Frigger v Trenfield

Case [2019] FCA 1746

FEDERAL COURT OF AUSTRALIA

Frigger v Trenfield [2019] FCA 1746

File number: WAD 141 of 2019
Judge: JACKSON J
Date of judgment: 24 October 2019
Catchwords: BANKRUPTCY - application for mandatory interlocutory injunctions against trustees - serious question to be tried - evidentiary uncertainties - adequacy of damages - balance of convenience against application - application dismissed
Legislation:

Bankruptcy Act 1966 (Cth) s 116, Schedule 2 ss 5‑30, 90‑15, 90‑20

Federal Court Rules 2011 (Cth) rr 1.34, 4.01

Personal Property Securities Act 2009 (Cth) s 12

Superannuation Industry (Supervision) Act 1993 (Cth)

Trustees Act 1962 (WA) s 10
Cases cited:

Apotex Pty Ltd v Cipla Limited [2017] FCA 1627

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57

Australian Securities and Investments Commission v Linchpin Capital Group Ltd [2018] FCA 1104

Australian Securities and Investments Commission v Triton Underwriting Insurance Agency [2003] NSWSC 1145; (2003) 48 ACSR 249

Baker & McAuliffe Holdings Pty Ltd t/as JSB Lighting v Carey [2018] FCA 1972

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618

Booth v Offerman as trustee of the bankrupt estate of Geoffrey David Booth [2019] FCA 5

Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499

Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253

Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471

Emeco International Pty Ltd v O'Shea [2012] WASC 282

Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670

Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49

Huhtamaki Australia Ltd v Botha [2004] NSWSC 386

La Housse v Counsel [2008] WASCA 207

Mingos v Commissioner of Taxation [2019] FCA 834

National Australia Bank Ltd v Joyce [2012] WASC 224

Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; (2018) 125 ACSR 355

Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238

Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76

Smith, in the matter of Buddy Management Pty Ltd (in liq) v Buddy Management Pty Ltd (in liq) [2019] FCA 566

Tsimidopoulos v Mulson Holdings Pty Ltd (1989) 1 WAR 359

Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Date of hearing: 20 September 2019
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 68
Counsel for the Applicants: The applicants appeared in person
Counsel for the Respondents: Mr SD Majteles
Solicitor for the Respondents: Carles Solicitors

ORDERS

WAD 141 of 2019
BETWEEN:

ANGELA CECILIA THERESA FRIGGER

First Applicant

HARTMUT HUBERT JOSEF FRIGGER

Second Applicant
AND:

KELLY-ANNE TRENFIELD

First Respondent

PAUL ANTHONY ALLEN

Second Respondent

JUDGE:

JACKSON J

DATE OF ORDER:

24 OCTOBER 2019

THE COURT ORDERS THAT:

1.The applicants' application on an interlocutory basis for the orders sought at paragraphs 1, 2, 3, 4 and 7 of the amended interlocutory application filed 18 September…

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AGLC
Frigger v Trenfield [2019] FCA 1746
Case
[2019] FCA 1746
Decision Date

CaseChat Overview and Summary

The Friggers have brought an application against the Trustees of the estate of Mr Trenfield, deceased, in the Federal Court of Australia. The dispute revolves around the ownership of a portfolio of shares held with CommSec and whether they were properly transferred to the estate. The Friggers claim that the shares were held on trust for the Family Superannuation Fund (FSF), which was established by the Friggers. They seek mandatory interlocutory injunctions against the Trustees to prevent the sale of the shares and for the Trustees to make good any losses incurred. The Trustees argue that the shares were not properly transferred to the estate and seek to sell them to benefit the creditors of the estate.

The court was required to decide whether the Friggers had established a serious question to be tried, whether there were evidentiary uncertainties that made it difficult to determine the outcome, and whether the balance of convenience favoured the granting of the interlocutory injunctions. The court also had to consider whether damages would be an adequate remedy for the Friggers.

The court found that the Friggers had not established a serious question to be tried as there were significant evidentiary uncertainties. The court noted that the Friggers had made broad assertions without providing sufficient evidence to support their claims. The court also found that the balance of convenience did not favour the granting of the interlocutory injunctions as it would result in potential loss to the creditors of the estate if the shares did not vest in the Trustees. The court held that damages would likely provide an adequate remedy for the Friggers.

The court dismissed the Friggers' application for interlocutory injunctions and reserved costs. The Friggers have the option to pursue the same orders as final relief.

Orders

Orders of the court

1. The applicants' application on an interlocutory basis for the orders sought at paragraphs 1, 2, 3, 4 and 7 of the amended interlocutory application filed 18 September 2019 is dismissed.

2. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Here, the Friggers claim that all of the securities were held on trust for another person because they were held subject to the trusts of the FSF. To establish that, in the absence of evidence of an express declaration of trust, it is essential that there be proof of an intention to create a trust, with certainty of subject matter and object, certainty as to the trustee and certainty of the personal obligation annexed to the property to hold it on the trusts alleged: see La Housse v Counsel [2008] WASCA 207 at [37] (Pullin JA, Wheeler and Buss JJA agreeing). The subjective intentions of the settlors are irrelevant; what is required is evidence that in all the circumstances the necessary intention was manifested objectively: see Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [46]‑[66] (Gummow and Hayne JJ, French CJ agreeing at [17]) and [113]‑[115] (Heydon and Crennan JJ).The evidenceThe FSF On 6 March 2019 Mrs Frigger swore an affidavit which was filed in support of the originating application. It annexes the trust deed for the FSF, which was established on 1 July 1997. It had a corporate trustee and its original members were Mr and Mrs Frigger. By deed of amendment dated 1 January 2008, they were each appointed as a trustee of the fund. Although it is not clear from the evidence, it appears that the original corporate trustee, Computer Accounting and Tax Pty Ltd, was removed as trustee, either at the same time as the Friggers were appointed, or in July 2010. By a further deed of amendment dated 1 July 2018, Mr and Mrs Frigger (and their two children) were removed as trustees of the fund and replaced with H & A Frigger Pty Ltd. Mrs Frigger's first affidavit says that she and her husband ceased to be trustees '[s]ince 21 July 2018' and she says in a written submission that the removal of the Friggers as trustees was 'backdated to 1 July 2018 for practical purposes'. The evidence does not reveal exactly when and how the children were appointed as trustees, although there is a schedule of 'associates' of the fund suggesting that this occurred on 6 July 2016.The CommSec portfolio In her first affidavit sworn in the proceedings, Mrs Frigger deposed that since the commencement of the FSF on 1 July 1997, she and Mr Frigger took 'all steps to ensure that all our assets would be held in FSF (other than our principal residence)' to obtain certain tax benefits. She said that to achieve that 'goal and plan', in or about 1997 they 'transferred a share portfolio held in our personal names to the FSF for approximately $650,000'. But she no longer has evidence of those transfers. She says that from the inception of the FSF she and her husband made 'all investment decisions. My husband manages a share portfolio held with Commsec.' In an affidavit sworn 6 September 2019 Mrs Frigger says that 'the portfolio has been held by [CommSec] as our on‑line stockbroker'. Ms Trenfield has produced a copy of the application form that opened the account with CommSec. It was opened in early 1999. The form shows Mr and Mrs Frigger as the applicants. It does not mention the FSF. There is a box for notification of an intention to operate the account on behalf of a superannuation fund but that box is empty on the form. It appears that Computer Accounting and Tax Pty Ltd (then named Serenity Holdings Pty Ltd) was trustee of the FSF at the time.

Decision

Reasons for decision

However I doubt that it is useful in this case to characterise the result in terms of the status quo or reversion to the position that obtained prior to the alleged contraventions. Fundamentally, the dispute here concerns ownership of property. The aim of the court must be to resolve the application for interlocutory orders in a manner calculated to best preserve the property, for the benefit of whichever party establishes ownership, while at the same time minimising the risk of injustice to both parties in view of the present uncertainty as to the ultimate outcome. For the reasons I have given, I consider that approaching the matter in that way does not favour the orders the Friggers seek.Conclusion I do not consider that the balance of convenience favours the application for an interlocutory injunction. The likely outcome of granting the orders sought will be that at least some of the shares, or the proceeds of selling them, are removed from the reach of the Trustees. If it turns out after trial that the shares did vest in the Trustees, the creditors of the estate may suffer loss as a result, which they may not be able to recover from the Friggers. If the orders sought are not granted, damages are likely to give the Friggers an adequate remedy. On the state of the evidence as it currently stands, the case for relief faces numerous uncertainties. The orders the Friggers seek here on an interlocutory basis are the same as the orders they seek on a final basis. Yet as I have explained, they ask the court to make those orders on the basis of evidence with many gaps; gaps that they seek to cross with leaps of broad assertion. The risk of injustice will be higher if the interlocutory application is granted than it will be if the application is dismissed. The application for interlocutory orders requiring Ms Trenfield to send letters to CommSec and ASX Settlement Pty Ltd, and to make good any loss, is refused. It remains open to the applicants to pursue those orders as final relief. I will hear the parties as to costs.

Ratio Decidendi

Legal Principle Established

The Friggers have brought their application under s 90‑15 of the Insolvency Practice Schedule (Bankruptcy). That section is as follows:90-15 Court may make orders in relation to estate administrationCourt may make orders(1)The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate.Orders on own initiative or on application(2) The Court may exercise the power under subsection (1):(a) on its own initiative, during proceedings before the Court; or(b) on application under section 90-20.Examples of orders that may be made(3)Without limiting subsection (1), those orders may include any one or more of the following:(a)an order determining any question arising in the administration of the estate;(b)an order that a person cease to be the trustee of the estate;(c)an order that another person be appointed as the trustee of the estate;(d)an order in relation to the costs of an action (including court action) taken by the trustee of the estate or another person in relation to the administration of the estate;(e)an order in relation to any loss that the estate has sustained because of a breach of duty by the trustee;(f)an order in relation to remuneration, including an order requiring a person to repay to the estate of a regulated debtor, or the creditors of a regulated debtor, remuneration paid to the person as trustee.Matters that may be taken into account(4)Without limiting the matters which the Court may take into account when making orders, the Court may take into account:(a)whether the trustee has faithfully performed, or is faithfully performing, the trustee's duties; and(b)whether an action or failure to act by the trustee is in compliance with this Act and the Insolvency Practice Rules; and(c)whether an action or failure to act by the trustee is in compliance with an order of the Court; and(d)whether the regulated debtor's estate or any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the trustee; and(e)the seriousness of the consequences of any action or failure to act by the trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.Costs orders(5)Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:(a)the trustee or another person is personally liable for some or all of those costs; and(b)the trustee or another person is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to some or all of those costs.Orders to make good loss sustained because of a breach of duty(6)Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:(a)the trustee is personally liable to make good some or all of the loss; and(b)the trustee is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to the amount made good.Section does not limit Court's powers(7)This section does not limit the Court's powers under any other provision of this Act, or under any other law.