Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd (in Liquidation) (ACN 009 570 491) [No 6] - [2024] WASC 108

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD -v- COMPUTER ACCOUNTING AND TAX PTY LTD (IN LIQUIDATION) [No 6] [2024] WASC 108
CORAM:   LUNDBERG J
HEARD:   11 MAY 2023, 14 JUNE 2023 & 20 JULY 2023
DELIVERED          :   10 APRIL 2024
FILE NO/S:   COR 2 of 2010
BETWEEN:   PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Plaintiff
DONALD CAMPBELL-SMITH AS EXECUTOR OF THE ESTATE OF MARTIN BANNING
Second Plaintiff
AND
COMPUTER ACCOUNTING AND TAX PTY LTD (IN LIQUIDATION) (ACN 009 570 491)
Defendant

Catchwords:

Practice and procedure - Interlocutory process filed by interested parties seeking substantive and final relief against legal practitioner who represented liquidator of the defendant company - No originating process issued - Premise of claim is that the legal practitioner was a de facto or shadow officer of the defendant company

Practice and procedure - Interlocutory process filed by legal practitioner to dismiss the interested parties' interlocutory process or alternatively to seek security for costs - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 180, s 181, s 182, s 471C, s 1317H, s 1324

Rules of the Supreme Court 1971 (WA), O 2 r 1, O 8 r 11, O 25 r 3, O 36 r 7

Result:

Interested parties' interlocutory process dated 22 March 2023 (and filed on 23 March 2023) and the amended interlocutory process dated 14 July 2023 are dismissed with costs

Category: B

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
Defendant	:	B W Ashdown (11 May 2023 only)
First Interested-Party	:	In person
Second Interested Party	:	In person
Third Interested Party	:	In person
Fourth Interested Party	:	In person
Non-party	:	S F Popperwell

Solicitors:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
Defendant	:	Herbert Smith Freehills
First Interested-Party	:	In person (Angela Cecilia Frigger as trustee for the Frigger Super Fund)
Second Interested Party	:	In person (Angela Cecilia Frigger)
Third Interested Party	:	In person (Hartmut Hubert Josef Frigger as trustee for the Frigger Super Fund)
Fourth Interested Party	:	In person (Hartmut Hubert Josef Frigger)
Non-party	:	Popperwell & Co (for David John)

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

Australian Securities and Investments Commission v King [2020] HCA 4; (2020) 270 CLR 1
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166
Forbes v Computer Accounting and Tax Pty Ltd [2009] WASC 89
Forbes v Computer Accounting and Tax Pty Ltd [No 2] [2012] WASC 49
Frigger v Clavey Legal Pty Ltd [No 2] [2015] WASCA 258
Frigger v Computer Accounting and Tax Pty Ltd [2023] WASCA 152
Frigger v Kitay [2016] WASC 60
Frigger v Kitay [No 2] [2017] WASCA 139
Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3
Frigger v Trenfield [2021] FCA 792
Hartland v Firm Construction Pty Ltd (in liq) [2023] WASC 147
Hawksford v Hawksford [2006] NSWSC 1458
In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2023] WASC 90
Keesing v Adams [2010] NSWSC 366
Kitay, in the matter of Frigger [No 2] [2018] FCA 1032
McCracken v Phoenix Constructions (Qld) Pty Ltd [2012] QCA 129
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2009] WASCA 183
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Re JL Young Manufacturing Co Ltd [1990] 2 Ch 753
Shafron v Australian Securities and Investments Commission [2012] HCA 18; (2012) 247 CLR 465

Table of Contents

A. Introduction

B. The Interested Parties' interlocutory process

C. Mr John's responsive interlocutory process

D. A summary of the Interested Parties' claims

Preliminary

The role of the Registered Charge

The legal proceedings

Sale of the property and business

E. Procedural history

Hearing on 11 May 2023

Hearing on 14 June 2023

Hearing on 20 July 2023

F. Disposition

Fresh proceedings should have been commenced

Claims not reasonably arguable

Additional bases for dismissal

Security for costs

G. Conclusion and orders

ATTACHMENT A Rulings in relation to evidentiary objections

Objections to Ms De Koning's affidavit

Objections to Mrs Frigger's affidavit

LUNDBERG J:

A. Introduction

The present proceeding, COR 2 of 2010, was initially filed on 8 January 2010 and, quite remarkably, has been on foot in this Court for over 14 years.
The present reasons relate to the interlocutory process filed in more recent times by Mrs Angela Frigger and Mr Hartmut Frigger (who I will refer to in these reasons, where appropriate, as the Interested Parties). That interlocutory process sought final relief against a non‑party, namely Mr David John, a partner of Herbert Smith Freehills (HSF). The process, dated 22 March 2023 but filed on 23 March 2023, was heard by me on 11 May 2023, and on 14 June 2023, and finally on 20 July 2023. These hearings were conducted in the context of a responsive application brought by Mr John, who sought to challenge parts of the supporting affidavit material filed by the Interested Parties and to have the interlocutory process dismissed or, in the alternative, to have security for costs ordered.
The first plaintiff, Professional Services of Australia Pty Ltd, and the second plaintiff, Mr Campbell-Smith as the executor of the Estate of Martin Banning, initially commenced these proceedings in 2010 seeking relief to wind up the defendant company for non-compliance with a statutory demand, and on the just and equitable basis. The defendant company is Computer Accounting and Tax Pty Ltd (CAT). The plaintiffs also filed an interlocutory process for the appointment of a provisional liquidator.[1]
[1] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 [1] ‑ [4] (Simmonds J).
As matters transpired, Mr Mervyn Kitay was appointed as a provisional liquidator of CAT on 21 January 2010, and was appointed as liquidator of the company on 6 May 2010. CAT itself was ordered to be wound up. Mr Kitay engaged the law firm HSF to act as his legal adviser in the matter. The partner at HSF primarily responsible for providing legal services to Mr Kitay has been Mr John.
CAT had been the plaintiff in earlier proceedings in this Court, namely CIV 2265 of 2006, in which the present plaintiffs were the defendants. The Interested Parties were at all material times the directors and sole shareholders of CAT. Summarising matters as briefly as possible, that earlier litigation resulted in a successful award of damages in favour of CAT, which award was substantially reduced on appeal by the Court of Appeal.[2] The judgment sum having been paid to CAT, it was necessary for CAT to repay the amount by which the judgment was reduced.
[2] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2009] WASCA 183.
CAT failed to repay the amount.[3]
[3] Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 [1] - [7] (Simmonds J).
That failure, among other matters, has spawned a vast array of litigation and, out of convenience more than logic, the present proceeding has been the receptacle of all manner of interlocutory disputes since 2010, including the present dispute.
I should mention at the outset two matters of broad concern as to the way in which the Interested Parties have approached this litigation.
First, the Interested Parties had filed another interlocutory process in these proceedings (i.e. in COR 2 of 2010) not long before the present application was filed. I refer to the process filed on 28 October 2022, which sought orders against Mr Kitay rather than Mr John. That process was dealt with by Smith J in early 2023 and is the subject of her Honour's reasons in In the matter of Computer Accounting and Tax Pty Ltd [No 4].[4] An appeal to the Court of Appeal from that decision was dismissed in October 2023: Frigger v Computer Accounting and Tax Pty Ltd.[5]
[4] In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2023] WASC 90 (Smith J).
[5] Frigger v Computer Accounting and Tax Pty Ltd [2023] WASCA 152 (Mazza & Mitchell JJA).
Second, there is also an overlap between some of the allegations raised by the Interested Parties against Mr John and the allegations of a similar nature made against Mr Kitay in 2016, which were dealt with by Le Miere J and which were the subject of an unsuccessful appeal to the Court of Appeal.[6]
[6] Frigger v Kitay [2016] WASC 60 (Le Miere J); and Frigger v Kitay [No 2] [2017] WASCA 139.
There has been no explanation given by the Interested Parties as to why the resources of the Court (which it must be remembered are limited and intended to be available to all prospective litigants) have been used in this terribly inefficient manner, and why the present allegations or claims were not raised in the earlier proceedings.
It is an approach to civil litigation which is to be deprecated.

B. The Interested Parties' interlocutory process

The interlocutory process filed on 23 March 2023 states that it is made under ss 1317H and 1324 of the Corporations Act 2001 (Cth) (the CorporationsAct) and s 102 of the Legal Profession Act 2010 (WA),[7] for orders against Mr John, allegedly in his capacity as an 'officer' of CAT. The scope of the application is sought to be amended through a subsequently filed interlocutory process, as noted below. Mr John is identified as the third defendant to the interlocutory process, but he is not substantively a party to the primary proceeding. Mr John does not hold an appointment, and has never held any appointment, as a director or secretary of CAT.
[7] Presumably this is intended to be a reference to the Legal Profession Act 2008 (WA), which was in operation prior to 1 July 2022.
On 14 July 2023, after the first two hearings in the matter, the Interested Parties filed an amended interlocutory process, without leave. As explained below, the amendments appear designed to remedy the substantive deficiencies in the originally filed document, by introducing matters concerned with a particular registered charge (being No. 1870823), by expressly asserting that Mr John was a de facto or shadow officer or liquidator of CAT (rather than simply an 'officer'), by abandoning reliance on the statute regulating legal practitioners, and by expressly inviting the court to treat the interlocutory process as if it were an originating process brought by the interested parties as plaintiffs against Mr John as a defendant and that 'a new file number be allocated'.
The amended interlocutory process includes the following details of the application:
This application is made under sections 180, 181, 182, 471C, 1317H and 1324 Corporations Act 2001, Section 20 Personal Properties Securities Act 2009 ~~102 Legal Profession Act 2010~~ and Registered Charge No. 1870823 for orders against David William John as officer and defacto/shadow liquidator of Computer Accounting & Tax Pty Ltd (in liquidation) (ACN 009470491) (CAT).[8]
[8] Presumably this is intended to be a reference to the Personal Property Securities Act 2009 (Cth).
The amended interlocutory process relevantly seeks the following relief:
1. Pursuant to O 2 r 1(3) RSC, if necessary, order this Interlocutory Process be treated as if it were an Originating Process brought by the Interested Parties as Plaintiffs against David William John as Defendants and a new file number be allocated. ~~This Interlocutory Process be heard concurrently with Amended Interlocutory Process dated 6 December 2022 filed in this proceeding~~.
2. ~~Pursuant to s 471B Corporations Act 2001 the Interested Parties have leave to commence this claim for and on behalf of CAT.~~
3. Pursuant to s 1324(1) Corporations Act 2001 an order that David William John, a certificated legal practitioner in the State of Western Australia, be and is hereby restrained from representing ~~acting as officer of~~ CAT in legal proceedings being choses in action secured by Registered Charge No. 1870823.
4. Pursuant to section 1324(1) Corporations Act 2001 ~~alternatively section 102(5) Legal Profession Act 2010~~, David William John, as officer and defacto/shadow liquidator of CAT, is not entitled to recover any costs in the following legal proceedings:
(a)Supreme Court of WA CIV 2765/2010
(b)~~Federal Court WAD 428/2016~~
(c)~~Federal Court WAD 616/2017~~
(d)COR2/2010 - Interlocutory Process dated 5 January 2012
(e)COR2/2010 - Interlocutory Process dated November 2013
(f) COR2/2010 - Interlocutory Process dated November 2019
(g)LPA 36/2008
(h)Magistrates Court PER/GLM7493/2009 [sic - 2493/2009]
(i) Supreme Court of WA CIV 2265/2006
5. Pursuant to section 1317H Corporations Act 2001 ~~alternatively s 102(6) Legal Profession Act 2010~~ David William John, as officer and defacto/shadow liquidator of CAT, ~~compensate and/or re~~pay Second and Fourth Interested Parties ~~CAT~~ the amounts paid to him out of CAT's liquidation bank account of $71,440.00 being a chose in action secured by Registered Charge No. 1870823.
6. Pursuant to sections 1317H and/or 1324(10) Corporations Act 2001 David William John, as officer and defacto/shadow liquidator of CAT, pay compensation to ~~CAT~~ Second and Fourth Interested Parties for losses ~~incurred~~ in the following legal proceedings being a chose in action secured by Registered Charge No. 1870823:
(a)LPA 36/2008 being a solicitor-client taxation between CAT and Bowen Buchbinder Vilensky in the sum of $135,000 plus interest from 1 July 2006;
(b)Magistrates Court PER 2493/2009 in the sum of $44,925.67 plus interest from 7 August 2009
(c)CIV 1716/2008 Forbes party-party taxation $15,000 plus interest from 25 August 2009 [sic - CIV 1216 of 2009]
(d)CIV 2265/2006 CAT's bill of costs filed on 2 June 2009 $701,598.67 plus interest from 9 July 2008
7. Pursuant to s 1324(10) Corporations Act 2001 an order that David William John ~~is jointly and severally liable with Mervyn Jonathan Kitay to~~ pay First and Third Interested Parties damages on loss of opportunity to earn capital increases and income from 11 February 2016 until judgment to be calculated at the annual rates of capital increases and income earned by the Frigger Super Fund:
(a) Sale proceeds of 269 South Western Highway Armadale of $1,178,275.47
(b) Service station business sale proceeds contributed to the Frigger Super Fund on 11 February 2016 of $1,463,000.00
The amended interlocutory process thus removed the relief which had been sought against Mr Kitay.[9] The amended interlocutory process also significantly modified the nature of the intended claims, abandoning the application for leave under s 471B of the Corporations Act to commence these proceedings for and on behalf of CAT,[10] and structuring the relief as claims for the benefit of the Interested Parties rather than CAT.
[9] Amended interlocutory process dated 14 July 2023, [7].
[10] Amended interlocutory process dated 14 July 2023, [2].
In support of the amended interlocutory process, the Interested Parties rely on several affidavits. The affidavits are an affidavit of Mrs Frigger sworn 22 March 2023 (which contains Attachments AF48 to AF55), an affidavit of Mrs Frigger sworn 13 June 2023 (which contains Attachments AF56 to AF61), and an earlier affidavit filed in the primary proceedings, being the affidavit of Mrs Frigger sworn 16 January 2017 (which contains Attachments AF1 to AF40), and which is Folio 108 on the court file.

C. Mr John's responsive interlocutory process

The foregoing application was met with an interlocutory process filed on behalf of Mr John, dated 19 May 2023. By his interlocutory process, Mr John seeks orders:
(a) striking out portions of the affidavit of Mrs Frigger sworn on 23 March 2023;
(b)dismissing the interlocutory process filed by the Interested Parties on the grounds that:
(i)the relief sought is final relief and should be sought by commencing an originating process;
(ii)further or alternative, the applicants have failed to seek leave to commence the process in which they seek relief on causes of action allegedly the property of CAT further, or alternatively, if leave were sought, it would be refused;
(iii)further, or alternatively, the affidavit filed in support of the interlocutory process fails to disclose any cause of action;
(c)in the alternative to paragraph (b), orders that the Interested Parties provide security for Mr John's costs of defending the interlocutory process in the amount of $20,000 by payment of that sum into Court within 21 days of the making of this order.
In support of Mr John's interlocutory process, two affidavits were filed, namely an affidavit of Olivia Carey De Koning sworn 18 May 2023 (which contains Attachment ODK1 to ODK33), and an affidavit of Sean Francis Popperwell sworn 19 May 2023 with Attachment SFP1, which is a draft bill of costs.

D. A summary of the Interested Parties' claims

Preliminary

It is immediately apparent that the attempt by the Interested Parties to pursue injunction and compensation remedies against Mr John, of a final nature, through the filing of an interlocutory process in this particular, long-running proceeding, is highly unorthodox and plainly not in compliance with the rules which govern the usual procedure of this Court. I refer in this regard to the procedures established in both the Rules of the Supreme Court 1971 (WA) and the Supreme Court (Corporations) Rules (WA) 2004 (WA) for commencing fresh proceedings by filing originating documents. This is, in effect, the first plank of the argument raised by Mr John as to why the Interested Parties' new process should be dismissed. Before I address these arguments, let me explain my understanding of the Interested Parties' claims.
The essence of the Interested Parties' claims appears to be a complaint as to how several legal proceedings were dealt with by Mr John, and how the sale of a property and business in Armadale was dealt with by him. It is asserted that Mr John acted as a de facto or shadow officer or liquidator of CAT in engaging in this conduct, although the precise conduct on the part of Mr John is not clear, such that it is said to give rise to a recognised claim on the part of the Interested Parties against him.
It appears to be suggested by the Interested Parties that Mr John has breached the duties in s 180 (care and diligence), s 181 (good faith) and s 182 (misuse of position) of the Corporations Act (which are all civil penalty provisions for the purposes of s 1317E), although (again) precisely how this is to be asserted is unclear.
It is further suggested that CAT has a claim against Mr John for compensation under s 1317H of the Corporations Act and further claims for remedies under s 1324(1) and s 1324(10) of the Corporation Act. This includes orders restraining Mr John from representing CAT (albeit in respect of legal proceedings now concluded), from being entitled to recover legal costs in the identified proceedings, to pay amounts to the Interested Parties held by CAT, and to pay unspecified compensation and damages for lost opportunity to the Interested Parties.[11]
[11] Amended interlocutory process dated 14 July 2023, [1] - [7].
Building on the foregoing, but without identifying any specific legal authority in support thereof, the Interested Parties submitted that CAT was not a client of Mr John as defined by the applicable professional legislation and by reason of the 'absence of a retainer' argument, as that argument was developed by the Interested Parties. As the legislation did not govern the relationship between Mr John and CAT, then it must follow, according to the Interested Parties, that Mr John has been acting as an in-house counsel and as an officer of CAT.[12] This argument is, at best, ambitious.

The role of the Registered Charge

[12] Interested Parties' submissions (undated), [20].

As counsel for Mr John noted, the gateway to the personal action against Mr John appears to be the exercise of rights by the Interested Parties under the identified charge (being Registered Charge No. 1870823), to realise assets of the charge.[13] Indeed, the foundations of the Interested Parties' claims were described in a similar fashion in the written submissions they filed ahead of the final hearing before me.
[13] ts 1083.
The Interested Parties submit that, pursuant to s 471C of the Corporations Act and the terms of the Registered Charge, they have a right to realise or otherwise deal with the security interests, including taking proceedings at law in respect of those security interests.[14] Further, it was submitted, where those security interests have been destroyed by a person who has acted as an officer or de facto liquidator of CAT, the cause of action is against the person who so acted.[15]
[14] Interested Parties' submissions (undated), [19].
[15] Interested Parties' submissions (undated), [19].
A copy of the Deed of Charge (Deed) was before me on the application, being an instrument between CAT on the one hand, and Mr Frigger and Mrs Frigger on the other, with Mr and Mrs Frigger described therein as grantees. The Deed is dated 10 September 2009.
By the terms of cl 3 of the Deed, the grantor (being CAT), as beneficial owner charged the 'Mortgaged Property' to and in favour of the grantees. The Deed defines the concept of 'Mortgaged Property' in the Schedule, by reference to three matters: (1) judgment sums, interest, legal costs and enforcement costs in several legal proceedings; (2) a particular term deposit; and (3) units in the Becton Office Fund. The description of the first of these matters is in the following express terms:
All of the judgment sums pre-judgment and post-judgment interest legal costs enforcement costs owing and payable to the Grantor in legal proceedings Supreme Court CIV2265/06, CACV76/2008, LPA36/2008 and related proceedings and Magistrates Court GCLM11299/2009 and GCLM7493/2009 and related proceedings.
Notably, the defined property does not extend to claims against Mr John (or HSF) arising from the conduct of these particular legal proceedings.

The legal proceedings

Let me now address the legal proceedings which have been identified by the Interested Parties as being relevant to their present claims. In addition to certain interlocutory processes in COR 2 of 2010, the other legal proceedings are summarised below.
First, reference is made by the Interested Parties to proceedings designated as LPA 36 of 2008 which were commenced in this Court, and which was a solicitor/client taxation between CAT and its former solicitors (Bowen Buchbinder Vilensky).[16] It appears that the Interested Parties level a complaint at Mr John that he failed to appear at the final hearing of the taxation, and/or that he (or Mr Kitay) refused to allow Mrs Frigger to represent CAT in the taxation. Mr John's counsel has drawn the Court's attention to the similarity between this allegation and the allegation directed at Mr Kitay in CIV 1606 of 2015 which was the subject of reasons published in 2016 by Le Miere J: Frigger v Kitay.[17] His Honour concluded that the allegations against Mr Kitay had no reasonable prospect of success and should be struck out.[18]
[16] This proceeding is also referred to in CACV 45 of 2016 and Frigger v Kitay [No 2] [2017] WASCA 139.
[17] Frigger v Kitay [2016] WASC 60 (Le Miere J).
[18] Frigger v Kitay [2016] WASC 60 [41] (Le Miere J).
Second, reference is made to proceedings designated as PER GCLM 2493/2009 which were commenced in the Magistrates Court, and which was a claim by CAT against its solicitors (Vogt Graham), being the legal firm that represented CAT in LPA 36 of 2008. Le Miere J similarly concluded this allegation, against Mr Kitay, had no reasonable prospect of success and should be struck out.[19]
[19] Frigger v Kitay [2016] WASC 60 [42] (Le Miere J).
Third, reference is made to proceedings designated as CIV 1216 of 2009 which were commenced in this Court, and which concerned an application by Mr Forbes for leave to be released from his implied undertaking in respect of a document. A costs order was made in his favour and a taxation hearing followed. There was an attempt to file an application for review of the taxation by Mrs Frigger, but leave to do that was refused by Le Miere J.[20] On the available material, there appears to have been no formal application for a review of that taxation in respect of which Mr John had any role to play.[21]
[20] This proceeding is the subject of decisions by Le Miere J in Forbes v Computer Accounting and Tax Pty Ltd [2009] WASC 89 and Forbes v Computer Accounting and Tax Pty Ltd[No 2][2012] WASC 49.
[21] Mr John's submissions dated 7 June 2023, [22].
Fourth, reference is made to proceedings designated as CIV 2265 of 2006 which were commenced in this Court, and which concerned an alleged entitlement to a costs orders in favour of CAT.[22] I accept that the record of proceedings before this Court shows that the bill of costs highlighted by the Interested Parties (being Attachment AF53) is otiose and that Mr John had no role to play in prosecuting the order which was the basis for the bill of costs identified by the Interested Parties.[23]

Sale of the property and business

[22] This proceeding is the subject of a decision by Simmonds J in Computer Accounting and Tax Pty Ltdv Professional Services of Australia Pty Ltd [No 8][2015] WASC 166.

[23] Mr John's submissions dated 7 June 2023, [24] and [26].

The breadth of the Interested Parties' new claims can be seen in the contention by the Interested Parties that Mr John should be ordered to pay them, pursuant to s 1324(10) of the Corporations Act, damages for the lost opportunity on the part of the Frigger Super Fund to earn capital increases and income from 11 February 2016.[24] I understand the Interested Parties assert they are the trustees of the Frigger Super Fund, which is a self-managed super fund.
[24] Amended interlocutory process dated 14 July 2023, [7].
The lost capital and income is said to relate to sale of the property in Armadale and the service station business sale proceeds contributed to the Frigger Super Fund. It is unclear whether this claim is founded on a contention that Mr John breached some obligation owed to CAT in contravention of the Corporations Act, or otherwise.
I frankly cannot discern from the materials relied upon by the Interested Parties, any act or omission on the part of Mr John relating to these sales which is said to give rise to any arguable relief in this regard.

E. Procedural history

Hearing on 11 May 2023

The competing applications were first listed for directions on 11 May 2023, at a hearing which consumed approximately 1 hour of court time. Mr and Mrs Frigger appeared in person on that occasion (and at the hearings thereafter). Mr Ashdown appeared for the defendant, and Mr Popperwell appeared for Mr John. Mr and Mrs Frigger raised objections to the appearances by counsel for the defendants and for Mr John.
As Mr Ashdown and Mr Popperwell both explained at that hearing, the interlocutory process filed by the Interested Parties was somewhat unusual. Indeed, one would ordinarily have expected an application for relief against a new party (that is, as against Mr John) to have been commenced by a writ of summons, an originating process, an originating motion or an originating summons.[25] The interlocutory process appeared, at least initially, to be an endeavour by the Interested Parties to bring some form of a derivative action in their trustee capacity over CAT for relief against Mr John.
[25] ts 963.
In response, Mrs Frigger explained her position as follows:[26]
I don't think there is anything wrong in the way we have commenced this proceeding. The only reason why I asked for it to be joined to the other interlocutory process, which was before Smith J, was because there is a common claim in relation to conduct of Mr John in relation to assets that we - for instance, are the same proceeds of our business, which we sold in February 2016. And so, all of this is brought in our own personal capacity as secured creditors and I think that an interlocutory process for issues that we raise in relation to the liquidation of our company is probably [sic - properly] brought in the proceeding in which these matters have occurred in the liquidation itself of our company and, in those circumstances, I think that the court should accept - well, the filing has happened, but your Honour, as the presiding judge, should accept that the matter can proceed as an interlocutory hearing for final relief.
[26] ts 965.
In resolving the objections as to appearances, I noted that Mr John was not a defendant to the proceeding but was named in the interlocutory process filed by the Interested Parties, and that orders were being sought that would impact Mr John and Mr Kitay. I accordingly formed the view that it would be highly unusual if I refused their respective counsel a right of audience to appear at the hearing. I thus permitted them leave to appear.
Counsel for Mr John thereafter foreshadowed at the hearing on 11 May 2023 that he wished to move to strike out portions of the supporting affidavit of Mrs Frigger sworn 23 March 2023 and to seek security for Mr John's costs in resisting the relief.[27] The matter was duly programmed to a hearing on 14 June 2023,[28] with the court noting that Mr Ashdown be excused from further attendance, unless relief was sought directly against his client. As already noted, no relief was ultimately pursued against Mr Kitay following the amendments sought to be made by the Interested Parties through the amended interlocutory process.
[27] ts 973 - 978.
[28] Orders made 11 May 2023.
On 19 May 2023, Mr John filed an interlocutory process in the proceeding, which sought not only to strike out paragraphs of the supporting affidavit of Mr Frigger and security for costs, but also sought orders that the interlocutory process filed by Mr and Mrs Frigger be dismissed.[29]

Hearing on 14 June 2023

[29] Interlocutory process dated 19 May 2023, [2].

At the hearing on 14 June 2023, Mrs Frigger raised an objection to the Court then hearing the portion of Mr John's application which sought to dismiss her interlocutory application.[30] That issue was resolved by adjourning the matter part-heard (albeit after some 2 ½ hours of hearing) to allow further submissions to be made at a resumed hearing. The parties were also given the opportunity to file additional submissions or affidavits.[31]

Hearing on 20 July 2023

[30] ts 999, 1012, 1057.

[31] Orders made 14 June 2023.

The competing applications returned before me on 20 July 2023, for a further hearing of some 2 ½ hours. In advance of the hearing, Mrs Frigger filed the amended interlocutory process dated 14 July 2023 which I have referred to above. The parties filed detailed written submissions ahead of the hearing.[32] I reserved my decision at the conclusion of the hearing.
[32] Interested Parties' submissions (undated) and Mr John's submissions dated 7 June 2023.

F. Disposition

Having now given the matter some consideration, I am of the view that the Interested Parties' interlocutory process dated 22 March 2023 (which was filed on 23 March 2023) and the amended interlocutory process dated 14 July 2023 must now both be dismissed. It follows that leave to amend the interlocutory process as sought by the Interested Parties must also be declined.
The Interested Parties must pay the costs of Mr Kitay and Mr John in responding to and resisting the interlocutory application (including Mr John's costs of his interlocutory application dated 19 May 2023).
Had it been necessary to consider the alternative application for security for costs, I would have been disposed to grant that application as well.
My reasoning process for reaching these conclusions is set out below. Additionally, I have outlined in Attachment A to these reasons my rulings on the objections to the affidavits which were raised at the hearing.

Fresh proceedings should have been commenced

The first basis upon which the Interested Parties' interlocutory process should be dismissed is that it is impermissible for a party to seek substantive and final relief through the device of filing an interlocutory process, particularly where the persons claiming the benefit of the relief are not named in the proceeding as plaintiffs and where the person against whom the relief is sought is not named in the proceeding as a defendant.
In the present case, the substantive proceeding on foot is COR 2 of 2010, in respect of which Mr and Mrs Frigger have, over time, become identified as the Interested Parties thereto. The plaintiffs to the proceeding are Professional Services of Australia Pty Ltd and Mr Campbell-Smith. Neither of those plaintiffs seeks any relief through the latest interlocutory process filed by the Interested Parties. Further, Mr John is not a party to the proceeding in any way. There has been no formal application to join him as a party.
The Interested Parties attempt to overcome this obvious difficulty by seeking orders pursuant to O 2 r 1(3) RSC, and further to ask the Court that a new file number be allocated to the matter. Order 2 r 1(3) RSC provides that:
(3)The Court shall not wholly set aside any proceedings or the writ or other originating process by which they were begun on the ground that the proceedings were required by any of these rules to be begun by an originating process other than the one employed.
As the terms of the rule make clear, it does not operate to permit an 'interlocutory process' to be converted into an originating process. There are long standing, sounds reasons why fresh, final relief against a person or entity should be sought by filing an originating document with the court. This is not a matter of mere insistence of form or procedure over substance. Rather, it ensures the intended parties to the proceeding are clearly identified. It allows the parties and the Court to assess whether the jurisdiction of the Court has been properly invoked, including through proper, personal service on the identified parties. It also allows the parties and the Court to properly assess whether any applicable limitation periods have expired. Fundamentally, it ensures there is procedural fairness for all parties involved (and affected) by the proceedings.
The Interested Parties also rely upon s 467A of the Corporations Act in support of a submission that an application must not be dismissed merely because of a defect or irregularity in connection with the application, citing Hartland v Firm Construction Pty Ltd (in liq).[33] As Acting Master McDonald correctly noted in that decision, s 467A applies to applications made under pt 5.4 or pt 5.4A of the Corporations Act.
[33] Hartland v Firm Construction Pty Ltd (in liq) [2023] WASC 147.
There are at least two answers to the Interested Parties' submission.
The first is that the current application against Mr John is not an application caught by s 467A. That is, it cannot be regarded as an application under either part of the Corporations Act referred to in s 467A. It is properly characterised as an interlocutory process seeking damages and relief in reliance on, primarily, ss 180, 181, 182 and 1324 of the Corporations Act.
The second answer is found in the chausette to s 467A, which excludes the operative effect of the provision if the Court is satisfied that 'substantial injustice' has been caused that cannot otherwise be remedied (for example, by an adjournment or an order for costs). I am satisfied that substantial injustice would arise if the interlocutory process was permitted to stand as the vehicle for a substantive action against Mr John. I say this largely because the proposed proceeding seeks substantial damages against him, arising from a broad set of circumstances including multiple historical legal proceedings, and yet denies to Mr John the usual protections and processes afforded to a defendant facing such an action. There is no countervailing factor in favour of permitting this course of action, in my view. The course of action proposed by the Interested Parties will give rise to substantial deficiencies in the proceedings, well beyond the intended curative scope of s 467A. I therefore do not consider s 467A assists the Interested Parties.
Fundamentally, there is no good reason, other than their own convenience, for the Interested Parties to have commenced the proposed claims against Mr John by filing an interlocutory process rather than a substantive writ or originating process. There is no suggestion of inadvertence or mistake on their part.
The disregard for the rules of the Court exhibited by the present interlocutory process should not be tolerated simply on the basis that the Interested Parties are unrepresented. While the Court must allow for some flexibility where unrepresented litigants are concerned, that does not extend to a disregard of established procedures to the potential, significant detriment of the opposing parties.
In any event, the Interested Parties are prolific litigators in both this Court and other courts, with considerable experience in navigating the litigation processes. Mrs Frigger demonstrated during the hearings on this matter that she was generally familiar with the rules of the Court and the typical processes to which litigants must adhere. Mrs Frigger is also a person who professes to have a considerable degree of business and professional acumen, having regard to the qualifications and experience to which she has deposed in her affidavit.[34]
[34] Mrs Frigger has deposed that: she holds a Bachelor's Degree with a double major in accounting and law from WAIT (which is now Curtin University); she has worked as a public accountant with Price Waterhouse (as it then was) and while there she acted as an insolvency accountant under Mr Geoff Totterdell; she has worked at five different public accounting firms in Perth, Melbourne and Frankfurt; she has worked as an accountant with Dow Chemicals; she was employed by the Western Australian government as a business adviser in the Small Business Development Corporation; and she has operated her own public accounting practice in Perth from 1997 until 2010: see affidavit of Mrs Frigger sworn 13 June 2023 [3] - [4].
Put simply, Mrs Frigger is no ordinary unrepresented litigant. Rather, Mrs Frigger is a relatively experienced user of the services of this Court and, I infer, would be well aware of the need to commence claims such as the present by filing fresh proceedings, rather than through an interlocutory document.
Nor do the goal and objects in O 1 r 4A RSC and O 1 r 4B RSC provide a basis to interpret and apply the rules to facilitate the approach sought by the Interested Parties. Indeed, it would be counter to the objects in O 1 r 4B RSC to do so because the parties and the Court would then face a convoluted proceeding without any defined boundaries or limits, extending to the conduct of at least four other legal proceedings and the conduct of a sale transaction undertaken many years ago. It would be a 'procedural morass' to quote White J in a case involving a similar procedural setting: Hawksford v Hawksford.[35]
[35] Hawksford v Hawksford [2006] NSWSC 1458 [19] (White J).
I consider it would be highly prejudicial to Mr John and extremely inefficient to permit the interlocutory process to travel forward as an originating process. The interlocutory process should be dismissed on this basis. However, if I am wrong in this regard, I have nonetheless also given consideration to whether the claims as articulated are reasonably arguable, to which I now turn.

Claims not reasonably arguable

Even if the interlocutory process might somehow be treated by the Court as an originating document, and the proceeding allowed to continue on that basis, perhaps by requiring a statement of claim to be filed, I am comfortably satisfied that the materials disclosed by the Interested Parties in their interlocutory process, supporting affidavits and submissions, demonstrate no arguable basis for the relief which is sought.
In saying this, I recognise that the bar to dismiss a proceeding on an interlocutory basis as disclosing no reasonably arguable case is high, and the Court should be reluctant to reach such a conclusion at an early stage of the proceeding. However, there are some difficulties which must squarely be faced by the Interested Parties in seeking to advance these claims, in the present form.
These difficulties are insurmountable, in my respectful opinion.
The first insurmountable difficulty arises because the claims are brought against a person who was acting as an external legal adviser for the company in question, and yet the Interested Parties seek to cast him as a de facto or shadow officer (or liquidator) of the company. The premise of this claim is that there is said to be an absence of any written variation to the costs agreement between Mr Kitay (as the liquidator of CAT) and HSF. The Interested Parties contend that this denies Mr John any authority to appear in proceedings for CAT (such as the proceedings which have been identified in the interlocutory process) and the absence of authority means that in providing legal services for CAT he was therefore acting as an officer of CAT.
As noted by Mr John's counsel, the premise of the argument is that the costs agreement is itself the sole source of HSF's authority to provide legal services to CAT on Mr Kitay's instructions. No authority was cited in support of that contention. It is wrong in law, in my view. The absence of a costs agreement does not deprive a client from the capacity to authorise a legal practitioner to act on their behalf in proceedings, in the same way that the absence of a costs agreement does not necessarily mean that a lawyer is deprived of a reward for the service provided.[36]
[36] Keesing v Adams [2010] NSWSC 366 [30].
The Interested Parties' submission concerning the absence of a retainer (because of the absence of a variation to the costs agreement) has echoes of a similar contention advanced by Mrs Frigger in the interlocutory process filed in October 2022 against Mr Kitay which I have earlier mentioned. That similar contention was rejected at first instance and by the Court of Appeal in an interlocutory dispute heard in (and on appeal from) the current proceeding: Frigger v Computer Accounting & Tax Pty Ltd.[37]
[37] Frigger v Computer Accounting & Tax Pty Ltd [2023] WASCA 152 [30], [37], [39] and [40] (Mazza and Mitchell JJA), being an appeal against a decision of Smith J in the current proceeding, COR 2 of 2010.
Accordingly, in my view, the foregoing 'retainer' argument is, of itself, inadequate to ground the claim against Mr John.
It is thus necessary for the Interested Parties to identify a proper factual basis for the contention that Mr John was an officer of CAT, within the meaning of that term in s 9 of the Corporations Act. As is made clear by the High Court in Australian Securities and Investments Commissionv King,[38] it would be necessary for the Interested Parties to specifically identify some conduct on the part of Mr John or Mr Kitay which indicates that Mr John was the decision maker on behalf of CAT, rather than Mr Kitay.
[38] Australian Securities and Investments Commissionv King [2020] HCA 4; (2020) 270 CLR 1.
The High Court was concerned in Australian Securities and Investments Commissionv King with a person (Mr King) who was the chief executive officer and an executive director of a particular corporation, and who had ceased at a certain point in time to formally hold an appointment as director. It was nonetheless contended by ASIC at trial that Mr King remained an officer of the corporation by virtue of para (b)(ii) of the definition of 'officer of a corporation' in s 9 of the Corporations Act, being 'a person … who has the capacity to affect significantly the corporation's financial standing'.
The definition of 'officer of a corporation' relevantly provides:
officer of a corporation means:
(a)a director or secretary of the corporation; or
(b)a person:
(i)who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(ii)who has the capacity to affect significantly the corporation's financial standing; or
(iii)in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation); …(emphasis added)
ASIC had argued that Mr King was a person who had this particular capacity (in par (b)(ii)) because he was the CEO and an executive director with overall responsibility for the corporation as a member of the corporate group. Further, another person who was the deputy CEO of an entity in the group and an executive director of the particular corporation in question, had reported directly and frequently to Mr King in the performance of that role, and customarily acted in accordance with Mr King's instructions and wishes.
The High Court allowed ASIC's appeal, accepting that the facts and circumstances described compelled the conclusion that Mr King was a person who had the capacity to significantly affect the financial standing of the corporate entity in question.[39] The question was not whether Mr King held a named office within the company. It was fundamentally a fact specific analysis.
[39] Australian Securities and Investments Commissionv King [67] (Kiefel CJ, Gageler and Keane JJ) and [186] (Nettle and Gordon JJ).
As to the position with respect to advisers and consultants to a company, which is highly relevant for present purposes, the High Court observed as follows, emphasising the role of the parenthetical exclusion in par (b)(iii) of the definition:[40]
[40]Section 179(2) of the Act notes that s 9 defines both 'director' and 'officer' and states that '[o]fficer includes, as well as directors and secretaries, some other people who manage the corporation or its property (such as receivers and liquidators)'. Section 179(2) confirms that the definition of 'officer' in s 9 is intended to capture those managing the corporation or its property, as distinct from those who are able to affect the corporation by the exercise of rights as a counterparty to a transaction involving the corporation. Thus, para (b)(ii) 'does not refer to a person who has [the relevant] capacity as a third party but is not involved in the management of the corporation's affairs'.
[41]It may happen, of course, that a person who has legal rights against a corporation as a counterparty to a particular transaction or particular transactions is able to inveigle himself or herself into the decision‑making processes of the corporation by means of the mere threat of the exercise of those rights. In such a case, that person may fall within either or both of para (b)(i) or (ii) of the definition. But that depends on the facts of the case as to the nature and extent of the counterparty's control of, or capacity to control, the corporation's decision‑making qua management; it does not depend on the counterparty's legal rights.
[42]In addition, although advisors and consultants may give advice which, if implemented, can significantly affect the financial standing of the corporation, it does not follow that it is the advisor or consultant who, in that circumstance, has the capacity to affect significantly the financial standing of the corporation. That capacity in fact resides in the person to whom the advice is given, because it is that individual who determines whether or not the advice should be acted upon. The giving of that advice is of no consequence, unless the advisor or consultant is, in fact, involved in the management of the corporation and is thereby able to ensure that the advice will be implemented.
[43]It is convenient to note here the parenthetical exclusion in para (b)(iii) of the definition. The exclusion makes it clear that, where the directors of the corporation are accustomed to act in accordance with advice given by the person 'in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation', that person is not captured by para (b)(iii). The parenthetical exclusion in para (b)(iii) serves to ensure that where the only connection between a person and decision‑making in the management of a corporation is that described in the exclusion, the person so described will not be saddled with the responsibilities of an officer of the corporation even though the directors, who are engaged in the management of the corporation, are accustomed to act in accordance with the person's instructions or wishes. That is because the professional or business relationship between the person and the directors differentiates the person from those who manage the corporation. The parenthetical exclusion is neither necessary nor appropriate in relation to para (b)(i) and (ii) because sub‑paras (i) and (ii) capture only persons who are, in fact, engaged in the corporation's decision‑making qua management.
[40] Australian Securities and Investments Commissionv King [40] - [43].
The foregoing statements of the High Court, and the text of the definition in s 9 of the Corporations Act, present as formidable obstacles to the central claim sought to be advanced by the Interested Parties through the amended interlocutory process (to the extent to which reliance is placed on par (b)(iii) of the definition).
The Interested Parties submit, without evidence or any factual foundation, that Mr John was informally appointed by Mr Kitay as a de facto provisional liquidator and liquidator.[41] The Interested Parties further submit, without evidence or any factual foundation, that Mr John was involved in every detailed aspect of CAT's liquidation and significantly affected its financial standing, such that it amounted to a wholesale delegation of CAT's liquidation to Mr John.[42]
[41] Interested Parties' submissions (undated) [27].
[42] Interested Parties' submissions (undated) [28].
There is simply no admissible material identified in the affidavits relied upon by the Interested Parties, or in their interlocutory process or submissions (other than mere assertion, conjecture, or submission), which arguably founds the conclusion that Mr John was a de facto or shadow officer of CAT in some way. This is so whether reliance is placed on par (b)(i), par (b)(ii) or par (b)(iii) of the definition of 'officer' in s 9 of the Corporations Act.
The position of the Interested Parties is not assisted by any of the authorities referred to in their submissions, including the earlier decision of the High Court in Shafron v Australian Securities and Investments Commission,[43] nor by insisting that it is for Mr John (by reason of a Jones v Dunkel inference) to file evidence to demonstrate that he was not involved in making decisions that affected the whole or a substantial part of CAT's liquidation.[44]
[43] Shafron v Australian Securities and Investments Commission [2012] HCA 18; (2012) 247 CLR 465; and see the Interested Parties' submissions (undated) [21] - [26].
[44] Interested Parties' submissions (undated) [28] and [29].
I specifically reject the submission that the circumstances call for Mr John to adduce evidence in opposition to the rather barren allegations made by the Interested Parties. The proper assessment to be made at this stage is whether the Interested Parties have themselves identified a proper and arguable basis for the relief which is sought, giving some due allowance to the fact these parties are unrepresented (in the manner earlier described), and also allowing for the prospect of further evidence being filed as the proceeding develops. However, in the face of the interlocutory process filed by Mr John to dismiss the proceeding, which has squarely put the Interested Parties on notice of the deficiencies in their position, I can discern from the materials no sensible or arguable basis to ground the relief which is outlined, nor was any future basis foreshadowed which would support that relief.
To put the matter another way, it remains incumbent on an applicant for relief of this type (involving significant claims for damages on the basis the putative defendant is a de facto or shadow officer) to carefully and clearly identify the factual material said to support the claim so the Court can be satisfied the proceedings can move forward on a proper basis. Although no statement of claim was prepared by the Interested Parties, affidavit material was filed to identify the nature of the claim to be mounted. This is of course not an unusual approach in matters litigated under the Corporations Act. Having regard to the material identified by the Interested Parties, taking matters at their highest, there is no factual framework identified by the Interested Parties to arguably sustain the relief they wish to pursue.
There is a further difficulty which stands in the way of the Interested Parties, to the extent to which they seek relief in their favour under s 1324(10) of the Corporations Act. That statutory provision does not authorise an award of damages in favour of a person other than a company. There is a considerable body of authority to this effect.[45]
[45] See, for example, In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2023] WASC 90 [77] (Smith J) and McCracken v Phoenix Constructions (Qld) Pty Ltd [2012] QCA 129 (Fraser and White JJA and Applegarth J).
I am accordingly satisfied the interlocutory process should be dismissed with costs.

Additional bases for dismissal

Mr John's counsel further contended that the interlocutory process should be dismissed by reason that it is for the liquidator to decide whether the company should commence proceedings (i.e. Mr Kitay).[46] That contention assumes less relevance given the amendments proposed to the interlocutory process.
[46] Mr John's submissions dated 7 June 2023 [36] - [40].
Further, it was submitted that the Interested Parties appear to maintain a claim to the fruits of any claims based on the contention that any compensation is captured by the Registered Charge they hold over the assets of CAT. However, Mr John's counsel submitted that the property the subject of that charge (defined in the document as the 'Mortgaged Property') does not include or extend to the alleged 'cause of action assets' of CAT identified in the interlocutory process.[47] There appears to be some force in this submission, which I have briefly addressed earlier in these reasons.
[47] Mr John's submissions dated 7 June 2023 [42].
Given the conclusions I have reached above at [64] and [85], which are sufficient to dispose of the dispute before me, I will refrain from expressing a concluded view on these additional arguments.

Security for costs

In the event I was not satisfied the interlocutory process should be dismissed, I would have been prepared to make orders for security to be provided by the Interested Parties for Mr John's reasonable costs of defending the application through to the next phase of the proceedings. That is, for security to be provided on a tranche by tranche basis, going forward.
As the security order is not sought against a corporation, the power to award security for costs in s 1335(1) of the Corporations Act is not engaged. Rather, the making of security orders in the present case is sought pursuant to the broad discretion vested in the Court by O 25 r 3 RSC or the inherent jurisdiction of the Court. These both involve the Court considering all the circumstances of the case.
As to the principles which are applicable in the present case, Smith J summarised the primary principles and approach as follows in the earlier application in the current proceeding which involved Mr Kitay:[48]
[93]The principles that apply to an application for security of costs are well established. The court's discretion to make an order for security for costs is broad and depends on all the circumstances of the case. The effect of O 25 r 3 if applied to this matter is that the court is required to take into consideration the prima facie merits of the claim, what property is within the jurisdiction may be available to satisfy any order for costs against the party from whom security is sought, and whether the normal processes of the court would be available within the jurisdiction for enforcement of any order for costs made against that party. Other factors that are relevant will vary from case to case, and are not exhaustive.
[94]One of the relevant factors often regarding the nature of a security for costs order is that it is protective, in the sense of ensuring a defendant is not unreasonably exposed to a risk that if successful in defending the claim, the respondent will be nevertheless deprived of the benefit of the costs order by reason of a plaintiff being impecunious. Although the Applicants [being the Interested Parties] are not impecunious, it is relevant that a respondent should not be faced with a plaintiff who clearly has the means to satisfy a costs order, but who refuses to pay. (footnotes omitted)
[48] In the matter of Computer Accounting & Tax Pty Ltd [No 4] [2023] WASC 90 [93] - [94] (Smith J).
In my view, the making of security for costs orders in the present case would have been appropriate, either in the inherent jurisdiction of the Court or having regard to O 25 r 2(g) RSC (and the discretion in O 25 r 3 RSC), in light of the matters identified below.
First, the application was made promptly following service of the interlocutory process on Mr John.
Second, there is evidence before the Court that the Interested Parties hold no assets against which an order for costs could ultimately be enforced.[49]
[49] Affidavit of Ms De Koning sworn 18 May 2023, [4] - [13] and [14] - [19].
Third, the Interested Parties bring these claims, in part, in their capacity as trustees.
Fourth, there is no suggestion by the Interested Parties that an order for the provision of security could not be met by them or that such an order would stifle the prosecution of the application by them.
Fifth, it is notable that an order for security was made in favour of Mr Kitay in relation to the earlier interlocutory process which was filed against Mr Kitay, to which I have referred at [9] above: In the matter of Computer Accounting & Tax Pty Ltd [No 4].[50]
[50] In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2023] WASC 90 (Smith J).
Sixth, the Interested Parties have a long history of failing to pay costs orders made against them, as explained by Smith J in In the matter of Computer Accounting & Tax Pty Ltd [No 4][51] and as deposed to by Ms De Koning in her affidavit.[52] Mrs Frigger's submission that every single prior decision of the Court in this respect has been 'wrong in fact and in law' cannot be accepted.[53]
[51] In the matter of Computer Accounting and Tax Pty Ltd [No 4] [2023] WASC 90 [102] (Smith J).
[52] Affidavit of Ms De Koning sworn 18 May 2023, [21] - [31].
[53] ts 1123.
Fundamentally, I agree with the submission made on Mr John's behalf that, if the proceedings were to continue, an order for security is the only way to provide Mr John with some prospect that he will be compensated for the costs incurred in responding to the application (in the event the application was ultimately dismissed at a final hearing).[54] Of course, as I have earlier noted, I consider it appropriate to dismiss the interlocutory process as it presently stands.
[54] In this regard, I note without repeating verbatim the various judicial comments made in relation to the conduct of the Interested Parties in other proceedings, which are collected in Mr John's submissions: Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3 [54] (Buss & Murphy JJA); Frigger v Clavey Legal Pty Ltd [No 2] [2015] WASCA 258 [32] (Buss & Murphy JJA); Frigger v Trenfield [2021] FCA 792 [18] (Colvin J); and Kitay, in the matter of Frigger [No 2] [2018] FCA 1032 [123] and [126] (Colvin J).

The amount of security I would have ordered is the sum of $20,000, having regard to the estimate prepared by Mr Popperwell as expressed in his affidavit sworn 19 May 2023. I accept this estimate is reasonable.[55]
[55] Affidavit of Mr Popperwell sworn 19 May 2023, [5] - [6] and Attachment SFP-1.

G. Conclusion and orders

I will order that the Interested Parties' interlocutory process dated 22 March 2023 (which was filed on 23 March 2023) and the amended interlocutory process dated 14 July 2023 both be dismissed. These processes are to be dismissed in the exercise of the Court's inherent jurisdiction to control its own processes. It follows that leave to amend the interlocutory process as sought by the Interested Parties is also declined.
The Interested Parties must pay the costs of Mr Kitay and Mr John in responding to and resisting the interlocutory application (which will include Mr John's costs of his interlocutory application dated 19 May 2023).
I will hear from the parties as to the form of the orders which should now be made having regard to these reasons.

ATTACHMENT A
Rulings in relation to evidentiary objections

Objections to Ms De Koning's affidavit

The Interested Parties challenged Ms De Koning's affidavit in their written submissions on the basis that it represented a conflict of interest. Ms De Koning is a solicitor employed by HSF.
It was contended by the Interested Parties that, although Mr John was formally represented in the proceeding by Mr Popperwell's law firm, because Ms De Koning had sworn an affidavit in support of Mr John's position in the proceeding, this effectively meant that HSF was acting for Mr John in the proceeding. Further, the Interested Parties contended that HSF was also representing CAT and CAT's interests were adverse to Mr John's interests.
Putting all of this together, the Interested Parties submitted that Ms De Koning's swearing of an affidavit was not permitted by reason of O 8 r 11 RSC. Order 8 rule 11 RSC states that:
11. Solicitor not to act for adverse parties
No solicitor shall act in any cause or matter for plaintiff and defendant, or for any 2 or more defendants having adverse interests in a cause or matter.
The objection is specious. By swearing an affidavit in support of Mr John's position, Ms De Koning is not representing Mr John. Mr John is plainly represented in these interlocutory proceedings by Popperwell & Co. There is thus no conflict of interest of the kind identified by the Interested Parties.
The objection to Ms De Koning's affidavit is disallowed.

Objections to Mrs Frigger's affidavit

I proceed on the basis that Mrs Frigger's affidavit has been filed in support of an interlocutory application and thus could permissibly contain hearsay material, subject however to compliance with O 37 r 6(2) RSC and O 37 r 6(3A) RSC. These rules require that affidavits be confined to such facts as the deponent is able of his or her own knowledge to prove other than, relevantly, when an affidavit is made on an occasion that permits an affidavit to contain statements of information or belief but then, only if the source or grounds of that information or belief are stated. In the absence of a statement of the source or grounds for belief matters of information and belief are not admissible: Re JL Young Manufacturing Co Ltd.[56]
[56] Re JL Young Manufacturing Co Ltd [1990] 2 Ch 753.
Among other bases, Mr John's counsel challenged a number of paragraphs in the affidavit on the basis there had not been compliance with O 37 r 6(3A) RSC, as well as on the basis that paragraphs should be struck out pursuant to O 37 r 7 RSC as being scandalous, irrelevant or otherwise oppressive.
The objections were addressed by Mrs Frigger and Mr Popperwell largely on an item by item basis, as can be seen from the transcript at ts 1090 to ts 1112.
In my view, much of Mrs Frigger's affidavit should be struck out as falling foul of O 37 r 6(3A) RSC, or as containing little more than submissions or conjecture on the part of Mrs Frigger. The paragraphs of Mrs Frigger's affidavit identified below should be struck out on the bases identified.

Paragraph

Ruling as to Mr John's Objections

4

2^nd and 3^rd sentences

Objection allowed. Sentences are submissions and conclusions as to the proper construction of the Registered Charge.

5

Objection allowed. Paragraph is a submission.

6

Objection withdrawn.

7

1^st sentence

Objection allowed. Sentence is a submission or unqualified legal opinion.

7

2^nd sentence

Objection allowed. Sentence is conjecture and speculation.

8

1^st sentence

Objection allowed. Sentence is conjecture and speculation.

8

2^nd sentence

Objection allowed. Sentence is conjecture and speculation, or a submission.

8

3^rd sentence

Objection allowed. Sentence is conjecture and speculation, or a submission.

11

Objection allowed. Paragraph is conjecture and speculation, or a submission.

12

Objection allowed. Paragraph is conjecture and speculation, or a submission.

13

Objection allowed. Paragraph is conjecture and speculation, or a submission.

14

Objection allowed. Paragraph is conjecture and speculation, or a submission.

15

1^st sentence

Objection allowed. Sentence is a submission.

15

2^nd sentence

Objection allowed. Sentence is a submission.

16

Objection allowed. Paragraph is conjecture and speculation, or a submission.

17

1^st sentence

Objection allowed. Sentence is inadmissible hearsay.

17

2^nd sentence

Objection allowed. Sentence is a mere conclusion.

17

3^rd sentence

Objection allowed. Sentence is a submission.

20

2^nd sentence

Objection disallowed.

20

3^rd sentence

Objection disallowed.

20

6^th sentence

Objection allowed. Sentence is inadmissible hearsay and a submission or conclusion without any foundation.

23

2^nd sentence

Objection disallowed.

23

3^rd sentence

Objection allowed. Sentence is a submission.

23

5^th sentence

Objection allowed. Sentence is inadmissible hearsay.

23

6^th sentence

Objection allowed. Sentence is a submission and conjecture.

25

1^st sentence

Objection allowed. Sentence is inadmissible hearsay.

25

2^nd and 3^rd sentences

Objection allowed. Sentences are submissions.

26

Objection allowed. Paragraph is inadmissible hearsay and a submission premised on an unfounded legal contention.

27

2^nd sentence

Objection allowed. Inadmissible commentary on documents.

27

3^rd sentence

Objection allowed. Sentence is a submission and mere conjecture.

29

Objection allowed. Paragraph is inadmissible hearsay.

30

Objection allowed. Paragraph is a submission.

31

Objection allowed. Paragraph is a submission.

Paragraph	Ruling as to Mr John's Objections
4 2^nd and 3^rd sentences	Objection allowed. Sentences are submissions and conclusions as to the proper construction of the Registered Charge.
5	Objection allowed. Paragraph is a submission.
6	Objection withdrawn.
7 1^st sentence	Objection allowed. Sentence is a submission or unqualified legal opinion.
7 2^nd sentence	Objection allowed. Sentence is conjecture and speculation.
8 1^st sentence	Objection allowed. Sentence is conjecture and speculation.
8 2^nd sentence	Objection allowed. Sentence is conjecture and speculation, or a submission.
8 3^rd sentence	Objection allowed. Sentence is conjecture and speculation, or a submission.
11	Objection allowed. Paragraph is conjecture and speculation, or a submission.
12	Objection allowed. Paragraph is conjecture and speculation, or a submission.
13	Objection allowed. Paragraph is conjecture and speculation, or a submission.
14	Objection allowed. Paragraph is conjecture and speculation, or a submission.
15 1^st sentence	Objection allowed. Sentence is a submission.
15 2^nd sentence	Objection allowed. Sentence is a submission.
16	Objection allowed. Paragraph is conjecture and speculation, or a submission.
17 1^st sentence	Objection allowed. Sentence is inadmissible hearsay.
17 2^nd sentence	Objection allowed. Sentence is a mere conclusion.
17 3^rd sentence	Objection allowed. Sentence is a submission.
20 2^nd sentence	Objection disallowed.
20 3^rd sentence	Objection disallowed.
20 6^th sentence	Objection allowed. Sentence is inadmissible hearsay and a submission or conclusion without any foundation.
23 2^nd sentence	Objection disallowed.
23 3^rd sentence	Objection allowed. Sentence is a submission.
23 5^th sentence	Objection allowed. Sentence is inadmissible hearsay.
23 6^th sentence	Objection allowed. Sentence is a submission and conjecture.
25 1^st sentence	Objection allowed. Sentence is inadmissible hearsay.
25 2^nd and 3^rd sentences	Objection allowed. Sentences are submissions.
26	Objection allowed. Paragraph is inadmissible hearsay and a submission premised on an unfounded legal contention.
27 2^nd sentence	Objection allowed. Inadmissible commentary on documents.
27 3^rd sentence	Objection allowed. Sentence is a submission and mere conjecture.
29	Objection allowed. Paragraph is inadmissible hearsay.
30	Objection allowed. Paragraph is a submission.
31	Objection allowed. Paragraph is a submission.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TL
Associate to the Honourable Justice Lundberg
10 APRIL 2024