Frigger v Trenfield (No 2)

Case [2022] FCA 501

FEDERAL COURT OF AUSTRALIA

Frigger v Trenfield (No 2) [2022] FCA 501  

Appeal from: Frigger v Trenfield (No 10) [2021] FCA 1500
File number: WAD 278 of 2021
Judgment of: FEUTRILL J
Date of judgment: 27 April 2022
Date of publication of reasons: 4 May 2022
Legislation:

Bankruptcy Act 1966 (Cth) ss 153B, 154

Corporations Act 2001 (Cth) s 477(2B)

Federal Court of Australia Act 1976 (Cth) ss 23, 37M,

Federal Court Rules 2011 (Cth) r 5.04, item 33; rr 36.11, 36.11(2)(i), 39.05(b)

Federal Circuit Court of Australia Act 1999 (Cth) s 104(4)

Cases cited:

Frigger v Trenfield (No 4) [2020] FCA 797

Frigger v Trenfield (No 2) [2021] FCA 1255

Frigger v Trenfield (No 9) [2021] FCA 652

New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118

Pedley v Deputy Commissioner of Taxation [2019] FCA 1106

Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; (2021) 392 ALR 93

Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 62
Date of hearing: 27 April 2022
Counsel for the Appellants: The Appellants appeared in person
Counsel for the Respondent: Mr S Majteles with Mr T Langdon
Solicitor for the Respondent: Carles Solicitors

ORDERS

WAD 278 of 2021
BETWEEN:

ANGELA CECILIA THERESA FRIGGER

First Appellant

HARTMUT HUBERT JOSEF FRIGGER

Second Appellant
AND:

KELLY-ANNE LAVINA TRENFIELD

Respondent

ORDER MADE BY:

FEUTRILL J

DATE OF ORDER:

27 APRIL 2022

THE COURT ORDERS THAT:

1.The appellants' interlocutory application for an order to vacate the hearing dates on 10, 11 and 12 May 2022 and for the appeal to be re-listed in the Full Court's calendar in August 2022 is dismissed.

2.The appellants are to pay the respondent's costs of the interlocutory application, including any reserved costs, to be taxed in any event.

3.Paragraph 6 of the orders of Registrar Davis of 28 March 2022 and paragraph 6 of the orders of Justice Feutrill of 4 April 2022 are varied such that by not later than 4.00 pm on 3 May 2022, the respondent is to file and serve on the appellant Part C and Part D of the Appeal Book.

4.By not later than 4.00pm on 29 April 2022, the appellants are to file and serve on the respondent a notice identifying:

(a)the exhibits and evidence to which the appellants intend to refer in their submissions and that are to form Part C of the Appeal book; and

(b)the documents referred to in paragraph 5(e) of the orders of Justice Feutrill of 4 April 2022 to which the appellants intend to refer in their submissions and that are to form Part D of the Appeal Book,

which are not referred to in the appellants' submissions of 8 April and 12 April 2022 in the appeal and on the application for the Court to receive further evidence in the appeal.

5.In the event of any unresolved…

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Frigger v Trenfield (No 2) [2022] FCA 501
Case
[2022] FCA 501
Decision Date

CaseChat Overview and Summary

The interlocutory application in Frigger v Trenfield (No 2) was brought by the appellants, who are the bankrupts, against the respondent, the trustee in bankruptcy of the appellants. The appellants sought an order vacating the hearing dates of the appeal scheduled for May 2022 and for the appeal to be re-listed in the Full Court's calendar in August 2022. The application was brought in the context of an ongoing dispute concerning the sequestration order made against the appellants in 2018 and the subsequent proceedings in this Court in WAD 141 of 2019. The legal issues before the Court were whether the appeal should be adjourned and, if so, on what terms. The Court considered the submissions of both parties and the relevant background and context of the proceedings.

The Court found that the application for an adjournment should be dismissed. The Court noted that the appellants' application for an adjournment was based on the premise that if the sequestration order were annulled or set aside, it would substantially resolve the issues in the appeal. However, the Court found that this was not the case and that there were other significant reasons that weighed against the adjournment. The Court also noted that the grounds relied upon in support of the application for the adjournment were substantially the same as the grounds relied upon in support of a previous application for a stay of judgment in WAD 141 of 2019, which was dismissed. The Court found that the appellants had not demonstrated any compelling reason for the appeal to be adjourned.

The Court dismissed the appellants' interlocutory application for an order to vacate the hearing dates on 10, 11 and 12 May 2022 and for the appeal to be re-listed in the Full Court's calendar in August 2022. The appellants were ordered to pay the respondent's costs of the interlocutory application, including any reserved costs, to be taxed in any event. The Court also varied certain orders made by Registrar Davis and Justice Feutrill to provide for the exchange of documents between the parties. The Court noted that, in the event of any unresolved difference(s) between the parties regarding the form and content of the Appeal Book, each party had liberty to apply for further directions regarding such difference(s). The orders of the Court are set out in the judgment.

Orders

Orders of the court

1. The appellants' interlocutory application for an order to vacate the hearing dates on 10, 11 and 12 May 2022 and for the appeal to be re-listed in the Full Court's calendar in August 2022 is dismissed.

2. The appellants are to pay the respondent's costs of the interlocutory application, including any reserved costs, to be taxed in any event.

3. Paragraph 6 of the orders of Registrar Davis of 28 March 2022 and paragraph 6 of the orders of Justice Feutrill of 4 April 2022 are varied such that by not later than 4.00 pm on 3 May 2022, the respondent is to file and serve on the appellant Part C and Part D of the Appeal Book.

4. By not later than 4.00pm on 29 April 2022, the appellants are to file and serve on the respondent a notice identifying:

(a) the exhibits and evidence to which the appellants intend to refer in their submissions and that are to form Part C of the Appeal book; and

(b) the documents referred to in paragraph 5(e) of the orders of Justice Feutrill of 4 April 2022 to which the appellants intend to refer in their submissions and that are to form Part D of the Appeal Book,

which are not referred to in the appellants' submissions of 8 April and 12 April 2022 in the appeal and on the application for the Court to receive further evidence in the appeal.

5. In the event of any unresolved difference(s) between the parties regarding the form and content of the Appeal Book, each party has liberty to apply for further directions regarding such difference(s).

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

Background

Background to the litigation

The main reason is I do not accept that the resolution of WAD 66 of 2021 will substantially resolve the issues in the appeal or that the appeal will be rendered substantially inutile as a consequence. There are also other less significant reasons that weigh against the adjournment. BACKGROUND Before addressing the substance of the submissions, it is briefly necessary to summarise the relevant background to the application. Although the background will be well familiar to the appellants and the respondent, it is necessary to set it out in a little detail because it forms part of the context in which the application has been brought and has a bearing on the exercise of the discretion overall. Sequestration order On 20 July 2018, Colvin J made a sequestration order under the Bankruptcy Act 1966 (Cth) (which I will refer to as the Bankruptcy Act), against the estates of each of the appellants. That order was made on the application of Mr Mervyn Jonathon Kitay (who I will refer to as Mr Kitay), in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (as the first applicant, and I will refer to that company as CAT), and CAT itself, as the second applicant. The application arose out of a judgment debt in the sum of $61,042 in respect of a costs order that Master Sanderson had made and a certificate of taxation of Registrar Boyle with respect to proceedings in Supreme Court of Western Australia involving Mr Kitay, CAT and the appellants. The respondent in this appeal (who I shall sometimes refer to as Ms Trenfield) is the trustee in bankruptcy of each of the appellants. Her appointment flowed from the sequestration order made in July 2018. WAD 141 of 2019 and WAD 278 of 2021 After the sequestration order, the appellants commenced proceedings in this Court in WAD 141 of 2019. The trial and submissions were heard over 12 days during 2020 before Jackson J. On 1 December 2021, Jackson J made an order dismissing the appellants' applications in WAD 141 of 2019 and delivered reasons for his decision. On 13 December 2021, the appellants commenced this appeal and filed a notice of appeal. On the same day, the appellants made an interlocutory application in the appeal to stay the primary judge's judgment. On 16 December 2021, Colvin J made an order dismissing the application for a stay. At about the same time, the respondent gave an undertaking, which was in the following terms:…the respondent in her capacity as trustee of the bankrupt estates of the first and second appellants to take no steps to dispose of, transfer or otherwise deal with the shares held by Commonwealth Securities Limited in Portfolio 270815 without first giving 30 days prior notice to the first and second appellants such undertaking being subject to the respondent complying with any court order concerning those shares and the respondent having liberty to apply on notice to vary or be released from the undertaking. The shares held by Commonwealth Securities Ltd formed part of the disputed assets, which were the subject of the application in WAD 141 of 2019. I will describe the nature of that dispute in more detail shortly.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

At this point, I want to note that, to accept that submission, would involve, in effect, prejudging ground 1 of the notice of appeal and judging it in favour of the appellants. But, in any case, it is difficult to characterise the decision of Jackson J in WAD 141/2019 as involving an hypothetical question. In substance, the decision and orders determined ownership of disputed assets. That was not an hypothetical question in the relevant sense in which that expression is used in the case referred to by the first named appellant. Application to stay judgment Before turning to the potential impact of WAD 66 of 2021 on the appeal, I need to mention a further application made in WAD 141 of 2019. After the trial, but before judgment was delivered, the appellants made an application in April 2021 seeking a stay of the delivery of a judgment in WAD 141 of 2019. That application was dismissed on 14 June 2021. That application is significant in that the grounds relied on in support of the application for the stay are substantially the same as the grounds relied upon in support of the adjournment of the appeal. That rather long summary provides relevant context in which to consider the question of the exercise of the Court's discretion on the adjournment. DISPOSITION Returning now to the primary premise upon which the application is based, namely, that if the sequestration order is annulled or set aside, in effect, it will obviate the need to determine all the issues in the appeal except for the fourth issue (that is, the fourth group of issues, the compensation resulting from the freeze of BOQ1 in the main portfolio) and the second group of issues, namely, compensation and losses associated with the orders made in the Supreme Court of Western Australia. If the sequestration order were annulled or set aside, it would resolve the question of removal of the respondent, that is, it would essentially, deal with ground 6 of eight, so one of the eight grounds. It would not resolve the second group of issues, that is, the question of losses flowing from the orders in the Supreme Court of Western Australia which is ground 5 of eight. Most significantly, there is very considerable uncertainty as to whether it would resolve the disputed asset issue. It certainly would not resolve that issue, but it also would not obviate the need, necessarily, to determine what assets truly form part of the estate of the bankrupts. Insofar as the appellants seek annulment in WAD 66 of 2021, the effect of an annulment was dealt with by the primary judge in Frigger v Trenfield (No 9) [2021] FCA 652 at [13]-[17]. In short, the annulment would not invalidate anything the respondent has done as trustee in bankruptcy. Further, the property vested in her will remain vested in her so that she may apply it in the payment of costs, charges and expenses of the administration of the bankruptcies, including her remuneration and expenses. There is evidence before the Court on this application that these costs exceed $1 million. There is no evidence before the Court on this application as to what assets may be available to be realised to recover the costs of the administration in bankruptcy and I am not in a position to form a view about the reasonableness of the fees or the assets vested in the respondent overall. However, I accept the respondent will claim in excess of $1 million and will seek to recover that sum from assets vested in her, including the disputed assets.

Ratio Decidendi

Legal Principle Established

Before addressing the substance of the submissions, it is briefly necessary to summarise the relevant background to the application. Although the background will be well familiar to the appellants and the respondent, it is necessary to set it out in a little detail because it forms part of the context in which the application has been brought and has a bearing on the exercise of the discretion overall. Sequestration order On 20 July 2018, Colvin J made a sequestration order under the Bankruptcy Act 1966 (Cth) (which I will refer to as the Bankruptcy Act), against the estates of each of the appellants. That order was made on the application of Mr Mervyn Jonathon Kitay (who I will refer to as Mr Kitay), in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (as the first applicant, and I will refer to that company as CAT), and CAT itself, as the second applicant. The application arose out of a judgment debt in the sum of $61,042 in respect of a costs order that Master Sanderson had made and a certificate of taxation of Registrar Boyle with respect to proceedings in Supreme Court of Western Australia involving Mr Kitay, CAT and the appellants. The respondent in this appeal (who I shall sometimes refer to as Ms Trenfield) is the trustee in bankruptcy of each of the appellants. Her appointment flowed from the sequestration order made in July 2018. WAD 141 of 2019 and WAD 278 of 2021 After the sequestration order, the appellants commenced proceedings in this Court in WAD 141 of 2019. The trial and submissions were heard over 12 days during 2020 before Jackson J. On 1 December 2021, Jackson J made an order dismissing the appellants' applications in WAD 141 of 2019 and delivered reasons for his decision. On 13 December 2021, the appellants commenced this appeal and filed a notice of appeal. On the same day, the appellants made an interlocutory application in the appeal to stay the primary judge's judgment. On 16 December 2021, Colvin J made an order dismissing the application for a stay. At about the same time, the respondent gave an undertaking, which was in the following terms:…the respondent in her capacity as trustee of the bankrupt estates of the first and second appellants to take no steps to dispose of, transfer or otherwise deal with the shares held by Commonwealth Securities Limited in Portfolio 270815 without first giving 30 days prior notice to the first and second appellants such undertaking being subject to the respondent complying with any court order concerning those shares and the respondent having liberty to apply on notice to vary or be released from the undertaking. The shares held by Commonwealth Securities Ltd formed part of the disputed assets, which were the subject of the application in WAD 141 of 2019. I will describe the nature of that dispute in more detail shortly. On 17 February 2022, Logan J, amongst other orders, granted the appellants leave to file an amended notice of appeal in terms of a document filed in the Court on 30 January 2022.