Frigger v Rowe Bristol Lawyers Pty Ltd
[2020] WASC 5
•20 JANUARY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: FRIGGER -v- ROWE BRISTOL LAWYERS PTY LTD [2020] WASC 5
CORAM: HILL J
HEARD: 5 AUGUST 2019
DELIVERED : 20 JANUARY 2020
FILE NO/S: LPA 10 of 2018
BETWEEN: ANGELA CECILIA THERESA FRIGGER
HARTMUT FRIGGER
Applicants
AND
ROWE BRISTOL LAWYERS PTY LTD
Respondent
Catchwords:
Bankruptcy and Insolvency - Appeal - Application for extension of time to appeal - Where applicants are bankrupts - Whether claim for assessment of costs is in respect of retainer for a personal injury or wrong - Whether claim is deemed to have been abandoned by trustee in bankruptcy - Consequence of abandonment - Turns on own facts
Legislation:
Bankruptcy Act 1966 (Cth), s 60
Rules of the Supreme Court, O 60A, r 4, r 5; O 23 r 2(1)
Result:
Further submissions required
Category: B
Representation:
Counsel:
| Applicants | : | In person |
| Respondent | : | Mr M A K Richards |
Solicitors:
| Applicants | : | In person |
| Respondent | : | Rowe Bristol Lawyers |
Case(s) referred to in decision(s):
Cole v Challenge Bank Ltd [2002] FCAFC 200
Cox v Journeaux [No 2] (1935) 52 CLR 713
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267
Fletcher v Westpac [2012] WASCA 154
Frigger v Banning [2017] FCA 1589
Frigger v Banning [No 8] [2019] FCA 1319
Frigger v Kitay [No 2] [2017] WASCA 139
Moss v Eaglestone [2011] NSWCA 404; (2011) 83 NSWLR 476
National Australia Bank Ltd v Nyasa Nominees Pty Ltd [2019] WASC 107
Priority Networking Pty Ltd v Peterson [2018] WASC 36
Rana v Chief of Army [2008] FCA 1554
Re Rules of the Supreme Court 1971 (WA); Ex Parte Frigger [2019] WASC 175
Sheehan v Brett-Young [No 3] [2016] VSC 39
Simonsen v Legge [2010] WASCA 238
HILL J:
On 30 May 2019, the first‑named applicant lodged a notice of appeal against an order of Acting Principal Registrar Whitby made 4 February 2019, that the applicants' application for an assessment of costs be discontinued pursuant to the Bankruptcy Act 1966 (Cth), s 60(3) and that the applicants pay the costs of the application and the proceedings.
Under the Rules of the Supreme Court (RSC), the first‑named applicant was required to lodge her appeal from the decision of the Acting Principal Registrar within 10 days after the date of the order.[1] The appeal was lodged more than three months late. Accordingly, the first‑named applicant requires leave to appeal. The appeal is by way of a new hearing of the matter.[2] That is, on an appeal from a registrar, the court may exercise its power regardless of error.[3]
[1] Rules of the Supreme Court, O 60A, r 5.
[2] Rules of the Supreme Court, O 60A, r 6.
[3] CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 [17]; see also Priority Networking Pty Ltd v Peterson [2018] WASC 36 [28].
The first‑named applicant sought to challenge the decision of the Acting Principal Registrar on two grounds. First, that the claims the subject of the respondent's retainer were claims in respect of a personal injury or wrong. As a consequence, the first-named applicant asserted that the claim had not vested in the trustee in bankruptcy pursuant to s 60(4) of the Bankuptcy Act. Second, that the underlying cause of action has not ended and the learned registrar had no jurisdiction to order costs against the applicants without the merits being determined.
It is my view that, with respect to the first ground, the proceedings on which the respondent firm was retained by the plaintiff were not claims 'in respect of a personal injury or wrong'. Accordingly, the proceedings are deemed to have been abandoned by the trustees pursuant to s 60(3) of the Bankruptcy Act. However, a dismissal or discontinuance of the proceedings does not automatically follow an abandonment of the proceedings by the trustee. If the respondent wished to seek an order for dismissal of the proceedings as a result of the abandonment of the proceedings, it was necessary for the respondent to file an application for the dismissal of the proceedings for want of prosecution.
My preliminary view is that little purpose would be achieved in granting an extension of time to appeal and allowing the appeal. This is because if the extension of time was granted and the appeal allowed, the respondent would be entitled to file an application for the dismissal of the proceedings for want of prosecution. This application would almost certainly be granted and it would be usual for an order to be made that costs follow the event. These orders would be of the same effect as the orders that were made by the Acting Principal Registrar on 4 February 2019. I recognise that neither of the parties had an opportunity to make submissions on this point at the hearing nor in their supplementary submissions, filed by the applicant on 28 November 2019 and the respondent on 29 December 2019. For this reason, before making any orders, I will hear from the parties concerning the appropriate disposition of the appeal.
The basis for my reasons is set out below.
Application for an extension of time
The principles regarding an extension of time for appeals were set out by the Court of Appeal in Simonsen v Legge[4] and apply by way of analogy to an appeal under O 60A r 4(1) of the RSC. In that decision, the Court of Appeal held that:[5]
[4] Simonsen v Legge [2010] WASCA 238.
[5] Simonsen v Legge [8].
The relevant matters to consider when a party seeks to extend the time for filing its notice of appeal include the following:
(a) on the expiry of the time for appealing, the respondent has a vested right to retain the judgment unless the application for an extension of time is granted;
(b) the grant of an extension of time under the rule is not automatic; the object of the rule permitting extensions of time is to ensure that the rules which fix time for the doing of acts do not become instruments of injustice; and the discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties;
(c) nevertheless, the rules of court must, prima facie, be obeyed, and in order to justify a court in extending the time, there must be some material upon which the court can exercise its discretion;
(d) there are, generally, at least four major factors to be considered, although they are not necessarily exhaustive in each case:
(i) the length of the delay;
(ii) the reasons for the delay;
(iii) the prospects of the applicant succeeding in the appeal; and
(iv) the extent of any prejudice to the respondent;
(e) other factors may include whether the delay was intentional, or contumelious, or merely the result of a bona fide mistake or blunder, and whether the delay is that of the litigant or of its lawyers with which the litigant should not be saddled;
(f) the length and reasons for the delay must be addressed by the applicant and the cogency of the explanation increases as the period of the extension sought increases:
(g)in relation to the third matter referred to in subpar (d) above, the time for appealing will not be extended unless the proposed appeal has some prospect of success; the converse of that proposition is not that time must be extended if an appeal has any prospect of success, but rather, the fact that an appeal has some prospect of success is a factor which is to be taken into account, together with all other relevant factors; and
(h)similarly, it is not the law that, whenever an applicant demonstrates an arguable case, or even a strongly arguable case, in the absence of significant prejudice suffered by the respondent, an extension of time should be granted. (citations omitted)
I will deal with each of the factors in turn. In this case the length of the delay – more than 110 days – is significant (compared to the time period within which the appeal was required to be lodged). Mrs Frigger did not file an affidavit providing an explanation for the delay. In oral submissions however, the first‑named applicant informed me that:
(a)the order of the Acting Principal Registrar was made ex parte and she had no notice of the order until after it was made;
(b)she was informed by the Supreme Court that she was not entitled to file a notice of appeal but was required to file an application pursuant to O 67 r 5 of the RSC for leave to file the notice of appeal;
(c)she filed an application which was heard and determined by Acting Justice Strk on 21 May 2019;
(d)shortly after the delivery of these reasons for decision,[6] she lodged the notice of appeal, the subject of this application.
[6] Re Rules of the Supreme Court 1971 (WA); Ex Parte Frigger [2019] WASC 175.
Mrs Frigger referred to the reasons for decision of Acting Justice Strk to support her submissions. From those reasons, it is apparent that:
(a)the first-named applicant filed an ex parte originating motion on 29 March 2019 seeking leave to file a minute of proposed ex parte originating motion. No minute was filed with the application;
(b)on 18 April 2019, a minute was filed which, inter alia, sought orders setting aside the orders of the Acting Principal Registrar in these proceedings;
(c)the ex parte originating motion was dismissed on the basis that, inter alia, it was not 'appropriate for grievances in relation to the four separate, unrelated proceedings … to be agitated through the vehicle of one fresh proceeding'.[7]
[7] Re Rules of the Supreme Court 1971 (WA); Ex Parte Frigger [53].
In relation to prejudice, the prejudice that Mrs Frigger will suffer if an extension of time is refused is that she will be unable to pursue the application to review the costs of the respondent firm. The respondent submits that it will be prejudiced if the application for an extension of time is granted due to the bankruptcy of Mr and Mrs Frigger. That is, if an application for an extension of time is granted and the appeal allowed, the respondent will be unable to recover any costs in relation to the proceedings.
In summary, putting to one side the merits of the appeal, the factors relevant to the exercise of the discretion to grant an extension of time do not provide a strong case for the exercise of the discretion in favour of the first‑named applicant. Accordingly, if the appeal has no merit, the extension of time should be refused. If, however, the appeal has merit, it is my view that the extension of time should be granted. On this basis, it is necessary to consider the merits of the appeal.
Statutory framework
By reason of s 58 and s 116(1) of the Bankruptcy Act, when a person becomes bankrupt, their property vests in the trustee in bankruptcy and all of the bankrupt's property is divisible among the creditors of the bankrupt. There are two exceptions to this. The only relevant exception in this case is where the applicants may recover damages or compensation 'for personal injury or wrong done to the bankrupt'.[8]
[8] Bankruptcy Act 1966 (Cth), s 116(2)(g)(i).
Pursuant to s 60(2) of the Bankruptcy Act, any proceedings which have been commenced by a person who becomes a bankrupt are automatically stayed until the trustee in bankruptcy makes an election in writing to either prosecute or discontinue the proceedings.
If the trustee does not make an election within 28 days after notice of the proceedings is served on the trustee, pursuant to s 60(3) of the Bankruptcy Act, the trustee is deemed to have abandoned the proceedings.
The exceptions to these provisions are set out in s 60(4) of the Bankruptcy Act. This section provides that:
Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of:
(a) any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or
(b) the death of his or her spouse or de facto partner or of a member of his or her family.
The effect of this subsection was summarised by Newnes JA in Fletcher v Westpac as follows:[9]
The effect, therefore, is that s 60(4) permits a bankrupt to proceed in his or her own name with an action for personal injury or wrong to such persons, and s 116(2)(g) provides that the right to damages in such an action does not vest in the trustee in bankruptcy for the benefit of the creditors. The intent is clear, namely, that the bankrupt's participating creditors should not be entitled to the benefit of compensation paid to a bankrupt for a personal injury or wrong done to any of the specified persons.
[9] Fletcher v Westpac [2012] WASCA 154 [14].
In Cox v Journeaux [No 2], Dixon J considered what constitutes a 'personal injury or wrong' within the meaning of s 60(4) of the Bankruptcy Act and held that:[10]
The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his [or her] mind, body or character and without reference to his [or her] rights of property.
[10] Cox v Journeaux [No 2] (1935) 52 CLR 713, 721.
Where damages for personal injury cannot be separated from or are a direct consequence of an interference with property rights, the claim for personal injuries does not survive the automatic stay under s 60(2) of the Bankruptcy Act.[11]
[11] Moss v Eaglestone [2011] NSWCA 404; (2011) 83 NSWLR 476 [77].
Actions for defamation[12] and malicious prosecution[13] are examples of claims for personal wrongs which fall within the exception in s 60(4) of the Bankruptcy Act.
[12] Moss v Eaglestone [79].
[13] Sheehan v Brett-Young [No 3] [2016] VSC 39 [69].
In relation to an appeal, in considering whether an appeal is in respect of a personal injury or wrong, it is necessary to consider the substance of the action which is the subject of the appeal.[14]
[14] Fletcher v Westpac [22] (per Newnes JA, Pullin and Murphy JJA agreeing).
In this case, the substance of the action is an application for an assessment of the costs invoiced by the respondent firm to the applicants. In determining whether this application is 'in respect of a personal injury or wrong', it is necessary to consider the matters on which the respondent was retained and whether any of those applications were 'in respect of a personal injury or wrong'. This approach is consistent with the history and policy of the law of bankruptcy, as summarised by Allsop P in Moss v Eaglestone.[15]
[15] Moss v Eaglestone [32] - [67].
In considering whether the claims the subject of the proceedings on which the respondent was retained are for a 'personal injury or wrong', it is necessary to consider them as at the date of bankruptcy. That is, the issue for my determination is whether, at the date of the applicants' bankruptcy, the claims fell within the 'personal injuries' exception.[16]
[16] Frigger v Banning [No 8] [2019] FCA 1319 [64].
Disposition of appeal
The evidence before me included an affidavit of Makan Mirzai dated 29 January 2019, which was the evidence filed by the respondent in support of its chamber summons dated 30 January 2019. On its face, the chamber summons was filed pursuant to s 60(3) of the Bankruptcy Act and sought an order that the proceedings be discontinued pursuant to s 60(3) of the Bankruptcy Act. This was the evidence before the Acting Principal Registrar.
Mr Mirzai's affidavit states that:
(a)on 20 July 2018, sequestration orders were made against each of the applicants;[17]
(b)on 1 November 2018, the respondent sent a notice to the applicants' trustee in bankruptcy pursuant to s 60(3) of the Bankruptcy Act notifying them of the proceedings and requiring the trustee to elect whether to prosecute or discontinue the proceedings;[18]
(c)no reply was received from the trustee within 28 days.[19]
[17] Affidavit of Makan Mirzai filed 30 January 2019 [3], 'MM1'.
[18] Affidavit of Makan Mirzai filed 30 January 2019 [4], 'MM2'.
[19] Affidavit of Makan Mirzai filed 30 January 2019 [5].
On the basis of this evidence, I accept that the proceedings had been abandoned by the trustee unless the proceedings fall within the exception contained in s 60(4) of the Bankruptcy Act.
Subject-matter of the respondent's retainer
There was a contest between the parties at the hearing before me as to the matters on which the respondent was retained by the applicants to act.
Mrs Frigger asserted that she and Mr Frigger retained the respondent in relation to WAD 607/2015, WAD 674/2015, CIV 2765/2010, CACV 45/2016 and WAD 428/2016. The respondent agreed that it had been retained to act for the applicants in relation to CACV 45/2016 and WAD 428/2016, but denied that it had been retained to act on the other matters. The respondent also asserted that it had been instructed to act on WAD 178/2017.
The costs agreement entered into between the applicants and the respondent does not provide any assistance in resolving this issue. The covering letter to the costs agreement states that the respondent firm was retained to:[20]
provide [the applicants] with legal advice and representation with respect to various matters related to the liquidation of Computer Accounting and Tax Pty Ltd (in liquidation).
[20] Affidavit of Mark Alexander Kenneth Richards filed 31 July 2019, 'MAR4', p 10.
The formal agreement executed by the applicants and respondent firm, attached to the cover letter, similarly states under the heading 'subject matter' that it concerned:[21]
Claims arising out of the liquidation of Computer and Tax Accounting Pty Ltd (In Liquidation).
[21] Affidavit of Mark Alexander Kenneth Richards filed 31 July 2019, 'MAR4', p 30.
I have been provided with a copy of the letter of advice of the respondent to the applicants dated 23 May 2017.[22] This letter specifically refers to CIV 2605/2010 [sic], CACV 45/2016, WAD 178/2017 (which was an appeal in relation to a decision in WAD 607/2015) and WAD 428/2016. It is apparent that the reference to CIV 2605/2010 is an error and that this is a reference to CIV 2765/2010. As a result, I accept that the respondent was retained to act in relation to each of these actions.
[22] Affidavit of Angela Frigger filed 13 August 2018, 'AF1'.
The letter of advice also refers to other actions commenced by the applicants which seek to restrain various parties from acting in relation to the liquidation of Computer and Tax Accounting Pty Ltd (CAT).[23] The letter does not specify what these actions are. It states that the respondent was not willing to 'pursue those allegations without explicit documentary evidence'.[24] This suggests that the respondent had been approached by the applicants to act for them in relation to these claims.
[23] Affidavit of Angela Frigger filed 13 August 2018, 'AF1', p 18 [16].
[24] Affidavit of Angela Frigger filed 13 August 2018, 'AF1', p 18 [16(a)(i)].
A copy of the amended statement of claim in WAD 674/2015 was in evidence before me.[25] From my review of the amended statement of claim, it is clear that the proceeding raises various claims in respect of the conduct of Mr Kitay, the liquidator of CAT.
[25] Affidavit of Angela Frigger filed 13 August 2018, 'AF2'.
In my view, WAD 674/2015 is a proceeding commenced by the applicants seeking to restrain Mr Kitay from continuing to act as liquidator of CAT. For this reason, I consider that this proceeding falls within the reference in the letter of advice to 'other proceedings' and formed part of the retainer of the respondent by the applicants.
For these reasons, I find that the respondent firm was retained to act for the applicants in relation to WAD 607/2015, WAD 674/2015, CIV 2765/2010, CACV 45/2016, WAD 428/2016 and WAD 178/2017.
I will consider the subject-matter of each of these actions in turn to determine whether any of them concerned a claim for a personal injury or wrong at the time of the respondent's retainer. I note that this retainer was terminated prior to the date of the applicants' bankruptcy. In considering these actions, I have referred to the evidence before me about each of the actions contained in the affidavits filed in these proceedings, as well as judgments that have been published by the courts in respect of each matter.
WAD 607/2015
Mrs Frigger deposed that Cowell Clarke had been retained to act in these proceedings and that Matthew Howard SC had been retained as senior counsel.[26] She annexed a copy of a proposed statement of claim.[27] It is clear from Mrs Frigger's evidence that this document had not been filed at the date of the applicants' bankruptcy.
[26] Affidavit of Angela Frigger filed 13 August 2018 [15].
[27] Affidavit of Angela Frigger filed 13 August 2018, 'AF3'.
A different proposed statement of claim was annexed to a later affidavit of Mrs Frigger.[28] Mrs Frigger deposed that the applicants had been given leave to file a statement of claim for any cause of action that had not vested in the trustee and that a proposed statement of claim had been filed on 7 May 2019.[29]
[28] Affidavit of Angela Frigger filed 28 June 2019, 'AF1'.
[29] Affidavit of Angela Frigger filed 28 June 2019 [5].
Neither of the proposed statements of claim are of assistance in determining this matter. This is because, as noted above, s 60(2) of the Bankruptcy Act provides that the action is automatically stayed at the time a person becomes a bankrupt. Accordingly, the relevant issue for my consideration is whether the proceedings as they were at the date of the respondent's retainer and, in any event, by no later than 20 July 2018, fell within the 'personal injuries' exception.
On 21 August 2019, Colvin J dismissed an application by the applicants in these proceedings for leave to file the proposed statement of claim (Frigger v Banning [No 8]). It is clear from this judgment that these reasons concerned the later version of the proposed amended pleading which is annexed to Mrs Frigger's affidavit of 28 June 2019. It is also clear from these reasons that neither of the proposed statements of claim which were in evidence before me had been accepted as the statement of claim as at the date of the bankruptcy of the applicants.
In any event, I have reviewed the documents in evidence before me. The later proposed statement of claim alleges that the applicants have suffered damage to their reputation and credit, that a letter sent to the Director of Public Prosecutions is defamatory, and that the 'malicious prosecution' of CAT and the first-named applicant has caused the applicants harm. Exemplary damages are sought for their loss of credit and reputation. I note that the allegations of defamation and malicious prosecution do not appear in the earlier draft of the statement of claim. For this reason, it is clear that these claims were added in between August 2018 and May 2019, after the applicants were declared bankrupt.
As these claims were not included in the draft of the statement of claim dated 23 July 2018, which was after the defendant's retainer had been terminated and the application for an assessment of costs had been filed, I find that these claims did not form part of the defendant's retainer.
As a consequence, there were no claims that formed part of the WAD 607/2015 at the time of the defendant's retainer which were personal injuries claims. Accordingly, any claim for the review of costs associated with the provision of advice in respect of this action did not survive the automatic stay under the Bankruptcy Act, s 60(2).
Following the hearing of this application but prior to me delivering my reasons for decision, the applicant sought leave to file supplementary submissions to update the court in respect of recent decisions made in WAD 607/2015. This application was not opposed by the respondent.
The applicant submitted that the decision of Colvin J in Frigger v Banning [No 8] was attended by jurisdictional error and that an appeal had been lodged against this decision. The applicant contended that the solicitor‑client taxation should not be dismissed but should be held in abeyance pending resolution of this appeal as well as the appeal against the sequestration order.
In my view, these matters are relevant to the question of the orders that should be made by the court (on which I have already indicated I will hear from the parties prior to making any orders) rather than the question as to whether the claims in WAD 607/2015 were personal injuries claims. The supplementary submissions of the applicant did not assist the resolution of this issue or cause me to alter the conclusion set out above.
WAD 178/2017 (appeal from decision in WAD 607/2015)
These proceedings concerned an application for leave to appeal from orders of Barker J, which refused the applicants leave to file a proposed substituted originating application and proposed substituted statement of claim in WAD 607/2015.
The application for leave to appeal was dismissed by Justice Siopis of the Federal Court on 21 December 2017.[30] It is apparent from Siopis J's reasons for decision that the proposed substituted statement of claim alleged that the respondents to those proceedings engaged in tortious conduct by way of litigating against the applicants or CAT for a collateral purpose. It also appears that the proposed substituted originating application sought to plead a claim against a legal practitioner, who acted on behalf of the respondents in a number of legal proceedings in the Supreme Court, against both CAT and the applicants.
[30] Frigger v Banning [2017] FCA 1589.
Siopis J stated that:[31]
[T]he fundamental premise underlying the Friggers' claims in the first five causes of action pleaded in the proposed substituted statement of claim is that the December 2009 Court of Appeal orders for the repayment of the excess monies by CAT and costs, are invalid and unenforceable; and that PSA and Mr Banning's estate, as well as their legal representatives, have, in treating the orders as valid and enforceable, and, in taking consequential legal action against CAT and the Friggers, acted for the collateral purpose of harming the Friggers.
Thus, the Friggers allege in their Corporations Act claim that the December 2009 Court of Appeal orders are invalid and unenforceable because they were obtained as a consequence of contraventions of the Corporations Act; and that, accordingly, they are entitled to obtain a permanent injunction pursuant to s 1324(1) of the Corporations Act restraining PSA and Mr Banning's estate from enforcing those orders; and also damages under s 1324(10) for the economic and reputational loss they have suffered as a consequence of the respondents treating the orders as valid and enforceable and 'dragging' the Friggers into a plethora of litigation.
As mentioned, it is this Corporations Act claim, which the Friggers say gives this Court jurisdiction to hear and determine that claim, as well as the common law claims founded on collateral abuse of process, and tortious interference with contract.
[31] Frigger v Banning [115] - [117].
In my view, if the claim for tortious interference with contract is a personal injuries claim (on which I make no finding), this claim cannot be separated from the claims that the orders made by the Court of Appeal are invalid and unenforceable. Similarly, any claim for economic and reputational loss is said to arise from the attempts to enforce the orders of the Court of Appeal and cannot be separated from these claims.
For these reasons, the claims in WAD 178/2017 are not properly characterised as claims for personal injuries under s 60(4) of the Bankruptcy Act. As a consequence, any claim for a review of the costs associated with the provision of advice in respect of this action did not survive the automatic stay under s 60(2) of the Bankruptcy Act.
WAD 674/2015
Mrs Frigger deposed that Cowell Clarke had been retained to act in these proceedings and that Matthew Howard SC had agreed to accept instructions on the matter.[32] She annexed a copy of an amended statement of claim dated 8 January 2018 which was filed in those proceedings.[33]
[32] Affidavit of Angela Frigger sworn 13 August 2018 [14].
[33] Affidavit of Angela Frigger sworn 13 August 2018 [14], 'AF2'.
The amended statement of claim raises a number of allegations concerning the liquidation of CAT. It seeks orders that Mr Kitay be removed as liquidator of CAT and the appointment of another liquidator. It also seeks orders for payment of certain amounts to CAT and the Frigger Superannuation Fund as well as declarations that Mr Kitay is personally liable for the costs of a number of legal proceedings between the parties. Relevantly, for the purposes of this application, the amended statement of claim alleges that the applicants' credit and reputation have been damaged as a result of false information published by Mr Kitay in respect of CAT. As a consequence of that conduct, the applicants seek exemplary or aggravated damages.
In my view, the claim for exemplary or aggravated damages is not properly characterised as a claim for personal injuries under s 60(4) of the Bankruptcy Act. This is because this claim arises from allegations concerning the liquidation of CAT and cannot be separated from the remainder of the claims made by the applicants in those proceedings. That is, the claim for damages is a direct consequence of the allegations made in respect of the conduct of the liquidation. For this reason, any claim for a review of the costs associated with the provision of advice in respect of this action did not survive the automatic stay under s 60(2) of the Bankruptcy Act.
CIV 2765/2010
These proceedings concern claims by the applicants in relation to the ownership of certain assets. The liquidator of CAT asserts that these assets are owned by CAT whereas the applicants assert that these assets are held by CAT on trust for the Frigger Superannuation Fund.[34]
[34] Affidavit of Angela Frigger sworn 13 August 2018, 'AF1', p 5.
An application of this nature is not, in my view, a claim for personal injuries under s 60(4) of the Bankruptcy Act. This claim is a direct consequence of the alleged interference with the applicants' property rights. As a consequence, any claim for a review of the costs associated with the provision of advice in respect of these proceedings does not survive the automatic stay under s 60(2) of the Bankruptcy Act.
CACV 45/2016
In these proceedings, the applicants appealed against a decision permanently staying proceedings that were commenced by them against the liquidator of CAT. The applicants sought damages arising from alleged misconduct by the liquidator over the period February 2010 to July 2014.[35]
[35] Frigger v Kitay [No 2] [2017] WASCA 139 [3].
The first‑named applicant did not put forward any basis upon which it could be said that this claim is a claim for personal injuries. In my view, the claims raised in this appeal cannot be considered a claim for personal injuries - rather, they concerned allegations about the conduct of the liquidation. As a consequence, any claim for a review of the costs associated with the provision of advice in respect of these proceedings are automatically stayed under s 60(2) of the Bankruptcy Act.
WAD 428/2016
Mrs Frigger's evidence is that these proceedings concerned an application to set aside bankruptcy notices that had been issued against the applicants.[36]
[36] Affidavit of Angela Frigger sworn 13 August 2018 [16].
In Rana v Chief of Army, Mansfield J stated:[37]
In my view, the claims of the appellant on the appeal, and in the primary application to set aside the bankruptcy notice, do not fall within the scope of s 60(4). If the appeal were successful, there would be no damages awarded to the appellant and certainly no damages assessed by immediate reference to pain or injury experienced by him. There would be no direct benefit to him in the sense of a valuable personal asset (his example was a driver's licence) being restored. An illustration of such a case is provided by Griffiths v Civil Aviation Authority, which recognised that a commercial pilot's licence (the appeal to this court was from a decision by the Administrative Appeals Tribunal imposing stringent conditions on the licence) is property of a bankrupt personal in nature and not part of the estate available to the creditors. See in particular per Spender J at 311–318.
In my view, s 60(4) is not intended to preserve to a bankrupt a claim to set aside a bankruptcy notice, as it is intended to preserve only the prosecution and benefits of litigation if there are potential benefits to the bankrupt which are not legitimately entitlements of the bankrupt's creditors. The application to set aside the bankruptcy notice will not directly result in any award of damages to the appellant. … (citations omitted)
[37] Rana v Chief of Army [2008] FCA 1554 [25] - [26].
I respectfully agree with his Honour's observations.
As an application to set aside a bankruptcy notice is not a claim for personal injuries under s 60(4) of the Bankruptcy Act, the applicants' claim for the review of the costs associated with the provision of advice on these proceedings does not survive the automatic stay under s 60(2) of the Bankruptcy Act.
Conclusion in relation to the respondent's retainer
For the reasons set out above, none of the proceedings on which the respondent was retained by the applicants are properly characterised as including any claim for personal injuries. As such, the costs invoiced by the respondent in the provision of advice to the applicants similarly cannot be characterised as including any claim for personal injuries.
As a result, these proceedings were automatically stayed pursuant to s 60(2) of the Bankruptcy Act on the bankruptcy of the applicants.
The applicants' trustee in bankruptcy did not make an election pursuant to s 60(3) of the Bankruptcy Act within 28 days after being served with notice of these proceedings. As a consequence, the trustee is deemed to have abandoned the proceedings.
I now turn to consider the consequence of the deemed abandonment of these proceedings.
Consequence of abandonment of proceedings
If proceedings are deemed to be abandoned pursuant to s 60(3) of the Bankruptcy Act, this does not automatically operate as a dismissal of the proceedings.[38] The statutory stay continues to operate. Where the proceedings have been abandoned, it is open to a respondent to move the Court to have the proceedings dismissed for want of prosecution.[39] Costs will usually follow the event.[40]
[38] National Australia Bank Ltd v Nyasa Nominees Pty Ltd [2019] WASC 107 [12].
[39] Cole v Challenge Bank Ltd [2002] FCAFC 200 [16].
[40] Cole v Challenge Bank Ltd [16].
Accordingly, the abandonment by the trustee of these proceedings did not mean that the proceedings should have been ordered to be discontinued. The proceedings can only be discontinued where the trustee elects to discontinue the proceedings pursuant to s 60(2) of the Bankruptcy Act. Where this does not occur, if the respondent wishes to bring an end to the proceedings, the respondent is required to file an application for the dismissal of the proceedings for want of prosecution. This was not the application filed by the respondent.
Order as to costs of application
The second ground of appeal concerned the costs orders that were made by the Acting Principal Registrar. The applicant contended that there was no basis upon which an order for costs could be made against the applicants. This contention was put forward on two grounds. First, if the proceedings had vested in the trustee, the applicants were not parties to the proceedings in their own capacity and orders could not be made against them. Second, costs should not have been ordered as there was no hearing on the merits.
In Cole v Challenge Bank Ltd, Gray J considered what costs orders should be made where the intention of the trustee in bankruptcy is to not continue the proceedings. Gray J (with whom Emmett J agreed) stated:[41]
Ordinarily, if an appeal is discontinued, costs follow the event. If an appeal were to be abandoned in normal circumstances by express statement of the appellant, it would be open to a respondent to put an end to it by moving the Court to have the appeal dismissed for want of prosecution. In those circumstances, costs would still follow the event and an order would be made against the appellant in respect of those costs. Such costs would, of course, include the costs of moving the Court to dismiss the appeal for want of prosecution.
I am not aware of any authority on the effect of s 60 of the Bankruptcy Act on the matter of costs when either there is an election to discontinue a proceeding or there is a deemed abandonment of it. In my view, the Court should follow the normal practice and costs should follow the event.
[41] Cole v Challenge Bank Ltd [16] - [17].
Pursuant to O 23 r 2(1) of the RSC, if a party discontinues a proceeding or withdraws part of the complaint, they are liable to pay the costs occasioned by the discontinuance or withdrawal. For this reason, if these proceedings were discontinued by the applicants, the usual costs order would be that the applicants pay the respondent's costs of the proceeding, including the costs of any motion required to be filed by the respondent.
While the proceedings vested in the trustee in bankruptcy as at the date of the applicants' bankruptcy, the trustee is not a party to the proceedings; the applicants are. For this reason, it is appropriate that any order for costs be against the applicants personally.
In my view, there is no substance in the second ground of appeal.
Conclusion
For the reasons I have given, I consider that the Acting Principal Registrar erred in ordering that the proceedings be discontinued pursuant to s 60(3) of the Bankruptcy Act. The effect of this section is that the proceedings are deemed to have been abandoned and the statutory stay continues to operate.
The appeal from the Acting Principal Registrar's decision is a new hearing of the matter and this court may exercise its power regardless of error. As noted above, my preliminary view is that little purpose would be achieved in allowing the appeal for the following reasons. First, even if the appeal is allowed, for the reasons I have set out above, the proceedings remain statutorily stayed pursuant to s 60(2) of the Bankruptcy Act. Second, the respondent would be entitled to immediately file an application for the dismissal of the proceedings for want of prosecution which would almost certainly be granted. If that occurred, it would be usual for an order to be made that costs follow the event. Third, these orders would be of the same effect as the orders made by the Acting Principal Registrar.
I am aware that the parties did not have an opportunity to make any submissions on these points at the hearing or for the applicant to raise the matters set out in the supplementary submissions, which were made in a different context. For this reason, before making any orders, I will hear from the parties concerning the appropriate disposition of the appeal.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ME
Associate to the Honourable Justice Hill20 JANUARY 2020
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