Frigger v Professional Services of Australia Pty Ltd [No 3]

[2018] WASCA 106

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 3] [2018] WASCA 106

CORAM:   MITCHELL JA

BEECH JA

HEARD:   21 JUNE 2018

DELIVERED          :   21 JUNE 2018

PUBLISHED           :   27 JUNE 2018

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 Number            :   CIV 2265 of 2006

Catchwords:

Appeals - Practice and procedure - Competing applications for moneys paid into court as security for costs to be paid out to successful respondents or to be held pending Federal Court proceedings

Legislation:

Rules of the Supreme Court 1971 (WA), O 25 r 7

Result:

Moneys paid into court as security for costs ordered to be paid out of court to respondents

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 Law
Second Respondent	:	Eastwood Law

Case(s) referred to in decision(s):

Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360

Frigger v Banning [2017] FCA 1589

Frigger v Banning [No 3] [2017] FCA 221

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

Frigger v Professional Services of Australia Pty Ltd [No 2] [2016] WASCA 68

Technomin of Australia Pty Ltd v XStrata Nickel Australasia Operations Pty Ltd [No 4] [2014] WASC 405

Walter v Gardner [1993] HCA 37; (1993) 177 CLR 378

REASONS OF THE COURT:

Introduction

1. In December 2014, the appellants paid into court the sum of $18,000 (the Security) as security for costs in this appeal.

2. At the hearing on 21 June 2018, we dealt with two competing applications concerning the Security:

   1.the appellants' application dated 25 July 2016 that the court hold the Security pending the outcome of the appellants' application in Federal Court matter WAD 607 of 2015; and

   2.the respondents' request by letter dated 19 April 2018 for payment out of court of those funds.

3. These are our reasons for refusing the appellants' application and making orders to the effect requested by the respondents.

Background

1. The background to the many legal proceedings instituted by or involving these appellants has been set out in detail in a number of decisions of this court, including in this appeal itself.[1]  These reasons should be read with the earlier reasons in this appeal.   It is convenient to give a broad overview of the progress of this appeal, including the making of orders for security for costs.

   [1] Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3(Frigger v PSA); Frigger v Professional Services of Australia Pty Ltd [No 2] [2016] WASCA 68 (Frigger v PSA [No 2]).

2. This appeal challenged the decision of Simmonds J[2] to dismiss the appellants' application to be joined as parties to the primary proceedings.  The primary judge's decision was outlined by this court in Frigger v Professional Services of Australia Pty Ltd.[3]

   [2] Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 7] [2014] WASC 360.

   [3] Frigger v PSA [15] - [22].

3. On 19 November 2014, Buss and Murphy JJA made orders that the appellants pay the sum of $18,000 into court as security for the first and second respondents' costs of the appeal.[4]

   [4] Orders of Buss and Murphy JJA, 19 November 2014, [3].

4. On or about 17 December 2014, the appellants filed a notice of payment into court of the sum of $18,000.

5. On 24 March 2016, Buss and Murphy JJA ordered that unless by 4.00 pm on 7 April 2016 the appellants filed and served the appeal books, the appeal be dismissed.[5]  At the same time, their Honours refused the appellants' application for a stay of the appeal.[6]  We will say more about that application later in these reasons.

   [5] Orders of Buss and Murphy JJA, 24 March 2016, [4].

   [6] See Frigger v PSA [No 2].

6. The appellants failed to file appeal books, following which the appeal was dismissed on 22 April 2016.[7]  At the same time, it was ordered that the appellants pay the respondents' costs of the appeal, including any reserved costs, to be taxed if not agreed.

   [7] Certificate of conclusion of a civil appeal dated 22 April 2016.

7. On 6 April 2018, the respondents' costs of the appeal were taxed at $32,720.06.[8]

   [8] Certificate of taxing officer dated 6 April 2018.  See also, reasons for decision, Registrar Gilich, 6 April 2018.

8. By letter of 19 April 2018, the respondents' solicitors requested the payment out of the Security.

The issues

1. As can be seen from that background, the appeal has been dismissed, and the respondents' costs have been taxed in a sum greater than the amount paid into court as security for their costs.  On the face of things, that suggests that the Security for the respondents' costs should now be paid out to them.  In that manner, the monies paid as security for costs will serve their purpose.

2. The appellants filed an application dated 25 July 2016, supported by an affidavit of that date, for an order that the Security be held by the court pending the resolution of the appellants' application in Federal Court proceedings WAD 607 of 2015 (the Federal Court proceedings) for an injunction against the respondents under s 1324 of the Corporations Act 2001 (Cth) in respect of those monies. That application was not progressed while the respondents' costs were taxed. The central issue is whether the Federal Court proceedings provide a sufficient reason to depart from the apparent position that the monies paid as security for the respondents' costs should be paid out to the successful respondents. The appellants also contend that they have a countervailing claim for costs against the respondents which should preclude payment out of the Security to the respondents.

The progress of the Federal Court proceedings

1. The statement of claim annexed to Mrs Frigger's affidavit of 22 July 2016 was struck out by orders of Barker J.[9]  An application for leave to appeal against that decision was dismissed by Siopis J on 21 December 2017.[10] His Honour outlined some of the substantial obstacles to any claim under s 1324 of the Corporations Act in favour of the appellants.[11]

   [9] Frigger v Banning [No 3] [2017] FCA 221.

   [10] Frigger v Banning [2017] FCA 1589.

   [11] Frigger v Banning [2017] FCA 1589 [114] - [143].

2. On 16 March 2018, the Federal Court proceedings were before Colvin J.  His Honour ordered that by 11 April 2018 the applicants file a proposed statement of claim of no more than 15 pages.[12]

   [12] Order of Justice Colvin dated 16 March 2018 [1].

3. A document comprising the proposed statement of claim was filed by the appellants on 10 April 2018.[13]  The document has not yet been accepted as a statement of claim in the Federal Court proceedings.  The other parties in those proceedings have opposed leave to substitute the further statement of claim on the ground that it has substantially the same problems as the version in respect of which leave was refused by Barker J.[14]

   [13] Affidavit of Cameron Eastwood, 14 June 2018 [6]; affidavit of Mrs Frigger, 18 June 2018, annexure AF1.

   [14] Affidavit of Cameron Eastwood [6].

4. On 28 May 2018, Colvin J directed that the applicants file and serve any application for an interlocutory injunction by 8 June 2018, with submissions in support to be filed and served by 18 June 2018.[15]

   [15] Order of Justice Colvin dated 28 May 2018 [4] ‑ [5].

5. In June 2018, this court received an affidavit of Mrs Frigger dated 18 June 2018 in support of the appellants' application to this court.  Attached to that affidavit was a copy of an interlocutory application for an injunction and a proposed statement of claim filed in the Federal Court proceedings.  The interlocutory application sought a number of orders, one of which was an order restraining the estate of Martin Paul Banning (deceased) and Professional Services of Australia Pty Ltd (PSA) from enforcing the costs order of $32,720.06 dated 6 April 2018 in CACV 118/2014 until the resolution of this proceedings.[16] 

   [16] Affidavit of Mrs Frigger dated 18 June 2018, annexure AF 1.

6. Mrs Frigger's affidavit dated 18 June 2018 filed in this appeal did not refer to or annex any affidavit or other evidence in support of the interlocutory application made in the Federal Court.

7. In the proposed statement of claim, the only fact pleaded referring to CACV 118/2014 is an assertion that, in an affidavit filed in this appeal, Mr Eastwood swore that he has not issued invoices to PSA and the deceased estate of Martin Paul Banning (referred to in the document as the Debtors).  The document sets out eight paragraphs of proposed relief.[17]  None of those paragraphs refer to this appeal, namely CACV 118 of 2014.  Nor is this appeal specifically referred to in the paragraphs that are said to set out the legal grounds for the relief sought.[18]

   [17] [51] ‑ [58].

   [18] [59] ‑ [63].

8. We were informed that the appellants' application in the Federal Court proceedings is listed for 17 July 2018.[19]

   [19] Appeal ts 273.

The appellants' submissions

1. The appellants' oral submissions to us emphasised that the determination of the application for an interlocutory injunction is less than four weeks away.[20]  The appellants submit that we should delay any order for payment out of the Security for that relatively short period to await the determination of the interlocutory injunction application.[21]  Further, the appellants submit that they have a cross‑claim, as assignee from Computer Accounting and Tax Pty Ltd (CAT) under a notice of charge, for an amount of costs exceeding the amount of costs ordered in this appeal.[22]  Further, the appellants submit that there is evidence, and Murphy JA has found in a related appeal, that the respondents are insolvent or without assets.[23]

   [20] Appeal ts 270, 274.

   [21] Appeal ts 270 ‑ 271, 274.

   [22] Appeal ts 272 ‑ 273.

   [23] Appeal ts 273, referring to Campbell‑Smith v Lean [2017] WASCA 89 [52], [56].

2. Before we deal with the merits of these submissions, we will say something more about the appellants' earlier unsuccessful application for a stay of this appeal.  That is because the appellants' arguments on that application have some echoes with their primary submission on these applications.

The appellants' unsuccessful application for a stay of this appeal

1. As has already been noted, by application dated 21 January 2016, the appellants applied for a stay of their appeal.  They sought an order staying the appeal pending the resolution of Federal Court proceedings WAD 607 of 2015 and WAD 674 of 2015.  Buss and Murphy JJA dismissed that application on 24 March 2016.  They subsequently published reasons for that decision.[24] 

   [24] Frigger v PSA [No 2].

2. Their Honours summarised the appellants' application in the following way.  The appellants sought a stay because they had recently commenced proceedings in the Federal Court of Australia, which they contended will (somehow) have the effect of, or lead to, the setting aside or variation of various judgments and orders made by this court, and by the General Division of the Supreme Court of Western Australia, going back over many years.  The appellants contended that if the Federal Court makes orders which have the effect of, or provide the basis for, setting aside or varying the judgments of the Supreme Court of Western Australia, this appeal would become otiose, and that accordingly, the interest of justice require that their appeal to this court be stayed.[25] 

   [25] Frigger v PSA [No 2] [4].

3. Their Honours observed that, on the information then available, it was difficult to see how, at least prima facie, any applications in the Federal Court designed to set aside or affect the orders of this court and of the General Division of the Supreme Court, going back several years, would not constitute an abuse of process as an impermissible collateral attack on the judgments of this court.[26]

   [26] Frigger v PSA [No 2] [65], referring to Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 392 - 393.

4. This court observed that, in due course, if and when the appellants file amended pleadings in the Federal Court, the merits of those claims will be a matter for the Federal Court to determine.  Buss and Murphy JJA concluded that the appellants had not adduced in evidence any material from which they could infer that the appellants had good arguable claims with reasonable prospects of success that could somehow lead to the setting aside or variation of any of the relevant orders.[27] 

   [27] Frigger v PSA [No 2] [77].

5. The submissions made by the appellants to their Honours included submissions that numerous costs orders in the original proceedings in the Supreme Court (meaning the General Division) and in this court were 'the subject of an injunction' under s 1324 of the Corporations Act and the question of whether the appellants had any interest in the original proceedings would be decided in the Federal Court.[28]  Their Honours found that there was no evidence that any injunctions had been granted or that the appellants had any relevant interests to set aside the judgments on any of the alleged grounds.[29]

   [28] Frigger v PSA [No 2] [42].

   [29] Frigger v PSA [No 2] [78].

Disposition

1. Order 25 r 7 of the Rules of the Supreme Court 1971 (WA) makes the following provision for the payment out of money paid into court as security for costs:

   7.       Payment out

   Where money has been paid into court as security for costs and the action has been finally disposed of, the amount of the security shall be paid out to the party for whose security it was furnished to the extent pro tanto that costs are due from the securer to such party, and the Principal Registrar shall pay out the security accordingly unless the Court has otherwise ordered, and the balance (if any) shall be refunded to the securer without the necessity for any special order.

2. The Rules of the Supreme Court apply in this court except to the extent that they are inconsistent with the Supreme Court (Court of Appeal) Rules 2005 (WA) (the Court of Appeal Rules).[30] Nothing in the Court of Appeal Rules is inconsistent with O 25 r 7.

   [30]  Court of Appeal Rules, r 5. 

3. An appeal has been 'finally disposed of', within the meaning of O 25 r 7, either when it was dismissed or when the certificate of taxation was issued.[31]  The operation of the rule is that the amount of the security shall be paid out to the party for whose security it was furnished, here the respondents, unless the court otherwise orders.

   [31] See Technomin Australia Pty Ltd v XStrata Nickel Australasia Operations Pty Ltd [No 4] [2014] WASC 405 [12] ‑ [13].

4. This reinforces that the starting point is that the monies paid in as security should now be paid out to the respondents.

5. The appellants seek an order that the Security be held in this court pending the resolution of an application for an injunction in the Federal Court proceedings.  The appellants made an application to this court in those terms in July 2016.  Almost two years later, the appellants have not obtained an injunction to the effect referred to and have, for the first time, just filed an application for an interlocutory injunction.

6. The appellants' failure to obtain an injunction in this period, and their delay in applying in the Federal Court proceedings for an injunction to sustain this application, in itself counts strongly against the making of the orders sought by the appellants.

7. Moreover, the appellants have yet to file a statement of claim in the Federal Court proceedings that has been found to reveal a sustainable case.  The previous statement of claim was struck out by Barker J.  The observations of Siopis J, in the application for leave to appeal, suggest that any proceedings by the appellants along the lines contemplated face very substantial obstacles.  A further statement of claim has been filed, but whether it has sufficient arguable substance to be permitted to stand remains to be determined by the Federal Court.

8. The merits of any proceedings commenced in the Federal Court are, of course, matters for that court.  The Federal Court will evidently determine the application in less than four weeks' time.  That being so, if it were demonstrated that there were any reasonably arguable basis on which the Federal Court might restrain the enforcement of the costs order in this appeal, there would be much to be said for an order in this appeal to the effect sought by the appellants.  However, nothing in the material before this court suggests, much less demonstrates, that the appellants have any plausible basis for obtaining any relief in the Federal Court proceedings that would justify dealing with the monies paid into court as security for costs, other than in the usual fashion. 

9. In our view, the appellants' alleged counterclaim for an amount of costs does not provide any sound basis to decline to pay, or to delay paying, the Security to the respondents.  The appellants' counterclaim for an amount of costs relies on rights they allege they have under a notice of charge.[32] The counterclaim is contested, both by the respondents to this appeal,[33] and by the liquidator of CAT.[34]  The respondents' liability in this respect has not been determined by a court.  In our view, the existence of a contested and contestable counterclaim does not provide any sufficient reason for not ordering payment out of moneys paid into court as security for costs to a successful respondent who has the benefit of an order for taxed costs exceeding the amount of the security.

   [32] Appeal ts 272; affidavit of Mrs Frigger, 18 June 2018, annexure AF11.

   [33] Appeal ts 275.

   [34] Affidavit of Mr Mervyn Kittay, sworn 8 August 2014 [19] ‑ [30], annexure CVE1 to affidavit of Mr Cameron Eastwood, 14 June 2018.

10. In our view, the monies paid into court as security for the respondents' costs should now be used for the purposes for which those monies were paid.  The respondents succeeded in the appeal.  Their costs have been taxed at an amount exceeding the amount paid into court.  The amount paid into court should be paid to the respondents.  None of the matters raised by the appellants justifies delaying that being done.

Conclusion

1. For these reasons, we ordered that the Security be paid out to the respondents. 

   I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

   DM
   ASSOCIATE TO THE HONOURABLE JUSTICE BEECH

   27 JUNE 2018