Frigger v Professional Services of Australia Pty Ltd [No 3]
[2014] WASCA 69
•8 APRIL 2014
FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 3] [2014] WASCA 69
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASCA 69 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:23/2012 | 23 JANUARY 2014 | |
| Coram: | PULLIN JA NEWNES JA | 8/04/14 | |
| 49 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | ANGELA FRIGGER HARTMUT FRIGGER PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD DONALD CAMPBELL-SMITH as executor of the estate of MARTIN BANNING KIM HOLBROOK |
Catchwords: | Appeal against costs orders Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 588FA, s 588FC, s 588FE Property Law Act 1969 (WA), s 89 Rules of the Supreme Court 1971 (WA), O 52A, O 36 r 2, O 66 r 51, O 52A r 5(4) Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(g)(i) |
Case References: | Aiden Shipping Co Ltd v Interbulk Ltd (The Vimeira) (No 2) [1986] AC 965 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382 Frigger v Professional Services of Australia Pty Ltd [2013] WASCA 26 Frigger v Professional Services of Australia Pty Ltd [No 2] [2013] WASCA 93 Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) House v The King [1936] HCA 40; (1936) 55 CLR 499 Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 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] [2010] WASC 113 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 Symphony Group PLC v Hodgson [1994] QB 179 |
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] [2014] WASCA 69 CORAM : PULLIN JA
- NEWNES JA
- CACV 24 of 2013
- 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
KIM HOLBROOK
Third Respondent
ON APPEAL FROM:
For File No : CACV 23 of 2012
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : SIMMONDS J
Citation : COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 3] [2010] WASC 2 (S)
File No : CIV 2265 of 2006
For File No : CACV 24 of 2013
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : SIMMONDS J
Citation : COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 5] [2012] WASC 382
File No : CIV 2265 of 2006
Catchwords:
Appeal against costs orders - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 588FA, s 588FC, s 588FE
Property Law Act 1969 (WA), s 89
Rules of the Supreme Court 1971 (WA), O 52A, O 36 r 2, O 66 r 51, O 52A r 5(4)
Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(g)(i)
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
First Appellant : Mr P Britten-Jones
Second Appellant : Mr P Britten-Jones
First Respondent : Mr T Stephenson
Second Respondent : Mr T Stephenson
Third Respondent : Mr J C Vaughan SC
Solicitors:
First Appellant : Peter Griffin Barristers & Solicitors
Second Appellant : Peter Griffin Barristers & Solicitors
First Respondent : Holborn Lenhoff Massey
Second Respondent : Holborn Lenhoff Massey
Third Respondent : Hotchkin Hanly Lawyers
Case(s) referred to in judgment(s):
Aiden Shipping Co Ltd v Interbulk Ltd (The Vimeira) (No 2) [1986] AC 965
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S)
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382
Frigger v Professional Services of Australia Pty Ltd [2013] WASCA 26
Frigger v Professional Services of Australia Pty Ltd [No 2] [2013] WASCA 93
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
House v The King [1936] HCA 40; (1936) 55 CLR 499
Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183
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] [2010] WASC 113
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Symphony Group PLC v Hodgson [1994] QB 179
1 REASONS OF THE COURT: These reasons deal with two appeals concerning costs which were heard together.
CACV 23 of 2012
2 This appeal by the appellants (the Friggers) concerned the costs of freezing and ancillary order proceedings. As revealed below, the Friggers' appeal as against orders for costs made in favour of the first and second respondents was dismissed because of non-compliance with a springing order. The only issue which remains in that part of the appeal is an application by the first and second respondents for a special costs order against the Friggers. The Friggers' appeal against costs orders in favour of the third respondent remains live, although the third respondent contends that the sole ground of appeal concerning him should be struck out and the appeal dismissed.
3 There is also an application by the first and second respondents for leave to cross-appeal against the primary judge's dismissal of their application for costs orders against the Friggers. That remains live. The first and second respondents will be referred to jointly as 'PSA', except where it is necessary to refer separately to the first respondent or the second respondent.
4 The background is as follows. In 2003, the Friggers' company, Computer Accounting and Tax Pty Ltd (CAT) purchased a property from the first respondent. The only shareholders and directors of CAT were the Friggers. The property was located at 269 South Western Highway, Armadale (the Armadale property).
5 Purchase of the Armadale property was induced by false representations made by Mr Banning, who was the sole director of the first respondent, on behalf of the first respondent. Simmonds J in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133, held that Mr Banning's conduct supported causes of action for damages for negligent misstatement, deceit and misleading and deceptive conduct against the first respondent and Mr Banning.
6 On 9 July 2008, Simmonds J entered judgment for CAT against PSA for $967,202.50, which was made up of:
(a) loss on acquisition - the difference between the contract price and the value of the property at the time of purchase - $287,125;
(b) lost rental - the difference between the amount that would have been received from the performance of a lease of the Armadale property misrepresented by Mr Banning as 'secure', and the amount actually received - $4,999.50; and
(c) loss of investment opportunity - $675,078.
The judgment also required PSA to pay interest on the amounts above.
7 One point in controversy at trial was whether CAT purchased the Armadale property in its own right, or in its capacity as trustee of the Frigger Superannuation Fund. The trial judge found that CAT purchased not as trustee for the Frigger Superannuation Fund, but in its own right [89], [128]. The trial judge referred to the Friggers' 'intention' to have CAT transfer the property into the Frigger Superannuation Fund, but said, '[i]t is common ground that no such intention was ever fulfilled' [89].
PSA appeals and applies for a stay of execution of judgment
8 PSA appealed against the judgment to this court. PSA applied for a stay pending the hearing of the appeal. An interim stay was granted but after a hearing on 24 September 2008, Buss JA dismissed the application to extend the interim stay. Buss JA said in his reasons Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 that CAT opposed any extension of the interim stay and added:
[CAT] relies on an affidavit of Angela Cecilia Theresa Frigger sworn 23 September 2008. Mrs Frigger is a director of [CAT]. She says, relevantly, in relation to [CAT's] current financial position, that the total value of [CAT's] net assets is about $2,850,043. It has no liabilities except for quarterly GST liabilities.
…
In my opinion, the only proper basis, in the present case, on which the interim stay might be extended is if there was a real risk that [CAT] would be unable to repay the judgment sum in the event of the appeal being allowed. I am satisfied, on the basis of the material in pars 7 and 16 to 22 of Mrs Frigger's affidavit, that there is no such risk [24] - [27].
Mrs Frigger's 23 September 2008 affidavit
9 Mrs Frigger's affidavit of 23 September 2008, and the paragraphs to which Buss JA referred, are of critical importance to the issues on this appeal. It is therefore appropriate to set out in full the paragraphs to which Buss JA referred. Those paragraphs read:
7. In response to paragraph 7.3 [of the affidavit of Martin Paul Banning sworn 25 August 2008] the buoyant financial state of [CAT] in 2007 compared to 2005, came about by the increase in the value of its property at 140 Edward Street, Perth from $435,000 to $1.1 million, as well as the ability of [CAT] to repay the directors' loan of $750,000 (taken out in March 2003) due to the economic boom in Western Australia and the resulting income earned by [CAT's] two professional working directors.
…
16. I refer to the security of costs [sic] application in the subject proceedings, wherein [CAT's] solicitor … deposed to a commercial property owned by [CAT] at 140 Edward Street, Perth having a sworn value in April 2007 of $1,100,000. This property is still owned by [CAT] and is unencumbered.
17. [CAT] owns the subject property of these proceedings at 269 South Western Highway, Armadale which His Honour Justice Simmonds set a value of $615,030 at 1 March 2007 (J397). This property is still owned by [CAT] and is unencumbered.
18. Annexure 'ACTF2' is an Internet printout of a Term Deposit with the ING Direct Bank in the amount of $999,999 earning interest at 7.7% in [CAT's] name expiring 8 January 2009.
19. Annexure 'ACTF3' is a copy of a tax statement for [CAT] showing 52,416 units at a price of $1.055 in Becton Office Fund. This investment earns 8% p.a.
20. Annexure 'ACTF4' is an internet printout of a term deposit of $80,000 in [CAT's] name earning 7% p.a. expiring 1/9/09.
21. The total of the above assets is $2,850,043.
22. [CAT] has no liabilities save quarterly GST liabilities.
23. Given [PSA's] own admission that [CAT's] financial affairs are 'buoyant', there is no reason to stay the judgment on the ground that [CAT] would not be in a financial position to repay the sum should the appeal be successful. (emphasis added)
10 The total value of assets of $2,850,043 was the total of the value of the assets referred to in pars 16 - 20. Paragraphs 21 and 22 have been emphasised by me because of the importance of those statements in relation to later observations made in these reasons.
PSA makes payment to the Friggers
11 As a result of the dismissal of the stay application, PSA was obliged to make payment of the judgment sum and on 2 June and 5 June 2009, PSA paid to CAT the sum of $1,165,661.54.
PSA's appeal
12 Mr Banning died on 8 September 2008. Mr Donald Campbell-Smith was appointed as the executor of Mr Banning's estate and thus Mr Campbell-Smith as executor of Mr Banning's estate became the second appellant in the original appeal. The appeal by PSA against the judgment of Simmonds J was heard on 22 July 2009. Reasons of the Court of Appeal were published on 23 October 2009: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183. PSA succeeded in obtaining a judgment from the Court of Appeal reducing the judgment sum. The component of the award for damages of $675,078 for the investment opportunity loss was set aside and the loss on acquisition was reduced by $6,500. This had the consequence that the interest component of the judgment also had to be reduced. The award of damages for lost rent was not challenged on appeal.
The Court of Appeal orders CAT to repay PSA approximately $850,000
13 On 7 December 2009, the Court of Appeal ordered that CAT pay (in effect, repay) the amount overpaid by PSA. The amount CAT had to repay, including the estimated costs of the appeal, was approximately $850,000: see Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) [21].
The steps taken by the Friggers on the day of and after the Court of Appeal published its reasons
14 Three events then occurred. One was on the day on which the reasons of the Court of Appeal were published (23 October 2009). The other two occurred soon after. The events were:
(a) on 23 October 2009, the Friggers registered a charge allegedly created on 10 September 2009, over property of CAT described as 'all of the proceeds from legal proceedings Supreme Court and Magistrates Court' to secure repayment of loans allegedly made by the Friggers to CAT in the sum of $2,000,000;
(b) on 13 November 2009, the Friggers arranged for the lodgement of two absolute caveats over the title to three pieces of real estate registered in the name of CAT. One caveat related to the title to the property at 140 Edward Street, Perth (referred to in Mrs Frigger's affidavit of 23 September 2008) and at 46 Pier Street, Perth, and the other related to the Armadale property. The caveats claimed that they were to protect the interest 'of the beneficiaries of the trust disclosed in declaration of trust L117599' (in relation to the first caveat) and to protect the interest 'of the beneficiaries of the trust disclosed in declaration of trust L117600' (in relation to the second caveat). It is common ground that these declared that the property was held by CAT as trustee for the Frigger Superannuation Fund. Land transfers were exhibited to an affidavit sworn by Mrs Frigger on 8 December 2009. In each case, the consideration for the transfer of the land from CAT to CAT as trustee was $1; and
(c) on 3 December 2009, the Friggers, being the members of CAT, resolved to put CAT into voluntary liquidation. No declaration of solvency existed when the resolution was passed.
PSA applies for a freezing order against the Friggers
15 Despite the Court of Appeal order, the (approximately) $850,000 was not paid by CAT and has not been paid since then. On 3 December 2009, pursuant to O 52A of the Rules of the Supreme Court 1971 (WA), PSA, having found out about the registration of the charge and lodgement of the caveats referred to above, brought an urgent application for freezing orders to prevent the Friggers taking steps to enforce payment to them of money due under the deed of charge or to diminish the value of CAT's real estate, and for ancillary orders requiring CAT and the Friggers to depose as to the assets and liabilities of CAT and what had become of the money paid to CAT by PSA in satisfaction of Simmonds J's original judgment. The orders were sought against both CAT and the Friggers. The application was heard by Simmonds J on 10 December 2009.
16 At the hearing on 10 December 2009, counsel for PSA said (correctly) (ts 2230) that if a liquidator were appointed, the Friggers would cease to be in a position as directors to dispose of other property of CAT and that would provide comfort to PSA. However, counsel pointed out that at the date of the hearing of the application for the freezing and ancillary orders, it was doubtful that a liquidator had been validly appointed because the Friggers claimed that the appointment had been made as a result of a members' voluntary winding-up resolution in circumstances where there had been no declaration of solvency and where there was evidence giving rise to doubt about the solvency of CAT.
Freezing orders made - Simmonds J's reasons for making the orders
17 At the conclusion of the hearing on 10 December 2009, his Honour said that he would make freezing and ancillary orders. His Honour's reasons were set out in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (CAT [No 3]). The precise form of the orders was settled on 16 December 2009.
18 The freezing orders, in their final form, were in the following terms:
8. [The Friggers] must not take any steps to enforce the payment to them of any amount claimed to be owing to them by [CAT] pursuant to a deed of charge dated 10 September 2009 or otherwise;
9. [the Friggers] must not take any steps to replace [CAT] as trustee of any trust in which [CAT] is presently the trustee; and
10. [the Friggers] must not take any steps to deal with or diminish the value of any of the following assets:-
(a) the properties known as 140 Edward Street and 46 Pier Street in Perth, and, 296 South Western Highway, Armadale … or, if any have been sold, the net proceeds of the sale;
(b) any money in the trust account of any solicitor acting for [CAT] but in particular Chris Stokes & Associates; but
(c) nothing in order 10(b) hereof shall be taken to prevent the use of the money therein referred to pay the reasonable legal expenses of [CAT].
20 In his reasons in CAT [No 3], Simmonds J recorded the fact that it was not in dispute that CAT had been paid the sum of $1,165,661.54 in June 2009 in payment of the judgment sum [6]. His Honour referred to the charge registered on the day the Court of Appeal published its reasons for decision [10] - [13].
21 Simmonds J referred to the 'tension' between Mrs Frigger's affidavit sworn 8 December 2009 filed in opposition to the freezing and ancillary orders which tended to confirm that there was a substantial liability which the deed of charge secured, and pars 7 and 16 - 23 of the affidavit of Mrs Frigger of 23 September 2008 which was filed in relation to the stay application in the Court of Appeal [12], [15].
22 Referring to the affidavit of 23 September 2008, Simmonds J said:
Mrs Frigger's affidavit indicated at that point that there were the properties referred to there - and I will have occasion to return to them later - including a property at Edward Street, described as, on the face of the material at least, the property of CAT. Also referred to in those paragraphs was an ability to repay a loan to directors in the amount of $750,000, and that there were no liabilities of CAT.
That assertion becomes rather difficult to square with what appears on the face of the deed of charge to which I referred earlier, confirmed, to the extent that it is, by Mrs Frigger's affidavit of 8 December of this year. That, it seems to me, points to - with the other evidence to which I referred - a danger of the kind to which O 52A r 5(5) points [16] - [17].
23 His Honour then explained that there was evidence raising a question about the solvency of CAT and that that evidence called into question the purported appointment of a liquidator on 3 December 2009 pursuant to the voluntary liquidation. His Honour said:
The question of the solvency of CAT is a matter which is raised both by the debt to which I have referred, as well as by the asset position of CAT, to which I will come shortly, when those two matters are considered with the affidavit of Mrs Frigger, 8 December, which refers in [9] to an exchange she had with a Mr Glenn Trinick, registered company liquidator, following the handing down of the Court of Appeal's decision on 23 October 2009. This was a conversation in which she sought advice from him, as the affidavit says, 'as I believed the Respondent could be insolvent.'
She goes on to say that she agreed with Mr Trinick that she would again consult with him after his return from holiday early in December 2009. Paragraph 10 says that on 3 December 2009 the members of the respondent resolved to put the respondent into voluntary liquidation, and adds, 'I have assessed the Respondent's financial status and we intend to make a declaration of solvency pursuant to s 494 Corporations Act 2001.'
No such declaration could be responsibly made if in fact CAT were insolvent, and Mrs Frigger indicated to me that par 10 was an indication that she had reconsidered the matters referred to in par 9. However, it seems to me that there is a significant question of doubt which has not altogether been resolved in view of the debt for which the deed of charge represents security and, having regard to transactions that I will shortly reach, that in fact the company is solvent [19] - [21].
24 Simmonds J also referred to the lodgement of the caveats by the Friggers over the three pieces of real estate referred to above [25] ff. The caveats signed by Mrs Frigger claimed a beneficial interest in the three pieces of land referred to above. In Mrs Frigger's affidavit of 8 December 2008 she stated that the beneficial interest was the interest of the beneficiaries of the Frigger Superannuation Fund, of which CAT was trustee. The interest was said to have arisen by reason of the execution of transfers of the title to the three pieces of land from CAT to CAT as trustee of the Frigger Superannuation Fund. As already mentioned, the transfer of land documents showed that the consideration for the transfer of the three titles was for nominal consideration, namely $1 in each case (GAB 71, 72).
25 In summary, his Honour said that the effect of the transfers of the real estate appeared to place 'the ... substantial non-cash assets of CAT … beyond the reach of the general creditors of [CAT]' [31], and that there was 'a danger that … the payment of the debt for which the deed of charge [was] security', would work 'a reduction in the capacity of CAT to meet the [obligation to repay to PSA the] $850,000 … due as a result of the [judgment and] supplementary judgment of the Court of Appeal' [33].
26 In effect, his Honour concluded there was sufficient evidence to support the claim by PSA that steps were being taken to dispose of assets of CAT, deal with assets of CAT, or diminish the value of the assets in CAT to the point where the judgment which required CAT to repay approximately $850,000 would be wholly or partly unsatisfied because of the exercise of power of disposition by the Friggers [33].
27 Simmonds J said that ancillary orders should be made pursuant to O 52A requiring the Friggers to provide information as to what had become of the money paid to CAT in satisfaction of the judgment, to provide information as to the consideration given by them in support of the loan owing to them by CAT, and to provide information as to what had become of any amounts paid to them by PSA in diminution of the loan account since 23 October 2009 [39] - [41]. His Honour also said that orders freezing assets should be made [42].
Undertakings
28 An undertaking as to damages was proffered by Mr Banning's executor, Mr Campbell-Smith, but no undertaking had been proffered by PSA prior to the hearing before Simmonds J.
29 On 10 December 2009, Simmonds J required an undertaking to be given also by Mr Kim Holbrook (the third respondent in this appeal) as the administrator of PSA under a deed of company arrangement [62] - [63]. That undertaking was given. The form of the undertakings was settled by Simmonds J on 16 December 2009.
30 Costs of the application for freezing and ancillary orders were reserved (ts 2305).
Chronology of events after the hearing on 10 December 2009
(a) 12 December 2009 - a resolution for a members' voluntary winding-up of CAT and the appointment of a liquidator, Glenn Douglas Trinick, was passed by the Friggers, replacing the earlier resolution of 3 December 2009. A declaration of solvency was provided on this occasion.
(b) 16 December 2009 - as mentioned above, the freezing and ancillary orders in their final form were made to reflect the judge's reasons on 10 December 2009: see Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) [37] (CAT [No 3] (S)). The orders were to have effect until 22 January 2010. The form of the undertaking to be given by Kim David Holbrook, the administrator of PSA was also settled.
Costs of that hearing were reserved (ts 2343).
(c) 20 January 2010 - Mrs Frigger swore an affidavit purporting thereby to comply with the ancillary orders.
(d) 21 January 2010 - on the application of PSA, Simmonds J made orders for the appointment of a provisional liquidator of CAT: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38. The provisional liquidator appointed was Mr Mervin Jonathan Kitay, who replaced Mr Trinick. The Friggers applied to Simmonds J to have the provisional liquidator removed. That application was dismissed on 15 February 2010: see Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113.
(e) 22 January 2010 - there was an appearance for PSA and by Mrs Frigger at a hearing before Simmonds J. The freezing orders, but not the ancillary orders, were extended by consent to a new return date of 19 March 2010. The ancillary orders were not extended following counsel for PSA's submission to the court that any outstanding information sought by the ancillary orders could now be dealt with by the provisional liquidator of CAT.
(f) 29 January 2010 - written submissions were filed by PSA seeking costs or the freezing and ancillary orders against CAT and the Friggers.
(g) 15 February 2010 - Simmonds J made programming orders for the costs of the freezing and ancillary orders to be determined after written submissions were received from the parties. His Honour also dismissed the application by the Friggers to remove the provisional liquidator.
(h) 19 February 2010 - written submissions were filed by the Friggers indicating that they sought cost orders against PSA. Responsive submissions were filed by PSA on or about 24 February 2010.
(i) 19 March 2010 - this was the third hearing relating to the freezing and ancillary orders. There were appearances by counsel for PSA and Mrs Frigger appeared in person. For the first time, Mr Holbrook also appeared via his solicitor. He appeared for two reasons; the first was because Mrs Frigger made assertions in affidavits that Mr Holbrook had acted 'dishonestly' and the second was because of an issue raised by Mrs Frigger about the form of the undertaking given by Mr Holbrook (ts 2752 - 2753).
During the hearing, Mrs Frigger said she was on medication, that it was 'running out' and that she needed an adjournment (ts 2404). An adjournment was granted and Mrs Frigger consented to an extension of the freezing order.
Costs were reserved (ts 2406).
(j) 31 March 2010 - Simmonds J made orders by consent on the papers further extending the freezing orders to a new return date of 9 April 2010.
(k) 9 April 2010 - there were appearances for the Friggers by their then solicitor, by PSA via counsel, and by Mr Holbrook's solicitor at a hearing before Simmonds J.
The Friggers' solicitor indicated that he had only recently been retained and requested a further adjournment to obtain the services of counsel. As a result, Simmonds J made orders further extending the freezing orders to a new return date of 29 April 2010. That date was set because there was an application pending before Master Sanderson to wind up CAT in insolvency or on the just and equitable ground. See CAT [No 3] (S) [50].
Costs were reserved.
(l) 29 April 2010 - the matter was again heard before Simmonds J. There were appearances for the Friggers by the solicitor who appeared for them on 9 April 2010, for PSA by counsel, and for Mr Holbrook by his solicitor. Simmonds J was informed by counsel for PSA that Master Sanderson had indicated that he intended to grant the application to wind up CAT, but wished to issue reasons before making formal orders. The solicitor for the Friggers, again, asked for the matter to be adjourned to permit counsel to attend and said they would consent to a further extension of the freezing orders. As a result, Simmonds J made orders further extending the freezing orders to a new return date of 20 May 2010.
The Friggers had indicated that they wished to claim that the freezing and ancillary orders should not have been made or did not come into effect because of alleged deficiencies of the undertaking by Mr Holbrook, and that the freezing orders should not be further extended. Simmonds J made orders programming the provision of submissions and affidavits by the Friggers and the other parties with respect to those contentions. See CAT [No 3] (S) [50].
Costs were reserved.
(m) 6 May 2010 - Master Sanderson made an order that CAT be wound up in insolvency: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93.
(n) 20 May 2010 - at a hearing before Simmonds J, there were appearances for the Friggers by the same solicitor who appeared for them on the two previous occasions. Counsel for PSA appeared and Mr Holbrook was once again represented by his solicitor.
On this occasion, the solicitor for the Friggers sought a further extension of the freezing orders with a variation to allow for the appointment of a replacement for CAT as trustee of the Frigger Superannuation Fund. Simmonds J made orders further extending the freezing orders with such a variation, until 9 June 2010.
The issue about the costs of the application for freezing and ancillary orders and the costs of the hearing on 20 May 2010 was adjourned to 9 June 2010. See CAT [No 3] (S) [53].
(o) 28 May 2010 - the High Court refused an application by CAT for special leave to appeal against the Court of Appeal decision.
(p) 9 June 2010 - at a hearing before Simmonds J, the Friggers were represented by counsel as were PSA. Mr Holbrook was represented by his solicitor. The Friggers again sought an adjournment and agreed to consent to an extension of the freezing orders until further order, and also sought an adjournment of the hearing as to costs. The adjournment sought by counsel for the Friggers was to allow the Friggers an opportunity to file an affidavit in response to the written submissions filed by PSA on 29 January 2010 seeking costs orders against CAT and the Friggers (ts 2498 - 2500). Simmonds J ordered that the Friggers file and serve any further affidavit or affidavits by 4pm on 21 June 2010 and made orders extending the freezing orders as varied until further order. The hearing concerning costs was adjourned to 5 July 2010 (ts 2552).
Counsel for PSA suggested that now that a liquidator for CAT had been appointed, it might be possible to make an order discharging the freezing orders, on the basis that the liquidator could bring proceedings to 'claw back' assets from the Friggers (ts 2524). No such order was made on that day.
An order was made that the costs of PSA and those of Mr Holbrook, thrown away by the adjournment, be paid by the Friggers in any event (ts 2552).
(q) 22 June 2010 – the Friggers filed an affidavit of Mrs Frigger sworn 22 June 2010 in purported compliance with the order of Simmonds J dated 9 June 2010 referred to above. Mrs Frigger deposed that she affidavit was 'a composite affidavit of the matters for which I can give evidence and which are to be relied on in the further hearing regarding the freezing orders' (par 4).
(r) 5 July 2010 - there was no hearing on this date by arrangement with the court.
(s) 7 July 2010 - at this hearing before Simmonds J, the Friggers and PSA were represented by counsel and Mr Holbrook was represented by his solicitor. Counsel for the Friggers contended that the freezing and ancillary orders had never come into effect because the undertaking of Mr Holbrook had been deficient and that, with the appointment of the liquidator to CAT on 6 May 2010, the orders had become 'redundant' (ts 2559). Counsel for PSA indicated that, by reason of the appointment of a liquidator, PSA was content to have the orders discharged (ts 2560). The parties then conferred and orders were made by Simmonds J on that day that the freezing orders should be discharged, effective at 4 pm on 14 July 2010 (ts 2564).
Counsel for PSA submitted that no regard should be given to the affidavit of Mrs Frigger sworn 22 June 2010 because substantial passages of the affidavit were inconsistent with earlier sworn statements of Mr and/or Mrs Frigger (ts 2578). Counsel foreshadowed that, if the affidavit were to be relied upon by the Friggers, PSA would make an application pursuant to O 36 r 2 of the Rules of the Supreme Court 1971 (WA) for leave to cross-examine Mrs Frigger on the matters deposed to in the affidavit (ts 2580). Counsel outlined in detail the alleged inconsistencies between the affidavit of 22 June 2010 and affidavits of Mrs Frigger sworn on 10 April 2007 and 24 April 2007 and filed in the proceedings before Simmonds J; an affidavit of Mrs Frigger sworn 7 July 2005 and filed in proceedings in the District Court; an affidavit of Mrs Frigger sworn 23 September 2008 and filed in the original appeal proceedings CACV 76 of 2008; and transcript of sworn oral testimony of Mrs Frigger in proceedings in the Magistrates Court on 9 April 2010 (ts 2581 - 2603). Counsel submitted that the inconsistencies in the affidavit sworn 22 June 2010 'strongly supports the view that there has been in the conduct of these proceedings by Mr and Mrs Frigger now clearly proven an element of the moral turpitude that requires or would support an order for indemnity costs' (ts 2604).
Counsel for PSA requested the production of certain documents referred to in Mrs Frigger's affidavit of 22 June 2010. Simmonds J adjourned the proceedings until 30 August 2010 in order to allow counsel for the Friggers to seek instructions before responding to PSA's oral submissions and to source the documents requested by PSA. His Honour ordered that Mrs Frigger be available to attend on 30 August should leave to cross-examine her on the 22 June 2010 affidavit be granted and made orders, without objection by the Friggers, that they produce the documents requested by PSA by 14 July 2010 (ts 2653).
Simmonds J also made orders that the costs of the hearing were to be treated, in effect, as costs in the cause of the application by PSA for the freezing and ancillary orders (ts 2653).
(t) 22 July 2010 - only counsel for PSA appeared. Simmonds J made springing orders for the production of the documents the Friggers were supposed to produce as a result of the orders of 7 July 2010. Simmonds J made an order that the Friggers pay the costs of the hearing and that the costs be fixed at $405. See CAT [No 3] (S) [61].
(u) 30 August 2010 – there were appearances at a hearing before Simmonds J by counsel for the Friggers and the solicitors for PSA and for Mr Holbrook. Counsel for PSA was ill and the instructing solicitor for PSA sought an adjournment on that basis. It was noted by his Honour that solicitors for Mr Holbrook had advised the court prior to the hearing that, as it now appeared to them that the Friggers intended to seek indemnity costs against Mr Holbrook personally, counsel had been retained, but was unable to attend on 30 August. Counsel for the Friggers did not object to an adjournment of the proceedings, but sought costs thrown away. Two days were set down for argument relating to costs on 13 and 14 October 2010. The costs of the 30 August 2010 hearing were reserved to that further hearing. See CAT [No 3] (S) [62].
(v) 12 October 2010 - Mrs Frigger filed an unsolicited affidavit sworn 12 October 2010, which she said to be 'evidence in response to a number of allegations I have identified as made by [PSA] … during the hearing on 20 May 2010 … and the hearing on 7 July 2010' (par 4).
(w) 13 - 14 October 2010 - counsel for PSA made a formal oral application that Mrs Frigger be cross-examined on her affidavit sworn 22 June 2010 (ts 2849). Lengthy submissions were made by counsel for PSA and counsel for the Friggers as to whether leave to cross-examine Mrs Frigger should be granted. Following those submissions, Simmonds J refused leave to cross-examine and gave ex tempore reasons for doing so (ts 2884 - 2887). His Honour held that, while the 22 June 2010 affidavit was likely to play a significant role in the proceedings relating to costs of the freezing and ancillary orders and he could not exclude the possibility that cross-examination might show that the affidavit or a material part of it could not be used for any purpose relevant to the costs applications (ts 2886), the costs that cross-examination would impose on both the parties and the administration of justice outweighed the benefit of allowing the cross-examination (ts 2886). His Honour considered that it would be exceedingly difficult to confine the cross-examination (which could lead to the need to adduce further evidence) and that the proper application of case management principles meant that leave to cross-examine should be refused (ts 2887). However, his Honour considered that the application by PSA for leave to cross-examine had been a reasonable application to bring, and as a result ordered that the costs of the application for leave to cross-examine should be costs in relation to the application for costs orders by the parties as a whole (ts 2887).
The parties then made detailed submissions about costs. The Friggers applied for an order that PSA should pay the costs of the application for the freezing and ancillary orders and all subsequent hearings on an indemnity basis. In the alternative, the Friggers submitted that there should be no order as to costs: CAT [No 3] (S) [67]. The Friggers also applied for an order that Mr Holbrook pay the costs of the proceedings insofar as they related to the provision of the undertaking by Mr Holbrook for the purposes of the freezing and ancillary orders on an indemnity basis and, in the alternative, that Mr Holbrook pay the Friggers' costs of PSA's application for the freezing and ancillary orders under the undertaking: CAT [No 3] (S) [70].
PSA applied for an order that the Friggers and CAT pay PSA the costs of the application for the freezing and ancillary orders and all subsequent hearings on an indemnity basis and, in the alternative, that the Friggers pay the costs with a special costs order to include an uplift on relevant scale items: CAT [No 3] (S) [68] - [69].
Mr Holbrook applied for costs against the Friggers.
(x) 22 September 2011 - the Friggers made an application to adduce fresh evidence in relation to the costs issues. The application was heard and dismissed by Simmonds J on 28 September 2011. His Honour ordered that the Friggers pay Mr Banning's estate's costs of the application fixed at $2,150. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2011] WASC 284.
(y) 9 March 2012 - Simmonds J published his reasons on the costs applications: CAT [No 3] (S). No orders were pronounced because new counsel had been appointed by the Friggers and he asked for an adjournment to seek full instructions and prepare a minute of proposed orders (ts 3227). The adjournment was granted. The Friggers were ordered to pay PSA's costs fixed at $429.
(z) 16 March 2012 - Simmonds J pronounced orders that the Friggers pay Mr Holbrook's costs to be taxed without regard to the relevant scale. His Honour dismissed the Friggers' application for a costs order against Mr Holbrook. His Honour also dismissed the Friggers' application for indemnity costs against PSA and dismissed PSA's application for costs against the Friggers. In effect, as between the Friggers and PSA, each party was left to pay their own and its own costs. The precise form of the orders is set out under the next heading.
(aa) 30 and 31 August 2012 - Simmonds J heard an application dated 1 May 2012 (amended 11 May 2012) by the Friggers for orders that Mr Campbell-Smith and Mr Holbrook pay compensation for damages allegedly suffered by the Friggers as a result of the freezing orders, and applications by Mr Campbell-Smith dated 23 January 2012 and Mr Holbrook dated 23 December 2011 for the discharge of the undertakings they had given. The decision on all three applications was reserved. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382 (Cat [No 5]).
(ab) 16 October 2012 - Simmonds J delivered his decision in respect of the application by the Friggers for compensation and the applications by Mr Campbell-Smith and Mr Holbrook for the discharge of the undertakings. His Honour dismissed the Friggers' application and granted the applications of Mr Campbell-Smith and Mr Holbrook: see CAT [No 5].
The costs orders made by Simmonds J on 16 March 2012
1. The application of Mrs Angela Frigger and Mr Hartmut Frigger (together the Friggers) seeking that [PSA] pay the Friggers' costs on an indemnity basis of [PSA's] application for freezing and ancillary orders ('the Defendants Application') including any reserved costs be dismissed.
2. The application of [PSA] seeking that the Friggers pay [PSA's] costs of the Defendants' Application including any reserved costs be dismissed.
3. There otherwise be no order as to the costs of the Defendants' Application, or of the application of the Friggers, for costs in respect of the Defendants' application, saving orders previously made for costs in any event, and the costs of today which are those of [PSAS] fixed at $429.00 and payable forthwith.
31 His Honour also made an order that the Friggers pay Mr Holbrook's costs without regard to the limit imposed by the relevant scale item. The precise terms of that order are set out later when dealing with Mr Holbrook's application to dismiss the Friggers' appeal against those orders.
Simmonds J's reasons for the costs orders
32 In his Honour's reasons for decision in CAT [No 3] (S), Simmonds J referred to a number of general principles, including setting out an extract from Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 - 625 (McHugh J). His Honour extracted what he considered were the following principles from that case:
(a) when orders terminate without a hearing on the merits, the usual approach to costs is that no order should be made as to costs, unless and to the extent that a party acted unreasonably in relation to obtaining, continuing or resisting the making or continuation of the orders;
(b) the court should not enter into the merits where the only reason for entry into them is the determination of a costs order;
(c) a determination of unreasonableness should not become a determination of the merits;
(d) however, even where the parties have acted reasonably, the court may feel confident that one party was almost certain to have succeeded had the matter been fully tried and then costs may be awarded to that party, but such cases are likely to be rare.
See CAT [No 3] (S) [74] - [76].
33 The Friggers submitted that those principles did not apply where the Friggers were not a party to the proceedings [77]. Simmonds J determined that the principles in Ex parte Lai Qin should apply [78], [80].
The Friggers' application for costs against PSA
34 It is not necessary to set out in full Simmonds J's reasons for dismissing the Friggers' application. They appear in CAT [No 3] (S) [82] - [116]. Simmonds J dismissed the Frigger's application for an order for costs in their favour against PSA [115]. His Honour concluded that it was not unreasonable for PSA to seek the freezing and ancillary orders, or to seek the maintenance of the orders until after the appointment of the liquidator in CAT's insolvency [112]. His Honour rejected the Friggers' submission that the Friggers were almost certain to have succeeded if 'the action' had been tried [113].
35 His Honour referred to matters referred to in various affidavits sworn by Mrs Frigger (including the affidavit sworn on 23 September 2008 in the stay application proceedings before Buss JA referred to earlier, an affidavit sworn on 22 June 2010 and filed in the proceedings before Simmonds J, and an affidavit sworn on 12 October 2010 and also filed in the proceedings before Simmonds J), which were called into question by PSA [95] - [96]. His Honour noted that no resolution of the issues raised between the parties arising out of those affidavits could be reached in proceedings in relation to costs [97].
36 As to the submissions by the Friggers that the freezing orders had never come into effect because the undertaking of Mr Holbrook had never been provided in a proper form, his Honour said that it was 'reasonably arguable that the undertaking by Mr Holbrook was such that the freezing order came into effect' [99], [106].
37 His Honour then turned to the effect of the appointment of the liquidator of CAT. The Friggers contention was that the appointment of the liquidator in the members' voluntary winding-up was the appointment of an independent party whose responsibilities included enquiring into whether there were assets of CAT held by others or other assets held as a result of voidable transactions with it. His Honour dealt with this between [107] - [111] and concluded:
[I]t is not evident to me that it would be unreasonable for [PSA] to seek the making of the ... freezing and ancillary orders notwithstanding the appointment of the liquidator in the members' voluntary liquidation. Nor is it evident to me it would be unreasonable for [PSA] to seek the maintenance of those orders until after a time following the appointment of the liquidator in CAT's insolvency [112].
38 His Honour concluded that he was unable to be satisfied that the Friggers were almost certain to have succeeded if 'the action had been tried' [113]. His Honour did not define what he meant by 'the action'.
39 As a result his Honour dismissed the Friggers' application that PSA pay the Friggers' costs [115].
The application by PSA that the Friggers pay their costs
40 PSA submitted that they were the successful parties. His Honour said he was unable to accept that submission. His Honour found that the arguments on both sides were arguable [120]. As a result, applying the principles set out in Ex parte Lai Qin, his Honour made the order set out above on 16 March 2012 dismissing the application by PSA for a costs order against the Friggers. That order is the subject of the PSA cross-appeal.
The Friggers' application for costs against Mr Holbrook
41 His Honour observed that an order for costs against a non-party would be exceptional and only made after exercising considerable caution [127]. His Honour concluded that it had not been shown, as the Friggers' argued, that Mr Holbrook had provided a 'manifestly' defective undertaking or that the undertaking was defective at all [128] - [129]. His Honour therefore dismissed the Friggers' application for costs against Mr Holbrook.
Mr Holbrook's application for costs against the Friggers
42 His Honour noted that Mr Holbrook put his case for costs against the Friggers on two bases. One was that the Friggers had alleged that Mr Holbrook had acted dishonestly [135] and that the undertaking given by Mr Holbrook was 'false, misleading and/or valueless' [136]. His Honour noted the submission from Mr Holbrook that such an allegation of dishonesty required a response including attendance at hearings by a legal representative [137].
43 The other basis for Mr Holbrook's application was the contention by the Friggers that the undertaking given by Mr Holbrook was of no effect [138].
44 His Honour, in effect, held that the allegation of dishonest conduct meant that it was reasonable for Mr Holbrook to appear [141] - [142]. As a result, his Honour made an order that the Friggers pay Mr Holbrook's costs [146]. The precise form of that order is set out later in these reasons.
The Friggers' appeal
45 The Friggers filed an appeal notice on 30 March 2012 and identified the orders which were the subject of their appeal. Some orders related to PSA. Some related to Mr Holbrook. They were identified as:
1. 9 June 2010 - The [Friggers] pay the respondents' costs thrown away for the hearing on 9 June 2010.
2. 22 July 2010 - the [Friggers] pay [PSA's] costs of the hearing fixed at $405.00.
3. 14 October 2010 - There be no order as to costs of [PSA's] dismissed application to cross-examine [Mrs Frigger] in support of their dismissed application for indemnity costs.
4. 28 September 2011 - The [Friggers'] application to adduce fresh evidence be dismissed.
5. 28 September 2011 - The [Friggers'] pay the respondents' costs of the [Friggers'] application fixed at $2,150.00.
6. 9 March 2012 - The [Friggers] pay [Mr Holbrook's] costs fixed at $429.00 and [PSA's] costs fixed at $429.00.
7. 16 March 2012 - The [Friggers] pay the costs of [Mr Holbrook's] involvement in the proceedings, to be taxed without regard to the relevant scale.
8. 16 March 2012 - The [Friggers'] application for costs against [Mr Holbrook] as far as they related to dealing with [Mr Holbrook's] undertaking be dismissed.
9. 16 March 2012 - The [Friggers'] application for indemnity costs for [PSA's] application for freezing and ancillary orders be dismissed.
10. 16 March 2012 - The [Friggers] pay [PSA's] costs of the hearing on 16 March 2012 fixed at $429.00.
46 The Friggers were self-represented at the time they filed the appeal notice.
The Friggers' appeal concerning PSA
47 The Friggers filed their appellants' case on 25 May 2012. By that time, they had obtained legal representation. The Friggers' grounds of appeal in their appellants' case dated 25 May 2012 alleged error by Simmonds J in making the costs orders in relation to various hearings relating to the freezing and ancillary orders.
48 The grounds of appeal referred indiscriminately to all of the orders the subject of the appeal, with no separate grounds identifying the alleged error or errors in respect of each order. That was unsatisfactory. Four of the orders were orders in favour of PSA made because of the particular circumstances of the day on which the order was made; for example, the order that the Friggers pay PSA's costs fixed at $429 for the hearing on 9 March 2012 was because the Friggers had only just briefed new counsel and that caused an adjournment which would have been unnecessary if counsel had not been briefed late. That was an issue quite separate from the issue about whether or not costs should be awarded in relation to the making of the freezing and ancillary orders. Another order appealed by the Friggers was that the Friggers pay costs thrown away because conduct of the Friggers had wasted costs. Three orders under appeal related to Mr Holbrook. Those orders raised issues separate from the issues between PSA and the Friggers.
49 On 22 January 2013, the Friggers filed a notice indicating that they were now, again, self-represented. In this court at a directions hearing on 24 January 2013 it was pointed out by the court to the Friggers that one set of grounds in relation to all 10 orders the subject of appeal would not identify the errors alleged in relation to the different costs orders appealed. It was explained to the Friggers by the court that it would be necessary for them to prepare separate grounds of appeal in relation to each order that was being challenged. At a further directions hearing on 21 June 2013, the appellants' case dated 25 May 2012 was struck out and the Friggers were given leave to file an amended appellants' case to address the issues identified by the court.
50 The amended appellants' case was filed by the Friggers on 11 July 2013. The amended appellants' case also failed to include separate grounds of appeal in relation to each order the subject of the appeal, and instead included grounds that referred to grouped sets of orders under appeal. This again made it impossible to distinguish the alleged error or errors in respect of each order under appeal.
51 Eventually, it was necessary to strike out the amended appellants' case dated 11 July 2013 as against PSA and make a springing order on 1 October 2013 requiring that there be separate grounds of appeal relating to each costs order which was challenged. Mrs Frigger said at a hearing on 1 October 2013 that she 'appreciated' being given the further opportunity to file proper grounds of appeal (1 October 2013, ts 114). The order made on 1 October 2013 read, relevantly:
Unless by 4.00 pm Monday, 14 October 2013 the appellants file and serve a substituted appellants' case in which:
(a) each order appealed against is the subject of separate grounds of appeal prepared in accordance with the Supreme Court (Court of Appeal) Rules 2005; and
(b) the appellants' submissions give a separate heading for each order appealed under which the grounds relating to that order are addressed in accordance with the Supreme Court (Court of Appeal) Rules 2005,
the appeal against [PSA] is dismissed and [the Friggers] pay [PSA's] costs of the appeal including reserved costs to be taxed.
52 The Friggers submitted a reamended appellants' case for filing on 14 October 2013. However, it was not accepted for filing as it did not contain separate grounds of appeal for each order appealed against, nor submissions with separate headings for each order appealed under which each ground relating to that order was addressed as required by the springing order dated 1 October 2013. The reamended appellants' case also contained grounds of appeal against Mr Holbrook in circumstances where leave had not been granted to the Friggers to amend their grounds of appeal relating to Mr Holbrook and where the sole ground of appeal relating to Mr Holbrook in the amended appellants' case dated 11 July 2013 still stood. The springing order was not complied with. As a result, the Friggers' appeal as against PSA was dismissed. A judgment dismissing that appeal has been drawn up and sealed. The judgment took effect on 14 October 2013. This was not challenged by the Friggers (see appeal ts 3).
PSA's application for a special costs order
53 On 30 October 2013, 16 days after the judgment dismissing the Friggers' appeal against PSA took effect, PSA gave notice in accordance with O 66 r 51 of the Rules of the Supreme Court 1971 (WA) that it would seek a special costs order because of the alleged inadequacy of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA) and the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2013 (WA) (the scales) to cover the work done in attending to the appeal and to the various hearings and the different proposed forms of the appellants' case. Counsel for the Friggers acknowledged that the court had the power to make such an order, but submitted that no such order should be made because the Friggers were, for the most part, unrepresented in the appeal and had done no more than make best endeavours to present an appellants' case in acceptable form (appeal ts 83). That submission has no merit. The Friggers have been represented by counsel on some occasions and on other occasions have represented themselves via Mrs Frigger on behalf of herself and Mr Frigger. Mrs Frigger's involvement has resulted in a substantial amount of extra costs, and an affidavit sworn and filed on 18 December 2013 by a solicitor on behalf of PSA reveals that costs exceeding the scale items have been incurred. This evidence justifies the grant of a special costs order.
54 This is a case where the amount of costs allowable in respect of the appeal pursuant to the scales is inadequate because of the difficulty and complexity of the matter caused by Mrs Frigger's formulation of the appellants' cases and her insistence that 10 costs orders should come under the scrutiny of the court, even though some of the costs orders were only for a few hundred dollars. The inadequacy of the scales has been demonstrated because PSA has shown that there is a fairly arguable case that the bill to be presented may tax at an amount which is greater than the limit that would be imposed by the relevant costs determinations: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [16].
55 Subject to submissions from the parties, the order should be:
1. The appellants pay the first and second respondents' costs of the appeal as against the first and second respondents, including reserved costs, to be taxed without regard to the limits fixed in items 23(b), (d) and (f) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA) and the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA).
The Friggers' appeal against the costs orders in favour of Mr Holbrook and the dismissal of the Friggers' application for costs against Mr Holbrook
56 In relation to Mr Holbrook, the Friggers identified in their appeal notice three costs orders made in favour of Mr Holbrook. They were the orders made on:
(a) 9 March 2012 - that the Friggers pay Mr Holbrook's costs fixed at $429.
(b) 16 March 2012 - that the Friggers pay Mr Holbrook's costs of involvement in the proceedings to be taxed without regard to the relevant scale. The precise form of the order was that:
The Friggers together and separately pay Mr Holbrook's costs of and incidental to:
(a) the preparation of Mr Holbrook's affidavit sworn 7 April 2010;
(b) appearing by counsel at hearings before the court on 19 March, 9 April, 29 April, 20 May, 9 June, 7 July, 30 August 2010 and 13 October 2010;
(c) the Friggers' application for costs to be paid by Mr Holbrook;
(d) Mr Holbrook's application for costs to be paid by the Friggers;
(e) appearing before the court today; and
(f) settling and extracting this order;
with such costs (including the costs of counsel, briefing counsel and obtaining relevant transcript) to be taxed forthwith (if not agreed) without regard to the scale limit appearing in item 10(a).
(c) 16 March 2012 - the Friggers' application for costs against Mr Holbrook on an indemnity basis 'be dismissed'.
57 The Friggers appeal against those orders. The Friggers' amended appellants' case dated 11 July 2013 contains only one - ground 4 - that relates to Mr Holbrook. It alleges an error in the exercise of Simmonds J's discretion in making the above three orders 'in the following circumstances':
(a) Mr Holbrook purported to act as administrator of PSA;
(b) Mr Holbrook gave an undertaking that had a value substantially less than the value that was required by the freezing and ancillary orders; and
(c) fixing costs for Mr Holbrook of the reserved decision on 9 March 2012 in relation to the order for costs of Mr Holbrook. (This was the order where Mrs Frigger was ordered to pay Mr Holbrook's costs fixed at $429.)
58 The first of the circumstances, namely that Mr Holbrook 'purported to act as administrator of PSA', is a reference to the fact that Mr Holbrook entered into an undertaking in respect of the freezing orders in his capacity as administrator of PSA under a deed of company arrangement, and that his undertaking was limited to the value of the assets of PSA, including the deed funds. The Friggers submit that the undertaking was 'so plainly beyond [Mr Holbrook's] authority or power that it was unreasonable and constituted conduct capable of founding a costs order against [Mr Holbrook]', and that Mr Holbrook's position in relation to the undertaking was 'manifestly incorrect' and could not 'reasonably or in good conscience be held by him' (Amended appellants' case dated 11 July 2007 [129], [131]). That submission must be rejected.
59 The Friggers were unsuccessful before Simmonds J in their attempt to establish that the undertaking was manifestly defective, or even merely defective: CAT [No 3] (S) [128] – [129]. Further, Mr Holbrook was not a party to the proceedings and played only a very limited role in the proceedings. The undertaking entered into by him was entered into at the direction of Simmonds J: see CAT [No 3] [59] - [64]. The terms of the undertaking were settled in court before Simmonds J on 16 December 2009: see CAT [No 3] (S) [39]. Mr Holbrook only did what was required of him by the court. The only other involvement by Mr Holbrook in the proceedings was that required by him in order to respond to the allegations of dishonesty on the part of Mr Holbrook that were alleged by Mrs Frigger in various affidavits: see CAT [No 3] (S) [134] - [137].
60 In the bulk of cases, it will be unjust to award costs against a non-party (Aiden Shipping Co Ltd v Interbulk Ltd (The Vimeira) (No 2) [1986] AC 965, 980 (Lord Goff)) and considerable caution should be exercised in making such orders: Symphony Group PLC v Hodgson [1994] QB 179, 193 (Balcombe LJ). See also Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 [65] – [67]. There is nothing in the conduct of Mr Holbrook sufficient to enliven the discretion of the court to award costs against him in these circumstances. As a result, the ground of appeal could not succeed because of the circumstances referred to in par (a).
61 The second point (circumstance (b)) is no basis for challenging the costs order made in favour of Mr Holbrook. If the undertaking had a value less than the value 'required' by the freezing and ancillary orders, then that was a matter for the parties to the freezing and ancillary orders proceedings, namely the Friggers and PSA. The ground of appeal has no reasonable prospect of succeeding on the basis of circumstance (b).
62 As to circumstance (c), that point was ultimately abandoned. (See below). In any event, leave would not be granted to agitate in this court a costs order for $429. Costs of such an appeal would far exceed the amount in dispute.
63 Mr Holbrook applied to strike out ground 4 of the amended appellants' case dated 11 July 2013 pursuant to r 43(2)(g)(i) of the Supreme Court (Court of Appeal) Rules 2005 (WA) on the basis that ground 4 had no reasonable prospect of succeeding against Mr Holbrook.
64 When Mr Holbrook's application came on for hearing on 1 October 2013, counsel for Mr Holbrook pointed out that Mrs Frigger had filed an affidavit sworn 27 September 2013 in support of an application by the Friggers for an adjournment of the directions hearing on 1 October 2013, and in that affidavit had attached a 'draft substituted grounds of appeal'. This draft contained, inter alia, a proposed new ground 4. It repeated the points made in the existing ground 4 under subpars (a) and (b) set out above. It contained nothing equating to par (c) of ground 4 of the amended appellants' case. Counsel for Mr Holbrook said (at the hearing on 1 October 2013) that from the omission of par (c) of the existing ground 4, he inferred that the complaint about the order of Simmonds J that the Friggers pay Mr Holbrook's costs of 9 March 2013 hearing had been abandoned. That was not disputed, so the appeal against the 9 March 2012 order may be dismissed on the basis that the Friggers no longer advance any submissions about why that order should be set aside.
65 Counsel for Mr Holbrook noted that the draft proposed ground also contained a new point or points which read:
The learned judge further erred at [141] - [146] …
(a) by finding that the allegations made by the [Friggers] in relation [to] the undertaking given by [Mr Holbrook] did not support an allegation of dishonesty where those allegations were made by self-represented parties who have been unnecessarily put to defending their retirement savings and were prevented from obtaining legal representation by the actions of the respondents;
(b) by placing too much weight on the word 'dishonesty' used by a layperson, who is unaware of the legal requirements for using such a word;
(c) by making costs orders against the [Friggers] and in favour of [Mr Holbrook] when the [Friggers] were entitled to question an undertaking given by a person who had no part to play in the proceedings;
(d) by failing to consider whether it was necessary for [Mr Holbrook] to have separate legal representation contrary to RSC O 66 r 2(d) in circumstances where he was initially represented by the … legal team [for PSA] when giving his undertaking.
66 The draft par (b) in the proposed new ground was apparently a recognition that his Honour had found that Mr Holbrook was entitled to appear via counsel to deal with the allegation of dishonesty which had been made by Mrs Frigger. The proposed new ground 4 in Mrs Frigger's affidavit of 27 September 2013 did not dispute that the allegation of dishonesty had been made without any foundation, but rather contended that the judge should have exercised his discretion not to award costs because the Friggers represented themselves and, said Mrs Frigger, might not have been aware of how serious the allegation of dishonesty was. That contention has no merit at all. It does not require a lawyer to know that an allegation of dishonesty is extremely damaging and, if made, requires answering. Mrs Frigger, who is a professional accountant, would certainly know how serious such an allegation was.
67 Counsel for Mr Holbrook made submissions at the hearing on 1 October 2013 supporting Simmonds J's reasons in CAT [No 3] (S). Reference was made particularly to [127]ff of the reasons. His Honour referred to authorities in this court and in the General Division of the Supreme Court indicating that the making of orders for costs against a non-party should be exceptional and should only to be made after exercising considerable caution. His Honour said that one such case might be where a non-party facilitates orders by providing for their purposes a 'manifestly' defective undertaking, but concluded that it had not been shown that the undertaking provided by Mr Holbrook was defective, let alone manifestly defective.
68 Counsel for Mr Holbrook pointed out that his Honour had said in [135] that Mrs Frigger's affidavit of 18 March 2010 raised allegations of dishonesty on the part of Mr Holbrook, and this prompted Mr Holbrook to appear by counsel on 9 April 2010.
69 His Honour detailed the allegations of dishonesty made against Mr Holbrook by Mrs Frigger at [135] and [136]. At [145], his Honour considered that it was 'impossible' on the information before him to find that the matters were capable of supporting an allegation of dishonesty by Mr Holbrook. That conclusion has not been challenged by the Friggers in their grounds of appeal or their proposed re-formulation of their grounds (referred to above and below). All the Friggers contend is that 'too much weight' was placed on the allegation.
70 In this court on 1 October 2013, after counsel for Mr Holbrook had made his submissions about why the Friggers' appeal as against Mr Holbrook should be dismissed, the application was adjourned because Mrs Frigger wanted to retain counsel. The matter was adjourned on the basis that counsel for the Friggers, when appointed, would be permitted to make written submissions in opposition to Mr Holbrook's application to strike out ground 4 of the amended appellants' case. An order was made requiring those submissions to be filed by 14 October 2010. Written submissions were filed on 14 October 2010. Those submissions were filed by the Friggers themselves, and not by counsel as anticipated. No new point of significance appeared in those submissions.
71 When the matter was relisted for hearing on 23 January 2014, the Friggers had appointed solicitors and counsel. Counsel informed the court that there were no oral submissions to make and that reliance was placed on the written material before the court. By then, part of the written materials included the proposed reamended appellants' case dated 14 October 2013 which the Friggers purported to file in compliance with this court's springing order dated 1 October 2013. As noted earlier, the reamended appellants' case was not accepted for filing by the registry because it did not comply with the order made on 1 October 2013 which is set out above.
72 The reamended appellants' case, although not accepted by the registry for filing, contained further proposed variations to ground 4 of the amended appellants' case dated 11 July 2013 which related to Mr Holbrook. Proposed grounds 3 and 4 of the reamended appellants' case dated 14 October 2013 alleged that Simmonds J erred by making a decision which was 'unreasonable or unjust', such that the court may infer that there has been a failure to properly exercise the discretion to award costs (ground 3) and that his Honour erred by failing to give 'proper genuine and realistic consideration' to the affidavit of Mr Holbrook dated 1 December 2009 and 7 April 2010 (ground 4). The proposed ground 4 reads that his Honour erred by:
[F]ailing to give proper genuine and realistic consideration to the affidavits of Mr Holbrook dated 1 December 2009 and 7 April 2010 which evidence showed the undertaking was defective if not manifestly so, and further erred by not giving adequate weight to the appellants' concern that the undertakings were not adequately compensate [sic] for losses which could exceed $1,950,000.
73 The proposed grounds 3 and 4 of the reamended appellants' case did not address at all his Honour's finding that the Frigger allegations of dishonesty were not capable of supporting an allegation of dishonesty and that those unfounded allegations alone justified counsel for Mr Holbrook attending. Hence, the making of a costs order against the Friggers in favour of Mr Holbrook was justified. For that reason alone, the Friggers' appeal as against Mr Holbrook has no reasonable prospect of succeeding.
74 Simmonds J's reasons reveal there was no error in making the costs order against the Friggers in favour of Mr Holbrook. His Honour's decision to award costs in favour of Mr Holbrook was right for the reasons he gave.
75 In conclusion, for the reasons given by Simmonds J, the Friggers' appeal as against Mr Holbrook has no reasonable prospect of succeeding. Ground 4 of the amended appellants' case dated 11 July 2012, insofar as it relates to Mr Holbrook, should be struck out. That means there is no ground left to sustain the appeal against Mr Holbrook.
76 The proposed ground 4 in the document exhibited in Mrs Frigger's affidavit of 27 September 2013, and grounds 3 and 4 in the proposed reamended appellants' case dated 14 October 2013, which was not accepted for filing, had no reasonable prospect of succeeding and therefore leave to amend ground 4 of the amended appellants' case dated 11 July 2012 should be refused.
77 The Friggers' application for leave to appeal against the orders in favour of Mr Holbrook must be dismissed. Subject to hearing from the parties, the orders should be:
1. The appellants' application for leave to amend the appellants' grounds of appeal as against the third respondent be dismissed.
2. The appellants' application for leave to appeal against the orders of Simmonds J dated 16 March 2012 that the appellants pay the third respondent's costs to be taxed without regard to item 10(a) of the scale be dismissed.
The cross-appeal by PSA
78 PSA seeks leave to appeal against the orders made on 16 March 2012 dismissing their application that the Friggers pay their costs of the freezing and ancillary orders proceedings. This cross-appeal concerned the costs of the hearing of the freezing and ancillary orders application and all adjourned hearings.
79 During the hearing before Simmonds J on 7 July 2010 and 13 - 14 October 2010 concerning costs, his Honour's attention was drawn to what was said by Mrs Frigger in her affidavit of 23 September 2008, which had been filed in opposition to the stay application heard by Buss JA in the Court of Appeal. Reference was also made to Mrs Frigger's affidavit of 22 June 2010 and (in the hearing on 13 - 14 October 2010) to the affidavit of Mrs Frigger sworn 12 October 2010. In his Honour's reasons for decision, CAT [No 3] (S), his Honour analysed the matter on the basis that 'the action' had not been tried [121]. This may have been a reference to a resolution of questions about whether the transactions instigated by the Friggers in creating the charge and transferring title to real estate that prompted PSA's application for the freezing and ancillary orders were transactions which, in the event of the planned liquidation of CAT, would be found to be unfair preferences within the meaning of the Corporations Act 2001 (Cth) s 588FA; insolvent transactions within the meaning of s 588FC of the Corporations Act; voidable transactions within the meaning of s 588FE of the Corporations Act; or transactions to defraud creditors in breach of the Property Law Act 1969 (WA) s 89. Alternatively, it may have been a reference to the question of the merits of the Friggers' submission that the freezing and ancillary orders should not have been made and should not have been continued. The parties suggested in submissions to this court that his Honour meant the latter. In any event his Honour referred to the High Court decision in Ex parte Lai Qin and said:
I have considered whether I can be satisfied that … the defendants were almost certain to have succeeded if the action had been tried. On the material I have reviewed as the basis of reasonableness of the conduct of the defendants, I am unable to attain such satisfaction [121].
80 As a result, his Honour dismissed PSA's application for costs against the Friggers with the result that no order for costs was made as between the Friggers and PSA.
PSA's grounds of appeal
81 PSA's appeal grounds, stripped to their essential aspects, are:
(a) his Honour erred in refusing PSA's application for costs of the appearance on 19 March 2010 when he misapprehended the facts. His Honour stated in his reasons in CAT [No 3] (S) that there was no application for costs for the hearing on 19 March 2010 [47]. This was incorrect because counsel for PSA had asked for an order for costs on that day (ground 1); and
(b) his Honour's decision to dismiss PSA's application for indemnity costs, or alternatively a special costs order, was manifestly unreasonable having regard, inter alia, to:
(i) the improper conduct of the Friggers in filing affidavit material containing false evidence and assertions or evidence which contradicted or was contradicted by other earlier evidence led by the Friggers, and to the improper conduct of the Friggers in attempting to mislead the court regarding the true position of assets available for execution. In effect, this was a submission that his Honour erred in applying Ex parte Lai Qin because it provided no guidance for the making of a costs order in the particular circumstances of this case; and
(ii) the application for the freezing order having not been determined on the merits (ground 2).
83 It is now necessary to turn to ground 2. In effect, it alleges that the judge's discretion miscarried and that there was error which may be inferred. See House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505 (Dixon, Evatt & McTiernan JJ).
84 In the circumstances which were known to the trial judge and which are set out below, his Honour erred in deciding the matter by reference to Ex parte Lai Qin. That case states that, where a matter in contest is settled by the parties, it is usually appropriate to not make a costs order and to leave each party to pay their own costs.
85 However, counsel for PSA had pointed out to his Honour in the hearing on 7 July 2010, and then again in the hearing on 13 and 14 October 2010, that Mrs Frigger had filed affidavits which revealed serious inconsistencies. His Honour, in CAT [No 3] (S) [93] and [95], identified the affidavits which had been referred to by counsel for PSA. The inconsistencies were such that counsel for PSA sought leave to cross-examine Mrs Frigger. Leave was refused by his Honour for the reasons set out earlier in these reasons.
86 His Honour in his reasons in CAT [No 3] (S), recorded the submissions by counsel for PSA that the affidavit of Mrs Frigger sworn 12 October 2010 should be 'approached with scepticism' for the same reason the explanations in Mrs Frigger's affidavit of 22 June 2010 should be so approached' [96]. Reference was also made by his Honour to Mrs Frigger's affidavit sworn on 23 September 2008 in relation to the stay application made by PSA before Buss JA the appeal in the Court of Appeal, which is referred to earlier in these reasons.
87 Despite having these affidavits drawn to his Honour's attention, it may be inferred that his Honour did not understand the significance of them because if he had, he would have made observations which correspond with the observations below. What the affidavits reveal is evidence of false statements made by Mrs Frigger in affidavits filed either in the General Division or in this court.
The contradictions in the affidavits of 23 September 2008, 22 June 2010 and 12 October 2010
88 The affidavit of Mrs Frigger dated 23 September 2008, which was filed by CAT in this court in the appeal proceedings (CACV 76 of 2008) and relied on by CAT for the hearing before Buss JA of the application by PSA for a stay of enforcement of the original judgment of Simmonds J pending the hearing of the appeal by the Court of Appeal, must first be examined. From that affidavit, the following pro forma balance sheet for CAT as at 23 September 2008 can be prepared:
| ||
(a) |
| $1,100,000.00 |
(b) |
| $615,030.00 |
(c) |
| $999,999.00 |
(d) |
| $55,014.03 |
(e) |
| $80,000.00 |
| $2,850,043.03 | |
| Nil |
89 The assets listed above were said by Mrs Frigger to be the assets of CAT. This affidavit convinced Buss JA that there was no risk that the judgment sum in relation to the original judgment of Simmonds J if paid could not be repaid if the appeal succeeded. As a result the stay application by PSA was refused by Buss JA: See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 [24], [27]. As also explained above, the consequence was that PSA was obliged to pay the judgment sum to CAT.
90 After the appeal to the Court of Appeal, CAT was ordered to pay (in effect to repay) to PSA about $850,000. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) [21].
91 As noted earlier in these reasons, the $850,000 was not repaid by CAT. As a result, the freezing and ancillary orders application was made on 3 December 2009. This was eventually discharged on 14 July 2010 after CAT was wound up in insolvency on 6 May 2010.
92 As also noted earlier, costs relating to the freezing and ancillary orders were ultimately dealt with by Simmonds J. A hearing took place on 13 - 14 October 2010. What was revealed in statements in Mrs Frigger's affidavits and particularly in her affidavits of 22 June 2010 and 12 October 2010 was that (if the statements in them were true) the affidavit of 23 September 2008 was false. If Mrs Frigger's two 2010 affidavits were correct, then the asset and liability position of CAT on 23 September 2008 was not as Mrs Frigger stated in her 23 September 2008 affidavit, but was as follows:
(a) ownership of 140 Edward Street, Perth had been transferred to CAT as the trustee of the Frigger Superannuation Fund (FSF) on 1 July 2007 (par 13 of the affidavit of 22 June 2010). If this was true then the statement in Mrs Frigger's affidavit of 23 September 2008 that this was an asset of CAT was false;
(b) ownership of the Armadale property had been transferred to CAT as trustee of the FSF on 1 July 2008 (par 19 of the affidavit of 22 June 2010). If true the statement in the 23 September 2008 affidavit that this was an asset of CAT was false; and
(c) the ING term deposit of $999,000 was an asset of the FSF (par 12 of the affidavit of 12 October 2010). If true then the statement in the 23 September 2008 affidavit that this was an asset of CAT was false.
93 The affidavit of 22 June 2010 also revealed that, as at 23 September 2008, CAT had liabilities to the Friggers as follows:
(a) Edward Street property loan, $452,450 plus interest at 8.5% (pars 8 - 10);
(b) the Armadale property loan, $665,000 plus stamp duty of $36,875 and interest (par 18);
(c) director's fees due to Mrs Frigger, $201,534 (par 22); and
(d) accrued salary due to Mrs Frigger - first three payments (2006, 2007 and 2008) totalling $225,000 (par 22).
The total of those figures is $1,580,859.
94 In Mrs Frigger's affidavit of 22 June 2010, she deposes that CAT 'did not make any repayments of principal or interest to us during the period December 2001 to June 2008' (par 21). The liability of $1,580,859 is an understatement of the liabilities because it does not include interest. Thus, if the affidavits of 12 October 2010 and 22 June 2010 are true then Mrs Frigger falsely stated that the liabilities of CAT on 28 September 2008 were nil.
95 Based on the two 2010 affidavits, the revised asset and liability position of CAT on 23 September 2008 was as follows:
| ||
(a) |
| $55,014.03 |
(b) |
| $80,000.00 |
| $135,014.03 | |
| $1,580,859 plus interest |
96 If what had been stated as to the financial position of CAT in the two 2010 affidavits had been disclosed to Buss JA there can hardly be any doubt that a stay would have been granted: See Professional Services of Australia Pty Ltd v Computing Accounting and Tax Pty Ltd [2008] WASCA 222 [27]. In that case the money would not have been paid by PSA to CAT, it would not have been necessary for the Court of Appeal to then order, in effect, that CAT repay $850,000 (approximately) and there would have then been no need for the freezing and ancillary orders.
97 At the hearing of this appeal on 23 January 2014, it was pointed out to counsel for the Friggers that it would be a very serious matter if this court were to conclude and to state in its reasons that Mrs Frigger had made false statements in affidavits sworn by her. As a result, the Friggers were given leave to file and serve further written submissions in order to ensure that no explanation by the Friggers for the inconsistencies in the affidavits of Mrs Frigger dated 23 September 2008, 22 June 2010 and 12 October 2010 was overlooked.
98 On 13 February 2014, those written submissions were received by the court. They were signed by counsel who appeared at the appeal, but who did not appear for the Friggers at any of the other hearings referred to above. Those submissions, which must reflect Mrs Frigger's instructions, do not assist her.
99 For example, the submissions purport to explain why Mrs Frigger deposed in her affidavit of 23 September 2008 that the Edwards Street property and the Armadale property were 'owned' by CAT, and yet in her affidavit of 22 June 2010 Mrs Frigger deposed, in par 13, that the 'ownership' of the Edwards Street property was transferred to the FSF on 1 July 2007 (ie, before Mrs Frigger signed the 23 September 2008 affidavit) and, in par 19, that ownership of the Armadale property was transferred to the FSF on 1 July 2008 (ie, only two months before Mrs Frigger signed the 23 September 2008 affidavit). Her explanation for the falsehood which appeared either in the 23 September 2008 affidavit or the 22 June 2010 affidavit is that Simmonds J and Buss JA suffered from 'confusion' (see par 12 of the submissions). That provides no explanation as to why Mrs Frigger made two unqualified statements about ownership of the properties, one of which had to be false.
100 Another example is the explanation for why Mrs Frigger deposed in the 23 September 2008 affidavit that CAT had no liabilities (save with respect to GST), when she was seeking to persuade Buss JA that CAT was in good financial health, and yet in her affidavit of 22 June 2010, deposed that CAT had liabilities in September 2008 to her husband and to her in a sum in excess of $1.5 million. The explanation in the submission reads as follows:
With respect to CAT's liability on the director's loan account deposed to in [Mrs Frigger's] affidavit [of] 22/6/10 at [22] to [25] the explanation for not including them in [Mrs Frigger's] of 22/9/08 is that the directors' loan account was not calculated until after 23 September 2008 as deposed to by Mrs Frigger at [12] of [her] affidavit of 12/10/10 (par 18).
101 This explanation merely reaffirms what Mrs Frigger deposed to in her affidavit of 12 October 2010, namely, that on 23 September 2008, the directors' loan accounts had not been 'calculated' (ie, added up) and were not added up until a later date. Mrs Frigger was either falsely stating in her affidavit of 23 September 2008 that CAT had no liabilities (save for GST), or falsely stating in her affidavit of 22 June 2010 that in September 2008 CAT had liabilities to Mr Frigger and herself (later added up and revealed at a figure of $1.5 million).
102 By way of a further example, the submissions also attempt to explain why Mrs Frigger deposed in the 23 September 2008 affidavit that CAT had an asset consisting of a term deposit of $999,999, and yet in her affidavit of 12 October 2010 stated that, in fact, the deposit was an asset of the FSF. The explanation is no explanation at all. It merely asserts that she became 'aware' in June and July 2010 that the deposit was not beneficially owned by CAT. Once again, either the statement in her 23 September 2008 affidavit is false, or the statement in her 12 October 2010 affidavit is false.
103 The fact that Mrs Frigger has sworn affidavits caring only about the outcome and not caring for the truth is a very serious matter whereby Mrs Frigger affected, or attempted to affect, the course of justice. If what she said in her affidavit of 22 June 2010 and her affidavit of 12 October 2010 was the truth, and what was stated in the 23 September 2008 affidavit was false, then she affected the course of justice because her 23 September 2008 affidavit was relied on by Buss JA to refuse the application for a stay of judgment. If the 23 September 2008 affidavit was true and what was said in her 22 June 2010 affidavit and her 12 October 2010 affidavit was false, then she attempted to influence Simmonds J in relation to the issues then before him. Mrs Frigger is an accountant and her training and experience means that she well understood the meaning of the words 'assets' and 'liabilities' and well understood the distinction between property which was beneficially owned or non-beneficially owned.
104 I should add that PSA filed submissions in answer to the Friggers' submissions. They made the points referred to above. Insofar as they made submissions about other aspects of the conduct of Mrs Frigger in affidavits other than the affidavits of 23 September 2008, 22 June 2010 and 12 October 2010 and in other documents and at trial, regard has not been given to those submissions in reaching the conclusion in these reasons. The Friggers sought and were granted leave to file further written submissions in reply to PSA's submission. The Friggers' submissions were filed in the court on 24 March 2014. They contain many references to alleged facts and circumstances not deposed to in any affidavits in the proceedings under review. However, where relevant, the submissions have been taken into account.
105 Other instances of inconsistent statements in affidavits which were drawn to Simmonds J's attention (see ts 2582ff) were found in Mrs Frigger's affidavit of 10 April 2007, filed in the main action before Simmonds J in opposition to an application by PSA for security for costs. Mrs Frigger again wanted to show that CAT was in a rosy state of financial health so that CAT would not have to provide security for costs. She said in the 10 April 2007 affidavit that CAT would be 'easily able to satisfy the claim for costs of the defendants in these proceedings' (par 23) if PSA succeeded in defending the original claim by CAT. Mrs Frigger stated, concerning the Armadale property, that it was purchased by CAT in its own right and not as trustee of the FSF; that 'there was a point in time when [CAT] considered transferring the Armadale property to the [FSF], but that transaction did not eventuate', and that 'no … transfer took place and the Armadale property is owned by the plaintiff in its own right as it always has been' (par 14) (see yellow cross-appeal book 23).
106 In contradiction, Mrs Frigger deposed in her affidavit of 24 April 2007, also filed in the main action and also in opposition to the application by PSA for security for costs, that '[t]he Armadale property was initially purchased by [CAT] in its capacity as trustee for the [FSF]. However, following advice that my husband and I received, in November 2005, it was resolved that the Armadale property be transferred from the [FSF] to [CAT] in its own right by way of an undeducted contribution and this was attended to' (par 11), (yellow cross-appeal book 28).
107 When Mr Banning, in par 7.2 of his affidavit of 25 August 2008 in the appeal CACV 76 of 2008 in support of the application for a stay of judgment pending the appeal, pointed out the inconsistency between Mrs Frigger's two affidavits, Mrs Frigger, in her affidavit of 23 September 2008 in CACV 76 of 2008, admitted the conflict. She said:
In response to par 7.2 [of the affidavit of Mr Banning of 25 August 2008], the conflicting statement made by me in my affidavit of 24 April 2007 was made shortly after the sudden death of my father and by my failure to check the affidavit, prepared by my new solicitors before swearing it [6].
108 Mrs Frigger's admission that she did not 'check' the affidavit before swearing it is extraordinary.
109 Simmonds J should have recorded in his reasons that the result of the inconsistencies in Mrs Frigger's affidavits of 23 September 2008, 22 June 2010 and 12 October 2010 was that if Mrs Frigger's affidavit of 23 September 2008 contained falsehoods, it resulted in Buss JA refusing the application for a stay. If, on the other hand, her two 2010 affidavits filed in relation to the freezing and ancillary orders application contained the falsehoods, then she was attempting to mislead Simmonds J. It is not necessary to decide which is true for the purpose of this appeal. All that is necessary is to observe that she has been guilty of bending the truth. If all that Mrs Frigger has now offered about CAT's circumstances as at 23 September 2008 had been put before Buss JA, a stay would almost certainly have been granted and the freezing and ancillary orders would not have been necessary. Because Simmonds J did not refer to this in his reasons, it may be inferred that his Honour overlooked it. If this had been detected by his Honour, the order that each party pay their own costs would not have been made.
110 Normally, when a freezing order is made, costs will be made dependent on the outcome of the underlying dispute, but this is not a normal case. The discretion as to costs conferred pursuant to O 52A of the Rules of the Supreme Court 1971 (WA) is a discretion to be exercised according to the requirements of justice. Simmonds J erred in applying the principles in Ex parte Lai Qin and not referring to the above circumstances, all of which was revealed to him on the material before him. Mrs Frigger's falsehoods, either in her affidavit of 23 September 2008 or in the affidavits of 12 October 2010 and 22 June 2010, justify the grant of costs in favour of PSA. Justice would only be served if a costs order is made against the Friggers.
111 An indemnity costs order is appropriate in situations which are shown to involve some element of improper conduct by a party. An indemnity costs order will constitute an appropriate sanction marking the disapproval of improper conduct. The conduct of the Friggers has been improper. Mrs Frigger's conduct in making false statements in either her affidavit of 23 September 2008 or in her affidavits of 12 October 2010 and 22 June 2010 must be marked by strong disapproval and as a result an indemnity costs order will be made. His Honour erred in failing to make such an order.
112 PSA is entitled to the costs of the application for the freezing and ancillary orders and all hearings that took place following the making of those orders, save for those hearings covered by an existing costs order. Leave to cross-appeal on part (i) of ground 2 (as identified above at [81]) should be granted. Part (i) of ground 2 of the cross-appeal should be upheld.
113 The order of Simmonds J dated 16 October 2012 dismissing the first and second respondents' application for costs of the application for freezing and ancillary orders should be set aside, and in its place an order should be entered granting the first and second respondents' costs of the freezing and ancillary orders application and the associated proceedings, including reserved costs, on an indemnity basis.
114 It only remains to be said that part (ii) of PSA's ground 2 of appeal, to the effect that Simmonds J erred in dismissing PSA's application for costs against the Friggers on the basis that the application for the freezing order had not been determined on the merits, must be dismissed. As noted earlier in these reasons, his Honour analysed PSA's application for costs on the basis that 'the action' had not been tried, but it was not clear what 'the action' referred to in this context. Counsel for both PSA and the Friggers considered the reference to 'the action' to be a reference to the question of the merits of the Friggers' submission that the freezing and ancillary orders should not have been made and should not have been continued (see above at [79]). However, the freezing order was made to prevent the frustration or inhibition of the court's process and to avoid the danger that the judgment of the Court of Appeal might be unsatisfied: see O 52A r 5(4) of the Rules of the Supreme Court 1971 (WA). The order preserved the status quo pending the resolution of the question about whether CAT had sufficient funds or assets to comply with the order of the Court of Appeal. That question in turn may have given rise to questions about whether the charge registered by the Friggers and the transfers of the property of CAT to CAT as trustee effected by the Friggers, were transactions which might, if CAT were insolvent and put into liquidation, be liable to be set aside as unfair preferences, insolvent transactions or voidable transactions pursuant to the sections of the Corporations Act identified earlier in these reasons, or set aside as transactions designed to defraud creditors in breach of the Property Law Act. Those were the 'merits' which had to be resolved. Those questions were not resolved prior to the discharge of the freezing orders on 14 July 2010. As a result, there was no determination on the merits. Leave to appeal on part (ii) of PSA's ground 2 of the appeal (as identified above at [81]) should be granted, but part (ii) of ground 2 of the cross-appeal dismissed.
115 Subject to submissions from the parties, the orders on the cross-appeal should be:
1. Leave to cross-appeal on grounds 1 and 2 of the cross-appeal be granted.
2. Ground 1 of the cross-appeal be upheld.
3. The appellants pay the first and second respondents' costs of the hearing on 19 March 2010 in CIV 2265 of 2006, to be taxed if not agreed.
4. Ground 2 of the cross-appeal be upheld in part.
5. (a) Order 2 of Simmonds J dated 16 March 2012 in CIV 2265 of 2006, being that the appellants pay the first and second respondents' costs of the first and second respondents' application for freezing and ancillary orders, be set aside;
(b) Order 3 of Simmonds J dated 16 March 2012 in CIV 2265 of 2006 be set aside insofar as it orders that there be 'no order as to the costs of the first and second respondents' application for freezing and ancillary orders'; and
(c) In lieu of the orders referred to in (a) and (b) above, it is ordered that the appellants pay the first and second respondents' costs of the application dated 3 December 2009 in CIV 2265 of 2006 for freezing and ancillary orders and any reserved costs of the freezing and ancillary orders proceedings in CIV 2265 of 2006, including but not limited to any reserved costs of the hearings on 10 December 2009, 16 December 2009, 22 January 2010, 15 February 2010, 19 March 2010, 9 April 2010, 29 April 2010, 20 May 2010, 9 June 2010, 7 July 2010, 30 August 2010, 13 and 14 October 2010, 22 September 2011 and 16 March 2012, on an indemnity basis.
CACV 24 of 2013
116 This is an appeal by the Friggers against the orders of Simmonds J set out below. The appeal was commenced four months out of time and the Friggers apply for an extension of time. The orders appealed against were, in effect:
(a) the dismissal of the Friggers' claim for compensation pursuant to the undertakings given by Mr Campbell-Smith as executor of the estate of Mr Banning and by Mr Holbrook;
(b) the discharge of the undertakings by Mr Campbell-Smith and Mr Holbrook in respect of the freezing orders;
(c) that the Friggers pay two sets of costs (one to PSA and the other to Mr Holbrook) in relation to the Friggers' application for compensation, such order to be without regard to the relevant scale; and
(d) the Friggers pay two sets of costs (one to PSA and the other to Mr Holbrook) in relation to the application by Mr Campbell-Smith and Mr Holbrook for discharge of their undertakings, such costs to be taxed without regard to the scale.
117 These orders were made on 16 October 2012.
118 The background is as follows. By chamber summons dated 1 March 2012 and amended 11 May 2012, the Friggers sought an order that there be an inquiry into damages suffered by the Friggers by reason of the restraints imposed on them by the freezing orders of Simmonds J dated 16 December 2009. The Friggers also sought an order that PSA pay the costs of the application on an indemnity basis. The application was originally only against PSA, but the amended application dated 11 May 2012 sought similar orders instead against Mr Holbrook and Mr Campbell-Smith.
119 To succeed on the application, it was necessary to show that there was at least a prima facie case that the freezing orders were the cause of damage suffered by the person affected by the freezing orders and that the freezing orders should not have been made. The primary reason his Honour gave for dismissing the application for compensation was that it had not been shown that the freezing orders ought not to have been granted: CAT [No 5] [51], [52].
120 His Honour also considered the four heads of damage relied on by the Friggers for the purposes of the claim for compensation. The first head of damage was said to be costs occasioned by the making of the freezing and ancillary orders that would not be allowed on a taxation of costs. His Honour said that none of the damage claimed was for any damage caused by the existence of the freezing orders, but rather was a claim relating to the proceedings for the freezing and ancillary orders themselves: CAT [No 5] [109] - [110].
121 The second head of damage was said to be loss of income to Mrs Frigger as a result of her involvement in the proceedings for the freezing and ancillary orders. His Honour said that that was also not a loss or damage caused by the freezing orders: CAT [No 5] [117] - [118].
122 The third head of damage claimed was as a result of 'distress, embarrassment and damage to reputation' suffered by the Friggers. His Honour dismissed that claim on the basis that the evidence in support of it did not demonstrate that the restrains or requirements of the freezing orders prima facie caused such loss or damage: CAT [No 5] [119] - [120].
123 The fourth and final head was said to be an entitlement to 'aggravated and exemplary damages' by reason of certain conduct of a solicitor for PSA. That head of damage was also rejected: CAT [No 5] [121].
124 On those bases, his Honour concluded that there had been no prima facie case of loss or damage shown on the evidence: see, generally, CAT [No 5] [107] - [126].
125 His Honour ordered that each of Mr Holbrook and Mr Campbell-Smith (as the executor of Mr Banning's estate) should have the costs of the Friggers' unsuccessful application to be taxed without regard to the relevant scale.
126 There was also before his Honour at the same time applications by both Mr Holbrook and Mr Campbell-Smith to discharge them from their undertakings given in support of the freezing order. His Honour made such orders and ordered that the Friggers should pay two sets of costs to each of Mr Holbrook and Mr Campbell-Smith without regard to the relevant scale limits.
127 The Friggers' grounds of appeal read:
1. Error of law and fact: The learned Judge erred in concluding @ 32, 33 and 52 in WASC/CIV/2012WASC0382 that as there was no final determination of the merits of the application for freezing and ancillary orders the discretion to enforce the undertakings had not been enlivened.
2. Error law and fact: The learned Judge erred @ 124 in finding the [Friggers] suffered no prima facie damages flowing from the freezing orders and refusing to enforce the undertakings given in the Freezing Order proceedings and refusing an inquiry into damages.
3. Error of law: The learned Judge erred in his discretion in ordering the [Friggers] pay two sets of costs for each of [Mr Campbell-Smith] and [Mr Holbrook] for the [Friggers'] application for compensation and discharge of [Mr Campbell-Smith's and Mr Holbrook's] undertakings and for each of the matters to be taxed without regard to the relevant Scale maximum.
128 Ground 1 must be dismissed. It is an attempt by a side wind to appeal against his Honour's decision to grant the freezing and ancillary orders. Those orders have not been appealed against and there was no final resolution of the Friggers' argument that the freezing and ancillary orders should not have been granted and should not have been continued: see CAT [No 5] [32] - [33].
129 Ground 2 should be dismissed because although the Friggers allege error by the trial judge, their submissions do not reveal any error. All that the written submissions contend is that certain amounts were claimed by the Friggers in relation to each of the four heads of damage they claimed before Simmonds J, and which his Honour dismissed. There was no attempt to suggest that his Honour's decision in relation to each of the four heads of damage was, in any way, in error.
130 Ground 3 must also be dismissed, because the award of costs was an award of costs in the exercise of a discretion. No error in the exercise of his Honour's discretion has been identified by the Friggers. The Friggers suggest that there should have been only one set of costs, but that ignores the fact that compensation was sought against two individuals, and each was entitled to be represented. The only submission about the scale uplift by the Friggers was that the application 'took one day of hearing' and that it has not been demonstrated that the scale maximum would be inadequate. His Honour had all of the information before him necessary to make a decision about the appropriate form of costs. This court will not interfere with the exercise of a discretion by Simmonds J based solely on a flimsy submission of the Friggers merely asserting that there should not have been a scale uplift.
131 Finally, PSA submitted that an extension of time should not be granted to the Friggers to appeal. An affidavit of Mrs Frigger sworn 5 March 2013 in support of the application for an extension of time to appeal deposes that, initially, the Friggers decided to appeal against the orders made on 16 October 2012 and made that decision promptly. However, they did not implement that decision immediately and no appeal was instituted in 2012. Instead, the Friggers decided that they would institute an appeal only in respect of the costs orders and they made an attempt to amend appeal CACV 23 of 2012 to complain about those costs orders in that appeal. Mrs Frigger made it plain that she did that because she wanted to avoid paying a new filing fee to institute a new appeal: Frigger v Professional Services of Australia Pty Ltd[2013] WASCA 26 [10]. That application was dismissed on 24 January 2013.
132 The Friggers sought to review the order dismissing the application to amend the appeal CACV 23 of 2012. The application for review was dismissed: Frigger v Professional Services of Australia Pty Ltd [No 2] [2013] WASCA 93. It was only then, on 6 March 2013, that the Friggers instituted this appeal seeking to challenge not just the costs orders but also the dismissal of the application for an inquiry as to damages and the discharge of the undertakings.
133 This appeal was first foreshadowed by the Friggers' application to amend the appeal notice in CACV 23 of 2012, which was filed on 6 November 2012. That was on the same day that Mr Holbrook was discharged as deed administrator in relation to PSA. Pursuant to the discharge conditions, Mr Holbrook had to relinquish funds which he would otherwise have been able to hold to meet the costs of the appeal. The Friggers, through counsel, pointed out at the hearing of the appeal on 23 January 2014 that Mr Holbrook had been provided with an indemnity by Mr Campbell-Smith as the executor of Mr Banning's estate, but Mr Holbrook rightly points out that cash in hand is worth more than an indemnity of unknown value (appeal ts 111). Mr Holbrook has therefore suffered prejudice as a result of the delay in instituting the appeal.
134 Thus, in relation to the appeal concerning Mr Campbell-Smith, leave to appeal out of time should be refused because there is no merit in any of the grounds of appeal. In relation to the appeal concerning Mr Holbrook, leave to appeal out of time should be refused because there is no merit in any of the grounds of appeal and because Mr Holbrook has demonstrated that he is prejudiced by the delay.
135 Subject to hearing from the parties, the orders should be:
1. The appellants' application dated 6 March 2013 for an extension of time to appeal be dismissed.
2. The appeal be dismissed.
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