APPEAL AND NEW TRIAL – appeal – appeal by way of rehearing – errors of fact – advantage of primary judge – principles of appellate review.
BANKRUPTCY AND INSOLVENCY – appeal from the decision of the primary judge in Frigger v Trenfield (No 10) [2021] FCA 1500 (primaryjudgment) – where the appellants made numerous challenges to the findings of the primary judge with respect to certain disputed assets – whether these disputed assets were contributed to the appellants’ self-managed superannuation fund, named the Frigger Superannuation Fund (FSF) such that they were trust property – whether the primary judge erred in finding that certain assets vested in the trustee in bankruptcy pursuant to s 58 of the Bankruptcy Act 1966 (Cth) (BankruptcyAct) and were therefore divisible amongst the appellants’ creditors – whether the primary judge erred in finding that the appellants’ Bankwest Account No. 1 (BW1) was not a trust asset of the FSF – whether the primary judge erred in finding that the Bank of Queensland Account No. 1 (BOQ1) and Bank of Queensland Account No. 2 (BOQ2) vested in the first respondent in circumstances where the first respondent failed to identify which funds were deposited into BOQ1 and BOQ2 were funds that belonged to the appellants personally – whether primary judge erred in finding that the shares held by Commonwealth Securities Limited (CommSec) Share Trading Account Portfolio (Main Portfolio) in its custodial service vested in the first respondent – whether the primary judge erred by finding that the first respondent’s conduct in consenting to a payout of security of costs in the Supreme Court of Western Australia did not breach s 82 of the Bankruptcy Act – whether the primary judge erred by refusing to determine the appellants’ claims for losses caused by freezing the BOQ1 account and the Main Portfolio account which required the court to finally determine all controversies between the parties – where no error is detected in the primary judge’s reasoning.
PRACTICE AND PROCEDURE – whether the primary judge failed to provide the appellants with procedural fairness – where the appellants claim that they were denied the right to know and to be given an opportunity to respond to the case presented against them – ground of appeal rejected in its entirety.
SUPERANNUATION – relationship between superannuation and trust law – compliance with legislative and regulatory requirements – adequacy of documentation – finding of lack of merit in appeal grounds.
TRUSTS AND TRUSTEES – whether the primary judge erred in finding that assets vested in the trustee in bankruptcy, in circumstances where the validity of the sequestration orders was being challenged in matter WAD…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Frigger v Trenfield (No 3) [2023] FCAFC 49
Case
[2023] FCAFC 49
Decision Date
CaseChat Overview and Summary
The appeal in Frigger v Trenfield (No 3) concerns the complex and protracted legal battle between the Friggers and Trenfield, focusing on the contested assets and the administration of the Friggers' bankrupt estate. The Friggers, a retired couple with substantial assets, appealed against the primary judge's decision, arguing that the primary judge had erred in determining that certain assets were not part of their self-managed superannuation fund (FSF) and thus were not trust property. They also contended that the primary judge incorrectly found that these assets vested in the trustee in bankruptcy, making them divisible among their creditors. Additionally, the Friggers challenged the primary judge's ruling that the Bankwest Account No. 1 (BW1) was not a trust asset of the FSF, and that the Bank of Queensland Accounts No. 1 (BOQ1) and No. 2 (BOQ2) vested in Trenfield despite her failure to identify which funds belonged to the Friggers personally. Furthermore, they disputed the primary judge's conclusion that the shares held by Commonwealth Securities Limited (CommSec) Share Trading Account Portfolio (Main Portfolio) vested in Trenfield and that her conduct in consenting to a payout of security of costs did not breach the Bankruptcy Act 1966 (Cth).
The central legal issues before the court were whether the primary judge had correctly determined the nature of the contested assets and whether there were any procedural errors or unfair treatment in the primary judge's handling of the case. The Friggers argued that they were denied procedural fairness and the right to respond to the evidence presented against them. The court was required to review the primary judge's findings for any errors in fact or law, considering the principles of appellate review and the burden of proof resting on the appellants.
In its decision, the court found no merit in the Friggers' arguments. The primary judge's reasoning was sound, and the Friggers failed to demonstrate any errors or procedural injustices. The court held that the evidence presented, while voluminous, was sufficient to support the primary judge's conclusions. The Friggers had ample opportunity to object to the evidence during the trial and had not provided a satisfactory explanation for their failure to do so. Additionally, the court found no basis for the Friggers' claims that the primary judge had failed to provide procedural fairness or that the assets were trust property of the FSF. Consequently, the appeal was dismissed, and the primary judge's decision was upheld in its entirety.
Orders
Orders of the court
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Background
Background to the litigation
The proceeding before the primary judge had a long and complex procedural history which is relevant to understanding the case which was put by the appellants on appeal. For this reason, we now set out the background of the appellants, the procedural history and relevant chronology which provides the framework for the determination of the grounds of appeal.Appellants’ background The appellants are husband and wife. The appellants are intelligent people and have each held professional roles throughout their working life. Mrs Frigger, is 71 years old and is now retired. Before her retirement she worked as an accountant. Mrs Frigger holds a Bachelor of Accounting from the Western Australian Institute of Technology (now Curtin University). After graduating, Mrs Frigger went on to qualify as a Certified Practising Accountant and a Registered Tax Agent. Mrs Frigger is also a Fellow of the National Tax and Accountants Association. Mrs Frigger managed all accounting records for the FSF and prepared the FSF’s financial statements throughout the years. Mr Frigger is 69 years old. He too is retired. During his working years, Mr Frigger was gainfully employed as a process and commissioning engineer. Mr Frigger also acted as a consultant to companies in this capacity. At one point in time, Mr Frigger also managed the family accounting and investment business, and used his own experience in investments in property, shares, managed funds and bonds to help others start a self-managed investment portfolio (see details surrounding the background of the appellants in: Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 and Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184). It is clear that through investment, entrepreneurship or other means, Mrs and Mr Frigger had accumulated substantial assets by the time they were declared bankrupt. Mrs and Mr Frigger have had, and had prior to the hearing before the primary judge, the opportunity to become familiar with court practice and procedure and important underlying notions such as the onus of proof resting on the party seeking to establish grounds for relief. Our observations of them in the various days of the appeal confirm this.Procedural historyFirst instance This appeal arises from an application brought by the first appellant, Mrs Frigger, against Mrs Trenfield seeking relief with respect to BOQ1 and BOQ2, the shares held in the Main Portfolio and the Residential Properties (collectively, the disputed assets), consent orders and costs assessments in the Court of Appeal of Western Australia, and the first respondent’s conduct of the administration of the bankrupt estate. The first appellant filed an originating application on 12 March 2019 as against Mrs Trenfield. By orders dated 14 June 2019 and 31 July 2019, the second appellant, Mr Frigger, was joined as the second applicant and Paul Allen was joined as the second respondent. Mr Allen was subsequently removed as the second respondent by order dated 19 March 2020. For the reasons given in Frigger v Trenfield (No 6) [2020] FCA 934 (Frigger (No 6)), H & A Frigger Pty Ltd (or HAF) as the former trustee of FSF was joined as second respondent. Neither Mr Allen nor HAF is a party to these proceedings.
Evidence
Evidence Before The Court
The appellants submitted that this arose in the context where they misapprehended the above claimed facts and law, and only became aware of this when served with the first respondent’s affidavit of 16 September 2020. As such, they were unable to object to the first respondent’s evidence during the trial or prior to its commencement. It is further worth noting that, in response to the appellants’ allegation that the letter of 3 September 2020 sent by the first respondent to Just SMSF Audits was false, the primary judge informed the appellants of the provisions of s 138 of the Evidence Act 1995 (Cth) (Evidence Act). The application was ultimately dismissed on the basis that the appellants failed to demonstrate any good reason to re-open the trial given that the parties had already closed their cases, both Mrs Frigger and Mrs Trenfield were cross-examined on the basis of the evidence that had been admitted up to that point, and judgment had been reserved: Frigger (No 7) at [26]. With respect to the claimed inability to object to the first respondent’s evidence, the primary judge noted that the letters the appellants referred to were all in evidence in applications well before the trial started, and that the 3 September 2020 letter had also been obtained during the course of the trial: Frigger (No 7) at [27]. Further, it was noted that the appellants had always been “alive to their ability to allege impropriety against Mrs Trenfield on [the basis that Mrs Trenfield’s letter of 28 August 2019 to CommSec was an ‘abuse of process’]”: Frigger (No 7) at [29]. While they might not have known the precise terms of s 138 of the Evidence Act, they had sufficient knowledge to claim that the evidence should be excluded because it was obtained by Mrs Trenfield abusing her power as was actually claimed by Mrs Frigger in her affidavit filed on 18 September 2020: Frigger (No 7) at [30]. Even though the primary judge acknowledged that the four established classes of reasons for re-opening a matter are not closed, the circumstances were such that they did not justify such an outcome: there was a “lack of a satisfactory explanation for why the objection was not raised during the trial”: Frigger (No 7) at [32]. Neither did the appellants present clear evidence of serious illegality or impropriety by another party to justify re-opening the matter: Frigger (No 7) at [34], [41]. The appellants also failed to explain why they did not raise an objection to the evidence they sought to exclude on the basis that it was adduced solely to impugn Mrs Frigger’s credibility: Frigger (No 7) at [45]. Furthermore, were the objections upheld, a large volume of documentary evidence and a significant quantity of oral evidence would have to have been excluded. This would have posed significant implications and illustrated “why objections of that kind need to be made and determined during the trial rather than after it”: Frigger (No 7) at [47]. The appellants also sought leave to re-open for the purpose of producing further evidence, namely, Mr Frigger’s (at that time) new affidavit of 27 October 2020. The primary judge acknowledged that the affidavit, which attached an email dated 28 September 2020 from one of the share registries, answered questions concerning a potentially significant issue in the proceeding: Frigger (No 7) at [50]. Even so, the attached email was merely a “general statement … unlikely to assist the court” concerning the dates on which an unspecified TFN was entered on the respective share registry’s system across different holdings: Frigger (No 7) at [50]. Mr Frigger’s affidavit concerned matters that were clearly in issue at the trial, which could have been adduced then. Similarly, the primary judge therefore held that there was no good reason to allow the appellants to adduce that evidence after the trial had finished: Frigger (No 7) at [51]. The same reason was given for rejecting leave to re-open for the purpose of putting into evidence an affidavit which Mrs Frigger swore on 17 September 2020: Frigger (No 7) at [52].
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Thirdly, as to the Residential Properties, the appellants submitted that those properties were FSF assets. Although each certificate of title of the properties lists Mrs Frigger as the registered owner, the appellants rely upon declarations of trust over the properties made on 1 July 2014 by Mrs Frigger (2014 Declarations) in support of their contention. More specifically, they contend that the properties were contributed to the FSF by Mrs Frigger as in specie transfer by way of these declarations. As a result, the appellants submitted that the first respondent does not have a caveatable interest in the Residential Properties. Fourthly, as to the Court of Appeal orders, the primary judge noted that the basis for the appellants’ claims was difficult to establish from their written submissions (Liability Judgment at [43]). Nonetheless, the appellants’ oral opening distilled two complaints. The first complaint was that the costs liabilities were debts provable in the bankruptcy, and, rather than calling for proofs and adjudicating on them, the first respondent signed consent orders which led to the payment out of the amounts that had been paid in as security for costs. The second complaint was that Mrs Trenfield should not have consented to that payment as the cost liabilities were more than offset by the substantial counterclaims the appellants had against Mr Mervyn Kitay and Clavey Legal. Although the appellants sought declarations that the Court of Appeal orders were “incompetent”, the appellants in oral submissions made clear that they were not seeking for this court to somehow reverse or override the order. Lastly, as to the first respondent’s conduct of the administration of the bankrupt estates, the appellants made a number of allegations in support for the declaration they sought that Mrs Trenfield be removed as trustee in bankruptcy. These were listed in schedule 4 to their written submissions dated 29 June 2020 and summarised by the primary judge in the Liability Judgment at [46]–[48].Classes of documents in support of the appellants’ claims In support of their submissions, the appellants relied upon numerous classes of documents that they put before the primary judge. This included financial statements, annual returns, audit reports, Personal Property Security Register (PPSR) registrations, tax file number (TFN) notifications, holder identification statements, bank statements and reconciliations among other things. However, as noted by the primary judge, the orders the appellants sought were “on the basis of evidence with many gaps; gaps that they seek to cross with leaps of broad assertion”: Frigger v Trenfield [2019] FCA 1746 at [67] (Frigger (No 1)). Indeed, one major issue that arose at trial was whether the financial statements and annual returns relied upon were reliable. The real possibility that such documents were prepared after the sequestration orders, and so were unreliable, was a real issue. As highlighted by the respondent, the appellants had not put before the primary judge documents evidencing their personal tax returns they asserted were relevant, financial statements, annual returns and audit reports prior to 2015, and CommSec statements prior to 2016, among other things. In other words, in the mass of material placed before the Court at first instance, and on appeal (including in additional tenders on the appeal) no coherent, reliable body or framework of documents was placed before the Court from which any reliable inferences could be drawn (in particular without Mrs Frigger’s evidence as to context) as to what assets and what activity were those of Mr and Mrs Frigger on their personal account and of the FSF. A starting point for such a coherent analysis could have been the kinds of documents referred to in the first sentence of this paragraph.Discovery orders