Kitay v Frigger

[2022] WASC 284

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   KITAY -v- FRIGGER [2022] WASC 284

CORAM:   HILL J

HEARD:   7 OCTOBER 2021; 18 FEBRUARY 2022

WRITTEN SUBMISSIONS 25 FEBRUARY 2022,

4 MARCH 2022, 26 JULY 2022 & 27 JULY 2022

DELIVERED          :   30 AUGUST 2022

FILE NO/S:   COR 131 of 2021

BETWEEN:   MERVYN JONATHAN KITAY

First Plaintiff

COMPUTER ACCOUNTING AND TAX PTY LTD (IN LIQUIDATION)

Second Plaintiff

AND

ANGELA CECELIA THERESA FRIGGER

First Defendant

HARMUT HUBERT JOSEF FRIGGER

Second Defendant

Catchwords:

Practice and procedure – Application for summary dismissal of originating process – Whether abuse of process – Whether costs agreement invalid – Indemnity principle - Turns on own facts

Corporations – Claim for oppression against liquidator of company – Application for summary dismissal – Whether defendants are shareholders of company – Whether shares vested in trustee in bankruptcy – Standing to bring application

Corporations – Claim for oppression against liquidator of company – Application for summary dismissal – Whether claim for oppression can be brought against company in liquidation or liquidator – Whether defendants can obtain relief sought under s 233 of Corporations Act 2001 (Cth)

Practice and procedure – Whether discovery should be ordered in originating process commenced under Corporations Act 2001 (Cth) – Whether categories of documents relevant to matters in issue - Application dismissed

Practice and procedure – Application for leave to issue subpoena – Whether legitimate forensic purpose – No exceptional circumstances – Leave refused

Practice and procedure – Application by defendants for summary dismissal of originating process – Whether abuse of process – Whether retainer void – Whether solicitors and counsel validly retained by plaintiffs – Maintenance and champerty – Application dismissed

Practice and procedure – Application by defendants for leave to reopen summary judgment application – Whether orders sought by plaintiffs in current proceedings are re-litigation of matters raised in earlier Federal Court proceedings – Whether orders could and should have been litigated to finality in Federal Court proceedings – Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth) s 5, 27, 58, s 116
Corporations Act 2001 (Cth) s 53, s 232, s 233, s 234, s 1072C
Rules of the Supreme Court 1971 (WA), O 16 r 1, O 26 r 7, O 36B r 2(2B)

Category:    B

Representation:

Counsel:

First Plaintiff	:	Mr B W Ashdown
Second Plaintiff	:	Mr B W Ashdown
First Defendant	:	In person
Second Defendant	:	In person

Solicitors:

First Plaintiff	:	Herbert Smith Freehills
Second Plaintiff	:	Herbert Smith Freehills
First Defendant	:	In person
Second Defendant	:	In person

Cases referred to in decision:

Achurch v The Queen [2014] HCA 10; (2014) 253 CLR 141

Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [2022] NSWSC 435

B v State of Western Australia [2002] WASC 298

Bale v Mills [2011] NSWCA 266; (2011) 81 NSWLR 498

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Clark v Framlingham Aboriginal Trust [2014] VSC 367

Clyne v New South Wales Bar Association (1960) 104 CLR 186

Corica v Shire of Mundaring [2016] WASC 356

Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liq) (No 2) [2017] FCA 755

DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226

D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1

EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd (No 3) [2013] WASC 183

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640

Freeman v Kellerberrin Farmers Co-Operative Company Ltd [2008] WASC 182

Frigger v Kitay (No 2) [2020] FCA 497; (2020) 143 ACSR 655

Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423

Hawkins Hill Gold Mining Co v Briscoe (1887) 8 LR (NSW) Eq 123

In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2014] WASC 169

In the matter of Imperium Projects Pty Limited [2017] NSWSC 141

J & J Richards Super Pty Ltd ATF the J & J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772

Jebb as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2017] WASC 335; (2017) 326 FLR 288

Kitay in the matter of Frigger (No 2) [2018] FCA 1032

Lewis, in the matter of Concrete Supply Pty Ltd (in liq) [2020] FCA 841; (2020) 145 ACSR 459

Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey [2017] QSC 145; (2017) 121 ACSR 389

Marsh v Baxter [No 2] [2016] WASCA 51

Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104

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

Osborne v Landpower Developments Pty Ltd [2003] WASCA 117

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1985) 147 CLR 589

Preston v Diaspora Holdings Pty Ltd [2019] NSWSC 651

Rankilor v Circuit Travel Pty Ltd [2012] WASCA 155

Re Griffiths; Ex parte Homestyle Pty Ltd [2005] WASCA 103

Re HIH Casualty & General Insurance Ltd (in liq) [2002] NSWSC 1036

Re HIH Insurance Ltd (in liq) [2014] NSWSC 922

Re Movitor Pty Ltd (in liquidation) (1996) 64 FCR 380

Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511

Sandy v Yindjibarndi Aboriginal Corporation RNTBC [2019] WASC 322

Smargiassi Nominees Pty Ltd v Shire of Collie [2021] WASCA 107

Stevenson v Zafra Pty Ltd [2021] WASCA 181

Sutherland v Brien [1999] NSWSC 155; (1999) 149 FLR 321

Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14

Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; (2016) 316 FLR 318

UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77

UTSA Pty Ltd (in liquidation) v Ultra Tune Australia Pty Ltd [1997] 1 VR 667

Webb v Stanfield [1991] 1 Qd R 593

Westpac Banking Corporation v Anderson [2017] WASC 106

Table of Contents

Procedural background to application

Factual background

Matters for determination

Application to strike out or dismiss the defendants' interlocutory process

Standing to bring application

Can a claim for oppression be brought against a liquidator or a company in liquidation?

Do the defendants require leave to file the interlocutory application?

Defendants' application for summary judgment

Preliminary matters

Abuse of process

No valid retainer to commence these proceedings

Invalidity of costs agreements

Breach of tort of maintenance and champerty

Defendants' application for discovery

Defendants' application for leave to issue subpoena to Lit-One Pty Ltd

Application for leave to re-open application for summary judgment

Legal principles on application for leave to re-open

Abuse of process

Claim in Kitay in the matter of Frigger (No 2) [2018] FCA 1032

Grounds 5 to 7 of Amended Originating Process

Disposition

Conclusion and orders

HILL J:

1. In these proceedings, Mr Kitay and Computer Accounting and Tax Pty Ltd (in liquidation) (CAT) seek various orders concerning the retention of two firms of solicitors to provide advice in relation to the conduct of the liquidation of CAT and to act in various proceedings in this court and the Federal Court. 

2. Mr and Mrs Frigger have been joined to the proceedings as defendants. Mr Kitay says this is not because the defendants are members of CAT, but in order to bind them to the ultimate decision of the court. The reason for this is that Mr and Mrs Frigger have filed applications for summary relief in a number of proceedings based on a contention that each of these proceedings is a nullity because approval has not been sought or obtained to any costs agreement between Mr Kitay, CAT and their solicitors under s 477(2B) of the Corporations Act 2001 (Cth) (Act).[1]

   [1] Plaintiffs' submissions filed 1 October 2021 [3].

3. The defendants oppose any orders being made in terms of the originating process.

4. On 8 September 2021, the defendants filed an interlocutory process in which they seek orders in respect of three separate matters. First, orders for discovery in accordance with a 'Notice to give discovery' dated 7 September 2021. Second, relief under s 233 of the Act for oppression. Third, orders under the Insolvency Practice Schedule (Corporations) that the plaintiffs are not entitled to the costs of a costs assessment or allocatur issued by this court. 

5. On 13 September 2021, the plaintiffs applied to strike out the defendants' interlocutory process in so far as it sought orders under s 233 of the Act and the Insolvency Practice Schedule (Corporations).

6. On 22 September 2021, the defendants filed a further interlocutory process seeking orders for the summary dismissal of the originating process.

7. Each of these interlocutory processes came on for hearing before me on 7 October 2021.  In relation to the defendants' first interlocutory process, only the question of discovery was substantively addressed.  At the conclusion of this hearing, I reserved my decision.

8. Prior to delivery of my reasons for decision, the defendants filed an amended interlocutory process and sought leave to reopen their application for summary judgment to seek, in the alternative, orders that [5], [6] and [7] of the amended originating process be summarily dismissed as an abuse of process.  The application for leave, together with the application for summary judgment, came on before me for hearing on 18 February 2022.  At the conclusion of this hearing, I gave leave to the parties to file further short written submissions on the question of Anshun estoppel and otherwise reserved my decision.

9. For the reasons that follow, it is my view that:

   (a)[2], [3], [4], and [5] of the defendants' interlocutory process should be struck out;

   (b)the defendants' application for discovery ought be refused;

   (c)the defendants' application for leave to issue a subpoena to Lit-One Pty Ltd should also be refused;

   (d)the defendants' have leave to re-open their application for summary judgment to raise the entitlement of the plaintiffs to seek relief in respect of the Second HSF Costs Agreement;

   (e)in so far as [5] - [7] seek relief in respect of the Second HSF Costs Agreement, this relief should be struck out; and

   (f)the defendants' applications be otherwise dismissed.

Procedural background to application

1. On 3 August 2021, Mr Kitay and CAT filed the originating process. In addition to orders sought for confidentiality of Mr Kitay's second affidavit of 3 August 2021, the plaintiffs seek the following relief in relation to various costs agreements between Herbert Smith Freehills (HSF) and Mr Kitay and, where relevant, CAT, and Lenhoff & Hotz and Mr Kitay and, where relevant, CAT. First, that Mr Kitay did not require approval pursuant to s 477(2B) of the Act to enter into the costs agreements or to retain the relevant solicitors to act in various proceedings. Second, in the alternative, if approval under s 477(2B) of the Act was required, an order approving entry into the costs agreements from the date they were entered into. Third, orders pursuant to s 1322(4) of the Act that the costs agreements are not invalid by reason of the failure of Mr Kitay to obtain approval prior to entry into the agreements. In respect of each of the proceedings the subject of these costs agreements, the plaintiffs seek declarations that each proceeding, including the steps taken and orders made, is valid and enforceable, and not a nullity.

2. Relief is sought in relation to four costs agreements with HSF (dated 8 February 2010, 29 October 2013, 23 August 2019, and 9 November 2020) as well as two costs agreements with Lenhoff & Hotz (for Federal Court proceedings WAD 40 of 2021 and a second agreement dated 26 July 2021).

3. The amended originating process is supported by two affidavits of Mr Kitay; an affidavit filed 3 August 2021 and a confidential affidavit of the same date. 

4. On 8 September 2021, the defendants filed an interlocutory process which was amended on 10 September 2021. The amended interlocutory process seeks orders in respect of three separate matters. First, orders for discovery; second, orders pursuant to s 233 of the Act for the discontinuance of the counterclaims in CIV 2765 of 2010 and an order setting aside the costs allocatur in COR 2 of 2010. Third, an order pursuant to s 90-15(3)(d) of the Insolvency Practice Schedule (Corporations), declaring that neither of the plaintiffs are entitled to the costs the subject of an allocatur dated 7 July 2015 in COR 2 of 2010.  At the hearing before me on 7 October 2021, only the first of these matters was substantively addressed. 

5. On 13 September 2021, the plaintiffs applied to strike out the defendants' interlocutory process in so far as it sought orders for oppression and in relation to the costs orders and allocatur in CIV 2765 of 2010.

6. On 22 September 2021, the defendants filed a further interlocutory process seeking orders for the summary dismissal of the originating process.

7. Each of these interlocutory processes came on for hearing before me on 7 October 2021.  At the conclusion of the hearing, I reserved my decision.  On 17 December 2021, the defendants filed an amended interlocutory process seeking leave to reopen the application for summary judgment.  The defendants sought orders that [5], [6] and [7] of the amended originating process be summarily dismissed as an abuse of process.  The application came on before me for hearing on 18 February 2022.  At the conclusion of this hearing, I gave leave to the parties to file further short written submissions and otherwise reserved my decision.

8. In July 2022, prior to delivery of these reasons, I gave the parties an opportunity to file further short submissions in relation to the oppression claim, which both parties did on 26 July 2022.  On 27 July 2022, the defendants filed submissions in reply which they sought leave to rely on.  It is inappropriate for parties to attempt to place further material before a court after a hearing has occurred without leave.  Where this occurs, the appropriate response is for the court to ignore the material.[2] 

   [2] Corica v Shire of Mundaring [2016] WASC 356 [92] citing with approval Bale v Mills [2011] NSWCA 266; (2011) 81 NSWLR 498 [57] - [61].

9. In this case, the parties were granted leave to file further written submissions, but not submissions in reply.  The basis upon which the defendants sought leave to file the submissions in reply was an assertion that the plaintiffs have attempted to mislead the court in their written submissions dated 26 July 2022.  The basis for this contention raises both factual matters that are in dispute between the parties, as well as their differing contentions in relation to the issues for determination by the court.  I do not accept the defendants' contention that the plaintiffs have attempted to mislead the court and do not grant leave to file the submissions in reply.  In these circumstances, I have ignored the submissions and have not had regard to them in reaching my decision.

Factual background

1. The originating process forms part of what is a very long history of acrimonious litigation between these parties.  For the purpose of the applications before me, it is unnecessary to address much of this history. 

2. Four factual matters, which cannot sensibly be in dispute, are relevant to the applications before me. 

3. First, on 22 January 2010, Mr Kitay was appointed by this court as provisional liquidator of CAT and as liquidator on 6 May 2010. 

4. Second, at the time of the appointment of Mr Kitay, Mr and Mrs Frigger were the directors and shareholders of CAT. 

5. Third, on 20 July 2018, Mr and Mrs Frigger were declared bankrupt.  This occurred as a result of the failure to pay costs in COR 2 of 2010 that were assessed and are the subject of a certificate of assessment.

6. Fourth, Mr and Mrs Frigger were discharged from bankruptcy on 26 July 2021.

Matters for determination

1. There was some dispute at the hearing as to the order in which I should hear from the parties in relation to the applications that had been filed. 

2. In these reasons, I propose to address the matters in the order in which I heard the argument on 7 October 2021 being:

   (a)the plaintiffs' application to dismiss the defendants' interlocutory process;

   (b)the defendants' application to dismiss the originating process;

   (c)the defendants' application for discovery; and

   (d)whether leave should be granted to the defendants to issue a subpoena to Lit-One Pty Ltd.

3. Finally, I address the defendants' application for leave to re-open their application for summary dismissal and the amended application for summary dismissal.

Application to strike out or dismiss the defendants' interlocutory process

1. The plaintiffs contend the defendants' interlocutory application dated 10 September 2021 should be struck out, further or alternatively, summarily dismissed. The primary basis on which the plaintiffs advance this application is their contention that the defendants are no longer shareholders of CAT. The plaintiffs submitted that, pursuant to s 58(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), on the bankruptcy of each of the defendants, all of their property, including their shares in CAT, vested in their trustee in bankruptcy. Notwithstanding their subsequent discharge from bankruptcy, the plaintiffs contend the defendants' shares in CAT (including any choses in action and any rights and powers that exist in respect of these shares) remain vested in the trustee in bankruptcy and did not re-vest in the defendants on their discharge from bankruptcy. As a consequence, the plaintiffs say that, by operation of law, any right the defendants had or have to bring a claim for oppression is vested in their trustee in bankruptcy.

2. The plaintiffs also submit a claim for oppression is not available in these proceedings.  First, if, as contended by the defendants, the bringing or continuation of the counterclaim in CIV 2765 of 2010 is oppressive (which is denied), any application to dismiss or stay the counterclaim should be brought in those proceedings.  Second, and in any event, the plaintiffs submit a claim for oppression cannot be brought where a company is being administered in insolvent liquidation.

3. Finally, the plaintiffs contend that, by reason of s 471B of the Act, the defendants cannot bring any claim against the second plaintiff except with leave of the court, which has not been obtained. On this basis, the plaintiffs submit the defendants' interlocutory process should be struck out.

4. The defendants submit they have standing to bring a claim for oppression on two grounds. First, the legal interest in their shares in CAT has not vested in their bankruptcy trustee as the shares have not been transferred into the name of the trustee. As legal owners of the shares, they contend they have standing to bring the application. Second, and in any event, pursuant to s 234(c) of the Act, former shareholders can bring a claim for oppression if the application relates to the circumstances in which they ceased to be a member, or alternatively under s 234(d) of the Act, as members whose shares have been transmitted by operation of law. The defendants contend that the conduct of Mr Kitay since his appointment as provisional liquidator and then liquidator of CAT has been oppressive, unfairly prejudicial and unfairly discriminatory to the defendants which led to the circumstances in which they ceased to be members, if (which they deny) this has occurred. In support of this contention, the defendants filed a chronology, a schedule, and relied on the contents of two affidavits of the first defendant filed 8 September 2021 and 10 September 2021.

5. Before turning to the merits of the respective submissions, it is important to emphasise that the plaintiffs seek to strike out the defendants' interlocutory process, alternatively dismiss the interlocutory process, on a summary basis.

1. The principles that apply to an application for summary judgment are well-known.  They were summarised by the Court of Appeal in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd in the following terms:[3]

   The principles to be applied on an application for summary judgment are well‑established.  Summary judgment will be granted only when there is no real question to be tried.  The power to order summary judgment is one that should be exercised with great care.  It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted.  (citations omitted)

Standing to bring application

[3] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24].

1. On the declaration that each of the defendants was bankrupt, pursuant to s 58(1) of the Bankruptcy Act, any property they held vested 'forthwith' in their trustee in bankruptcy. Pursuant to s 5 of the Bankruptcy Act, this property included:

   real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.

2. There is an exception to this general position in s 58(2) of the Bankruptcy Act which provides that:

   Where a law of the Commonwealth or of a State or Territory of the Commonwealth requires the transmission of property to be registered, and enables the trustee to be registered as the owner of any such property that is part of the property of the bankrupt, that property, notwithstanding that it vests in equity in the trustee by virtue of this section, does not vest in the trustee at law until the requirements of that law have been complied with.

3. Pursuant to s 116(1)(b) of the Bankruptcy Act, the property of the defendants that was divisible among their creditors includes:

   the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge.

4. The effect of s 5 and s 58 of the Bankruptcy Act, in the context of the ownership of shares, was considered by Parker J in Preston v Diaspora Holdings Pty Ltd.[4]  His Honour relevantly held that:[5]

   (a)registration is necessary for a person to be a member of a company;

   (b)beneficial ownership without registration does not make a person a shareholder;

   (c)s 1072C of the Act (which sets out the rights of a trustee of the estate of a bankrupt shareholder, whether or not the trustee is registered as a shareholder) is designed to ensure a trustee in bankruptcy can realise shares for the benefit of creditors of the bankrupt; and

   (d)without registration, there can be no effective transfer of the share.

   [4] Preston v Diaspora Holdings Pty Ltd [2019] NSWSC 651.

   [5] Preston v Diaspora Holdings Pty Ltd [99] - [111].

5. His Honour concluded that:[6]

   Sub-section 58(2) [of the Bankruptcy Act] was clearly intended to cover real property held under Torrens Title systems of registration. Such systems of registration do not, typically, impose any obligation to register a transfer; but they do operate so that, without registration there can be no effective transfer at law. In my opinion, the scheme of the Corporations Act is relevantly the same.

   I think this conclusion is reinforced by the fact that the Corporations Act (which post-dates the Bankruptcy Act) makes specific provision for transfer of shares. If the contention for the Strata Corporation were correct, those provisions would be unnecessary.

   [6] Preston v Diaspora Holdings Pty Ltd [108] - [109].

6. The plaintiffs sought to distinguish this decision on two grounds. First, it was limited to the right of a registered shareholder to vote at a general meeting, including to appoint a director. This is because, in their submission, the right to vote is an incident of legal title. Second, Parker J, in reaching his decision, did not consider the effect of s 116(1)(b) of the Bankruptcy Act.

7. A current and historical search of CAT from the records maintained by ASIC was in evidence before me.[7]  The search discloses that as at 2 September 2021:

   (a)Mr Kitay was the appointed liquidator of CAT;

   (b)the defendants were directors of CAT, having been appointed on 26 July 2021 (the date of their discharge from bankruptcy); and

   (c)there were two issued shares in CAT, one registered in the name of by the first defendant and the other in the name of the second defendant.

   [7] Affidavit of Angela Cecilia Theresa Frigger filed 8 September 2021, 'AF1'.

8. The ASIC search is prima facie evidence of each of these matters.[8]

   [8] Corporations Act 2001 (Cth) s 1274.

9. There is no evidence before the court that on the bankruptcy of each of the defendants, any steps were taken by their trustee in bankruptcy to transfer registration of the defendants' shares in CAT into the trustee's name, or to exert any control over CAT, or over the defendants' shareholding in CAT.  In fact, the prima facie evidence is that there has been no legal transfer of their shares and the defendants remain the registered shareholders. 

10. On the basis of the reasons of Parker J in Preston v Diaspora, which I do not consider are plainly wrong, it is arguable that the defendants, as legal owners of the shares in CAT, are entitled to exercise certain rights attached to those shares.  I do not consider it is unarguable that the right to bring a claim for oppression under the Act is a right associated with legal title to a share. The question as to whether the right to commence these proceedings is a right which is divisible among the defendants' creditors under s 116 of the Bankruptcy Act should not, in my view, be determined summarily.

11. The defendants relied on the decisions of Martin J in Jebb as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd^[9] and Robson J in Clark v Framlingham Aboriginal Trust[10] in support of their contention that they have standing to bring a claim for oppression. 

    [9] Jebb as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2017] WASC 335; (2017) 326 FLR 288.

    [10] Clark v Framlingham Aboriginal Trust [2014] VSC 367.

12. In Jebb as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd, Martin J, in considering whether a vesting order should be made which would enable the plaintiff to be substituted as a replacement plaintiff in proceedings for oppression, held that:[11]

    [A] key proposition emerging from earlier reasons is a recognition of the overall supremacy of the share register kept, recording a corporation's members, in terms of the Corporations Act's regime as regards any pursuit of a statutory oppression action under Pt 2F.1. Considerations emerging from the equitable ownership of shares through trusts or the like, simply do not present as considerations of materiality in that corporate regulatory environment.

    [11] Jebb as trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [153].

13. The plaintiffs deny this decision assists the defendants given the significantly different factual situation in those proceedings.[12]

    [12] ts 48 - 49.

14. In Clark v Framlingham Aboriginal Trust, the dispute arose in relation to a statutory trust created under the Aboriginal Lands Act 1970 (Vic) and a deed of settlement that was entered into between certain of the parties. The defendants relied on Robson J's conclusion that where no established claim has been made by the trustee in bankruptcy that the shares have vested in the trustee or that the trustee was entitled to registration of the shares, there is no basis to deny the registered owners 'the full rights of entitlement'.[13]  The plaintiffs dispute this decision is of any assistance to the resolution of this matter as no question of standing arose in that case (as the plaintiff was not bankrupt) and it concerned a different piece of legislation. 

    [13] Clark v Framlingham Aboriginal Trust [166].

15. Ultimately, it is not necessary for me to resolve these issues.  For the reasons set out above, I consider it is arguable that the defendants, as legal owners of the shares in CAT, have standing to bring a claim for oppression and this question should not be resolved on a summary basis.  My preliminary view is that the defendants' trustee in bankruptcy should be given notice of the defendants' claim and be given the opportunity to be heard on the application.  However, I will hear from the parties before making any orders in this regard. 

16. In any event, the defendants submit they have standing to bring a claim for oppression under s 234 of the Act. Section 234 of the Act sets out the classes of person who may apply for an order under s 233. These include a former shareholder 'if the application relates to the circumstances in which they ceased to be a member' (s 234(c)) as well as a person to whom a share has been transferred 'by operation of law' (s 234(d)).

17. The defendants submit that even if the plaintiffs are correct in their contention that they are no longer shareholders of CAT, they are entitled to bring the action under s 234(c), alternatively s 234(d) of the Act.

18. If the plaintiffs' submissions are correct and the defendants' shares in CAT have vested in their bankruptcy trustee, I accept this will have occurred by operation of the provisions of the Bankruptcy Act. As was noted by Barrett AJA in Treadtel International Pty Ltd v Cocco:[14]

    The inclusion of that category of eligible applicant is traceable to a recommendation of the Jenkins Committee in its report of 1962.  The Committee said:

    The position of legal personal representatives and others (e.g, trustees in bankruptcy) to whom shares are transmitted by process of law, but who are not registered members, would be improved by an express provision in s 210 entitling them to present a petition under that section, so as to place beyond doubt their rights in this respect, which appear as the law now stands to be open to question.

    Australia's adoption of a like reform suggests that similar reasoning was at work.  That being so, the legislative intention may be taken to have been to assimilate the position of a person entitled to shares by transmission by will or operation of law to the position of a registered holder that and, by implication, not to extend like status to someone having (or claiming) some other kind of beneficial interest or ownership right in respect of a share. 

    The concept of "transmission" referred to in s 234(d) is to be gathered from s 1072E of the Act. In the case of a deceased or bankrupt person registered as the holder of shares, that section permits registration instead of the trustee, executor or administrator of the deceased estate or the trustee in bankruptcy as the holder. (citations omitted)

    [14] Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; (2016) 316 FLR 318 [93] - [95] (Gleeson JA and Leeming JA agreeing).

19. On this basis, I accept that even if the defendants do not have standing as members of CAT, they have standing under s 234(d) of the Act to bring a claim for oppression.

Can a claim for oppression be brought against a liquidator or a company in liquidation?

1. Section 233 of the Act gives the court broad powers to make orders in the circumstances set out in s 232 of the Act.

2. Section 232 of the Act enables a court to make orders if:

   (a)the conduct of a company's affairs; or

   (b)the actual or proposed act or omission by or on behalf of a company; or

   (c)a resolution, or proposed resolution, of members or a class of members of a company;

   is either:

   (d)contrary to the interests of the members as a whole; or

   (e)oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

3. The phrase 'affairs of a body corporate' is defined in s 53 of the Act (including for the purposes of s 232, 233 or 234 of the Act) to include 'any act or thing done … by or on behalf of the body, or to or in relation to the body or its business or property, at a time when … the body is being wound up' and includes the conduct of 'a liquidator or provisional liquidator of the body'.[15]

   [15] Corporations Act 2001 (Cth) s 53(d)(iv).

4. The plaintiffs relied on the judgment of McPherson J in Webb v Stanfield as authority for the submission that claims based on oppression are inapplicable where a company is being administered in insolvent liquidation.[16] In that case, the applicant sought orders for the first respondent to purchase his shares in the second respondent company. The application was dismissed at first instance. On appeal, McPherson J (with whom Demack J and Williams J agreed) concluded that the appeal should be dismissed on the basis that the relief sought by the applicant for oppression ceased to be appropriate once the company was ordered to be wound up. In reaching this decision, his Honour expressed the view that the applicant was not able to bring himself within the terms of s 320(1) of the Corporations Law.  Specifically, McPherson J commented that:[17]

   The 'affairs of the company', in so far as they exist at all in a winding up, are now being conducted by a liquidator, who is an officer of the court: see r 73(1). It is impossible to sustain a rational belief that the liquidator now in control of the company is conducting those affairs in a manner that is in any way oppressive to the applicant in this matter. If he were found to be doing so, the appropriate remedy would be to apply to the court for directions to be given that the liquidator discontinue such conduct. Alternatively, if s 320(1)(a)(ii) is resorted to, it can be seen to require, as a condition precedent for the relief envisaged by the section, that there be an act or omission "by or on behalf of the company". The applicant's complaint is of Stanfield's action in allegedly appropriating to himself or his new company the advantages of the company's agency agreement or its business with Capita. The very basis of that assertion is that Stanfield did so on his own behalf and not on behalf of the company Stanfield Webb & Associates Pty Ltd. The applicant's claim for relief under s 320 by way of order for purchase of his shares is therefore not within the literal terms of s 320(1).

   If it is objected that this represents too narrow a reading of the provision, the fact remains that the relief sought has, with the intervention of the winding up, ceased to be such as may in this, and perhaps in any other case, be appropriately awarded.  The company is insolvent and its affairs are under the control of an officer of court, who is engaged in a form of administration prescribed with some particularity by statute, in which the interests of creditors are entitled to consideration in priority to those of any member or contributory.  If it be the case that Stanfield's conduct has caused loss to the company, then it is open to the liquidator by proceedings under s 542 of the Code or by action in the name of the company in the ordinary way to recover the loss from Stanfield.  If such proceedings are taken and succeed, any judgment that follows or its proceeds will enure for the benefit of the company and so form part of the assets from which the claims of creditors and the costs and expenses of winding up will be met. 

   [16] Plaintiffs' submissions filed 1 October 2021 [43].

   [17] Webb v Stanfield [1991] 1 Qd R 593, 598-599.

5. As was noted in Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey,[18] Webb v Stanfield was decided under s 320 of the Corporations Law in contrast to s 232 and 233 of the Act which are in different and wider terms. As Jackson J commented:[19]

   The possible effect of this on the court's power to grant relief under s 233 where the company is in liquidation was recognised by the High Court in Campbell v Backoffice Investments Pty Ltd.

   [18] Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey [2017] QSC 145; (2017) 121 ACSR 389.

   [19] Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey [66].

6. In Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey, the alleged act of oppression was an issue of shares prior to the appointment of a liquidator as a creditors' voluntary winding up.  The relief sought included declarations that the issue of shares was oppressive, as well as orders restraining any dealing with the shares or exercising voting rights attached to the shares.  In this case, Jackson J did not consider it was necessary to consider whether there was power to make the order sought and held that the relief sought should not be granted on discretionary grounds as it lacked utility.[20]

   [20] Manthey Redmond (Aust) Pty Ltd (in liq) v Manthey [72].

7. In Campbell v Backoffice Investments Pty Ltd,[21] the respondents contended that the appellant's wrongful exclusion of Mr Weeks from management of Healthy Water (NSW) Pty Ltd was a form of oppression for the purposes of s 232 of the Act. At first instance, the appellant was ordered to purchase the respondent's shares in Healthy Water. The plurality of the High Court held that, on the particular facts of that case, the appointment of a provisional liquidator had brought to an end any conduct of Healthy Water's affairs that was 'oppressive to, unfairly prejudicial to, or unfairly discriminatory against' the respondent. In reaching this conclusion, the plurality held that it was not necessary to decide whether this was because there was no power to make an order or because the discretion to make an order could only be exercised by refusing to do so.[22]

   [21] Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304.

   [22] Campbell v Backoffice Investments [182].

8. The question as to whether it is appropriate to summarily dismiss an action for oppression where a company is in liquidation was recently considered by Ball J in Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd.[23] In this case, two of the plaintiffs sought leave to file an amended summons and commercial list statement to include a claim for oppression. The application was opposed by the defendants. The defendants contended that relief could not be sought where the company was in liquidation. Ball J held that the claim for relief under s 233 of the Act was arguable.[24]  In reaching this conclusion, his Honour referred to the decision of Black J in In the matter of Imperium Projects Pty Limited.[25]  In this case, Black J expressed the view that:[26]

   It seems to me that the decision in Campbell v Backoffice Investments Pty Ltd above is not authority that the Court lacks the power to make such an order for a shareholder to purchase another shareholder's shares, where a company is in provisional liquidation or liquidation, where the plurality left that question open.  It also seems to me that the factual position in that case is arguably distinguishable from the position in this case.  In that case, the plurality observed that the alleged oppression, in the company's internal management, had ended when a liquidator was appointed.  Here, it is alleged assets of the company have been diverted to other entities, and the liquidator has not yet taken steps to retrieve those assets, possibly because he lacks funds to do so.  In those circumstances, any oppression arising from the diversion of those assets is arguably continuing rather than, as in Campbell v Backoffice Investments Pty Ltd above, having been brought to an end by the appointment of the liquidator.

   It seems to me that the fact that the Company is in liquidation will be a matter which may be relevant for the trial judge, if he or she finds that oppression is established, in determining whether to grant the remedy sought by Mr Hourican.  Even if that fact is a significant obstacle to the making of the orders sought, in the ultimate outcome, that is not a matter which means that leave to amend should be withheld and the Plaintiff be deprived of a hearing on the merits.  (emphasis added)

   [23] Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [2022] NSWSC 435.

   [24] Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [28] - [29].

   [25] In the matter of Imperium Projects Pty Limited [2017] NSWSC 141.

   [26] In the matter of Imperium Projects Pty Limited [29] - [30].

1. Justice Ball went on to express the view that in circumstances where the High Court had left open the issue as to whether orders could be made under s 233, it must follow that the matter is arguable.[27]  After quoting the paragraphs of the judgment of McPherson J in Webb v Stanfield, set out above at [56], his Honour concluded that:[28]

   The point made by McPherson J has considerable force. But the question is whether the point has survived the re-enactment of s 320, which specifically addresses the narrow construction given to the predecessor section. That question was not addressed by the High Court in Campbell.  It should not be determined on an amendment application.

   [27] Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [34].

   [28] Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [36].

2. His Honour noted that the power given by s 233 of the Act is extremely broad. In his view, 'the essential question must be whether the order sought provides an appropriate means to address the oppression about which the plaintiff complains'.[29] 

   [29] Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [37].

3. In each of these cases, the conduct which was contended to be oppressive was the conduct of directors and/or members of the company which occurred prior to the appointment of the liquidator.  In that situation, the questions for the court were first, whether, on the appointment of the liquidator, the oppressive conduct ceased and second, what, if any, relief ought to be granted.  These cases do not support a conclusion that the fact a company is in liquidation precludes a claim for oppression or prevents relief being granted.

4. In this case, the conduct of which the defendants complain is the liquidator's conduct in the liquidation of the second plaintiff.  The defendants contend that the first plaintiff has 'abused his power as liquidator of the second plaintiff to deliberately extend the liquidation'.[30]  All the matters of which the defendants complain occurred after the first plaintiff was appointed liquidator of the second plaintiff. 

   [30] Defendants' amended outline of submissions filed 14 September 2021 [7].

5. The plaintiffs accept that none of these cases address the matters raised by the defendants in their interlocutory process.  The plaintiffs drew attention to the fact that the second plaintiff is in liquidation and that the first plaintiff, as liquidator of the second plaintiff, is an officer of the court as being 'fundamental impediments' to any claim by the defendants.  The defendants dispute these contentions and maintain that their claim is, at a bare minimum, arguable and should not be struck out or summarily dismissed. 

6. To date, it does not appear that any court has considered whether a claim for oppression can be made against a liquidator for their conduct as liquidator. Ultimately, whether a claim of this nature can be brought is a matter of statutory construction of s 232. Given the definition of 'affairs of a company' in s 53 of the Act, which expressly refers to conduct of a liquidator, I do not consider this question should be determined on a summary basis. It is sufficient for the purpose of this application to say that, in my view, the construction contended for by the defendants is open.

7. I turn then to consider the specific relief sought by the defendants and whether it is arguable that they could obtain this relief under s 233 of the Act. The relief sought by the defendants in relation to the alleged oppression is twofold; first, orders discontinuing the defence and counterclaim in CIV 2765 of 2010, and second, setting aside the costs order and assessment in COR 2 of 2010.

8. For the following reasons, it is my view that the defendants cannot obtain relief under s 233 as presently framed.

9. First, if, as the defendants contend, the defence and counterclaim in CIV 2765 of 2010 contains 'false pleadings of law and facts',[31] an application should be brought in those proceedings to strike out the relevant paragraphs. If the defendants are correct in their assertions, the maintenance of such a pleading would be an abuse of process and render it liable to be struck out. While I accept that the relief that can be granted under s 233 of the Act is broad, it does not, in my view, extend to the making of case management directions or determining applications in separate proceedings.

   [31] Defendants' amended outline of submissions filed 14 September 2021 [15].

10. Second, in seeking to set aside the costs order of Master Sanderson and the costs assessment of Registrar S Boyle under s 233 of the Act, the defendants are attempting to undermine the finality of the order and assessment. While I accept the power under s 233 of the Act is broad, I do not consider that it extends to setting aside final orders of the court. If the defendants consider there is a basis to challenge these matters, the appropriate action is for the defendants to appeal the costs order and seek to set aside the costs assessment.[32]

    [32] DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 [90] (Kirby J); D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 [34] (Gleeson CJ, Gummow, Hayne & Heydon JJ); Achurch v The Queen [2014] HCA 10; (2014) 253 CLR 141 [14] (French CJ, Crennan, Kiefel & Bell JJ).

11. Third, the costs order that was obtained by Mr Kitay is not, as contended by the defendants, in breach of the indemnity principle.  This principle was summarised by Pritchard J in Hancock Prospecting Pty Ltd v Hancock [No 3] as follows:[33]

    The rationale for the usual rule that an unsuccessful party should pay the party-party costs of the successful party to an action is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred in respect of those costs.  In other words, costs are awarded to indemnify the successful party for their liability for costs - a principle known as the indemnity principle - rather than to punish the unsuccessful party, or to reward the successful party.

    The making of a costs order in favour of a party is not dependent upon the party seeking costs producing a costs agreement between that party and their solicitors.

    The application of the indemnity principle means that a party (the client) who does not have a liability to his or her solicitors for costs cannot recover costs against an unsuccessful party to the litigation.

    The indemnity principle is flexible, and is designed to allow for a just and fair result.  Accordingly, if the client and his or her solicitor reach an agreement that the client will not have to pay the solicitor's costs, the client cannot obtain an award of costs against an unsuccessful party in litigation.  Similarly, if the liability of the client to the solicitor is limited, the quantum of costs that can be recovered from the unsuccessful party is also limited to that amount.

    …

    The liability of the client to pay the fees charged by the solicitor for the legal work performed for the client arises by contract, called the retainer.  Like any contract, proof of the existence of a retainer can be implied from conduct. 

    [33] Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423 [16] - [19], [21].

12. In order for the defendants to displace the indemnity principle, it is necessary for them to prove that either there was no retainer, or that there was an agreement between Mr Kitay and his solicitors that under no circumstances would Mr Kitay be liable for the costs.[34]  The defendants bear the onus of establishing these matters.  On an application to strike out, it is necessary for the defendants to establish that they have an arguable claim on either of these grounds.

    [34] Marsh v Baxter [No 2] [2016] WASCA 51.

13. The defendants contend that both of these grounds apply and that the costs order should be set aside for three reasons. First, Mr Kitay had no liability to pay costs under the Second HSF Costs Agreement (a defined term in the affidavit of Mr Kitay filed 3 August 2021) and he has not paid any costs. Second, the interlocutory process of November 2013, in which orders were sought in relation to the confidential affidavit of Mr Kitay, was a nullity. Third, the Second HSF Costs Agreement is void pursuant to s 187 (sic) of the Legal Profession Act 2008 (WA) (LPA) as it is a conditional costs agreement.

14. The affidavit evidence before the court discloses the following matters.

15. The Second HSF Costs Agreement[35] is a letter from HSF dated 29 October 2013, which was signed by Mr Kitay as Principal of Crowe Horwath on 30 October 2013.  The scope of the legal services are set out in letter.  The letter refers to the filing of a confidential affidavit by Mr Kitay in COR 2 of 2010 (Confidential Affidavit) and the access to the Confidential Affidavit by Mrs Frigger.  The scope of the legal services are defined as first, to issue a letter to Mrs Frigger demanding delivery up of the Confidential Affidavit and second, to seek orders for the court in relation to the Confidential Affidavit.  Under the Second HSF Costs Agreement, HSF agreed to undertake this work on the basis that:

    If you [Mr Kitay] are unsuccessful in the Application or succeed, but do not recover costs from Mrs Frigger, we will not seek recovery from you for our professional fees (that is, the time we spend working on your matter) nor internal Herbert Smith Freehills expenses (such as photocopying).

    However, we will continue to charge for, and seek recovery from you, for external payments we make to others on your behalf (such as Court filing fees). 

    If you have a successful outcome, and you recover certain of your costs from Mrs Frigger (or in some other way), we may seek to recover our professional fees in those limited circumstances described in the section below titled 'If you have a successful outcome and receive legal costs from the other side'.

    [35] Affidavit of Mervyn Jonathan Kitay filed 3 August 2021, 'MJK2'.

16. This section then goes on to state that:

    We need to tell you that the law requires us to send you a bill for our legal costs.  We will, however, waive payment of those costs except in the circumstances described below.

    …

    We will, however, waive payment of those costs (except external payments) if you are unsuccessful, or are successful and cannot recover costs from;

    1.the other side (either as a result of a court order, or an agreement with the other side);

    2.somewhere else (for example a statutory fund); and

    3.you have followed our advice.

17. The section which addresses what will occur if there is a successful outcome provides that:

    We will send you a bill and ask you to pay us any amount that you receive from any other party, or parties, for any part of your legal costs which you have not already paid to us.  We will do this if:

    1 a court makes an order that another party must pay all or part of your legal costs; or

    2 you reach an agreement with another party that requires them to pay all or part of your legal costs; or

    3 you are able to recover all or part of your legal costs from somewhere else eg a statutory fund. 

    An order by the court for payment of costs in your favour against any other party or parties in the litigation will not necessarily cover all of our legal costs.  In the Supreme Court, 'taxed costs' could amount to between one half to two-thirds of the actual costs incurred.  However, if the amounts recovered from any other party or parties do not cover all of our legal costs, we will waive payment of the outstanding costs as long as you do everything you can to help us to recover those costs.

18. On 25 November 2013, HSF, on behalf of Mr Kitay, filed an application in COR 2 of 2010 for orders seeking to protect the confidentiality of the Confidential Affidavit of Mr Kitay (Application).  HSF were the solicitors on record for the Application and Mr John, a partner of HSF, appeared as counsel on the Application.  On 15 May 2014, reasons for decisions were delivered by Master Sanderson[36] and orders were made in relation to the Application.  On 17 June 2014, Master Sanderson made indemnity cost orders in respect of the Application.  Neither of these orders has been appealed by the defendants.  For this reason, these orders are valid unless and until they are set aside on appeal.[37]

    [36] In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2014] WASC 169.

    [37] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 [151]; Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511, 592 [164] - [165]; New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118 [32] - [33], [38].

19. On 6 July 2015, a certificate of assessment of the costs of the Application was issued in the amount of $61,000.42.[38] The defendants did not object to the assessment or seek a review under O 66 r 55 of the Rules of the Supreme Court 1971 (WA) (Rules), nor have they sought to set aside the certificate in the inherent jurisdiction of the court.

    [38] Affidavit of Mervyn Jonathan Kitay filed 17 September 2021'MJK-7'.

20. The question as to whether Mr Kitay has any liability for costs is a matter of the proper construction of the contract.  These principles are well-established.  The Second HSF Costs Agreement must be construed objectively by determining what a reasonable businessperson would have understood its terms to mean.  This is determined by reference to its text, context and purpose.[39]

    [39] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35] (French CJ, Hayne, Crennan & Kiefel JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [47] (French CJ, Nettle & Gordon JJ).

21. I do not accept that under the terms of the Second HSF Costs Agreement, it is arguable that Mr Kitay does not have any liability for costs.  The terms of the Second HSF Costs Agreement make clear that HSF will invoice Mr Kitay for the work performed under the agreement but that HSF have agreed not to seek payment unless one of the three circumstances set out in the agreement applies.  This includes where costs are recovered from the defendants.  On its face, the costs agreement is a conditional costs agreement as that term is defined in the LPA. 

22. Section 252 of the LPA defines a conditional costs agreement as 'a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate' (see also s 283(1) of the LPA). Contrary to the submission of the defendants, conditional costs agreements are not automatically void under the LPA.[40]  The LPA simply requires that a conditional costs agreement contain certain mandatory terms, without which the agreement will be void. 

    [40] Legal Profession Act 2008 (WA) s 283. See in particular s 283(4)(b).

23. Under the terms of the LPA, Mr Kitay as a liquidator is a 'sophisticated client'.[41]  For this reason, any conditional costs agreement is required to set out the circumstances that constitute a successful outcome, it may provide for disbursements to be paid irrespective of outcome, and must be in writing.  The Second HSF Costs Agreement complies with each of these requirements.

    [41] Legal Profession Act2008 (WA) s 252, s 263(2)(c)(iv).

24. In addition, I do not consider it is arguable that the interlocutory process was a nullity as HSF was not retained by Mr Kitay to lodge the Application.  As was stated by Pritchard J in Hancock Prospecting Pty Ltd v Hancock [No 3]:[42]

    [O]nce it is established that a solicitor was acting for a client with the client's knowledge and assent, it will be presumed that the retainer existed, and that the client is liable to his or her solicitors for the solicitors' costs.  The presumption that a retainer exists is a strong one.  So strong is the presumption that it has sometimes been equated to a 'deemed retainer'.

    [42] Hancock Prospecting Pty Ltd v Hancock [No 3] [21].

25. In this case, the retainer is evident from the actions of HSF in filing court documents, attending the hearing of the Application and seeking orders.  It is clear from Mr Kitay's affidavit that a solicitor-client relationship existed between Mr Kitay and HSF, and that HSF was retained to file the Application.  Even if the Second HSF Costs Agreement is not valid, this, of itself, would not invalidate this retainer.  The only consequences if the Second HSF Costs Agreement were held to be invalid would be first, the amount of costs payable to HSF or that may be recovered by them may be impacted, and second, the timing of the recovery of any costs may change.  Under the terms of the LPA, even if there is no costs agreement between a solicitor and a client, legal costs are recoverable in accordance with the applicable costs determination, or according to the fair and reasonable value of the legal services provided.[43]

    [43] Legal Profession Act 2008 (WA) s 271. In relation to the proceedings commenced in the Federal Court of Australia, see Stevenson v Zafra Pty Ltd [2021] WASCA 181 [288].

26. Fourth, and more generally, the affairs of the second plaintiff are currently being administered by the first plaintiff as a court appointed liquidator.  If the liquidator is conducting the affairs of the company in the manner alleged by the defendants, the appropriate remedy is for the defendants to apply to the court for directions to be given to the liquidator for the discontinuance of such conduct. 

27. Fifth, at the hearing before me, the plaintiffs contended that no orders could be made under s 233 in relation to the costs order because that order was not made against the defendants as shareholders of the second plaintiff. I do not accept this submission as, under the terms of s 232(e) of the Act, conduct is not restricted to conduct in the capacity of the shareholder. However, I do not consider it is arguable that obtaining and enforcing a valid costs order against a shareholder (whether in that capacity or a different capacity) could constitute oppressive conduct.

28. For these reasons, I consider it is not arguable that the defendants can obtain the relief set out in [2] - [4] of their amended interlocutory process on a claim for oppression.  Accordingly, these paragraphs of the interlocutory process ought be struck out.  

29. In the alternative to the relief sought on the grounds of oppression, the defendants seek an order pursuant to s 90-15(3)(d) of the Insolvency Practice Schedule (Corporations) declaring that the plaintiffs are not entitled to the costs the subject of the allocatur in COR 2 of 2010.

30. Section 90-15 of the Insolvency Practice Schedule (Corporations) relevantly provides that:

    (1)The Court may make such orders as it thinks fit in relation to the external administration of a company.

    …

    Examples of orders that may be made

    (3)Without limiting subsection (1), those orders may include any one or more of the following:

    …

    (a)an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;

    …

    Matters that may be taken into account

    (4)Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

    (a)whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and

    (b)whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and

    (c)whether an action or failure to act by the liquidator is in compliance with an order of the Court; and

    (d)whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and

    (e)the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

    Costs orders

    (5)Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:

    (a)the external administrator or another person is personally liable for some or all of those costs; and

    (b)the external administrator or another person is not entitled to be reimbursed by the company or its creditors in relation to some or all of those costs.

1. While I accept that the court has broad power under s 90-15 of the Insolvency Practice Schedule (Corporations) to make orders 'in relation to the external administration of a company', for the following reasons, I do not accept that it extends to making the orders sought by the defendants.  First, while I accept that the Application was an application in relation to the external administration of the second plaintiff, costs orders have already been made in respect of the Application.  These orders were that the defendants pay the costs of the plaintiffs on an indemnity basis.  Second, I do not consider that s 90-15(3)(d) of the Insolvency Practice Schedule (Corporations) gives the court the power to overturn costs orders that have already been made.  There is nothing in the text, context or purpose of the section that would support a construction that this section gives the court the ability to overturn orders that have previously been made.  Third, if the defendants seek to alter the order for costs that has been made by the court, it is necessary for the defendants to appeal the original costs order.  If the defendants seek to challenge the assessment of the costs, they need to either review the assessment or seek to set it aside.

2. Finally, even if I had reached a different conclusion as to whether it was arguable the defendants could seek this relief under s 233 of the Act, in the interests of case management, I would have required these paragraphs of the interlocutory process to be severed from the hearing of the originating process and separately case managed. This is for two primary reasons. First, as has been emphasised by the defendants on both occasions this matter has been listed for hearing, a number of proceedings in both this court and the Federal Court have been stayed pending a decision on the plaintiffs' originating process. In these circumstances, it is in all parties' interests for the originating process to be heard and determined as quickly as possible. In my view, following the delivery of these reasons for decision, there is no reason the originating process cannot be programmed through to a final hearing within a relatively short period of time. Second, any claim for oppression that might be maintainable by the defendants is likely to involve a significant range of issues and factual disputes. This is not suited to the summary process envisaged by the Supreme Court (Corporations) (WA) Rules 2004 (WA) (Corporations Rules) and any claim would be ordered to proceed by way of pleadings. This contrasts with the orders sought in the originating process which raise limited issues for determination.

Do the defendants require leave to file the interlocutory application?

1. Given my conclusion in relation to the claim filed by the defendants, it is not strictly necessary for me to address the plaintiffs' submissions on s 471B of the Act. For completeness, I address this briefly.

2. Section 471B of the Act provides that:

   While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

   (a)a proceeding in a court against the company or in relation to property of the company; or

   (b)enforcement process in relation to such property;

   except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

3. In their interlocutory application, the defendants seek relief against both the first and second plaintiffs. In so far as relief is sought against the second plaintiff, leave is required under s 471B of the Act. If relief was not sought against CAT, it is arguable the second plaintiff is not a necessary party to the claim and that leave would not be required.

4. The principles applying to a grant of leave under s 471B of the Corporations Act were summarised by Derrington J in J & J Richards Super Pty Ltd ATF the J&J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) as follows:[44]

   [44] J & J Richards Super Pty Ltd ATF the J & J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772 [8] - [9].

   The principles on which a court will grant leave under s 471B are well established and are substantially the same as those which apply to an application under s 500(2) of the Corporations Act. For present purposes, it is sufficient to observe the following matters:

   (a)The broad purpose of s 471B is to prevent an insolvent company's assets being dissipated by unnecessary litigation and it enables the Court to effectively supervise the claims brought against the company. The section prevents circumstances arising in which the company in liquidation is subject to a multiplicity of actions which would be expensive, time consuming and, most likely, unnecessary.

   (b)An applicant for leave will be required to show why it should not be left to prove its debt in the winding up and, in the absence of establishing any such reason, it ought ordinarily be left to pursue that process.

   (c)In seeking leave, an applicant must generally establish that it has a good claim with a solid foundation which gives rise to a serious question to be tried.  It is perhaps not necessary to establish a prima facie case.  Relevant to the exercise of the Court's discretion are factors such as the amount and seriousness of the claim, the degree of complexity of legal and factual issues, the prospect that a proof of debt will be rejected and the stage at which the proceedings, if already commenced, have progressed.

   (d)It must be recognised that the power to grant leave is discretionary and depends upon the particular circumstances of the case and there are many other factors which may be relevant to the power's exercise.

   (e)Special circumstances exist where a policy of insurance may exist for the purposes of indemnifying a claim made against the company.

   It is widely accepted that the power under s 471B may be exercised by the Court by granting leave nunc pro tunc. (citations omitted)

5. In this case, if it were necessary for me to consider this application, for the following reasons, I would not have granted leave to the defendants to proceed with the application against the second plaintiff.  First, there is already a multiplicity of proceedings between the parties and alternative avenues for the defendants to raise the complaints identified by them.  Second, for the reasons set out above, I do not consider the defendants have a good claim for the relief they seek against the second plaintiff or that there is a serious question to be tried.  Third, the second plaintiff is likely to incur significant costs in defending these proceedings.  This will reduce the amount available to distributed to creditors of the second plaintiff.

Defendants' application for summary judgment

1. The defendants applied for summary dismissal of the originating process pursuant to O 16 of the Rules. Four separate grounds were advanced in support of this application. First, it was contended the application was an abuse of process. Second, that HSF and counsel had not been validly retained on this application. Third, any costs agreements and oral retainers of HSF are void under the LPA. Fourth, any retainer is in breach of the torts of maintenance and champerty.

2. The plaintiffs denied the defendants could seek summary judgment as, in their submission, it could not be said that a liquidator seeking clarification as to whether court approval was required for entry into certain agreements was a matter which is 'frivolous or vexatious'.  The plaintiffs contended there was a real issue to be determined in the proceedings and, as such, the defendants' application should be dismissed.

Preliminary matters

1. Order 16 r 1(1) of the Rules relevantly provides that:

   Any defendant to an action may within 21 days after appearance or at any later time by leave of the Court, apply to the Court for summary judgment, and the Court, if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily …, may order …

   (a)that judgment be entered for the defendant with or without costs.

2. The originating process was filed on 3 August 2021 together with two supporting affidavits of Mr Kitay filed on the same date.  Notices of intention to appear were filed by the first defendant on 18 August 2021 and by the second defendant on 24 August 2021.  An amended originating process and further affidavit were filed by the plaintiffs on 27 August 2021. 

3. The interlocutory process for summary judgment was not filed until 22 September 2021.  As such, the chamber summons was filed outside the timeframe provided by the Rules.  However, no objection was taken by the plaintiffs at any time and the application was programmed to hearing on 7 October 2021. 

4. Given that there was only a short delay in filing the application after service of the amended application, to the extent that leave was required to file the interlocutory process, I consider that leave should be granted.

5. Following the hearing of the application, the defendants filed submissions in reply to the oral submissions of the plaintiff and sought leave to rely on them.  The basis upon which the defendants sought leave to file these submissions was the volume of material that was filed by the plaintiffs prior to the hearing, the failure of the plaintiffs to file and serve their written submissions on 30 September 2021, the alleged 'misconstruing' of the grounds of the interlocutory process, and the conflation of two separate issues.  These contentions raise both factual matters (in relation to the retention of Mr Ashdown and HSF in these proceedings and the terms of any such retainer), and legal matters.  I do not accept the defendants' contention that these matters have not already been addressed by them and do not grant leave to file the submissions in reply.  In these circumstances, I have ignored the submissions and have not had regard to them in reaching my decision.

6. I turn then to consider the grounds on which the application was advanced.

Abuse of process

1. The defendants acknowledge that the purpose of the plaintiffs joining them as defendants to these proceeding was to ensure they were bound by the decision of the court.  The defendants contend the proceedings were an abuse of process for two reasons.  First, they contend the plaintiffs deny they have 'any entitlement to object to the application'.  On this basis, it was submitted the proceedings were being used for a collateral purpose.  Second, the defendants have brought applications for summary relief in various proceedings which have not yet been determined on their merits.  The defendants contend that this application has been brought to prevent those applications being determined and that it is an abuse of process to litigate a matter which is already in issue in other proceedings. 

2. In relation to the first contention, this submission was advanced on the basis of the plaintiffs' acknowledgement that the defendants have been joined to the proceedings to ensure they are bound by the decision of the court.[45]  This does not mean, however, that the defendants will not be able to be heard on the application.  In the plaintiff's submissions in opposition to the application for summary judgment, the plaintiffs accept 'it may be relevant' to the court to hear from the defendants.  Given this, I do not consider that the filing of the originating process is an abuse of the processes of the court or that it should be struck out summarily on this basis. 

   [45] Plaintiffs' submissions [79] - [81].

3. In relation to the second contention, the defendants have raised the same legal issue in various proceedings in relation to the ability of the solicitors on record to appear for the plaintiffs.  The only factual differences between the applications concern the firm of solicitors that has been instructed, whether the retainer is governed by a costs agreement and, if so, the terms of that costs agreement.  In my view, it is consistent with the objects of case management and efficiency for this legal issue to be determined by one judicial officer.  This will save time, costs and the public resources of all courts.  In this regard, not only can it not be said that the approach adopted by the plaintiffs is an abuse of the processes of the court but the approach is entirely consistent with the objects of case management.

4. For these reasons, I do not accept that the plaintiffs' originating process should be dismissed as an abuse of process. 

No valid retainer to commence these proceedings

1. In their written submissions, the defendants contend that, without approval having been given under s 477(2B) of the Act, HSF has not been validly retained by the plaintiffs and had no authority to commence these proceedings. The primary matters put forward in support of this contention were concerns in relation to the costs agreement between HSF and the plaintiffs, including the failure to disclose the hourly rates charged by HSF and the fees of Mr Ashdown, who appeared as counsel at the hearing.

2. As counsel for the plaintiffs contended, the defendants' written submissions conflate a retainer with a costs agreement, when they are different and distinct concepts.  A retainer is the agreement by a client to appoint a solicitor to act on their behalf.  The retainer includes an implied obligation to pay legal fees unless this is expressly excluded.  In contrast, a costs agreement sets out the basis on which the solicitor will charge the client, if those charges differ from those that apply as a matter of law. 

3. It is not compulsory for a costs agreement to be entered into between solicitors and their client.  This is made plain by the express terms of s 282(1) of the LPA, which provides that a costs agreement 'may' be made (as opposed to 'shall' be made) between a client and a law practice, s 288 of the LPA, which sets out this court's powers to set aside a costs agreement, and s 301, which concerns the assessment of costs. 

4. At the hearing of the application, the defendants accepted there was a retainer between HSF and the first plaintiff.[46]  Most of the defendants' written submissions concerned the validity of the costs agreement between HSF and the plaintiffs and the defendants' objections to its terms.  However, even if these objections were to succeed, none of these objections would invalidate HSF's retainer.  This position is made plain by the express terms of pt 10, div 6 and 8 of the LPA.  Specifically, where a costs agreement is set aside by the Supreme Court under s 288 of the Act, the court 'may' make an order in relation to the payment of legal costs the subject of the agreement (s 288(5)).  Pursuant to s 288(6) of the LPA, in making an order for the payment of costs, one of the factors the court may take into account is the scope of the retainer (s 288(8)(e)). 

   [46] ts 28.

5. As set out above at [84], where it is established that a solicitor was acting for a client with the client's knowledge and assent, a strong presumption will arise that a retainer exists and the client is liable to his or her solicitors for the solicitors' costs. 

6. In this case, as was accepted by the defendants at the hearing,[47] the actions of HSF in commencing the proceedings, which included preparing and filing affidavits of the first plaintiff, filing court documents, attending on the application and seeking orders creates a strong presumption that a retainer exists.  There is no evidence to displace this presumption. 

   [47] ts 28.

7. Similar reasons apply to the defendants' objection to Mr Ashdown, including his appearance as counsel at the hearings before me.  Mr Ashdown's appearance at the hearings of these applications on behalf of the plaintiffs creates a strong presumption that a retainer exists between HSF and Mr Ashdown.  HSF has confirmed that a written agreement exists but has refused to provide Mrs Frigger with a copy of this agreement.  The defendants submit that HSF had no authority to enter into any agreement on behalf of Mr Kitay to retain Mr Ashdown.[48]  There is no evidence before the court to support an inference that the agreement to retain Mr Ashdown has been entered into 'on behalf of Mr Kitay' or that Mr Ashdown has not been validly retained.  If Mr Ashdown was briefed without the consent of Mr Kitay, this may impact whether Mr Kitay is liable to reimburse HSF for Mr Ashdown's fees.  However, it will not impact the validity of any retainer of Mr Ashdown by HSF.  Once again, there is no evidence before the court which displaces the presumption of a valid retainer.  The defendants' objection to Mr Ashdown's appearance is without merit and should be dismissed.

   [48] ts 35.

8. At the hearing of the application, Mrs Frigger submitted that it was clear the retainer required approval under s 477(2B) of the Act because Mr Kitay entered into the costs agreement in his capacity as liquidator of CAT. On this basis, it was contended that the retainer was entered into for and on behalf of CAT and will last for more than three months. It was submitted that without approval, there was no valid retainer to commence these proceedings and, as a result, the proceedings were a nullity.

9. As set out above, I do not consider this issue should be determined summarily.  This is the ultimate issue that is raised by the plaintiffs for determination in the originating process.  It is sufficient to state that given the reasons expressed by Charlesworth J in Frigger v Kitay (No 2),[49] I do not consider it is unarguable that the plaintiffs may be entitled to relief sought on one of the alternative grounds in the originating process, including for retrospective approval.[50]

   [49] Frigger v Kitay (No 2) [2020] FCA 497; (2020) 143 ACSR 655 [47] - [52].

   [50] Re HIH Casualty & General Insurance Ltd (in liq) [2002] NSWSC 1036.

10. In these circumstances, it cannot be said that the plaintiffs' case should be summarily dismissed on this ground.

Invalidity of costs agreements

1. The defendants advanced this contention on a number of grounds including that any agreement is a contingent costs agreement which is void under s 285 of the LPA, there is no written costs agreement between HSF and Mr Kitay (or in respect of Mr Ashdown) which is unsatisfactory conduct or professional misconduct, and that without approval under s 477(2B) of the Act, there is no valid costs agreement.

2. The defendants contend that all costs agreements between Mr Kitay and each of HSF, Holborn Lenhoff Massey, Mr Ashdown (counsel for the plaintiffs in these proceedings) and Lenhoff & Associates are void pursuant to s 285 of the LPA.[51]  This contention was advanced on the basis that the quantum of the costs that will be paid to each of them depends on 'what is recovered in CAT's liquidation' and from any 'litigation proceeds in CIV 2765 of 2010'.[52] 

   [51] Defendants' responsive submissions filed 5 October 2021 [8.11].

   [52] Defendant's submissions in support of summary disposal of originating process filed 1 October 2021 [10].

3. Section 285 of the LPA (which was in force at the time of the hearing but has since been repealed and replaced by s 183 of the Legal Profession (Uniform Law)) prevents law practices from entering into a costs agreement under which the costs are calculated by reference to the amount or any award or settlement or value of any property, ie contingency fees. 

4. In this case, the defendants' submissions focussed not on the calculation of the fees payable to the relevant legal practices or counsel but on the amount that would be recovered by them.  The relevant costs agreements with HSF do not calculate costs by reference to the amount of any settlement or damages that might be achieved in the litigation.  The agreements state that HSF have agreed not to seek payment of their costs unless there is a successful outcome.  This is not a contingent costs agreement but a conditional costs agreement. 

1. I turn then to consider the merits of the remaining matters raised by the defendants and whether leave should be granted to re-open the application to raise these issues.

2. In relation to the contention that this court does not have jurisdiction to hear the application because it raises issues concerning the bankruptcy notices of the defendants, this submission has no merit. 

3. Under s 27 of the Bankruptcy Act, the Federal Court and the Federal Circuit and Family Court of Australia (Division 2) have concurrent jurisdiction in bankruptcy, which is exclusive other than aspects of the jurisdiction of the High Court and the Federal Circuit and Family Court of Australia (Division 1), and in criminal matters. This is defined in s 5 of the Act to mean 'any jurisdiction or proceedings under or by virtue of the Bankruptcy Act'.

4. In Sutherland v Brien,[86]Austin J held that s 27(1) of the Bankruptcy Act did not vest in the courts to which it refers, exclusive jurisdiction in every question turning on the interpretation and application of the Bankruptcy Act. His Honour held that nothing in the Bankruptcy Act precluded the exercise of the well-established jurisdiction of courts 'to determine and declare rights to property and make orders as to its destination'.[87]

   [86] Sutherland v Brien [1999] NSWSC 155; (1999) 149 FLR 321.

   [87] Sutherland v Brien [8].

5. The amended originating process in these proceedings seeks orders under the Act, which this court has jurisdiction to hear and determine. No orders are sought 'under or by virtue of the Bankruptcy Act'.

6. The defendants also challenged the validity of the costs allocatur on the basis that it was not personally signed by Registrar S Boyle.  The document that is in evidence before the court has the title:[88]

   Certificate of Assessment

   Applicant's bill of costs for filed 19 January 2015

   Pursuant to Order of Master Sanderson Made on 12 June 2014

   [88] Affidavit of Mervyn J Kitay filed 27 August 2021 'MJK18'.

7. This document has the stamp of 'S BOYLE' immediately above the words 'Registrar S Boyle' and bears the seal of the Supreme Court of Western Australia.

8. Pursuant to O 66 r 57 of the Rules, the costs allowed by the taxing officer on an interim or final certificate of taxation is deemed to be a judgment of the court. The certificate, which is also referred to as the allocatur, is signed by the registrar at the foot of the bill which has been taxed. However, the court can and will, if asked, sign and seal under O 43 a separate document as a certificate.[89] 

   [89] Rankilor v Circuit Travel Pty Ltd [2012] WASCA 155 [65].

9. On its face, the certificate of assessment is a certificate that has been signed and sealed by the court under O 43 of the Rules as a judgment of the court.  That is, the document is not the signed bill of costs which has been taxed but has the form of an order of this court.  However, this matter was not fully argued before me and accordingly, I make no findings of fact on this.  It is sufficient to say that I do not consider the plaintiffs' position to be unarguable. 

10. In relation to whether the court can grant retrospective ratification of the entry into the costs agreements and retainers set out in the amended originating process, I also consider this submission is without merit.  There is no doubt that the court has power to grant retrospective approval; the question in this case is whether the court should exercise its discretion to do so.[90]  I do not consider that it is unarguable that the discretion would be exercised in favour of the plaintiffs and that this should not be determined summarily. 

    [90] Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liq) (No 2) [2017] FCA 755 [27] (Gleeson J) and the authorities cited therein.

11. The defendants also submitted that the Confidentiality Orders could not be the subject of the Second HSF Costs Agreement as these orders were sought and obtained prior to the date this agreement was entered into.  For this reason, they contended that [5(b)(1)] be struck out of the originating process.  In oral submissions, the defendants also drew attention to the apparent duplication between the orders sought in [2(b)(4)] and [5(b)(1)] both of which appear to refer to the same matters.[91]

    [91] ts 94.

12. In respect of the first submission, the order sought by the plaintiffs is a declaration that approval under s 477(2B) of the Act was not required for Mr Kitay to retain HSF to obtain the Confidentiality Orders. As set out above, this was not an issue that was raised before or determined by Colvin J in Kitay in the matter of Frigger (No 2).  In my view, it is not unarguable that the plaintiffs would be entitled to the relief that they seek and I do not consider this should be determined summarily.  In respect of the second submission, I accept that on their face it appears that the orders in [2(b)(iv)] and [5(b)(i)] refer to the same application and orders of this court.  This needs to be clarified by the plaintiffs prior to the hearing of the originating process.  I will hear from the parties as to what orders should be made in this regard.

13. In relation to the issues raised by the defendants as to whether the scope of the HSF retainer as set out in the Second HSF Costs Agreement could be extended to include the matters referred to in [5(b)] of the originating process, I do not accept that it is not arguable that the scope of HSF's retainer could be extended without a written amendment. 

14. In Re HIH Insurance Ltd (in liq), Brereton J held that:[92]

    Fundamentally, the extent of a lawyer's authority depends on the construction of the retainer, in which terms can be implied as well as express.  However, generally speaking, clear and specific words are required to authorise the institution of court proceedings.  This is because of the serious consequences, including in particular exposure to the possibility of adverse costs orders; and also because a solicitor ought not readily be implied to be authorised to decide whether or not to institute proceedings.  Where words to the effect of authorising 'such further steps as may be necessary' follow the main object of the retainer, those words are not sufficient to authorise institution of proceedings where the specific words would not do so, the general words being restricted to what is necessary for the proper performance of the particular acts.  While authority to institute proceedings once given extends to final judgment and execution, it does not authorise institution of an appeal without further express instructions.  (citations omitted)

    [92] Re HIH Insurance Ltd (in liq) [2014] NSWSC 922 [17].

15. The authority to commence proceedings can be written or oral and 'may in some cases even be implied from surrounding circumstances'.[93] 

    [93] Hawkins Hill Gold Mining Co v Briscoe (1887) 8 LR (NSW) Eq 123, 129 - 130 (Stephen J) cited with approval in Re HIH Insurance Ltd (in liq) [10].

16. I consider it is arguable that Mr Kitay has given oral instructions to extend the scope of the original retainer of HSF beyond its original scope or that this can be implied from the surrounding circumstances. This matter was not the subject of argument or determination by Colvin J. For this reason, I do not consider it to be an abuse of process for this matter to be raised in these proceedings. However, in so far as these retainers are said to be governed by the terms of the Second HSF Costs Agreement, the questions as to who the parties to that agreement are and whether approval is required under s 477(2B) of the Act for entry into that agreement, these matters have already been finally determined by Colvin J and cannot be re-litigated.

17. The final issue to be addressed is the question as to whether the plaintiffs should be prevented from bringing the claims in these paragraphs on the basis that they should have been raised at the hearing before Colvin J.  That is, the question for determination is whether Anshun estoppel applies. 

18. The plurality of the High Court in Port of Melbourne Authority v Anshun Pty Ltd explained this principle in the following terms:[94]

    [T]here will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.  Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and that subject matter it would be expected that the defendant would raise the defence and thereby enabled the relevant issues to be determined in the one preceding.  In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably restrain from litigating an issue in one preceding yet wish to litigate the issue in other proceedings e.g.  expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.

    [94] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1985) 147 CLR 589, 602 - 603.

19. They went on to state that:[95]

    The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgements is obviously an important factor to be taken into account in deciding whether the omission to plead confound an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding.  By "conflicting" judgements we include judgements which are contradictory, though they may not be pronounced on the same cause of action.  It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.  (emphasis added)

    [95] Port of Melbourne Authority v Anshun Pty Ltd 603 - 604.

20. For the following reasons, I do not accept that the plaintiffs should be prevented from seeking the relief in pars 5 to 7 of the amended originating process on the basis of Anshun estoppel. 

21. First, it is important to stress that while Mr Kitay has commenced these proceedings, the defendants raised the issues in the proceedings before Colvin J (as well as in the proceedings before Charlesworth J).  In this regard, it cannot be said that the plaintiffs split their claims between the two proceedings and were required to raise them in the proceedings before Colvin J.

22. Second, the proceedings before Colvin J concerned a petition for sequestration of the defendants' estates.  In opposing the petition, the defendants raised for determination the validity of the Second HSF Costs Agreement.  It was not necessary for the court to consider the separate question of the validity of various retainers in reaching its decision.  Nor, in my view, can it be said that it was unreasonable for the defendants not to raise these matters for determination.

23. Third, while I accept that the plaintiffs seek relief in relation to a number of different costs agreements and retainers in these proceedings, I do not consider that determining whether the plaintiffs are entitled to the relief sought will have the effect of declaring rights which are inconsistent in respect of the same transaction.

24. Given these reasons, I do not consider it would be in the interests of justice for the defendants to have leave to re-open to raise these issues and leave should be refused.

Conclusion and orders

1. For these reasons:

   (a)the plaintiff's application for summary judgment in relation to [2], [3], [4], and [5] of the defendants' interlocutory process is allowed and these paragraphs should be struck out;

   (b)the defendants' application for discovery is refused;

   (c)the defendants' application for leave to issue a subpoena to Lit-One Pty Ltd is refused;

   (d)in respect of the defendants' application for summary judgment, the defendants' have leave to re-open their application for summary judgment in relation to the Second HSF Costs Agreement but that leave should otherwise be refused;

   (e)my preliminary view is that the following should be struck out of the amended originating process:

   (i)[5(a)];

   (ii)in [6], the words 'the Second HSF Costs Agreement and/or', 'the Second HSF Costs Agreement is approved' effective as and from 29 October 2013 and';

   (iii)in [7], the words 'neither the entry by the Liquidator into the Second HSF Costs Agreement, nor the Second HSF Costs Agreement itself and', and 'the Second HSF Costs Agreement or';

   (iv)the word 'not' be inserted between 'are' and 'invalid' in [7],

   but will hear from the parties before making formal orders; and

   (f)the defendants' application for summary judgment should otherwise be dismissed.

2. I will hear from the parties as what other orders should be made to reflect these reasons and as to the costs of the applications.

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

FD
Associate to the Honourable Justice Hill

30 AUGUST 2022

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION: KITAY -v- FRIGGER [2022] WASC 284 (S)

CORAM:   HILL J

HEARD:   ON THE PAPERS

DELIVERED          :   4 OCTOBER 2022

PUBLISHED           :   4 OCTOBER 2022

FILE NO/S:   COR 131 of 2021

BETWEEN:   MERVYN JONATHAN KITAY

First Plaintiff

COMPUTER ACCOUNTING AND TAX PTY LTD (IN LIQUIDATION)

Second Plaintiff

AND

ANGELA CECELIA THERESA FRIGGER

First Defendant

HARMUT HUBERT JOSEF FRIGGER

Second Defendant

Catchwords:

Practice and procedure – Application for leave to amend originating process – Whether amendments reflect previous reasons for decision – Whether amendments are statute barred – Turns on own facts

Legislation:

Limitation Act 2005 (WA)

Result:

Application for leave granted

Category:    B

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Herbert Smith Freehills
Second Plaintiff	:	Herbert Smith Freehills
First Defendant	:	In person
Second Defendant	:	In person

Case(s) referred to in decision(s):

Kitay v Frigger [2022] WASC 284

Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2021] WASC 356

HILL J:

1. On 30 August 2022, I delivered reasons for decision on a series of interlocutory applications in this matter.[96]  Following delivery of my reasons for decision, the plaintiffs sought leave to further amend their originating process in terms of a further amended originating process dated 8 September 2022. 

   [96] Kitay v Frigger [2022] WASC 284.  In this decision I adopt the abbreviations contained in that judgment.

2. Given the minute was filed only shortly prior to the directions hearing on 9 September 2022, on that date, I made programming orders for the parties to file submissions on the application for leave.

3. The proposed amendments address four matters.  First, amendments which arise from the reasons for decision.  Second, movement of the relief sought in respect of what are referred to as the Confidentiality Orders, being the orders of Acting Master Chapman of 17 January 2012.  Third, the insertion of a new par 4A concerning an alleged retainer by the second plaintiff of HSF in relation to the orders made by Master Sanderson on 22 November 2016 in COR 2 of 2010.  Fourth, consequential amendments to [6] and [7] of the originating process.  It is primarily the second and third of these amendments that require determination.

4. The application for leave to amend the originating process is opposed by the defendants.

5. Both parties have filed submissions in support of the position for which they contend.

Relocation of relief in relation to the Confidentiality Order

1. This issue arises as a result of [199] of my primary reasons for decision.  At the hearing of the defendants' application to reopen their application for summary judgment, the defendants drew attention to the fact that there was an apparent duplication in between two paragraphs in the originating process, namely [2(b)(4)] and [5(b)(1)].  I accepted that this appeared to be the case and that, while it was not a matter for strike out or summary judgment, the matter needed to be clarified prior to the hearing of the originating process.

2. The plaintiffs submit that their proposed amendment to add a new [2(b)(4)(i)] and delete [5(b)(1)] is to remove any duplication between [2(b)(4)] and [5(b)(1)] of the originating process.

3. The defendants oppose the application on the basis that no separate instructions were given in relation to Confidentiality Orders and the proposed amendments will only increase the costs of the application.  The defendants also contend that the statute of limitations apply to the orders sought by the plaintiff and that it is not now open to the plaintiffs to seek orders in these terms.

4. In my view, for the following reasons, it is appropriate to grant leave to the plaintiffs to amend the originating process in terms of [2(b)(4)(i)].  First, in my original reasons for decision, I noted that there appeared to be a duplication between two paragraphs of the originating summons and that this needed to be clarified prior to the final hearing.[97]  This is now done by the proposed amendment.  In this regard, I accept that the proposed amendment is consistent with my reasons for decision. 

   [97] Kitay v Frigger [199].

5. Second, while I accept that Mr Kitay's evidence is that the instructions to obtain orders for the approval to enter into the funding agreements included instructions to obtain the Confidentiality Order, it is the alleged breach of the Confidentiality Order that led to the instructions to obtain what is referred to in the originating summons as the Protection Orders.  I am not persuaded that there will be any significant time or costs involved in addressing the retainer to obtain the Confidentiality Orders separate to the instructions for approval to enter into the funding agreements if leave is granted in the terms sought.

6. In relation to the defendants' contention that the plaintiffs are statute barred from seeking this relief, I note from the outset that this was not a matter raised on the original application to strike out the originating process, nor on the application for leave to re-open.

7. The plaintiffs say that the Limitation Act 2005 (WA) (Limitation Act), which is a state Act, does not apply to these proceedings which seek declarations under the Act. In addition, they contend that even if the Limitation Act does apply, any cause of action did not accrue until 30 July 2017 at the earliest. The defendants say that any cause of action accrued on entry into each of the retainers or costs agreements.

8. The question as to whether an action seeking a declaration falls within the limitation periods set out in s 13 of the Limitation Act was considered by Tottle J in Wyloo Metals Pty Ltd v Quarry Park Pty Ltd.[98] His Honour relevantly held at [137] that a cause of action seeking declaratory relief is an action on a cause of action and is governed by the Limitation Act. That decision, however, dealt with an action seeking a declaration in respect of Western Australian legislation and not Commonwealth legislation. His Honour also held that a cause of action for declaratory relief arises once a justiciable controversy comes into existence and it accrues to the person who has a real interest in raising it.

   [98] Wyloo Metals Pty Ltd v Quarry Park Pty Ltd [2021] WASC 356.

9. In my view, both of the matters raised by the plaintiff are arguable and, accordingly, I do not consider this issue should be determined on a summary basis.  The defendants can raise any limitation issues at the final hearing of the matter and it can be determined at that stage on a proper consideration of all of the evidence that is admissible on the application.

Second Plaintiff's retention of HSF to the obtain the Protection Orders

1. This issue also arises from the primary reasons for decision.  At [185] of my reasons, I concluded that it would be an abuse of process to allow the plaintiffs to raise issues in respect of the Second HSF Costs Agreement that were the subject of the decision of Colvin J. 

1. It is clear from the reasons of decision of Colvin J that his Honour's decision concerned the enforceability of any costs agreement between CAT and HSF because of the failure to obtain leave under s 477(2B) of the Act. In his reasons for decision, his Honour does not consider or address the separate question as to whether CAT retained HSF to act for it in relation to the application, or whether the application was brought solely by Mr Kitay as liquidator for CAT. If, in fact, CAT did retain HSF to act for it (as opposed to enter into a costs agreement with HSF), this then raises the question as to whether approval to enter into the retainer was required under s 477(2B) of the Act.

2. For these reasons, I consider it is open for the plaintiffs to raise this issue at the hearing of the originating process and that to do so would not constitute an abuse of process. 

Conclusion

1. I will grant leave to the plaintiffs to amend their originating process in terms of the minute of the Further Amended Originating Process dated 8 September 2022.

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

FD
Associate to the Honourable Justice Hill

4 OCTOBER 2022