unsigned version of the memorandum because they knew of the forgery.
Third, they allege that the fourth defendant sought, in the Federal Court proceedings, that the judge assume that the first defendant did not have any memorandum and articles of association approved by the subscribers. This allegation was based on an annotated document on which matters were listed after the sentence '[w]ithout any admission by any party the following facts and matters are to be assumed for purposes of answering the separate questions'.[8]
[8] Frigger May Affidavit Attachment AF5 page 29.
Fourth, they allege that evidence in the Federal Court proceedings shows that the purported appointments of two directors of the first defendant in 2008 were invalid as neither were members.
The plaintiffs contend that the above matters show that the first defendant never actually came into existence.
In making these submissions, the plaintiffs referred to alleged evidence that was not included in the evidence they filed in support of the stay application and was not set out in their submissions. When it was pointed out to them that this could prejudice the defendants in their capacity to respond to their submissions, they submitted, in effect, that they did not realise they needed to put the defendants on notice, if the documents were already on a court file. They submitted that, if they should have given notice of those documents, they should nevertheless be given leave to rely on them.
It is unnecessary to consider this further, as I consider it is unnecessary to scrutinise the alleged evidence relied upon by the plaintiffs. That is because I consider that there are significant legal obstacles in the plaintiffs' assertion that, as a result of these alleged matters, the first defendant did not exist.[9]
[9] See Frigger v Professional Services of Australia Pty Ltd [2022] FCA 1477 [58] ‑ [68]. In addition, it seems likely that any of the causes of action the plaintiffs may have had against the defendants would have vested in the trustee in bankruptcy.
An application for a stay based on two proceedings
The legal principles to be applied
As to the principles to be applied, the plaintiffs submit that:[10]
The principles that apply to this stay application [are] contained in Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd[11], where the same issues are to be determined in another forum. It was found the court had a general power to control its own proceedings, and that power extends to enable it to order a temporary stay of proceedings in various circumstances including the case where proceedings are pending in another court, and it is desirable that those proceedings should proceed to their conclusion first.
[10] Plaintiffs' Submissions [10].
[11] Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287.
The defendants' written submissions addressed, understandably, the application on the basis that it was as set out in the amended chamber summons. Nevertheless, those parts of their submissions that dealt with discretionary factors were relevant to the final basis upon which the plaintiffs contended that a stay should be granted.
The relevant factors where there are two proceedings
In Sterling Pharmaceuticals, Lockhart J listed 10 matters he considered should be taken into account in the case before him (numbering added):[12]
[12] Sterling Pharmaceuticals (291).
1.Which proceeding was commenced first.
2.Whether the termination of one proceeding is likely to have a material effect on the other.
3.The public interest.
4.The undesirability of two courts competing to see which of them determines common facts first.
5.Consideration of circumstances relating to witnesses.
6.Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted.
7.The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues.
8.How far advanced the proceedings are in each court.
9.The law should strive against permitting multiplicity of proceedings in relation to similar issues.
10.Generally balancing the advantages and disadvantages to each party.
Application to the facts
In my view, these factors do not support the grant of a stay in the context of this case.
As to the first factor, the 2021 Proceedings were commenced well before the 2023 Proceedings. The plaintiffs submit that this factor is not applicable as the alleged fraud was concealed until after the 2021 Proceedings were commenced. As will become apparent, it is unnecessary to consider this further.
As to the second factor, if the plaintiffs were successful in setting aside the orders in the 2021 Proceedings, there would be no costs to tax. However, on the materials currently before me, I am not satisfied that the prospect of the plaintiffs succeeding is more than remote. Even putting aside the legal obstacles, there would be a real question as to whether the 2023 Proceedings would itself be an abuse of process. Accordingly, this factor is of little weight.
As to the third factor, the public interest weighs against a stay. This is for the following reasons.
First, a court has ordered that the plaintiffs pay the defendants' costs. The defendants are entitled to have those costs assessed and paid promptly.
Second, the plaintiffs appealed, raising fraud. The appeal was dismissed.
Third, the application for a stay was not brought promptly. The defendants began filing their costs documents in January 2023, commencing with the fifth defendant's bill of costs filed on 18 January 2023. The plaintiffs did not seek a stay until 22 May 2023.
Fourth, and related to the third point, there is no explanation for the delay.
In the directions hearing, I advised Ms Frigger that, if the question of whether a discretion should be exercised arose, a discretionary factor would be any delay in bringing the application for a stay. I said that, if there had been any delay on her part in bringing the application, she would need to explain that delay in an affidavit so that any explanation could be taken into account.[13] Ms Frigger did file a further affidavit, but did not explain the delay.
[13] See ts 194.
In oral submissions, the plaintiffs asserted that the delay was not significant and that it occurred because it took them some time to understand the significance of the evidence and what it all meant, because it was extremely complicated. Putting aside the fact that this evidence was given from the bar table, this is an inadequate explanation. The grounds of appeal were dated 10 June 2022.
As to the fourth factor, if the stay is refused, there would not be two courts competing to see which of them would determine common facts first. Accordingly, there is nothing in this factor to support a stay.
As to the fifth, sixth and ninth factors, the plaintiffs do not refer to these factors and there is no reason to treat them as supporting a stay.
As to the seventh factor, the proceedings sought to be stayed are the 2021 Proceedings, which were commenced first. Accordingly, this factor does not support a stay.
As to the eighth factor, the 2021 Proceedings have reached the stage of taxation of costs. This factor weighs against a stay.
As to the tenth factor, the only legitimate advantage to any party would be the saving of the costs associated with the taxation if the 2023 Proceedings were successful, and successful to the extent that any loss associated with the 2021 Proceedings was compensated. The disadvantage to the defendants, in delaying their receipt of the fruits of the costs orders made in their favour, are obvious. Balancing the advantages and disadvantages, this factor weighs against a stay.
For these reasons, I would not grant a stay on the basis sought by the plaintiffs.
Eastland Technology stay
For completeness, I note that, had the plaintiffs sought a stay under the principles in Eastland Technology Australia Pty Ltd v Whisson,[14] I would also not have granted a stay. It is sufficient to set out, in short, the main reasons.
[14] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9].
First, a stay is not necessary to preserve the subject matter or the integrity of these proceedings or the 2023 Proceedings.
Second, there are no special circumstances justifying the departure from the ordinary rule that a successful litigant is entitled to the fruits of their judgment.
Third, the balance of convenience is against the stay, having regard to the delay and the history of the 2021 Proceedings.
Abuse of process stays
Although this was not the basis of the plaintiffs' submissions, the plaintiffs' amended chamber summons did seek to rely on abuse of process.
What amounts to an abuse of process and the principles to be applied were set out by Buss JA[15] in Sheraz Pty Ltd v Vegas Enterprises Pty Ltd.[16] In Frigger v Lean,[17] Mitchell J[18] summarised those principles, noting that he agreed with them, as follows:
[15] As his Honour then was.
[16] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 [4] ‑ [11].
[17] Frigger v Lean [2015] WASC 125 [29] ‑ [31]. See also Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [102] ‑ [109] (Vaughan J, as his Honour then was). In dismissing the appeal from this decision, the Court of Appeal endorsed, in effect, Vaughan J's summary - see Patrick Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASCA 208 [12]. See also Green v Fairfax Media Publications Pty Ltd [No 3] [2021] WASC 7 [46] ‑ [51].
[18] As his Honour then was.
As Buss JA noted at [5], what constitutes an abuse of process is incapable of being described exhaustively.
However, as Buss JA also noted at [6], the High Court has stated that at least one of three characteristics will be apparent in many cases of abuse of process, namely:
1.the court's processes being invoked for an illegitimate or collateral purpose;
2.the use of the court's procedures being unjustifiably oppressive to a party; or
3.the use of a court's procedures bringing the administration of justice into disrepute.
Buss JA identified a number of propositions in Sheraz [8] ‑ [20] concerning the nature of abuse of process, namely:
1.Inherent or implied power exists to prevent misuse of its procedures in a manner which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation or would bring the administration of justice into disrepute among right‑thinking people.
2.Abuse of process extends to proceedings that are seriously and unfairly burdensome, prejudicial or damaging or productive of serious and unjustifiable trouble and harassment.
3.Categories of abuse are not closed and the court may exercise its power as and when administration of justice demands.
4.An abuse of process may arise where there are successive proceedings which cause or are likely to cause improper vexation or oppression.
5.It would be a scandal to the administration of justice if a litigant were to be permitted by changing the form of the proceedings to set up the same case again in circumstances where the same question had previously been disposed of.
6.A court may invoke principles of an abuse of process to prevent attempts to litigate an issue which should have been litigated in earlier proceedings, as well as to prevent attempts to re‑litigate an issue which has, in substance, been litigated and determined in earlier proceedings.
7.The focus in applying the principles of abuse of process is on matters of substance and not form.
In my view, there is no basis upon which it could be concluded that the taxation of costs in the 2021 Proceedings would constitute an abuse of process.
The court's processes are not being invoked for an illegitimate or collateral purpose. There would be no unjustifiable oppression to the plaintiffs. The administration of justice would not be brought into disrepute. The taxations are simply the orthodox next step in the 2021 Proceedings following a summary judgment decision, with costs, and the dismissal of an appeal.
Orders
For these reasons, I would dismiss the plaintiffs' application for a stay, and will hear from the parties as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
NL
Associate to the Judge
5 JULY 2023
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