In the Matter of Computer Accounting and Tax Pty Ltd (ACN 009 470 491) [No 4] - [2023] WASC 90

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   IN THE MATTER of Computer Accounting and Tax Pty Ltd (ACN 009 470 491) [No 4] [2023] WASC 90
CORAM:   SMITH J
HEARD:   14 FEBRUARY 2023
DELIVERED          :   24 MARCH 2023
FILE NO/S:   COR 2 of 2010
BETWEEN:   ANGELA CECILIA THERESA FRIGGER
HARTMUT HUBERT JOSEF FRIGGER
Applicants
AND
MERVYN JONATHAN KITAY in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (ACN 009 470 491) (In Liquidation) and COMPUTER ACCOUNTING AND TAX PTY LTD (In Liquidation)
Defendants

Catchwords:

Practice and procedure - Application to stay the interested parties' interlocutory application made under the Corporations Act 2001 (Cth) until payment into court of estimated likely taxed costs of the liquidator in related proceedings and in this proceeding

Practice and procedure - Security for costs

Legislation:

Bankruptcy Act 1966 (Cth)
Corporations Act 2001 (Cth)
Rules of the Supreme Court of Western Australia 1971 (WA), O 25

Result:

Orders made staying the interlocutory process and security for costs in COR 126 of 2020 and COR 2 of 2010

Category: B

Representation:

Counsel:

Applicants	:	In Person
Defendants	:	Mr B Ashdown

Solicitors:

Applicants	:	In Person
Defendants	:	Herbert Smith Freehills

Cases referred to in decision:

Cole v Challenge Bank Ltd [2002] FCAFC 200
Commonwealth Bank of Australia v Cheng [No 2] [2021] WASC 291
Frigger v Kitay (Liquidator) (No 3) [2020] FCA 861
Frigger v Kitay (No 2) [2020] FCA 497
Frigger v Kitay (No 3) [2020] FCA 650
Frigger v Kitay [2016] WASC 60
Frigger v Kitay [2019] FCA 624
Frigger v Kitay [No 2] [2017] WASCA 139
Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347
Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 14] [2017] WASC 120
Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 17] [2020] WASC 366
Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 9] [2016] WASC 92
Frigger v Professional Services of Australia Pty Ltd [2022] WASCA 119
Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69
Frigger v Rowe Bristol Lawyers Pty Ltd [2020] WASC 5
Frigger v Trenfield (No 10) [2021] FCA 1500
Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121
John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
Jones (Liquidator) v Matrix Partners Pty Ltd; Re Killarnee Civil and Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310
Kitay (Liquidator) v Trenfield (Trustee) [2021] FCA 508
Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (In Liq) and Computer Accounting and Tax Pty Ltd (In Liq) [2022] WASC 350
Kitay, in the matter of Frigger (No 2) [2018] FCA 1032
National Australia Bank Ltd v Nyasa Nominees Pty Ltd [2019] WASC 107
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
Wallman and Quin in their capacity as joint and several liquidators of Goldeagle Nominees Pty Ltd (In Liq) [2023] WASC 7

Table of Contents

1.0 Introduction

1.1 The application for orders in relation to the external administration of a company

1.2 Prior interlocutory process for similar orders dismissed in COR 126 of 2020

1.3 Related proceeding – CIV 2765 of 2010

2.0 The defendants' application for a stay of the Applicants' interlocutory process until payment of existing costs orders and security for costs

2.1 The defendants' application

2.2 Legal principles – stay of proceedings until costs orders satisfied in earlier proceedings

2.3 Prior unpaid cost orders and history of not paying costs unless security ordered

2.3.1 The Applicants have expressed an intention not to pay the costs awarded against them in COR 126 of 2020

2.3.2 The Applicants' personal financial circumstances

2.3.3 Prior orders for security and failures to pay costs orders

2.4 Disposition – Stay application

2.4.1 The factual basis of the Applicants' claims to the disputed real property

2.4.2 The grounds of the Applicants' interlocutory process

2.5 The interlocutory process should be stayed until Mrs Frigger pays into court in COR 126 of 2020 security for estimated tax costs

3.0 Application for security

3.1 Grounds of the application - foreshadowed application to strike out/summary judgment

3.2 Relevant principles – Inherent power of the court to award security

3.3 Disposition

4.0 Orders

SMITH J:

1.0 Introduction

1.1 The application for orders in relation to the external administration of a company

On 28 October 2022, Mrs Angela Frigger and Mr Hartmut Frigger (Applicants), as trustees of the Frigger Super Fund, filed an interlocutory process under the Corporations Act 2001 (Cth), Schedule 2 Insolvency Practice Schedule (Corporations) s 90‑15 and/or s 1324(1) of the Corporations Act for orders and damages against Mr Mervyn Kitay, the liquidator (Liquidator) of Computer Accounting and Tax Pty Ltd in liquidation (CAT).
Solicitors Herbert Smith Freehills (HSF) for the Liquidator and CAT filed an application dated 15 January 2023 seeking that the Applicants' interlocutory process filed on 28 October 2022, be stayed, and for security of costs.
On 6 December 2022, the Applicants filed an amended interlocutory process. In the amended interlocutory process, CAT is named as the defendant and the Liquidator is named as the second defendant (Defendants).
The only new orders sought in the amended interlocutory process are leave to the extent necessary, pursuant to s 471B of the Corporations Act to commence the claim against the Liquidator (and CAT), and that HSF be restrained from appearing and representing CAT.
The orders sought by the Applicants in the interlocutory process can be summarised as follows:
(a)orders requiring the Liquidator transfer specified land and other assets to the Applicants as trustees of the Frigger Super Fund, together with consequential orders, the removal of the Liquidator as the signatory to a bank account, and the transfer of funds (pars 4, 5, 9 and 11);
(b)orders for damages for losses to the Frigger Super Fund from the loss of opportunity to sell assets claimed by the Liquidator which the Applicants claim are assets of the Frigger Super Fund (pars 7 and 8);
(c)orders for damages for a loss of opportunity to earn capital increases in income on funds held by the Liquidator which the Applicants claim is property of the Frigger Super Fund (pars 6, 9, 10, 12, 13, 14 and 16);
(d)an order that the Liquidator pay the Frigger Super Fund payments of costs, costs orders, security for costs and payments made to its solicitors in other proceedings (par 15); and
(e)an order that the Applicants have access to the Liquidator's confidential affidavit sworn 5 January 2012 (par 17).
Master Sanderson made an order on 10 January 2023 in COR 219 of 2022 (pursuant to s 477(2B) of the Corporations Act) approving the retainer of HSF to act on behalf of, advise and represent the Liquidator and/or CAT in respect of the interlocutory process filed on 28 October 2022 by the Applicants in COR 2 of 2010, and such further proceedings as may be commenced by the Applicants.
At the hearing of the Defendants' application for a stay and security for costs, Mrs Frigger stated the Applicants opposed CAT being represented by solicitors in the hearing of the interlocutory process and sought an order restraining HSF from acting for CAT because although CAT is a party to COR 2 of 2010 the Applicants do not seek any orders against CAT, and CAT has no right to defend the Applicants' claims.
The Applicants' submission is misconceived. It is an established principle that where a party is invited to make, or proposes to make orders directly affecting the rights or liabilities of a non‑party, the non‑party is a necessary party and ought to be joined.[1] The purpose of joinder is to enable the non‑party to be heard on any application in a proceeding in respect of any order that will directly affect the rights or liabilities of the non‑party, including a claim of interest in any property.
[1] John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 [131] ‑ [133]; applying News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, 524 ‑ 525.
Although the Applicants in their interlocutory process claim they do not seek any orders against CAT, it is clear from the nature of the majority of the orders sought that those orders would if made directly affect the rights and liabilities of CAT. For example, whether orders should be made that specified assets are assets of the Frigger Super Fund and not assets of CAT are orders that would directly affect the rights and liabilities of CAT.
Consequently, it is necessary that CAT be entitled to be heard on the interlocutory process claim because the relief sought in par 4 relates to property registered in the name of CAT, the relief sought in pars 5 and 11 relates to a bank accounts in the name of CAT or standing in the name of CAT, the filing fee referred to in par 9 relates to a fee paid on behalf of CAT for the lodgement of a bill of costs, and the relief sought in par 17 relates to an affidavit covered by a confidentiality order made in proceedings in favour of, and for both the Liquidator and CAT.
For these reasons, CAT is entitled to appear and be heard in respect of the Applicants interlocutory process by solicitors.

1.2 Prior interlocutory process for similar orders dismissed in COR 126 of 2020

On 16 October 2020, Mrs Angela Frigger, as a trustee of the Frigger Super Fund, filed an earlier interlocutory process under the Corporations Act, and Schedule 2 Insolvency Practice Schedule (Corporations) s 90‑20. This application also sought orders and damages against Mr Kitay. At the time Mrs Frigger bought this application she was an undischarged bankrupt.
The orders sought in the interlocutory process filed on 16 October 2020 fell into the following broad groups:[2]
(1)Whether specified assets are assets of the Company or assets of the Frigger Super Fund, and consequential orders regarding the vesting of land, the removal of the liquidator as the signatory to a bank account, and the transfer of funds. [Orders 1, 2, 5 and 7]
(2)A claim for damages for losses to the Frigger Super Fund from the loss of opportunity to sell assets claimed by the liquidator but which the applicant claims are assets of the fund [Order 4].
(3)A claim for damages for loss of opportunity to earn capital increases and income on funds held by the liquidator but which the applicant claims are the property of the Frigger Super Fund [Order 3].
(4)A claim for repayment of costs incurred by Frigger Super Fund in payment of security for costs, costs orders, and payments made to its solicitors in other proceedings [Order 8].
[2] Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [4].
The Liquidator brought an application to strike out Mrs Frigger's application, or alternatively security for costs.
Allanson J struck the interlocutory process out on grounds that Mrs Frigger lacked standing to bring the application. Mrs Frigger lacked standing as one of two trustees because of the application of the general rule that where there are several trustees, they hold a single, joint, inseverable office, and the superannuation deed of the Frigger Trust Fund did not provide for the powers of the trustee to be exercised unilaterally.[3]
[3] Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [49] ‑ [50].
Importantly, Allanson J found that if he had not found that Mrs Frigger lacked standing to bring the application, he would have struck out the claims for orders 3, 4, 6, 7 (except 7(a)), and 8 in the originating process, on grounds that:[4]
(a)s 90–15 does not operate on a finding of breach of duty or a contravention of the Corporations Act;
(b)s 90–15 does not refer to an order relating to losses suffered by third party;
(c)the orders sought for damages against the Liquidator might arise out of the conduct of the Liquidator as external administrator but the orders would not determine any question arising in the administration or affect the external administration. The connection between the orders sought and the administration is not sufficient, for the orders to be properly regarded as in relation to the administration.
[4] Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [45] ‑ [47].
On 25 October 2022, Allanson J ordered that Mrs Frigger's interlocutory process application for orders and damages be struck out and that she pay the Liquidator's costs of Mrs Frigger's application and the Liquidator's application to strike out, and for security of costs.
On 17 November 2022, the Liquidator's solicitors wrote a letter to Mrs Frigger enclosing a draft bill of costs in the sum of $31,461.10. Mrs Frigger did not respond to the letter.[5]
[5] Affidavit of David William John sworn 15 January 2023, pars 24 and 25, Attachment DWJ-6, 49 ‑ 54.
On 25 November 2022, the Liquidator filed a bill of costs in COR 126 of 2020 in the amount of $30,951.10. On 25 November 2022, the Liquidator's solicitors sent a letter to Mrs Frigger informing her that the bill of costs had been filed for taxation and the reason for the new amount claimed. Mrs Frigger did not respond to the letter. On 28 November 2022, Mrs Frigger was served with a copy of the bill of costs.[6]
[6] Affidavit of David William John sworn 15 January 2023, pars 24 and 25, Attachment DWJ-8, 61.
On 30 November 2020, the Associate to Registrar Griffin sent a letter to the parties referring to the filed bill of costs and advised that pursuant to Practice Directions 4.7.2, the Registrar considered the matters suitable for a provisional assessment.[7]
[7] Affidavit of David William John sworn 15 January 2023, pars 24 and 25, Attachment DWJ-0, 62.
As at the date of the hearing of the application presently before the court, the filed bill of costs in COR 126 of 2020 had not been provisionally assessed.

1.3 Related proceeding – CIV 2765 of 2010

In an affidavit sworn by Mrs Frigger in support of this application, Mrs Frigger states that the relief claimed in the interlocutory process is the same relief sought in CIV 2765 of 2010 which has been deemed to be abandoned by the bankruptcy trustee in July 2018.[8]
[8] Affidavit of Angela Frigger sworn 25 January 2023 par 20(a).
The procedural history of action CIV 2765 of 2010 relevant to this application was set out in Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 17] by Allanson J as follows.[9]
(1)The action CIV 2765 of 2010 was commenced by originating summons on 4 November 2010. The Applicants brought the claim in their own right and as trustee for The Frigger Superannuation Fund. They sought relief including declarations that specified property was held by the second defendant, CAT (in liquidation), in trust for the Fund.
(2)The Liquidator counterclaimed seeking relief that includes declarations to the effect that the property the subject of the claim is owned by CAT in its own right, or that any transfer of property to CAT as trustee of the Fund is not binding.
(3)Subsequent to the commencement of the action, the Applicants were declared bankrupt. The trustee in bankruptcy was given notice of the action in CIV 2765 of 2010. It is not disputed that, pursuant to s 60(3) of the Bankruptcy Act 1966 (Cth), the trustee in bankruptcy is now deemed to have abandoned the Applicants' action.
(4)On 30 July 2021, Mrs Frigger advised the court that she had been discharged from bankruptcy.[10]
[9] Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 17] [2020] WASC 366 [1] ‑ [4].
[10] Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [56].
Where 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. The statutory stay continues to operate, and it is open to a respondent (or a defendant) to move the court to have the proceedings dismissed for want of prosecution.[11]
[11] Frigger v Rowe Bristol Lawyers Pty Ltd [2020] WASC 5 [66]; applying National Australia Bank Ltd v Nyasa Nominees Pty Ltd [2019] WASC 107 [12] and Cole v Challenge Bank Ltd [2002] FCAFC 200 [16].
Pursuant to an order made on 6 May 2021 by Jackson J in Federal Court proceedings WAD 40 of 2021,[12] the Liquidator and CAT were given leave pursuant to s 58(3) of the Bankruptcy Act to proceed with their counterclaims in CIV 2765 of 2010 against the bankrupt estates of the Applicants.[13] In his Honour's reasons for granting leave, Jackson J summarised the claims made in the Liquidator's and CAT's counterclaim in CIV 2765 of 2010 as follows:
Mrs Frigger commenced the Supreme Court action against Mr Kitay and CAT in 2010. The present issues are defined by an amended substituted statement of claim (SOC), a further re‑amended substituted defence and counterclaim (DAC), and an amended substituted reply and defence to counterclaim.
The Friggers were directors of CAT and say that they are trustees of their self-managed superannuation fund, the Frigger Super Fund (FSF). Mr Kitay became liquidator of CAT on 6 May 2010. CAT is the registered proprietor of real property in Perth and real property in Armadale. It is common ground that CAT was trustee of the FSF at material times (it claims that it is and has been the only trustee). The Friggers made claims, among others, that they contributed the Perth and Armadale properties to the FSF as in specie contributions to be held on trust by CAT or that, in other ways, CAT came to hold the properties on trust on the terms of the FSF.
The DAC is a long and involved document and it would be a substantial task to describe fully all of the different claims made in it. There are claims that CAT owns the Perth land in its own right and is entitled to the proceeds from the sale of the Armadale land, which are held in an escrow account. There are also claims to the proceeds of the sale of a business conducted on the Armadale land, claims of estoppel, claims to rights of indemnity out of assets as trustee, claims about the identity of trustees and members of the FSF at certain times and claims of breach of fiduciary duty and voidable transactions. But it is not necessary to go into detail about these, because for reasons that appear below it is sufficient in this application to focus on a claim based on an alleged loan account between CAT and the Friggers, and the manner in which that claim is dependent on other issues of fact and law in the Supreme Court action.
The DAC claims a declaration that the Friggers owe CAT $2,600,801, alternatively $2,356,283, as the balance of the loan account. The loan account is said to be comprised of a large number of transactions; it is only necessary to focus on the most material ones here. The first of these is an amount of $435,000 which the Friggers are said to have provided to CAT for the purchase of the Perth property. The second is a sum of $665,000 which they are said to have provided to CAT for the purchase of the Armadale property. The DAC pleads that both of these advances are properly characterised as loans by the Friggers to CAT. The third is a sum of $80,000 which Mrs Frigger is said to have paid to St George Bank to secure a bank guarantee needed for the service station business operated on the Armadale land. This too is said to be a loan from Mrs Frigger. (Note, the DAC has a schedule which appears to contain all alleged transactions concerning the loan account. There are discrepancies between the figures in that schedule and corresponding figures in the body of the pleading, but they are not material for present purposes.)
The fourth transaction material to the loan account was an alleged transfer by CAT to the Friggers, in January 2009, of a sum of $999,999 which CAT had on deposit with ING Direct Bank. The fifth material transaction is an alleged payment by CAT to the Friggers, on or about 30 June 2009, of the entire amount of a sum paid to CAT pursuant to judgment in different Supreme Court proceedings, alternatively $900,000 of that judgment sum. These are both pleaded (as one of many alternative pleas) to be unsecured loans by CAT to the Friggers.
However these transactions are not the only matters potentially material to the balance of the loan account that are pleaded in the DAC. For example there are allegations raised in the alternative that, when alleged in specie contributions of the real property were made to the FSF, they occurred via transfers of the land from CAT to the Friggers, in return for the reduction of money which at that time CAT owed to the Friggers, so that the Friggers could then personally contribute the land to the FSF. The reductions of CAT's debt to the Friggers are claimed to have taken place at a time when CAT was insolvent, and so to have been unfair preferences or otherwise voidable. If that allegation is made good, it may result in the effective reversal of the decreases in moneys owing to the Friggers, and so will affect the ultimate balance of the loan account. Allegations are also made that the alleged payment to the Friggers of the ING amount of $999,999 in January 2009, and of some or all of the judgment sum on 30 June 2009, are both voidable transactions. If those claims are established, that will also affect the balance of the loan account.
[12] Kitay (Liquidator) v Trenfield (Trustee) [2021] FCA 508.
[13] Kitay (Liquidator) v Trenfield (Trustee) [2021] FCA 508 [10].

The Applicants have continued to defend the counterclaim in CIV 2765 of 2010. On 20 July 2021, the Applicants filed a chamber summons in the action seeking orders that the counterclaim of the Liquidator and CAT be struck out as a nullity, and that judgment be entered for the Applicants in respect of the counterclaim.
On 30 July 2021, the Liquidator and CAT filed submissions in support of orders they sought in respect of the parties to the counterclaim. They sought orders that:
(a)Ms Trenfield, as trustee of the property of the Applicants, be joined as a party to the counterclaim;
(b)the Applicants remain as the first and third defendant by counterclaim in the proceedings; and
(c)the Applicants in their capacity as trustees of the Frigger Super Fund remain as second defendant by counterclaim to the proceedings.
It appears that these proposed orders are yet to be considered by the court because of an issue raised by the Applicants in respect of the legal representatives of the Liquidator and CAT in COR 131 of 2021.
On 13 August 2021, Allanson J in CIV 2765 of 2010 ordered that the Applicant's application for summary disposal of counterclaim dated 20 July 2021, be adjourned pending the outcome of the proceedings in COR 131 of 2021 (in which the Liquidator seeks orders in respect of costs agreements and the retention of HSF to act on behalf of the Liquidator and/or CAT in relation to specified legal services).[14]

2.0 The defendants' application for a stay of the Applicants' interlocutory process until payment of existing costs orders and security for costs

2.1 The defendants' application

[14] Frigger v Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [57].

As required by orders made on 1 December 2022, the Defendants filed and served applications on 15 January 2023 for a stay of the interlocutory process pending payment into court of security for the taxed costs of COR 126 of 2020, and security for costs in relation to the interlocutory process.
The Defendants seek orders that:
(a)the interlocutory process be stayed until the Applicants pay $30,951.10 into court, being the estimated likely taxed costs of the Liquidator as the defendant in COR 126 of 2020;
(b)further, or in the alternative, pursuant to O 25 of the Rules of the Supreme Court of Western Australia 1971 (WA), the Applicants give security for the costs of the Liquidator (and to the extent relevant, CAT), of bringing a strike out application/application for summary judgment in the sum of $30,000, either by way of payment of that amount into court, or by way of an unconditional bank guarantee in favour of the Liquidator (and to the extent relevant, CAT) from an Australian trading bank;
(c)the interlocutory process be stayed until security is provided in accordance with (b) above; and
(d)other consequential orders.

2.2 Legal principles – stay of proceedings until costs orders satisfied in earlier proceedings

The court is conferred with a discretion, as it sees fit, to stay proceedings pending the payment of costs arising in earlier proceedings which raise the same, or substantially the same cause of action or subject matter, to control an abuse of process of the court.
In Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd, Vaughan J relevantly observed:[15]
In its inherent jurisdiction the court may stay proceedings pending the payment of costs arising in interlocutory proceedings in the same action or earlier proceedings raising the same, or substantially the same, cause of action or subject matter. The court does not do so as a matter of course but rather if required to control an abuse of the process of the court. Accordingly, it may, depending on the circumstances, be an abuse of process for a person to pursue litigation where there are unsatisfied costs orders in an earlier action for the same, or substantially the same, cause of action or subject matter.
In Cobbett v Warner the matter was explained in these terms:
The Court, undoubtedly, has jurisdiction to prevent the abuse of its process by bringing vexatious actions. This summary jurisdiction should be sparingly exercised, as it deprives the party whose action is stopped of the right to try his cause, and if necessary to carry it to the highest tribunal. It has, however, generally been exercised, where the party has previously failed in the course of litigation, and then without paying the costs of the former action has brought a fresh action against the same party, or someone identified in interest with him, for the same, or what is substantially the same, cause of action. In such cases the Court will interfere to prevent him harassing his opponent, and will stay the proceedings till the costs of the former litigation are paid.
[15] Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [138] – [139] (footnotes omitted); see also his Honour's observations in [147] ‑ [148].
His Honour, however, also pointed out that prosecuting a claim where there are unsatisfied costs orders from earlier proceedings raising the same, or substantially same, cause of action or subject matter will not always constitute an abuse of process. His Honour then went on to find that like the doctrine of abuse of process more generally it will be necessary to consider all the relevant circumstances and come to a normative, merit‑based judgment taking account of all the relevant public and private interests.[16]
[16] Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [160].
Importantly, his Honour found that it did not matter that the costs of the earlier proceedings had not been quantified by taxation so that it could not be said there had been a failure to pay, because the plaintiff in the matter before his Honour had acknowledged that the costs of the failed action would not be paid unless the new proceedings were successful. His Honour then found that the lack of quantification is properly addressed by a stay pending the payment into court of the court's estimate of the likely costs.[17]

2.3 Prior unpaid cost orders and history of not paying costs unless security ordered

2.3.1 The Applicants have expressed an intention not to pay the costs awarded against them in COR 126 of 2020

[17] Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [161].

At the hearing of this application Mrs Frigger stated on behalf of the Applicants that they have no intention of paying the costs awarded to the Liquidator by Allanson J in COR 126 of 2020 on 25 October 2022. Mrs Frigger asserted the reason why they do not intend to pay these costs is because the Frigger Super Fund is entitled to claim these costs as a set off against the damages owed by the Liquidator to the Frigger Super Fund.[18]
[18] ts 934 - 936.
This is not the first time that Mrs Frigger has indicated that the Applicants do not intend to pay costs including costs that have either been taxed, or fixed by the court for this reason.[19]
[19] For example, Mrs Frigger made the same claim in Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 9] [2016] WASC 92 [28] ‑ [30].
Clearly, Mrs Frigger is mistaken about the ability of an unsuccessful party to a proceeding who has costs awarded against them to claim those costs as a set off in other proceedings. Unless a costs order is set aside on an appeal, the costs order must be complied with. A set off cannot be claimed.
No distinction should be drawn where costs orders have been made against either Mr Frigger or Mrs Frigger in their own right or in their capacity as trustees of the Frigger Super Fund. This is because if a costs order is made against a person in their capacity as a trustee, that person is personally liable on the orders made, even where those costs relate to issues where they have sued in their capacity as trustees.[20]
[20] Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 9] [2016] WASC 92 [39] ‑ [40] (Allanson J).
Consequently, it is immaterial whether there are sufficient funds and assets in a trust fund to satisfy a costs order made against a trustee of a trust fund. It is the trustee who is required to pay the costs order. Once paid, the trustee has a right to be indemnified for those costs out of the trust fund. The successful respondent who the costs order has been made in their favour should not have to attempt to recover the costs from the trust fund.

2.3.2 The Applicants' personal financial circumstances

The financial position of the Applicants to the extent that it is disclosed publicly in available records is that Mrs Frigger owns land in Applecross, Bayswater and Como. Each of those properties are the subject of an unregistered mortgage in favour of H & A Frigger Pty Ltd. The Applecross property mortgage is said to secure the sum of $2,500,000, the Bayswater property is said to secure a sum of $800,000 and the Como property is said to secure the sum of $800,000 also.[21] There are also a number of Property (seizure and Sale) Orders registered on the titles to the properties.
[21] Affidavit of David William John sworn 15 January 2023, pars 42 ‑ 51
However, the Applicants are retired, and are over the age where they can readily access funds from the Frigger Super Fund. Mrs Frigger states in her affidavit sworn 25 January 2023 that the Frigger Super Fund holds a share portfolio held by Commonwealth Securities Ltd, that has a current market value of $17,353,082[22] and the Frigger Super Fund Citibank online saver account has an available balance of $437,848. On this basis, it cannot be found that the Applicants do not have the capacity to pay the estimated bill of costs of $30,951.10 as costs awarded against them in COR 126 of 2020.
[22] Affidavit of Angela Frigger sworn 25 January 2023, Attachment AF7, 8.
Consequently, the Applicants do have the capacity to pay the estimated costs in COR 126 of 2020. However, it is clear from the statements made in open court that the Applicants have made a deliberate decision to not pay.
As Allanson J remarked in 2016 in reasons for decision for ordering security of costs to be paid into court by the Applicants in the amount of $80,000, the decision by the Applicants to not pay existing costs orders can engender no confidence that they will meet future costs orders that might be made against them.[23]

2.3.3 Prior orders for security and failures to pay costs orders

[23] Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 9] [2016] WASC 92 [30].

The Applicants were bankrupted in 2018 as a consequence of a refusal to pay costs to the Liquidator in satisfaction of a costs order made against them.[24]
[24] Kitay, in the matter of Frigger (No 2) [2018] FCA 1032.
On 6 May 2019, McKerracher J in reasons for decision for making an order that the Applicants provide security for costs of the Liquidator to defend an application by the Applicants to extend the time within which to appeal a decision made by the Federal Court in which the Applicants were made bankrupt, his Honour observed that this was not the first occasion on which the Applicants, who are prolific litigants, have been ordered to pay security for costs. His Honour said the Applicants have been required to pay security on a number of occasions including:[25]
[25] Frigger v Kitay [2019] FCA 624 [22].
(a)on 19 November 2014, by the Court of Appeal of the Supreme Court in the matter of Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3;
(b)on 11 December 2015, by the Court of Appeal of the Supreme Court in the matter of Frigger v Clavey Legal Pty Ltd (No 2) [2015] WASCA 258;
(c)on 30 March 2016, by the Supreme Court in Frigger v Mervyn Jonathan Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (In Liquidation) [No 9] [2016] WASC 92;
(d)on 7 April 2016, by the Court of Appeal of the Supreme Court in the matter of Frigger v Clavey Legal Pty Ltd [2016] WASCA 67;
(e)on 13 April 2016, by this Court in Frigger v Banning [2016] FCA 359 (the quantum of which security was adjusted in the decision reported as Frigger v Banning (No 2) [2016] FCA 749;
(f)on 2 September 2016, by the Court of Appeal of the Supreme Court in the matter of Frigger v Kitay [2016] WASCA 173;
(g)on 11 November 2016, by the Court of Appeal of the Supreme Court in the matter of Frigger v Mervyn Jonathan Kitay in his capacity as Liquidator of Computer Accounting & Tax Pty Ltd (in liq) [2016] WASCA 204; and
(h)on 7 May 2018, by this Court in Frigger, in the matter of Computer Accounting & Tax Pty Ltd (in Liq) (No 2) [2018] FCA 612.
McKerracher J in the matter before him ordered on 6 May 2019 that the Applicants provide security for costs in the amount of $12,500.[26] On 17 April 2020, orders were made that this security be provided on or before 15 May 2020, and if it is not paid, the matter be dismissed.[27] The Applicants did not pay that security and the proceedings were dismissed. As a consequence of the dismissal of the proceedings to extend time to file an appeal, the Applicants were ordered to pay costs fixed in the sum of $30,000.[28] The Applicants have not paid this sum of fixed costs.[29]
[26] Frigger v Kitay [2019] FCA 624.
[27] Frigger v Kitay (No 2) [2020] FCA 497.
[28] Frigger v Kitay (No 3) [2020] FCA 650.
[29] Affidavit of David William John sworn 15 January 2023, par 72.
On 19 June 2020, in other proceedings before the Federal Court bought by Mrs Frigger against the Liquidator, Mrs Frigger was ordered to pay costs fixed in the sum of $18,000.[30] Mrs Frigger has not paid those costs.
[30] Frigger v Kitay (Liquidator) (No 3) [2020] FCA 861; Affidavit of David William John sworn 15 January 2023, par 68.
The decision of the Supreme Court in 2016 requiring the Applicants to give security referred to by McKerracher J in [46(c)] above was a decision of Allanson J in Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in Liq) [No 9]. His Honour ordered that the Applicants give security of $80,000 by payment into court in CIV 2765 of 2010. The Applicants paid that amount into court on 15 January 2018 after an order was made by Allanson J on 19 December 2017, extending time to the Applicants to comply. In this application the Applicants claim that the amount paid into court on 15 January 2013 is more than adequate to satisfy any costs order made in these proceedings in favour of the Liquidator. I return to this submission below in 2.5.
The most recent decision of the Court of Appeal requiring the Applicants to pay security appears to be a decision given on 26 August 2022 by the Court of Appeal in Frigger v Professional Services of Australia Pty Ltd that the Applicants pay security of costs in the sum of $50,000 in an appeal against a decision of Master Sanderson dismissing a claim against Professional Services of Australia Pty Ltd and others including three lawyers, none of whom who had acted for the Applicants.[31]
[31] Frigger v Professional Services of Australia Pty Ltd [2022] WASCA 119.
On 25 October 2022, Allanson J in these proceedings (COR 2 of 2010) ordered that Mrs Frigger give security for costs to the hearing of the application to set aside an interlocutory process filed by her on 19 October 2020, seeking orders against the Liquidator, relating to a litigation funding agreement and a costs agreement, in the sum of $15,000.[32] The security has not been paid but it is not due to be paid until 14 days of the date of the delivery of judgment by Hill J in COR 131 of 2021. Until the security is paid, that interlocutory process is stayed.
[32] Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (In Liq) and Computer Accounting and Tax Pty Ltd (In Liq) [2022] WASC 350.
The Applicants claim they are not in default of any costs orders ordered to be paid in proceedings previously bought against the Liquidator for substantially the same cause of action or in relation to the same subject matter. This submission is wrong and misleading.
In these proceedings (COR 2 of 2010) on 2 April 2020, Hill J made orders requiring Mrs Frigger to pay the Liquidator's costs in the sum of $1,750, and on 15 October 2020, Hill J made another order requiring Mrs Frigger to pay a further sum of $1,750 costs to the Liquidator. Mrs Frigger has not paid these amounts to the Liquidator.[33]

2.4 Disposition – Stay application

2.4.1 The factual basis of the Applicants' claims to the disputed real property

[33] Affidavit of David William John sworn 15 January 2023 pars 66 and 67.

The Applicants claim in effect that binding findings of fact have been made in proceedings that real property at 140 Edward Street, Perth (Edward Street property) registered in CAT's name when purchased in 2001 was subsequently transferred as an in specie contribution to the Frigger Super Fund. The Applicants also submit that binding findings of fact have been made in proceedings that real property at 269 South Western Highway, Armadale (Armadale property) were at all material times held in the Frigger Super Fund.
Mrs Frigger states in an affidavit sworn by her on 25 October 2022 that Pullin J made a finding of fact in Frigger v Professional Services of Australia Pty Ltd [No 3],[34] that the Edwards Street property was transferred to the Frigger Super Fund on 1 July 2007.[35] This submission is blatantly wrong.
[34] Frigger v Professional Services of Australia Pty Ltd[No 3] [2014] WASCA 69.
[35] Affidavit of Angela Frigger sworn 25 October 2022, par 12.
The decision referred to by Mrs Frigger in her affidavit is a joint judgment of Newnes and Pullin JJA, in an appeal by the Applicants against costs orders of freezing and ancillary orders. In their Honours' reasons they made findings that there was evidence that Mrs Frigger had made false statements in affidavits filed either in the General Division of the court or in the Court of Appeal.[36]
[36] Frigger v Professional Services of Australia Pty Ltd[No 3] [2014] WASCA 69 [87].
The conflicting affidavits referred to by their Honours were:
(a)an affidavit of Mrs Frigger dated 23 September 2008 which was filed by CAT (being at a time prior to CAT being in liquidation) in appeal proceedings CACV 76 of 2008 and relied upon by CAT for a hearing before Buss JA of an application by Professional Services of Australia Pty Ltd for a stay of enforcement of the original judgment of Simmons J pending the hearing of an appeal by the Court of Appeal. In her affidavit, Mrs Frigger stated that the Edward Street property and the Armadale property were assets of CAT and were valued at $1,100,000 and $615,030 respectively. The contents of this affidavit convinced Buss JA that there was no risk that the judgment sum in relation to the original judgment if paid could not be repaid if the appeal succeeded. As a result, the stay application made by Professional Services of Australia Pty Ltd was refused by Buss JA;[37]
(b)an affidavit sworn by Mrs Frigger on 22 June 2010 (and filed in the General Division) in which she stated that the Edward Street property had been transferred to CAT as the trustee of the Frigger Super Fund on 1 July 2007, and ownership of the Armadale Property had been transferred to CAT as the trustee of the Frigger Super Fund on 1 July 2008. In addition, this affidavit also reveal that, as at 23 September 2008, CAT had liabilities to the Applicants;[38]
(c)an affidavit sworn by Mrs Frigger on 22 June 2010 (and filed in the General Division) that an ING deposit of $999,000 was an asset of the Frigger Super Fund.
[37] Frigger v Professional Services of Australia Pty Ltd[No 3] [2014] WASCA 69 [88] ‑ [89].
[38] Frigger v Professional Services of Australia Pty Ltd[No 3] [2014] WASCA 69 [92] ‑ [93].

Newnes and Pullin JJA concluded that if Mrs Frigger's two 2010 affidavits filed in the General Division were true then the statements made in her affidavit filed in opposition to the stay in the Court of Appeal that the Edward Street property and the Armadale Property were assets of CAT (as at 23 September 2008) were false.[39]
[39] Frigger v Professional Services of Australia Pty Ltd[No 3] [2014] WASCA 69 [92].
Importantly, their Honours in Frigger v Professional Services of Australia Pty Ltd[No 3] made no finding of fact that the Edward Street Property was transferred to the Frigger Super Fund in July 2007.
In her affidavit sworn on 25 October 2022, Mrs Frigger states that Jackson J made findings of fact that the Edward Street property and the Armadale Property in Frigger v Trenfield were at all material times held in the Frigger Super Fund.[40]
[40] Affidavit of Angela Frigger sworn 25 October 2022, pars 13 and 17; Frigger v Trenfield (No 10) [2021] FCA 1500 [282], [285] and [292].
This submission is misleading.
In Frigger v Trenfield, the Applicants made an application for declarations that various assets were held in a regulated superannuation fund and so not divisible amongst creditors. The first respondent to the application was the Applicants' trustee in bankruptcy, Kelly‑Anne Trenfield, and the second respondent H & A Frigger Pty Ltd in its capacity as former trustee of the Frigger Super Fund. The second respondent did not appear in the proceedings. The application was dismissed by Jackson J on 1 December 2021.
In his reasons for decision, Jackson J relevantly defined the issues in the matter before him into three groups:[41]
[41] Frigger v Trenfield (No 10) [2021] FCA 1500 [2] ‑ [6].
The first concerns whether certain assets are property divisible amongst the creditors of the bankrupt estates. This turns on whether the applicants hold interests in the assets by way of their interests in the FSF. For some of the assets, the issue arises directly, because the applicants seek declarations that they do hold interests in those assets by way of the FSF. For other assets, while the applicants do not seek declarations to that effect, the issue still arises because they do seek orders that would be consequential on findings that the assets are part of the FSF. There is a related issue about whether the FSF is a regulated superannuation fund within the meaning of the (Cth) (SIS Act). The assets in question, which I will call the disputed assets, are:
(1)two bank accounts with Bank of Queensland Limited, one of which holds more than $2.8 million (BOQ1), the other of which holds just over $50 (BOQ2);
(2)shares held in a share portfolio (Main Portfolio) administered by the share broker, Commonwealth Securities Limited (CommSec); and
(3)two parcels of residential land in suburbs of Perth, one in Bayswater (Bayswater Property) and the other in Como (Como Property, together the Residential Properties).
As will be seen, while not the subject of any of the declarations the applicants seek, it was also in issue whether a Bankwest Retirement Advantage account in Mrs Frigger's name (BW1) was an asset of the FSF.
The second group of issues concerns orders relating to costs that were made by the Court of Appeal of Western Australia. There are three relevant orders, each made in a different appeal. The first respondent consented to the orders in her capacity as trustee in bankruptcy of the applicants. The applicants seek declarations that the minutes of consent orders, and the orders that followed them, are 'incompetent', and claim losses they say they have suffered as a result of the orders.
The third group of issues concerns the first respondent's conduct of the administration of the bankrupt estate. The main question raised by the applicants is whether the first respondent should be removed as trustee of the applicants' bankrupt estates. There are also issues raised as to whether the court should order that the first respondent may not recover any costs or remuneration associated with the Bank of Queensland accounts, the Residential Properties and the costs orders in the Court of Appeal.
There is one other group of issues arising from the relief sought which I mention for completeness. It concerns whether the applicants are entitled to compensation in relation to losses said to have been caused by a hold placed on BOQ1 at the instigation of the first respondent and the applicant's inability to trade the shares in the Main Portfolio. For reasons published as Frigger v Trenfield (No 4) [2020] FCA 797, I ordered, in effect, that any hearing to establish and quantify those alleged losses would take place after delivery of this judgment, if the court determines that any of the relevant assets are indeed FSF assets.
It emerges clearly from this summary that the Applicants did not seek any declarations in the Federal Court proceedings before Jackson J that the Edward Street property or the Armadale Street property were assets of the Frigger Super Fund. However, the Applicants did put documents before the court in the proceedings in support of a contention by the Applicants that income from these properties were assets of the Frigger Super Fund.
The Applicants made a submission in the Federal Court proceedings that the properties in Perth and Armadale were to be taken to have been made as in specie contributions to the Frigger Super Fund in 2009, and following the sale of a BP service station business conducted from the Armadale property in 2016 the sale proceeds of that business were contributions to the Frigger Super Fund. His Honour, after referring to this submission, said that none of these assets were disputed assets for the purposes of the proceeding (before the Federal Court).[42]
[42] Frigger v Trenfield (No 10) [2021] FCA 1500 [177].
Consequently, the only relevance of the Edward Street property and the Armadale property in the proceedings before Jackson J was that the Applicants claimed in the Federal Court proceedings that rental income from the properties were deposited in the accounts of BOQ1 and BOQ2, which income was claimed to be income of the Frigger Super Fund.[43]
[43] Frigger v Trenfield (No 10) [2021] FCA 1500 [29] and [294).
In the passage of the reasons of Jackson J referred to by Mrs Frigger in her affidavit sworn on 22 October 2022 in these proceedings, and in the passages that immediately followed, his Honour made it clear that for the purposes of the proceedings before him he would assume that the Edward Street property was an asset of the Frigger Super Fund. He, however, did not find that the Edward Street property was an asset of the Frigger Super Fund. The observations made by his Honour in which he makes this clear are as follows:[44]
It will be recalled that the applicants sought to frame the question posed by their case as whether 'the funds in the Bank of Queensland accounts constitute rental income earned by Frigger Super Fund (FSF) from Hobart and Perth [Edward Street] properties'.
The first respondent expressed no opinion on whether the Hobart and Edward Street properties were held in the FSF (KAT 4 para 155). She did not contend that they were not.
The applicants put into evidence what appeared to be the contract under which they purchased the Hobart property (ACTF 14 p 32). It appears to be dated 29 October 2014 and the names of the purchasers are shown on the contract as the applicants 'ATF Frigger Super Fund'. This is precisely the sort of objective manifestation of intention that is signally lacking in relation to most of the disputed assets. Despite my concerns about Mrs Frigger's credibility, the first respondent made no submissions that this sale contract document was false and there is nothing to indicate that it is anything other than what it appears to be. While I do not need to make a firm finding about the legal and beneficial ownership of the Hobart property, as it is not a disputed asset, I will proceed on the basis that it was at all times from its acquisition until its sale an asset of the FSF.
Similarly, there is evidence of a registrar's caveat dated 13 November 2009 over the Edward Street property lodged to protect the interest of the beneficiaries of a trust disclosed in a document described as the 'Frigger Super Fund Deed' (ACTF 14 p 232). The registered proprietor was (and appears to remain) CAT (see ACTF 14 p 441). No submission was made to me that the caveat was false. While I do not need to make a firm finding, as the matter was not seriously in dispute, I will proceed on the basis that the Edward Street property has at all material times been an asset of the FSF. (My emphasis)
[44] Frigger v Trenfield (No 10) [2021] FCA 1500 [282] ‑ [285].
His Honour also made a similar tentative assumption in respect of the Armadale property. His Honour also made it very clear in his reasons in the passages that follow that this was an assumption only for the purposes of the proceeding before him:[45]
There is evidence as to the ownership status of another asset from which it is asserted rent was received by the FSF, namely the Armadale property. Mrs Frigger has annexed a lease of that land, in a form suitable for registration with Landgate dated 1 July 2009, which shows the lessor as CAT 'as trustee for the Frigger Super Fund' (ACTF 1 p 66). It is doubtful, however, that the Registrar of Titles would permit the lease to be registered in that form, as (WA) (TLA) prohibits the Registrar from entering notice of any trust on any certificate of title. There was no evidence of when or why the notation 'as trustee for the Frigger Super Fund' was placed on this document. I place no weight on the notation.
There is also a deed of amendment of lease apparently signed and dated 8 April 2015 which appears to change the lessor to Mr and Mrs Frigger 'as trustees for the Frigger Super Fund' (ACTF 1 pp 69‑71). I make no finding that the deed was effective to transfer the lease to them and there is no evidence indicating that they were registered proprietors by 2015. But if these documents were altered it would be a more elaborate forgery than the deliberate alterations to other documents I have found Mrs Frigger to have made. I will therefore proceed on the basis that the Armadale land was an FSF asset (whether CAT or the applicants were its registered proprietors or otherwise entitled to the proceeds of its sale is not necessary for me to determine in this proceeding). (My emphasis)
[45] Frigger v Trenfield (No 10) [2021] FCA 1500 [291] ‑ [292].
In any event, even if Jackson J had made findings of fact that the Armadale property and the Edward Street property were assets of the Frigger Super Fund, the findings of fact made in that proceeding could not bind the Liquidator in any other proceeding as an estoppel because the Liquidator was not a party to the proceedings in Frigger v Trenfield and there has not been a final determination of these alleged facts.

2.4.2 The grounds of the Applicants' interlocutory process

The basis of the Applicants' claims as outlined in Mrs Frigger's affidavit sworn 6 December 2022 is that the allegations are based upon the position that the Liquidator has powers pursuant to ss 474(1)(a), 477(2)(d) and 477(2)(m) of the Corporations Act which should have been exercised so as to transfer or vest property of CAT to the Applicants as trustees of the Frigger Super Fund.
Mrs Frigger in her affidavit sworn 6 December 2022 makes a submission that the Applicants' claim for damages or compensation pursuant to s 1324(10) of the Corporations Act must be based on a contravention of the Corporations Act and for injunctive relief to lie under s 1324(2) there must be a failure to do an act that a person is required to do by the Corporations Act.
In reliance of these provisions, the Applicants' claim against the Liquidator that he has failed to act pursuant to ss 474(1)(a), 477(2)(d) and 477(2)(m) by:
(a)refusing to transfer or vest the Edward Street property and Armadale property in the Applicants as trustees of the Frigger Super Fund;
(b)refusing to allow the sale of the service station business conducted from the Armadale property to United Fuel Pty Ltd, interfering in the sale of the Armadale service station business to Viva Energy (Australia) Pty Ltd, and refusing to hand over sale proceeds of that business to the Frigger Super Fund; and
(c)refusing to deliver up assets secured by a registered charge over a St George Term deposit.
As set out above, it is not the case that there has been any decision made by any court that the Applicants are entitled to the transfer or vesting of any of the property referred to in the interlocutory process.
Insofar as the Applicants' claim that the alleged failures by the Liquidator to act constitute contraventions of the Corporations Act by the failure to act pursuant to ss 474(1)(a), 477(2)(d) and 477(2)(m), such a claim is unlikely to succeed because these provisions are not contravention provisions of the Corporations Act.
In the Amended Interlocutory Process the Applicants in effect seek orders in the form of a mandatory injunction pursuant to s 1324(2) to compel the Liquidator to exercise powers, in respect of property claimed by CAT, so as to effect transfers or vesting of property in them without those issues being determined in CIV 2765 of 2010.
Unless those issues are determined in favour of the Applicants in the counterclaim in CIV 2765 of 2010 in their capacity as trustees of the Frigger Super Fund there appears to be no basis for such a mandatory injunction.
In addition, s 1324(10) does not authorise an award of damages to a person other than a company. The interlocutory process is not bought on behalf of a company but by the Applicants as trustees of the Frigger Super Fund.
Further, even if property was held by CAT as trustee of the Frigger Super Fund contrary to the primary position in the counterclaim in CIV 2765 of 2010, CAT as such a trustee would still possess rights of indemnity together with an accompanying lien over the assets of the trust which survives the appointment of a liquidator.[46] Even where a trustee is removed as trustee of the trust by reason of the terms of the trust deed, the trustee retains the right to hold trust assets as bare trustee.
[46] Wallman and Quin in their capacity as joint and several liquidators of Goldeagle Nominees Pty Ltd (In Liq) [2023] WASC 7 [12] (Hill J).
The right of indemnity and exoneration and the lien in support is 'property of the company' which may be used to pay trust creditors if the court orders. The liquidator's costs are also payable out of the trustee's right of indemnity.[47]
[47] Wallman and Quin in their capacity as joint and several liquidators of Goldeagle Nominees Pty Ltd (In Liq) [2023] WASC 7 [12] ‑[16]. (Hill J); see also Jones (Liquidator) v Matrix Partners Pty Ltd; Re Killarnee Civil and Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310 [69], [79], [93], and [105] ‑ [106] (Allsop CJ).
Consequently, in such an eventuality, the Liquidator would be entitled to seek an order appointing him as a receiver of the trust property for the purposes of enforcing the right of indemnity and accompanying lien.

2.5 The interlocutory process should be stayed until Mrs Frigger pays into court in COR 126 of 2020 security for estimated tax costs

The fact that the Applicants have paid an amount of $80,000 into court in CIV 2765 of 2010, is irrelevant as to whether an order for security for the estimated tax costs in COR 126 of 2020 should be made. This is because the order for security of the amount of $80,000 is for security of costs in CIV 2765 of 2010, and not for any other matter. In the reasons of Allanson J for making that order, his Honour found he was satisfied that unless an order for security was made in favour of the Liquidator and CAT, they would be unable to enforce a judgment for the costs should they be successful following trial in that action. His Honour referred to a draft bill of costs of an amount of $162,000 (as at 2016) based upon a trial of eight days, and costs already incurred in the application for security for costs and found that in his experience, for a matter of complexity (of the matters raised in CIV 2765 of 2010) that was not an unreasonable estimate.[48]
[48] Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 9] [2016] WASC 92 [43] ‑ [47].
The Applicants also claim that a stay should not be granted and they should not be required to pay security because the Liquidator has not paid outstanding costs to lawyers, and that his professional indemnity insurance has a maximum cover of between $2 million and $5 million which is insufficient to cover costs of legal fees and the quantum of the claims the Applicants say he will be liable for if they are successful. This appears not to be the first occasion on which the Applicants have raised this argument. A similar argument was rejected by Allanson J in October 2022. His Honour examined four cost agreements made by the Liquidator and HSF and found that: [49]
(a)there was nothing to rebut the presumption that in engaging solicitors to provide legal services the Liquidator is liable for the payment of legal costs; and
(b)although there was a liability on the Liquidator to pay costs, there was a deferral of liability to pay until the Liquidator was in funds.
[49] Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (In Liq) and Computer Accounting and Tax Pty Ltd (In Liq) [2022] WASC 350 [33] ‑ [41].
For these reasons, the submission put by the Applicants about the ability of the Liquidator to pay the legal costs of his representation and the representation of CAT in these proceedings and in other proceedings is irrelevant.
It is clear that the claims made by Mrs Frigger in the interlocutory process in COR 126 of 2020 and the claims now made in this interlocutory process raise the same, or substantially the same claims and subject matter.
It is also clear that even if the amendments to the interlocutory process sought by the Applicant are accepted, the claims are not without their difficulties, and the claims are unlikely to be able to be determined until the issues raised in the counterclaim of the Liquidator and CAT in CIV 2765 of 2010 are finally determined.
In circumstances where the Applicants have informed the court that Mrs Frigger does not intend to pay the tax costs of COR 126 of 2020 a clear abuse of process of the court arises. The court should not stand by and allow a new claim raising the same or substantially the same claims and subject matter as the present claim when the costs orders of the prior failed proceeding will not be complied with.
For these reasons, I am satisfied that an order should be made that the Applicants' interlocutory process filed in this matter on 28 October 2022, as amended on 6 December 2022, be stayed until Mrs Frigger pay into court the amount of $30,951.10, being the estimated likely taxed costs of the Liquidator in COR 126 of 2020.

3.0 Application for security

3.1 Grounds of the application - foreshadowed application to strike out/summary judgment

The Liquidator and CAT also seek a stay of these proceedings pending payment into court of the costs of these proceedings pursuant to O 25 r 1 of the Rules of the Supreme Court, to bring a strike out application/application for summary judgment in the sum of $30,000.
The grounds upon which a foreshadowed application to strike out/summary judgment is to made are set out in the affidavit of Mr John sworn on 15 January 2023 as follows:
(a)much of the relief sought in the New Action is an abuse of process, as the issues are the subject of other, ongoing proceedings between the same parties (ie including CIV 2765 of 2010, and other applications made by Mrs Frigger in COR 2 of 2010);
(b)to the extent that damages are sought in reliance upon s1324(10) of the Corporations Act in orders 7,8, 10, 12, 13, 14, 15 and 16 in the Amended Interlocutory Process, such relief is beyond power, as damages are not available to be awarded under s 1324(10) of the Corporations Act if a claim is not also made for an injunction;
(c)in any event, s 1324(10) does not authorise the award of damages to a person other than the relevant company. In this case, all of the relief is sought by, and in favour of, the FSF;
(d)to the extent that relief is sought under s1324 of the Act, a number of the breaches alleged (which are denied) are not breaches of the Corporations Act, and therefore relief under that section is not available. I note that Mrs Frigger, apparently in response to the letter dated 25 November 2022, purported to address this deficiency in paragraphs [12] to [26] of her affidavit sworn on 6 December 2022;
(e)in order to begin proceedings against CAT, as a company in liquidation, the Friggers need leave under s 471B of the Corporations Act which they had not sought in the Original Interlocutory Process, although I note that by the Amended Interlocutory Process, relief is apparently not sought against CAT (although it remains a party);
(f)in order begin proceedings against a liquidator, where the proceedings relate to activities and actions undertaken by him in that capacity, the Friggers also need leave which they had not sought in the Original Interlocutory Process, although I note that by the Amended Application such relief has been sought; and
(g)certain of the relief sought, being orders 4, 5, 7 and 11 of the Amended Interlocutory Process and relief consequent upon the relief sought in those paragraphs, cannot be sought against Mr Kitay, and can only be sought against CAT (or CAT and Mr Kitay).

The proposed order in par 17 of the interlocutory process seeks an order that the Applicants have access to the Liquidator's confidential affidavit sworn 5 January 2012 in COR 2 of 2010. It is noted that such an application for an order is likely to be unsuccessful on grounds of abuse of process. This is because the Applicants unsuccessfully made an application for a similar order in CIV 2765 of 2010. On 28 April 2017, Martino J dismissed the application by the Applicants to inspect, rely upon and refer to this confidential affidavit and attachments.[50] The Applicants did not appeal this decision. It is well established that it is an abuse of process to attempt to relitigate a matter that is finally disposed of by a judgment.[51]

3.2 Relevant principles – Inherent power of the court to award security

[50] Frigger v Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (In Liq) [No 14] [2017] WASC 120.

[51] Jebb as trustee forThe Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [106] ‑ [111]; applied in Commonwealth Bank of Australia v Cheng [No 2] [2021] WASC 291 [29] (Smith J).

Order 25 rule 1 provides an unfettered discretion to order that a plaintiff give security for costs.
In Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (In Liq) and Computer Accounting and Tax Pty Ltd (In Liq) v Frigger, Allanson J when making an order for security against Mrs Frigger for an interlocutory process she bought against the Liquidator under the Corporations Act, observed that:[52]
The Supreme Court (Corporations) (WA) Rules 2004 do not expressly provide for security for costs. Mrs Frigger may not be a plaintiff within the meaning of O 25 of the Rules of the Supreme Court. It has often been recognised, however, that a State Supreme Court has inherent jurisdiction to order security for the costs of proceedings. I am satisfied that I have power to order security for costs in this discrete application. The principles that guide the exercise of the power to order security under the Rules should also guide the exercise of the inherent power.
The discretion to order that a party give security for costs is unfettered. There are several cases which have identified the factors commonly considered in such applications. None of the lists of relevant factors is, or claims to be, exhaustive, and which factors are relevant will vary from case to case. In exercising a discretion, the weight to be given to any circumstance depends not only upon its own intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed.
[52] Kitay in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (In Liq) and Computer Accounting and Tax Pty Ltd (In Liq) [2022] WASC 350 [22] ‑ [23] (footnotes omitted).
The principles that apply to an application for security of costs are well established.[53] The court's discretion to make an order for security for costs is broad and depends on all the circumstances of the case. The effect of O 25 r 3 if applied to this matter is that the court is required to take into consideration the prima facie merits of the claim, what property is within the jurisdiction may be available to satisfy any order for costs against the party from whom security is sought, and whether the normal processes of the court would be available within the jurisdiction for enforcement of any order for costs made against that party. Other factors that are relevant will vary from case to case, and are not exhaustive.
[53] Jebb as trustee for The Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2019] WASC 121 [215] ‑ [219] (Vaughan J)
One of the relevant factors often regarding the nature of a security for costs order is that it is protective, in the sense of ensuring a defendant is not unreasonably exposed to a risk that if successful in defending the claim, the respondent will be nevertheless deprived of the benefit of the costs order by reason of a plaintiff being impecunious. Although the Applicants are not impecunious, it is relevant that a respondent should not be faced with a plaintiff who clearly has the means to satisfy a costs order, but who refuses to pay.

3.3 Disposition

The court is yet to deal with the Applicants' application for leave to bring the interlocutory process against CAT, and for leave to proceed against the Liquidator.
The principles that apply to the granting of leave to bring a claim against a liquidator were set out by Le Miere J in Frigger v Kitay as follows:[54]
The applicable principles and their public purpose which underlie the requirement that a prospective litigant must obtain leave to sue a court appointed liquidator can be stated in the following propositions.
(i)The Court will protect its officer from spurious or vexatious litigation: Re Siromath Pty Ltd (No 3) (1991) 25 NSWLR 25 at 29; Re Magic Aust Pty Ltd(in liq) (1992) 7 ACSR 742, at 746; 10 ACLC 929 at 932; and
(ii)The Court will protect the integrity of the winding up process to ensure no wrongful interference with that process: Sydlow Pty Ltd (in liq) v T G Kotselas Pty Ltd & Ors (1996) 65 FCR 234 at 241; 144 ALR 159 at 165-166.
[54] Frigger v Kitay [2016] WASC 60 [15].
On appeal, the Court of Appeal agreed these were the applicable principles to apply a person who seeks to sue a liquidator and added:[55]
To those ends, a prospective litigant must, to obtain the necessary leave, demonstrate its claim has sufficient merit. What is sufficient is affected by the circumstances and timing in which that leave is sought. Moreover courts recognise that liquidators, like administrators, often have to make decisions on the run; to expect perfection in those circumstances is unrealistic. In Sydlow, above, Tamberlin J stated:
'The discretionary power of the court to grant leave must be exercised having regard to all the circumstances of the particular cases and bearing in mind the need to protect the integrity of its process. It does not necessarily follow that, in order to obtain leave, a prima facie case must be demonstrated. There is no specific threshold appropriate in all cases, however there must be more than mere assertion. The court's discretion may be exercised on many grounds, including, but not limited to, the sufficiency of the evidence adduced, as to the prospects of success of the action on the application for leave.' [4].
[55] Frigger v Kitay [No 2] [2017] WASCA 139 [4].
Whether leave should be granted to the Applicants to bring this interlocutory process against the Liquidator and CAT is yet to be decided. These applications would have to be dealt with either prior to or when the foreshadowed application to strike out/summary judgment is heard and determined.
For the reasons I have given in 2.4.2, it is apparent that claims made by the Applicants may face jurisdictional hurdles under the Corporations Act. For these reasons, it cannot be found that the foreshadowed application to strike out/summary judgment is without merit.
In any event, the Applicants' claims are likely not to be capable of being determined until the counterclaim in CIV 2765 of 2010 is heard and determined.
The effect of encumbrances on the Applicants' real property would make it very difficult for the Liquidator to enforce any future costs order against their real property if the Liquidator is successful in a strike out/summary judgment application. The Applicants have access to substantial funds in the Frigger Super Fund. They have paid some security of costs orders and outstanding costs orders in the past when they have been faced with the dismissal of actions. Consequently, there is no basis for considering that they will be unable to maintain these proceedings should a security for costs order be made.
The Applicants are not impecunious, but instead they have a long history of refusing to pay costs orders made against them. This factor bears overwhelming weight in favour of the application made by the Liquidator and CAT for security of costs for their foreshadowed application to strike out/summary judgment application.
For these reasons, I am satisfied that it is appropriate to make an order for security costs for the foreshadowed application to strike out/summary judgment.
As to the quantum of security, I accept the opinion expressed by Mr John in his affidavit sworn 15 January 2023 that whilst steps to be taken in preparation of the application are likely to be similar to those which were raised in the successful strike out/summary judgment in respect of the prior interlocutory process in COR 126 of 2020, the costs to be incurred in preparation of the foreshadowed application are likely be comparable. Mr John estimates that the Liquidator's and to the extent necessary CAT's likely recoverable costs will be in the order of $30,000.[56]
[56] Affidavit of David William John sworn 15 January 2023, pars 60 ‑ 61.

4.0 Orders

I will order that:
(a)the Applicants provide security for costs in the amount of $30,000, to be paid into court in COR 2 of 2010;
(b)until the amount of $30,951.10 is paid into court in COR 126 of 2020, and the amount of $30,000 is paid into court in COR 2 of 2010, the Applicants interlocutory process filed on 28 October 2022 and the amended interlocutory process filed on 6 December 2022 is stayed; and
(c)the Applicants pay the costs of the Liquidator's and CAT's application filed on 15 January 2023 for a stay of the interlocutory process and for security of costs, to be assessed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

TS
Associate to the Honourable Justice Smith

24 MARCH 2023