FEDERAL COURT OF AUSTRALIA

Frigger v Banning (No 3) [2017] FCA 221

ORDERS

THE COURT ORDERS THAT:

1.    The application for an order permitting the applicants to file the proposed substituted statement of claim be dismissed.

2.    The application for an order to restrain lawyers from acting be dismissed.

3.    The costs of the first to fourth respondents of these two applications be taxed and paid forthwith.

4.    The matter otherwise be listed for a case management hearing on 22 March 2017 at 10:15am.

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

REASONS FOR JUDGMENT

BARKER J:

1    The applicants, Mrs and Mr Frigger (who in these reasons may also be referred to as the Friggers or the applicants) seek to file a substituted originating process and statement of claim (proposed substituted statement of claim) in this proceeding, and an order restraining certain of the lawyers currently acting for the respondents from continuing to do so. The respondents oppose these applications.

Should the Friggers be permitted to file their proposed substituted statement of claim?

The Friggers’ submissions

2    Mrs and Mr Frigger make the following submissions in support of their application to amend the originating application:

1.    Mr & Mrs Frigger seek leave to amend/substitute the originating application (‘the First Application’) dated 19 October 2015 with the PROPOSED originating application (‘the Second Application’) dated 3 May 2016 pursuant to sub-rule 8.21(g)(i).

2.    The Second Application identifies new foundations in law but does not change the claims for relief that was sought in the First Application.

3.    The Second Application specifically identifies those sections of the Corporations Act 2001 which were contravened by the respondents’ conduct in the third respondents’ Deed of Company Arrangement (‘DOCA’). The second application further identifies respondents’ torts of collateral abuse of process and intentional interference in business relations as further and or alternate causes of action which caused the applicants’ loss and damage.

4.    There is no reason why the applicants should not be permitted to amend the originating application pursuant to the jurisdiction of this Honourable Court’s Rules.

5.    No new facts have been raised in the proposed amended Statement of Claim and the respondents are not prejudiced in any way and have not identified any prejudice. The application for amendment was made in January 2016, just 3 months after commencement of these proceedings.

6.    In the above circumstances, the applicants humbly request this court give leave for the Second Application to stand as the amended Originating Application in this proceeding.

3    In relation to their application for leave to file a substituted statement of claim, which in their submissions they refer to as “the second statement of claim”, Mrs and Mr Frigger submit:

7.    Mr & Mrs Frigger seek leave to amend the amended Statement of Claim dated 30 December 2015 (‘the First Statement of Claim’) in accordance with the PROPOSED Substituted Statement of Claim (‘the Second Statement of Claim’) pursuant to rule 16.53.

8.    The Second Statement of Claim cures the issues identified by the learned Judge in the reasons dated 13 April 2016, in particular the applicants standing to bring the claim.

9.    Mr & Mrs Frigger refer to the respondents’ letter to the court dated 5 May 2016 in which it is submitted:

‘the legal basis for many of the claims in the proposed amendments is particularly opaque and many of the pleas in support are embarrassing.’

10.    As no details of those submissions have been provided to the court or the applicants, they are unable to respond to those contentions in this document, and will have to rely on oral submissions.

Issues raised by trial judge

11.    His Honour raised issues which he saw as relevant to the commencement and maintenance of the claims by the applicants in reasons dated 13 April 2016 (‘the Reasons’).

12.    At paragraph 46 a reference is made to [2015] WASCA 253. The application heard on 10 December 2015 was made by the applicants as secured creditors of CAT. The assets secured by the applicants’ Fixed Charge include the payments that were made, and to be made, under the DOCA. The error of the chief judge in deciding that the applicants were creditors of CAT did not impact on the final decision, which was that the application did not properly come under the slip rule and in any event was brought too late.

13.    The applicants’ standing in this proceeding is pleaded in paragraphs 6 and 12-14. There can be no doubt that the applicants are persons whose substantial economic interests have been damaged by the respondents’ conduct, pursuant to s 444D(1), 447A(4)(f) and 1324(1) Corporations Act 2001. There is no doubt that the applicants were dragged into the Freezing Orders, the Provisional Liquidator application, the Winding Up Application by the respondents in their collateral endeavours to earn legal fees. There is no doubt the applicants are still owed substantial legal and enforcement costs under the Original Judgment [2008] WASC 133, which asset is also secured in the Fixed Charge, and which costs were to be paid pursuant to the DOCA.

14.     In the part 5.3A context, creditor status is broadly understood. In Selim v McGrath [2003] NSWSC 927; (2003) 47 ACSR 537 at [68]:

In summary, therefore, ‘creditors’ for the purposes of s 439A meeting of creditors in a voluntary administration are all persons who have, as against the company concerned, ‘debts’ or ‘claims provable in a winding up’. The boundaries are therefore those set by s 553(1) which refers to ‘all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages)…

Consistently with this, it has been held that a beneficial holder of convertible notes (that is, a person on whose behalf a registered holder holds the notes) is an equitable creditor to whom a prospective debt is owed, the prospective element coming from the circumstances that a right actually to be paid does not arise until some relevant event of default occurs: Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560;

15.    In Allatech v Construction Management Group [2002] NSWSC 293, Austin J canvassed extensively persons who have standing under s 445D and 447A Corporations Act 2001 and found @ [18]: ‘it is likely given the breadth of the powers conferred by s 447A on the court, and the remedial purpose of the section as recognized by the High Court, that the legislature intended to give standing to apply for such relief to a broad class of applicants.’ Austin J found that ‘other interested persons’ are applicants whose material rights or economic interests are or may be affected by the operation or effect of a DOCA which they seek to challenge. The interest need not be legal, nor does the person need to establish legal ownership of the interest. It is clear that the applicants’ material rights and economic interests were affected by the conduct of the respondents, in purporting to vary the terms of the DOCA and by so doing, caused the applicants substantial loss and damage in the numerous and unnecessary processes instituted by the respondents where they had no right to do so. The analogy found by Austin J @ [44] is relied on by the applicants in asserting that the loss and damage claimed against the respondents arose directly out of the payments required to be made pursuant to the applicants’ Fixed Charge, and the collateral abuses of process which resulted directly from the operation of the DOCA and the impact of the DOCA on those collateral abuses of process. Therefore, the interests asserted by the applicants is an interest properly arising out of their pleading.

16.    At paragraph 49 of the Reasons, reference is made to a decision by Le Miere J to enter summary judgment. That decision is the subject of an appeal CACV62/2016, which appeal has been accepted for hearing by the Court of Appeal.

17.    At paragraph (3) page 11 of the Reasons, it is noted that the liquidator of CAT disputes the Fixed Charge. That submission by the respondents is simply false. The liquidator has never disputed the Fixed Charge, and since 12 December 2012 is statute-barred from so doing: s 588(f) Corporations Act 2001.

18.     At paragraph (4) page 11 of the Reasons, the termination of the DOCA was Simmonds J was made ex parte. The finding by Simmonds J that the DOCA had served its purpose was in error, as the DOCA had automatically terminated on 30 August 2009, and the order terminating the DOCA in November 2012 was a nullity. In any event, despite the DOCA having terminated, the power of the court under s 447A is wide enough to permit orders having the effect of rectifying deeds of company arrangement that have been terminated: Brandrill v Newmont Yandal [2006] NSWSC 974 @ [54].

19.    At paragraph (5) and 67 page 11 of the Reasons, the respondents’ submission there were no costs orders in existence until 18 September 2015 is false. CAT was awarded costs of the action in the Original Judgment dated 9 July 2008: [2008] WASC 133. There were numerous costs orders that were made during the proceeding, which commenced on 17 September 2003, that were not disturbed by the Court of Appeal on 23 October 2009. In addition, the Remitter Order was made only for the purpose of directing the taxing officer on what basis the costs of the action would be taxed. The respondents misunderstand how costs orders are made and taxed.

20.    At paragraph (6) page 11 of the Reasons, the respondents have no right to dispute any notices served by the applicants on CAT, and any such submissions serve no purpose other than to introduce issues that are irrelevant.

21.    At paragraph 67 page 11 of the Reasons, the submission that the applicants, as the assignees of the judgment debt, were required to repay the second and third respondents the judgment debt. That is an issue in this proceeding and will be resolved at a trial. Further the respondents say that Banning Holdings Pty Ltd ‘loaned’ the judgment debt to the second and third respondents, but no evidence of such a loan has been produced. Furthermore, the Deed Administrator’s evidence and Mr Stephenson’s written submissions state that Banning Holdings Pty Ltd loaned only that part of the judgment debt that was not disturbed by the Appeal to the second and third respondents, and the balance was required to be repaid directly to Banning Holdings Pty Ltd, if the DOCA had not automatically terminated on 30 August 2009.

22.    At paragraph 67 page 11 of the Reasons, the liquidator of CAT, or CAT itself no longer have any interest in the judgment sum absolutely assigned to the applicants under the Fixed Charge, in whose possession it is. Therefore, neither the liquidator nor CAT has any rights in bringing an application impugning the conduct of the respondents either in the DOCA or in the collateral abuses of process pleaded by the applicants.

23.    At paragraph 67 page 11 of the Reasons, nowhere in the statements of claim do the applicants seek to set aside the Court of Appeal judgment, and the submission is nonsensical.

24.    At paragraph 68(1) and (2) page 11 of the Reasons, the costs in CIV1727/2009, are costs that the respondents are liable for pursuant to Order 8 made on 21 November 2008 in CIV2265/2006. The applicants have a claim against the Receiver for those costs, which Simmonds J found to be ‘strongly arguable’ as mitigation costs. In those circumstances, the net effect will be the respondents have no entitlement to anything.

25.    At paragraph 68(3) - (9) page 11 of the Reasons, the respondents were not entitled to obtain any of the costs referred to in those paragraphs as they had no entitlement to the judgment dated 7 December 2009, which was obtained by a collateral abuse of process and in contravention of S 445D Corporations Act 2001, when they gave effect to purported variations to the DOCA by filing false submissions. The applicants seek interlocutory and permanent injunctions against those costs and is a matter to be decided at the trial of this proceeding.

The respondents’ position

4    The respondents challenge:

(1)    what they refer to, in a preliminary way, as the “foundational facts” and in particular, paras 6(b) and (c), 8, 9, 10, 12(a), (b), (c) and (d), 13, 14, 15, 16, 17 and 19 of the proposed substituted statement of claim;

(2)    what is referred to as the “first cause of action”, and in particular, paras 20 to 23, 24 and 25;

(3)    what is referred to as the “second cause of action”, and in particular, para 26;

(4)    what is referred to as the “third cause of action”, and in particular, paras 27 and 28;

(5)    what is referred to the “fourth cause of action”, and in particular, paras 29 to 33;

(6)    what the Friggers call the “fifth cause of action” but the respondents repeat as the “fourth cause of action”, and in particular, paras 34 to 38 and 39(f);

(7)    what is referred to as the “sixth cause of action”, and in particular, paras 40 to 41;

(8)    what is referred to as the “seventh cause of action”, and in particular, paras 42 to 45;

(9)    the loss and damage claimed, particularly at paras 46 to 52, and the economic loss claimed at paras 53 to 57; and

(10)    what they call the “claim generally”.

5    I will adopt these same topic headings in dealing with the amendment applications before me, to which I now turn.

The “foundational facts” pleadings

6    Paragraphs 6 to 19 of the proposed substituted statement of claim state:

6)     The Applicants (‘Mr & Mrs Frigger’):

a)     Were at all material times directors and members of CAT;

b)     Executed a contract for litigation with CAT (‘the Litigation Contract’) dated 1 September 2003 for the purposes of issuing a writ against PSA and Martin Paul Banning for losses resulting from misleading and deceptive conduct in the purchase of real estate at 269 South Western Highway Armadale registered in CAT’s name the purchase price of which was paid by Mr & Mrs Frigger. Pursuant to the Litigation Contract Mr & Mrs Frigger are the beneficial owners of the judgments in CIV2265/2006.

c)     Executed a Fixed Charge with CAT on or about 10 September 2009 securing inter alia the fruits of the litigation referred to in paragraph 6(b) which Charge was registered with Australian Securities and Investments Commission on or about 23 October 2009 and which migrated to the Personal Properties Securities Register (‘PPSR’) as a Specific Security Agreement (‘SSA’) having an Allotted number 20112210122618.

7)     On or about 9 July 2008 CAT was awarded damages, costs and interest against PSA and Martin Paul Banning (the Defendants) in Supreme Court of WA [2008] WASC 133 (the Original Judgment).

8)     The Defendants failed and or refused to pay the Original Judgment to CAT in circumstances where the respondents had combined net assets of approximately $5,000,000.

9)     The DOCA was executed on 20 March 2009 pursuant to Part 5.3A the Act for the purposes of administering the business, property and affairs of PSA so as to result inter alia in a better return to PSA’s creditors than would result from an immediate winding up.

10)     By their execution of the DOCA the respondents were bound by s 444G not to use their powers under the Act that was inconsistent with the terms of the DOCA.

11)     The relevant terms of the amended DOCA dated June 2009 are:

a)     Clause 5.1.1: On or before 30 August 2009 Banning Holdings Pty Ltd would pay CAT $1,172,388.91 which amount was defined as ‘Judgment Sum’ under Definition and Interpretation;

b)     Clause 5.1.3: CAT’s taxed costs (‘the Taxed Costs’) would be paid from the proceeds of the sale of PSA’s property at 11 Lacey Street, Perth.

c)     Clause 5.2: the DOCA would automatically terminate if the amounts payable were not paid by 30 April 2009 (‘the Date’);

d)     Clause 6.1.3: if the Judgment Sum is reduced on Appeal, then the excess Judgment Sum plus interest is to be repaid to BH immediately being an amount of $770,924.70;

e)     Clause 6.3: if the payment obligations of the parties are not finalised but the DOCA terminates, any funds received by the Creditors prior to the termination shall be retained by those parties.

f)     Clause 6.13: Notwithstanding anything contained in the DOCA appearing to the contrary, any payments made to CAT shall be without prejudice to the rights of PSA and Mr Banning in the Appeal. Any reduction in the Original Judgment resulting from the Appeal may be set-off against any other amount which would be payable pursuant to the DOCA including the Taxed Costs.

Mr and Mrs Friggers’ rights

12)     In the circumstances of the matters in paragraphs 6, 7 and 14:

a)     Pursuant to s 19(2) PPSA on registration of Fixed Charge on 23 October 2009 Mrs & Mrs Frigger’s security interest attached to the collateral in theAssets named in the schedule to the Fixed Charge including the Original Judgment.

b)     Pursuant to s 20(1)(b)(i) PPSA Mr & Mrs Frigger’s security interest in the Original Judgment became enforceable against third parties including the respondents by reason of possession of collateral.

c)     Mr & Mrs Frigger are creditors in the DOCA being assignees of the debts payable under the DOCA pursuant to s 444D(1) the Act and pursuant to the definition of ‘creditor’ are parties who are permitted assigns in clause 1.2 in the DOCA and pursuant to the matters in paragraph 14;

d)     are ‘other interested parties’ whose substantial economic interests are at stake pursuant to s 447A(4)(f) the Act and are persons whose interests have been or would be affected by the conduct of the respondents pursuant to s 1324(1) the Act:

i)     Taxed Costs in CIV2265/2006 secured by the Fixed Charge payable by the Defendants to Mr & Mrs Frigger;

ii)     Respondents to the Freezing Orders in CIV2265/2006 with losses particularised in paragraph 53 and 54;

iii)     Parties in COR2/2010 pursuant to Frigger -v- Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 @ [27] with losses particularised in paragraph 53 and 54;

iv)     Parties in CIV2265/06 and COR2/2010 for the purposes of the tort of collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26 and caused loss and damage particularised in paragraph 53 and 54;

v)     Persons who have suffered substantial damage to their reputation resulting from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26;

vi)     Persons who have suffered substantial credit damage and are unable to obtain loans in Australia from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26;

vii)     Persons who have suffered substantial mental harm and stress resulting from the matters in this statement of claim from collateral abuses of processes which processes relied on the respondents‟ contraventions in paragraphs 21-26.

13)     On or about 2 and 9 June 2009 Banning Holdings Pty Ltd delivered to CAT’s solicitor Stokes & Associates two cheques in the total amount of $1,165,661.54 in purported compliance with clause 5.1.1 DOCA leaving an amount of $6,727.37 unpaid.

14)     Pursuant to the Litigation Contract CAT assigned the cheques referred to in paragraph 13 to Mr & Mrs Frigger and all benefits liabilities and rights under the DOCA were transferred to Mr & Mrs Frigger and became effectual in law.

15)     On 2 June 2009 CAT lodged a bill of costs for taxation in an amount of $701,000 which bill has never been assessed.

16)     Pursuant to clause 5.2.1 the DOCA automatically terminated on 30 August 2009 when the payments to two other creditors and the balance of the Original Judgment $6,727.37 had not been made:

Particulars

In [2012] WASC 444 @ [16] Simmonds J found that no further amendments had been made to the DOCA other than the amendments contained in the June Version

17)    In the circumstances of the automatic termination of the DOCA on 30 August 2009:

a)     pursuant to clause 6.3 the Creditors including Mr & Mrs Frigger were entitled to retain the funds paid under the DOCA;

b)     Pursuant to clause 6.13 any reduction in the Original Judgment would be applied to the Taxed Costs;

c)     By clause 6.1.3 any remainder after the Taxed Costs was to be repaid to BH if, which is denied, clause 6.3 was of no effect.

18)     Notwithstanding the automatic termination of the DOCA on 30 August 2009 pursuant to s 445H the Act the termination did not affect the previous operation of the DOCA.

19)     Pursuant to the doctrine of finality in litigation Mr & Mrs Frigger were entitled to take all necessary steps to finalise the litigation with the Defendants in the most cost effective manner as quickly as possible.

7    In respect of the particular paragraphs attacked by the respondents, as identified above, for the reasons advanced by the respondents, which I essentially adopt because I agree with them, I consider the proposed pleadings of the Friggers are misconceived and so they should not have leave to file them.

8    Paragraphs 6(b) and (c) and 8 – The “contract for litigation” appears as annexures CVE 6 and CVE 7 to the affidavit of Mr Cameron Victor Eastwood sworn 24 February 2016. It is the only documentary evidence of the alleged contract which the applicants have provided. Annexure CVE 6 identifies the beneficial owner of the property at 269 South West Highway as having been “the Frigger Super Fund” and not the applicants. It is also implicit that if the “contract for litigation” was entered into, it was entered into by the applicants in their capacity as trustees of the Frigger Super Fund, with Computer Accounting & Tax Pty Ltd (CAT) and not in their own right as asserted.

9    I accept that Mrs Frigger (with whom Mr Frigger did not disagree) gave evidence at the trial of CIV 2265 of 2006 in November and December 2007 (see headnote of Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (the original decision) to the effect that the Frigger Super Fund was not the owner of the property at 269 South West Highway (beneficially or otherwise) and that it was owned by CAT in its own right.

10    I also accept that, as the evidence given by the applicants was under sustained attack during the trial, the trial judge (Simmonds J) summarised it at length at [51]-[77] of his reasons and ultimately found, at [88]-[89], that the evidence established that CAT had purchased the assets in its own right and not for the Frigger Super Fund. The issue of whether the property at 269 South West Highway and its associated business was owned by the applicants or CAT was also the subject of CIV 2765 of 2010 between the applicants and the liquidator of CAT in the Supreme Court of Western Australia. I consider it is an abuse of process for these proceedings to be used as a basis for fresh findings as to those issues when the proper parties to the actual controversy (the Friggers and the liquidator) are not before the Court and are indeed engaged in litigation elsewhere on the same issues; a matter of which the applicants are well aware given my recent decision in Kitay, in the matter of Computer Accounting & Tax Pty Ltd (in liq) [2016] FCA 720. Additionally where, as here, a case is being set up again by the applicants in a different form or forum seeking a different result where the issue has already been determined to the contrary, it also constitutes an abuse. See, for example, Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 at [4]-[11]; Idoport v National Australia Bank Ltd [2006] NSWCA 202 at [107], [110] and [119]. Accordingly, leave to plead in that manner should be refused.

11    It is not in dispute that judgment was given in the original decision to CAT against Mr Martin Banning and Professional Services of Australia Pty Ltd (PSA) in July 2008. It was not, however, given in favour of Mrs and Mr Frigger, and they were not then, and never have been, parties to that action.

12    There are no proper material facts pleaded in the proposed substituted statement of claim, nor is there any evidence put forward by the Friggers to show that they can claim any beneficial entitlement to the ownership of the original decision in favour of CAT pursuant to the litigation contract or at all. The mere execution of even a fixed charge on 10 September 2009 could not have had that effect (see para 6(c) of the proposed substituted statement of claim).

13    Where a statement of claim does not reveal how a cause of action arises and the defendants are prejudiced in pleading their defence, particulars would ordinarily be ordered before any defence is required. See Selangor United Rubber Estates Ltd v Cradock [1965] Ch 896 at 901. Pleas would also be liable to be struck out as embarrassing where they are evasive or obscure the real questions in controversy, or ambiguous or not reasonably intelligible. See Hart-Roach v Public Trustee unrep. WASC lib. no. 980044; Kidd v Artus t/as Downings Legal [2013] WASC 264 at [26] (Allanson J). I consider the pleas here are embarrassing.

14    Costs orders in favour of CAT in CIV 2265 of 2006 were originally made on 6 May 2009 by the trial judge. See Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133(S) (original costs orders). However, it cannot now be in dispute in these proceedings (due to the decision of the Court of Appeal in CACV 76 of 2008) that the original decision and the original costs orders were set aside in December 2009 by the Court of Appeal. See annexure CVE 2 to the affidavit of Mr Eastwood sworn 9 December 2015 (the appeal orders).

15    The Court of Appeal accepted that the original costs orders were satisfied by payment to CAT by the time of the appeal orders and that the fact this was so was not in dispute before it on the part of CAT or any other party. See Professional Services of Australia Pty Ltd v Computer Accounting & Tax Pty Ltd [No 2] [2009] WASCA 183(S) at [13] ([2009] WASCA 183(S)). The original decision was, in my view, replaced by a judgment against CAT in favour of PSA and the second respondent (who had by then been joined as a party to appeal CACV 76 of 2008 and action CIV 2265 of 2008, as the executor of the estate of Mr Banning who had died in late 2008) – see paras 2, 3, 4 and 5 of the appeal orders – and the original costs orders were set aside and remitted back to Simmonds J, the trial judge, to be reconsidered in light of the appeal reasons (see para 8 of the appeal orders). Consequently, para 8 of the proposed substituted statement of claim (and para 16 whereby the assertion is made that the “judgment” – meaning the original decision – was not paid) is embarrassing.

16    It follows that the plea in para 6(c) of the proposed substituted statement of claim can only possibly relate to the costs of CIV 2265 of 2006 as it makes little sense to plead, as presently proposed, that the judgment in favour of PSA and the second respondent against CAT pursuant to the appeal orders is a “fruit of the litigation” payable to the Friggers. The proposed plea is therefore embarrassing.

17    Any alleged entitlement of the applicants can only relate to the costs of CIV 2265 of 2006 to the extent that those costs are owing after being set-off against the judgment created in favour of PSA and the second respondent by the appeal orders, and other costs now payable by CAT to the applicants pursuant to the orders of Simmonds J. See annexures CVE 3, CVE 4 and CVE 5 to the affidavit of Mr Eastwood sworn 9 December 2015, noting that the decisions in regard to these orders have not been appealed: see Computer Accounting & Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166 ([2015] WASC 166) and Computer Accounting & Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 9] [2015] WASC 343 ([2015] WASC 343). It is plain that the Supreme Court has accepted on more than one occasion that the costs owing to CAT (which might be claimed to be secured by the disputed charge) are exceeded by the quantum of the unpaid judgment due from CAT pursuant to the appeal orders and the various costs orders set out above. See Holbrook v Professional Services Pty Ltd [2012] WASC 444 at [21], [36] and [37] as an example. No evidence has been adduced by the applicants that casts any doubt on this finding. This finding is binding on CAT, and since the applicants claim by virtue of their security to be entitled to possess and deal with CAT’s interests, it follows that it must be binding on them. To the extent that the proposed plea relies upon a claim that the Friggers have some kind of “economic or other interest” at stake in the resurrection of the terminated deed of company arrangement (DOCA) of PSA for the purposes of s 445D of the Corporations Act 2001 (Cth) (see Commonwealth of Australia v Rocklea Spinning Mills Pty Ltd [2005] FCA 902), in my view, none has or can be demonstrated. A proceeding brought on this basis would be an abuse of process. See Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 at [27].

18    Further, the alleged entitlement can only have substance if there is a debt owing by CAT to the applicants. It is common ground that the issue of whether CAT is actually indebted to the Friggers is the subject of CIV 2765 of 2010, where the liquidator has averred that there is no debt owing by CAT to the applicants. It would be an abuse of process, in my view, for the same reasons just mentioned, to seek findings in this proceeding regarding the same debt when the parties to the actual controversy (the Friggers and the liquidator) are not before this Court and are engaged in litigation elsewhere.

19    Paragraph 9 – The effect of entry into a DOCA is set out in principally Division 10, 11 and 12 of Part 5.3A of the Corporations Act, and the balance of Part 5.3A has no obvious application to its interpretation. The proposed plea is not referred to as the purpose, or even one of the purposes, of the effect of entry into a DOCA, in Div 10, 11 and 12 of Pt 5.3A. In any event, the applicants are not now and never have been creditors of PSA, and they have not put forward evidence or any material fact to justify their claim to the contrary. As proposed to be pleaded, this paragraph is embarrassing.

20    Paragraph 10 – Upon asking what powers “under the Act” have been used, and in what way were they used in a manner that was inconsistent with the DOCA, I consider the pleading is obscure. As proposed to be pleaded, this paragraph is embarrassing.

21    Paragraph 12(a), (b) and (c) – First, s 19 of the Personal Properties Securities Act 2009 (Cth) (the PPSA) makes it plain that enforcement can only take place where the security interest has attached to the collateral, and it can only attach to the collateral when the grantor has rights in, or the power to, transfer rights to the secured party. Section 20 of the PPSA makes it clear that in order to enforce against particular property the security interest must not only attach to the property, but the secured party must be in possession of the property or have control over it. Both of these possibilities are impossible in the present case, as the alleged property (the thing defined by the applicants as the “Original Judgment”) has been set aside by the appeal orders and no longer exists. Proceedings brought on this alleged basis would involve an abuse of process.

22    Further, even though the order for costs of the action CIV 2265 of 2006 has now been re-made in 2015 in favour of CAT pursuant to the remitter to the trial judge, it has not been taxed. Therefore the liquidator is still not in any position to transfer these rights to the applicants. Section 8 of the PPSA does not define what “personal property” is, only what it is not, for the purposes of the Act, and it may be presumed that the drafters wished the general law to apply. EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd (No 3) [2013] WASC 183 at [886]-[888], [912], [915] is apposite by analogy to the effect that a right to pursue a costs order is a mere “personal right” and not property. The same must be considered true, by analogy, in relation to untaxed costs where the personal right (in this instance, of CAT through its liquidator) is to seek taxation so as to quantify the entitlement. That may never occur if the liquidator agrees to the costs and sets them off with PSA and the second respondent, which is a matter solely for him under the Corporations Act. There is no basis for the assertion that the liquidator is in a position to transfer or assign this property to the alleged secured creditor without first having regard to the rights of PSA and the second respondent to set-off the judgment and costs, to which they are entitled against what is only the costs orders in CIV 2265 of 2006, pursuant to s 553C of the Corporations Act. It would also appear there are rights inuring to PSA and the second respondent to this same set-off either under the set-off rule in Order 66 Rule 59 of the Supreme Court Rules 1971, or, under the various imperial Statutes of Set-Off (UK) adopted as legislation in Western Australia and still extant. See Hazcor Pty Ltd & Ors v Kirwanon Pty Ltd Lib No. 950074b, (Kennedy J) at 8. The proceedings of the applicants would therefore, on this basis, be without foundation.

23    Finally, in relation to para 12(c), no material fact is pleaded as to how the Friggers have actually become assignees of the “rights under the DOCA”, and it is plain that because the company is now in liquidation and the liquidator is now disputing the claimed debt owed to the applicants in action CIV 2765 of 2010, that such a claim in this proceeding would be an abuse of process for the same reasons of competing litigation stated above. Therefore, the pleas in para 12(a), (b) and (c) as presently formulated are embarrassing and leave to plead in that form should be refused.

24    Paragraph 12(d) – This plea apparently seeks to identify the economic interests alleged to have been affected by conduct claimed to have been in contravention of the Corporations Act, as set out in paras 21-26 of the proposed substituted statement of claim, as these are the only alleged breaches (as set out in para 47 of the proposed claim) giving rise to the claim under s 1324 of the Corporations Act. I consider that a person seeking relief under s 1324 must have interests which go beyond the mere interests of an ordinary member of the public. See Broken Hill Proprietary Co Ltd v Bell Resources Ltd (1984) 8 ACLR 609; (1984) 2 ACLC 157. The applicants have not established by evidence, or even on the face of the pleading, that they have an arguable case that they have standing to seek any orders under s l324 of the Corporations Act. See Smolarek v Liwszyc [2006] WASCA 50 at [38]. They were not parties to the appeal CACV 76 of 2008.

25    Further, s 1324(1) of the Corporations Act does not give the Court the power to award damages. See Medibank Private Ltd v Cassidy [2002] FCAFC 290. It is difficult to see how any of the “losses” claimed in para 12(d)(i)-vii) can amount to such an interest. It follows that the applicants have no standing to pursue those matters.

26    Standing to sue is integral to the Court’s jurisdiction in a case like this. In this case, I consider the applicants have no standing and no viable cause of action pursuant to s 1324 of the Corporations Act for damages. Leave to plead in that regard should be refused.

27    I also consider s 447A(4)(f) of the Corporations Act can have no bearing on this issue as it cannot be used as a tool to obtain orders that would affect accrued rights. See Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 282-284; [2000] HCA 30. This may be said to be because the provision can only be used in the furtherance of the objects of Part 5.3A. See Re Ansett [No 1] [2001] FCA 1806 at [52] (Goldstein J); Flynn v Theobald [2008] WASC 263 at [57] (Beech J); and Re Sons of Gwalia Ltd; ex parte Love [2008] WASC 75. There must be a sufficient nexus between proposed orders and the operation of Part 5.3A (see Re New Tel Ltd (in liq) [2004] FCA 1154). Not one of the alleged interests stated in para 12(d)(i)-(iv) has a connection with the objects of Part 5.3A. As to para 12(d)(i) of the proposed pleading, there are no “taxed costs” in CIV 2265 of 2006 which can now be secured by the alleged charge after set-off. Each of the matters referred to in para 12(d)(ii) and (iii) of the proposed pleading represent “accrued rights” on the part of PSA and the second respondent in both judgments for payment of money and costs (for example, the appeal orders and other orders by Simmonds J), and/or in the orders for liquidation of CAT in insolvency and for costs when the judgment was not paid, in respect of which s 447A cannot be used to set them aside. None of the matters in para 12(d)(v)-(vii) of the proposed pleading are related to the objects of Part 5.3B.

28    The pleas in para 12(d) are therefore embarrassing.

29    Paragraph 13 – This plea would also be an abuse of process as it seeks to set up a different result from that found to the contrary in the Court of Appeal.

30    Paragraph 14 – The “litigation contract” was not between CAT and the Friggers in their own right. This part of the plea is therefore embarrassing.

31    The balance of the plea to the effect that the “litigation contract” had the effect of transferring the rights and liabilities “under the DOCA” to the Friggers makes little sense in the full circumstances of the known facts. No mechanism is identified as to how this is possible, nor have any submissions or evidence been directed to this aspect of the claim. It was not until after the DOCA was terminated in 2012 that the Friggers maintained this interest existed and there is no reason to presume that, even if it did, the termination of the DOCA should be reversed. This part of the plea is embarrassing.

32    Paragraph 15 – It is plain from the proposed pleading, and not in contention between the parties, that the bill of costs lodged by CAT was pursuant to the original costs orders of 6 May 2009. Since those original costs orders were set aside by the appeal orders, this bill of costs cannot now be taxed.

33    Paragraphs 16 and 17 – The DOCA was not automatically terminated as alleged, but was terminated by Simmonds J in 2012. See Holbrook at [37]-[38]. His Honour accepted at [12], [15], [21]-[22], and [41]-[42], on the evidence before him, that the DOCA had been fully effectuated by payment of the judgment sum to CAT. This plea is a collateral attack on that decision and as such is an abuse of process.

34    Paragraph 19 – This plea makes little sense as to the meaning of “litigation”. This part of the plea is embarrassing.

The first cause of action

35    Paragraphs 20 to 25 of the proposed substituted statement of claim state:

20.     On or about 23 October 2009 in [2009] WASCA 183 the Original Judgment was reduced:

a)     $675,078 plus pre-judgment interest that had been awarded on that amount totalling $723,350.70

b)     $6,500 plus pre-judgment interest that had been awarded on that amount totalling $6,964.79

Total $730,315.50 (‘the Appeal Judgment’).

First cause of action

21.     During the period between 24 June 2009 and 29 October 2009 the respondents, as parties to the DOCA, and Mr Lenhoff, as counsel who aided and abetted and was knowingly concerned, purportedly varied the DOCA (the Purported Variations):

a)     Clause 5.1.1: The words ‘the payment is to be derived by payment made by Banning Holdings Pty Ltd to the Fund’ were replaced by ‘the payment is to be made by Professional Services of Australia Pty Ltd and the Estate of Martin Paul Banning’.

b)     Clause 5.1.3: the entire clause was deleted;

c)     Clause 5.2: the entire clause was deleted;

d)     Clause 6.1.3: the words ‘If the Judgment Sum is reduced on appeal, the Judgment Creditor shall forthwith repay the excess amount it has been paid (with interest that relates to that sum) to Banning Holdings’ was deleted.

e)     Clause 6.1.3: the clause was amended by varying the definition of ‘excess amount’ to include pre-judgment interest from 2 June 2009 at 6% p.a., and to include statutory interest on the excess amount and pre-judgment interest from the date of the Appeal judgment being 23 October 2009;

f)     Clause 6.2: the entire clause was deleted;

g)     Clause 6.3: the words ‘any funds received by the Creditors shall be retained by those parties’ were deleted;

h)     Clause 6.1.1: the words ‘Debts or claims must have arisen on or before the day when the Company’s administration began to be admissible under the Deed’ were deleted and replaced by the words ‘Legal charges owing to David Lenhoff shall be paid via the DOCA.’

i)     Clause 6.13: the words ‘Should the appeal result in a judgment…..may be set-off….pursuant to this Deed’ were deleted.

j)     Clause 8.1: was deleted;

k)     Clause 15.1.1: was deleted;

l)     Clause 20 was deleted.

Particulars

i)     Written Submissions dated 29 October 2009 prepared and filed by Mr Lenhoff stated the Defendants had paid the Original Judgment and were entitled to immediate repayment and CAT was not entitled to set-off legal and enforcement costs;

ii)     Mr Campbell-Smith advised Mr Lenhoff in an email dated 17 November 2009 that M Lenhoff would be paid ‘via the DOCA’.

iii)     A Statement of Assets and Liabilities prepared by Mr Campbell-Smith in July 2010 shows the proceeds of sale of the Property would be paid to BH and not to the Judgment Creditor;

iv)     the document omitted the words ‘(subject to deed of company arrangement)’ (the Statutory Words) after PSA’s name in contravention of s 450E Corporations Act 2001.

v)     Further particulars will be supplied after discovery and interrogatories.

22.     The Purported Variations were not valid:

a)     No notice of meeting was given to CAT or Mr & Mrs Frigger in contravention of s 445F the Act;

b)     No meeting was convened to consider the variations to the DOCA in contravention of s 445F (2) the Act;

c)     No notice of proposed resolution under s 445A was given to CAT or Mr & Mrs Frigger in contravention of s 445F (3) the Act;

d)     The purported variations of the DOCA were made without a creditors‟ resolution in contravention of s 445A the Act.

23.     In the premises of the matters in paragraph 22 the Purported Variations had no effect and were void.

24.     Resulting from the Written Submissions the Court of Appeal ordered CAT to pay the Defendants $800,917.08 immediately on 7 December 2009 and made an indemnity cost order against CAT because it opposed the repayment orders.

25.     In the premises of the matters in paragraphs 21-24 the Defendants were not entitled to the repayment orders issued by the Court of Appeal on 16 December 2009.

36    I accept, and essentially adopt the respondents’ submissions because I agree with them, that the Friggers should not have leave to plead in these forms.

37    Paragraphs 20-23 – Whilst at first blush the thrust of the proposed pleading appears to be that the DOCA was only “purportedly” as opposed to actually amended, the implication of the plea at para 20 is that something other than “purported” is meant, and therefore, it must have been an actual amendment. If not, the proposed plea is incapable of being understood and on its face would be embarrassing. If, however, it means to assert there was an actual amendment, the plea is in direct conflict with Holbrook, where it was held that there were no variations to the DOCA after August 2009, and so seeks to mount a collateral attack on this finding. As such it is an abuse of process and leave to plead in that way should be refused.

38    Paragraphs 24-25 – These paragraphs make plain that, in fact, an underlying purpose of the preceding pleas is to make a collateral attack on the decision, appeal orders and the entitlements of PSA and the second respondent to those orders in CACV 76 of 2008. Accordingly, they would constitute an abuse of process. This same argument, by CAT, regarding the effect of the DOCA was rejected by the Court of Appeal in December 2009. The merit of the argument was substantially criticised (without finally deciding the point) by the Court of Appeal in Professional Services of Australia Pty Ltd v Computer Accounting & Tax Pty Ltd [No 4] [2015] WASCA 253 at [31] ([2015] WASCA 253) when the Friggers put it forward again in 2015.

39     Further, the other party to the appeal CACV 76 of 2008 was CAT (now in liquidation) and not the present applicants. The Friggers, in my view, have no standing to intervene in those proceedings, nor in CIV 2265 of 2009 where they made the same argument in unsuccessfully seeking to be joined as parties to that action. In CACV 76 of 2008, the Court of Appeal did not allow the Friggers leave to be heard. See [2015] WASCA 253 and in particular at [23]-[24]. Prior to that, Simmonds J refused their application to be joined as parties to CIV 2265 of 2006. See Computer Accounting & Tax Pty Ltd v Professional Services of Australia (No 7) [2014] WASC 360 ([2014] WASC 360). The appeal by the Friggers against this last decision, CACV 118 of 2014, now stands dismissed with costs against the Friggers to be taxed.

40    Further, paras 24 and 25 of the proposed substituted statement of claim are embarrassing as it is not possible to see from the claim as pleaded, how the making of submissions to the Court of Appeal (which the Court accepted) or the equally embarrassing pleas in paras 20-23 regarding “purported” variations to the DOCA, can give rise to the claim that the appellants in CACV 76 of 2008 (PSA and the second respondent) were “not entitled to” the appeal orders. As cl 6.13 of the DOCA provided, notwithstanding anything to the contrary, PSA and the second respondent (Mr Banning was then deceased) were at liberty to pursue the appeal. It makes little sense for the Friggers to assert that, upon success of that appeal, PSA and the second respondent were not entitled to the judgment they received. Leave to plead in these terms should be refused.

The second cause of action

41    Paragraph 26 of the proposed substituted statement of claim, relating to the “second cause of action” states:

26     The Written Submissions were a collateral abuse of process and had collateral purposes:

a)     effectively vary the DOCA without a creditors’ resolution;

b)     obtain funds in PSA and Mr Campbell-Smith both of which were insolvent entities and which did not own the funds;

c)     obtain funds under the control of Mr Lenhoff for the purposes of paying Mr Lenhoff his unpaid legal charges;

d)     obtain a judgment for the purposes of issuing a statutory demand;

e)     obtain a judgment that was $23,105.76 above the DOCA amount;

f)     remove funds from Banning Holdings Pty Ltd to the detriment of that company’s shareholders including Mrs Sandra Banning and receiver Mr Graeme Lean;

g)     defeat the effect of clause 6.3.    

h)     obviate Mr Campbell-Smith’s indemnities promising to be personally liable for the respondents‟ legal costs;

42    Leave to plead should be refused for the reasons set out in the respondents’ submissions, which I essentially adopt because I agree with them.

43    Paragraph 26 – As an overall proposition, no evidence or submissions have been put forward by the Friggers to justify the claim that the submissions were an actual or collateral abuse of process, but most importantly, the party entitled to complain about these matters is the liquidator of CAT (against whom the judgment was made in CACV 76 of 2008) and not the Friggers. No attempt to justify why the liquidator’s role should be usurped in that regard has been put forward in the evidence filed by them. The rights of a creditor (secured or otherwise) do not justify overriding the clear proscriptions in ss 471A, 471B and 477 of the Corporations Act. The Friggers do not have leave to commence these proceedings on behalf of CAT in relation to its property (s 471B), or to control the exercise of the liquidator’s powers (s 477(6)).

44    Paragraph 26(a) – This proposed plea makes little sense for the same reasons given in dealing with the first cause of action, and is an abuse of process. Leave to plead it should be refused.

45    Paragraph 26(b) – No material facts are pleaded (nor has any evidence been filed) by the Friggers to justify the allegations regarding the alleged insolvency, and plainly, PSA and the second respondent (as the appellants in CACV 76 of 2008) were entitled to the fruits of the judgment given by the Court of Appeal pursuant to the appeal orders. The proposed plea is an attempt to maintain the opposite of an issue already decided to the contrary and is an abuse of process. Leave to plead it should be refused.

46    Paragraph 26(c) – It is not at all obvious that it is an abuse of process for a solicitor to have an amount paid into Court, for security for costs, paid out to him on instructions and then to use it for the payment of his unpaid fees. This proposed plea is embarrassing and leave to plead it should be refused.

47    Paragraph 26(d) – No material facts are pleaded as to this, and no evidence is given as to how, at the time the written submissions were prepared, any of the respondents were aware that CAT would not immediately pay the judgment sum pursuant to the appeal orders. This part of the proposed plea is embarrassing and leave to plead it should be refused.

48    Paragraph 26(e) – No material facts are pleaded as to this and the proposed plea makes little sense as it is obvious that the submissions were prepared to obtain the judgment to which PSA and the second respondent were entitled in CACV 76 of 2008 pursuant to the Court’s reasons. As such there can be no abuse of process for doing so. The plea is embarrassing and leave to plead it should be refused.

49    Paragraph 26(f) – No material facts are pleaded as to this and the proposed plea makes little sense. The judgment was obtained against CAT to enable enforcement (if necessary) by PSA and the second respondent so as to reimburse Banning Holdings Pty Ltd in terms of clause 6.1.3 of the DOCA. There can be no suggestion of any abuse of process by those actions. Even if what is alleged were true (which the respondents have denied) it is difficult to see how the Friggers could pursue the respondents for losses caused to the first respondent by some of the other respondents. Nor is it easy to see how they could sue on behalf of Mr Lean for the same purposes. This part of the plea is embarrassing and leave to plead it should be refused.

50    Paragraph 26(g) – No material facts are pleaded as to this and the plea makes little sense. There was no termination of the DOCA (which is implicit in what is otherwise pleaded by the Friggers) at the time the appeal orders were made. This is another plea that appears to be proposed to establish the contrary of the matters already found by Simmonds J, and so is an abuse of process. Leave to plead it should be refused.

51    Paragraph 26(h) – No material facts are pleaded as to this and the plea makes little sense since the appeal orders did not affect in any way, the second respondent’s indemnities. Even if it did (which the respondents have denied), the Friggers cannot pursue some of the respondents for losses caused to those respondents by some of the other respondents, as appears to be claimed. This part of the plea is embarrassing and leave to plead it should be refused.

The third cause of action

52    Paragraphs 27 and 28 of the proposed substituted statement of claim relating to the “third cause of action” state:

27     On or about 4 December 2009 the Defendants instructed Mr Lenhoff, and Mr Lenhoff prepared and filed, an application for freezing orders (‘the Freezing Orders’) in CIV2265/2006 which named Mr & Mrs Frigger as respondents. The application did not contain the Statutory Words.

28    In the premises of the matters in paragraph 22 the Defendants had no entitlement to obtain Freezing Orders against Mr & Mrs Frigger’s superannuation assets and the Freezing Orders were a collateral abuse of process which had the following collateral purposes:

a)     To freeze $4,000,000 of Mr & Mrs Frigger’s assets in circumstances where there was no risk that the Court’s processes would be frustrated;

b)     To conduct a covert Public Examination of Mrs Frigger for the liquidators benefit including the financial documents of the Frigger Super Fund;

c)     to make unsubstantiated allegations of criminality against Mr & Mrs Frigger in relation to certain transactions between CAT and Mr & Mrs Frigger all of which were legitimate and complied with Australian Accounting Standards and the Income Tax Assessment Act 1936;

d)     The Defendants never intended to prosecute the Freezing Orders to resolution;

e)     to earn Mr Lenhoff and counsel Mr Stephenson representing the Defendants $200,000 in sham legal fees, which fees were not payable by the Defendants but by Mr & Mrs Frigger:

Particulars

In these proceedings Mr Eastwood on behalf of the Defendants has sworn that the Defendants have not paid legal costs in the Freezing Orders since 2010 despite Mr Campbell-Smith’s undertaking referred to in paragraph 26(h) and the respondents’ assets referred to in paragraph 8.

53    For the reasons advanced in the respondents’ submissions, which I essentially adopt because I agree with them, leave to plead in those terms should be refused.

54    Paragraphs 27-28 – Due to its reliance on para 22 of the proposed substituted statement of claim, the proposed plea is embarrassing.

55    The essence of the cause of action appears to constitute an attack on the decision of Simmonds J granting the freezing orders. See Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 – the original freezing order decision. As such it proposes a collateral attack on that decision and is an abuse of process. It should be noted that the original freezing order decision was impugned in CACV 23 of 2012 as to the costs orders in the proceeding only. The Court of Appeal found that the costs of the second and third respondents should be paid on an indemnity basis by the Friggers because of their behaviour in the litigation by filing affidavits, at least one of which was untrue and affected the course of justice. See Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69 at [81]-[109]. Thus to the extent that this cause of action appears to be the basis for a claim that the respondents should be permanently restrained by injunction from “claiming” the costs orders made as a result of that appeal, it is also clearly a collateral attack on the decision of the Court of Appeal and an abuse of process. Accordingly, leave to plead those paragraphs should be refused.

The fourth cause of action

56    Paragraphs 29-33 of the proposed substituted statement of claim relating to the “fourth cause of action” state:

29     On 16 December 2009 the Defendants served a Statutory Demand on Mrs Frigger at her residence in Applecross for $800,917.08.

30     The Statutory Demand did contain the Statutory Words to ensure it was not capable of being set aside for defect pursuant to the Act.

31     Pursuant to the matters in paragraph 22-23 the Defendants had no entitlement to issue the Statutory Demand.

32     The Statutory Demand was issued pursuant to s 459E the Act and was an abuse of process by the Defendants pursuant to the matters in paragraph 22-23.

33     Notwithstanding the terms, and their rights, pursuant to the DOCA Mr & Mrs Frigger sought to resolve the legal dispute with the respondents which had commenced in September 2003 and made written offers (the Offers):

Particulars

i)     In a letter dated 21 January 2010 offered to pay into a joint account with the respondents $285,317.08 being an estimate of balance remaining after the Taxed Costs. On 21 January 2010 in the Provisional Liquidator hearing Mr Tim Stephenson advised the court ‘there would be no negotiation’.

ii)     In a letter dated 3 February 2010 Kott Gunning on behalf of Mr & Mrs Frigger to the provisional liquidator offered to secure $850,000 in a joint account pending the resolution of CAT‟s special leave application and the Taxed Costs;

iii)     In a letter dated 5 February 2010 Kott Gunning on behalf of Mr & Mrs Frigger to Mr Lenhoff offered to secure $850,000 in a joint account pending resolution of CAT’s special leave application and the Taxed Costs;

iv)    In a written undertaking dated 8 February 2010filed in COR2/2010 Mr Frigger undertook to deposit $850,000 in a term deposit pending the resolution of the Taxed Costs;

v)     In an email dated 16 February 2010 Mrs Frigger advised Mr Lenhoff she had arranged for $850,000 for the benefit of CAT from Bankwest to be secured pending the resolution of CAT’s special leave application and the Taxed Costs;

vi)     In an affidavit dated 3 March 2010 Mrs Frigger undertook to secure $850,000 for the benefit of CAT’s creditors pending the resolution of CAT’s special leave application and the Taxed Costs;

vii)     In a letter dated 18 May 2010 Dutton Legal wrote to the liquidator on behalf of Mr & Mrs Frigger offered to secure $850,000 in an account pending the resolution of CAT’s special leave application and the Taxed Costs. On 20 May 2010 Mr Stephenson advised the court that $850,000 was not sufficient and his clients would not accept the offers.

viii)    During a telephone conversation between Mrs Frigger and Mrs Sandra Banning on or about 7 October 2015 Mrs Banning informed Mrs Frigger that she had not been informed of the Offers and that she had been ‘milked’ by her Solicitors.

57    For the reasons advanced by the respondents in their submission, which I essentially adopt because I agree with them, leave to plead in these terms should be refused.

58    Paragraphs 29-33 – It is not in issue that the statutory demand was issued by the second and third respondents to CAT based upon the non-payment of the judgment contained in the appeal orders. It was not set aside by CAT and in turn it formed one of the bases of the proceedings COR 2 of 2010 brought to wind-up CAT in insolvency (the liquidation proceedings).

59    The plea is relevant to the proposed pleas in paras 22 and 23 of the proposed substituted statement of claim, which I have found are embarrassing.

60    The Friggers have no standing to raise any claim on behalf of CAT seeking findings that the statutory demand, which CAT itself did not challenge successfully, was an abuse of process.

61    In seeking such findings the Friggers are plainly seeking to make a collateral attack on the decision of Master Sanderson in the liquidation proceedings. See Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting & Tax Pty Ltd [No 3] [2010] WASC 93 at [2]-[5], [13] and [17] ([2010] WASC 93), in which the validity and service of the statutory demand was accepted, as well as the failure to comply with it by CAT and CAT’s insolvency. These pleas, if allowed, constitute an abuse of process.

62    Paragraph 33 of the proposed substituted statement of claim, that the making of written offers (which the first to fourth respondents maintain are “without prejudice”), which were never accepted (and therefore cannot have given rise to any agreement to compromise the liquidation proceedings) should be considered irrelevant to the validity or otherwise of the statutory demand, and/or to the validity of the result in the liquidation proceedings, and so are embarrassing. Leave to plead them should be refused.

The fifth cause of action

63    Paragraphs 34 to 39 of the proposed substituted statement of claim relating to the “fifth cause of action” state:

34     On 8 January 2010 the Defendants applied for the appointment of Mr Kitay as provisional liquidator to CAT in COR2/2010. The application did not contain the Statutory Words.

35     On 8 January 2010 the Appellants applied for the winding up of CAT in insolvency in COR2/2010. The application did not contain the Statutory Words.

36     On 21 January 2010 Mr Kitay was appointed as provisional liquidator to CAT based on the repayment orders: [2010] WASC38 @ [12].

37     On 6 May 2010 CAT was wound up in insolvency based on the repayment orders: [2010] WASC 93 @ [5].

38     In the premises of the matters in paragraphs 22-26 the Defendants were not entitled to the orders made on 21 January 2010 and 6 May 2010.

39     In the premises of the Offers, the applications in paragraphs 34 and 35 were not made for the proper purposes of the process pursuant to s 459Q and or s 461 the Act but were for ulterior and or collateral purposes:

a)     To wrest control of CAT from Mr & Mrs Frigger under the control of the liquidator of their choice;

b)     To damage the reputation and credit of Mr & Mrs Frigger as directors of a purported insolvent company;

c)     To earn Mr Kitay $500,000 in liquidation fees and expenses in circumstances where Mr Kitay has not proofed any creditors claims;

d)     To obtain the consent of Mr Kitay to set aside the Original Judgment for the purposes of increasing the Defendants’ proof of debt in the liquidation:

Particulars

On or about 7 May 2014 in a letter to Mr Kitay Mr Eastwood demanded Mr Kitay consent to the Original Judgment being set aside on the ground the Original Judgment was obtained by a fraud on the court by Mr & Mrs Frigger

e)     To institute a counterclaim against Mr & Mrs Frigger for $14,500,000 (the Counterclaim);

f)     In combination with Mr Lenhoff and Mr Stephenson who intended to issue bills of costs for $350,000 to the Defendants for the purposes of negativing the Taxed Costs which bills of costs were found by Justice Newnes to be unjustified: [2010] WASCA177;

Particulars

i)     The Defendants filed a Statement of Assets and Liabilities in CACV51/2010 listing the Defendants’ legal costs in exactly the same amount as the estimated Taxed Costs of $350,000;

ii)     A written demand by Mr Lenhoff dated 17 February 2010 that Mr & Mrs Frigger:

a.     pay the Appellants $800.917.08 unconditionally;

b.     pay the costs of all the legal process without regard to the limits in the Scale;

c.     pay all costs of the liquidation;

vi)     A written demand by Mr Lenhoff dated 21 May 2010 that Mr & Mrs Frigger:

a.    pay the appellants $1,150,000 including costs of Appeal, CIV1727/2009, COR2001/2009 and CIV2265/2006;

b.     pay costs of the liquidation application of $50,399.40;

c.     pay costs of the provisional liquidation application of $13,992.55;

d.     pay costs of the liquidation unconditionally without court approval;

e.     discontinue appeal against the costs in COR2/2010 and pay the appellants costs;

64    For the reasons advanced in the respondents’ submissions (in a section mistakenly dealing with the fourth cause of action for a second time), which I essentially adopt because I agree with them, leave to plead in these terms should be refused.

65    Paragraphs 34-38 – This relies on para 22 of the proposed substituted statement of claim, which is embarrassing for the reasons given above.

66    The Friggers have no standing to make this application for orders on behalf of CAT for the reasons I have given above.

67    The proposed pleading seeks to make a collateral attack on both the decision of Simmonds J appointing a provisional liquidator to CAT and removing the liquidator appointed by CAT itself (Professional Services of Australia Pty Ltd v Computer Accounting & Tax Pty Ltd [2010] WASC 38 ([2010] WASC 38)), and the decision of Master Sanderson to wind up CAT in insolvency in the liquidation proceedings. It would be an abuse of process to plead in such terms. Leave to plead them should be refused.

68    Paragraph 39 – As presently formulated, it is impossible to discern the nature of the cause of action the Friggers have sought to maintain and the overarching claim is embarrassing. I agree also that many of the particulars are unintelligible, for example, (b), (c), (d), and (e), which relate to the interests of CAT, not the Friggers.

69    Additionally, the paragraph is based, in part, upon particulars which would be an abuse of process. Paragraph 39(a) seeks to maintain that proceedings COR 2 of 2010 against CAT, including the application for the appointment of a provisional liquidator, were an abuse of process and thereby comprise a collateral attack on the earlier decisions made. Particular (f) appears to relate to the orders for costs made in CACV 23 of 2012, CACV 24 of 2013, CIV 1727 of 2009 and CIV 2265 of 2006 and would constitute an impermissible collateral attack on the costs decisions referred to previously.

70    Paragraph 39(f) is also embarrassing because no such “finding” can be found in the decision referred to.

The sixth cause of action

71    Paragraphs 40 to 41 of the proposed substituted statement of claim relating to the “sixth cause of action” state:

40     During the period 21 January 2010 until 2011 Mr Lenhoff conducted a campaign of tortious interference in Mr & Mrs Frigger’s legal representation for the purposes of inducing and procuring the legal representatives to withdraw their services:

Particulars

i)     Mrs Frigger spoke to Mr Tom Darbyshire of Kott Gunning who confirmed Mr Lenhoff had made defamatory comments about her in January 2010;

ii)     On or about 3 and 4 March 2010 the employees of Clavey Legal Pty Ltd made Notes to File recording telephone conversations with Mr Lenhoff who made defamatory comments about Mrs Frigger

iii)     On 28 April 2010 Mr Geoff Dutton informed Mrs Frigger that Mr Lenhoff had made defamatory comments about her during their first telephone conversation

iv)     On or about December 2011 Ms Louise Horwood failed to deny that Mr Lenhoff had made defamatory comments about her during their first telephone conversation

41     As a result of Mr Lenhoff’s tortious interference referred to in paragraph 40 Mr & Mrs Frigger had no legal representation and or no legal representation prepared to represent them in the following:

a)     Application to terminate provisional liquidation dated 8 February 2010;

b)     Application for stay of the Appeal Judgment dated 23 March 2010;

c)     Opposing the application to wind up CAT dated 8 February 2010;

d)     Opposing the Freezing Orders during the period 21 January 2010 to 7 July 2010;

e)     Magistrates Court application for refund of payment made to Mr Forbes as unjust enrichment.

72    For the reasons advanced in the respondents’ submissions, which I essentially adopt because I agree with them, leave to plead in these terms should be refused.

73    Paragraphs 40-41 – This plea is not made against the first to fourth respondents but against Mr Lenhoff, who is not a party to the proceeding, and it is unclear in any event if this Court would have jurisdiction to hear and determine a standalone action for fraud against Mr Lenhoff.

The seventh cause of action

74    Paragraphs 42 to 45 of the proposed substituted statement of claim relating to the “seventh cause of action” state:

42     In or about September 2010 Mr Lenhoff paid $10,000 in part payment of Mr Kite’s costs in the Counterclaim.

43     In or about September 2010 Mr Eastwood paid $20,000 in part payment of Mr Kite’s costs in the Counterclaim.

44     In or about February 2012 Mr Stephenson on behalf of BH agreed to indemnify Mr Kitay for indemnity costs that Mr Kitay may be ordered to pay Mr & Mrs Frigger in the Counterclaim.

45     In an affidavit filed in WAD674/2015 Mr Kitay did not list Mr Lenhoff, Mr Eastwood or BH as creditors of CAT and in those circumstances it is to be implied that those parties have a covert personal interest in the liquidation and Counterclaim.

75    For the reasons advanced by the respondents in their submissions, which I essentially adopt because I agree with them, leave to plead in these terms should be refused.

76    Paragraphs 42-45 – It would appear that the counterclaim referred to is the claim of Mr Kitay as liquidator of CAT in CIV 2765 of 2010, and the liquidation referred to is that of CAT.

77    The pleas are embarrassing as they obscure the real questions in controversy, are ambiguous or are not reasonably intelligible.

78    They also appear to be calculated to place in issue in these proceedings matters that are being litigated in CIV 2765 of 2010, when the parties to that claim are not before this Court and are engaged in litigation elsewhere on the same issues. I consider this constitutes an abuse of process. Leave to plead in this way should be refused.

The loss and damage question

79    In relation to “loss and damage”, paras 46 to 52 of the proposed substitute statement of claim state:

46     In the premises of the matters in this document the conduct of the respondents was contrary to the object of Part 5.3A Corporations Act 2001.

47     In the premises of the contraventions of the Corporations Act 2001 in paragraphs 21-26 Mr & Mrs Frigger are entitled to interlocutory and permanent injunctions and damages pursuant to s 1324 Corporations Act 2001.

48     Further in the premises of:    

a)     the collateral abuses of process in paragraphs 27-39

b)     The tortious interference by Mr Lenhoff;

c)     The unsubstantiated allegations of criminality by Mr Stephenson in paragraph 28(c) Mr & Mrs Frigger have suffered substantial loss and damage.

Reputation

49     In CACV23 and CACV24/2013 the appeal judges relied on Mr Stephenson’s submissions in paragraph 28 (c) and the contraventions in paragraph 21-26 and published a judgment on the Internet which has permanently damaged Mrs Rigger’s reputation: [2014] WASCA 93; the judgment was referred to the Director of Public Prosecutions who took no action against Mrs Frigger

50     In [2014] WADC 15 the trial judge relied on the same matters and published a judgment on the Internet which has permanently damaged Mrs Rigger’s reputation;

51     The Freezing Orders judgments are published on the Internet and have permanently damaged Mr & Mrs Rigger’s reputation and credit;

52     As directors of a company wound up in purported insolvency Mr & Mrs Rigger’s creditworthiness has been permanently damaged and they are no longer able to obtain loans in Australia;

80    For the reasons advanced by the respondents in their submissions, which I essentially adopt because I agree with them, leave should not be granted to plead in those terms.

81    Paragraph 46 – This plea is plainly embarrassing as it is not clear what matters in the proposed pleading are relied upon to found it.

82    Paragraph 47 – For the same reasons that leave to plead paras 21–26 should be refused, leave to plead this paragraph should also be refused. Further, s 1324(1) does not permit damages to be awarded.

83    Paragraph 48 – For the reasons that leave to plead paras 27–39 should be refused, leave to plead this paragraph should also be refused.

84    Further, para 48(b) relates to the tort claim against Mr Lenhoff, as to which I have ruled leave to plead should be refused.

85    Paragraphs 48(c) and 49-52 – These appear to be a new and, as yet, unpleaded claim of defamation against counsel for the respondents relying upon submissions made in the Supreme Court when acting as counsel. As a standalone proceeding against counsel, the proposed action would not appear to be within the jurisdiction of this Court.

86    There is no relationship between such a tort claim and any of the other matters pleaded, and the matters pleaded do not provide any basis, in my view, for the claims under s 447A and s l324 of the Corporations Act against the first to fourth respondents.

Paragraphs 53 to 57 of the proposed substituted statement of claim

87    Paragraphs 53 to 57 of the proposed substituted statement of claim state:

Economic loss

53)     Costs paid and ordered to be paid:

i)     Freezing Orders $ 294,538.83

ii)     Provisional Liquidation $ 50,021.30

iii)     Winding up $150,729.18

iv)     Appeal Judgment CACV76/2008 $18,687.77

Total $513,977.08 17

54)     Losses incurred in the liquidation of CAT

i)     $430,000 being the difference between an offer received from United Fuel Pty Ltd in December 2013 of $1,500,000 and $1,070,000 concluded sale of the Armadale Property to Viva Energy Australia Ltd;

ii)     Costs of joinder in CIV2265/2006 $20,927

iii)     Forbes review of $60,925.37

iv)     Vogt Graham Magistrates Court $47,500

v)     BBV solicitor/client taxation $135,000

vi)     Loss of accounting practice valued at $109,000 - $115,000

vii)     Legal costs paid and ordered to be paid in District Court CIV 1221/2011 and CACV56/2015 $94,757.71

viii)     Further legal costs in CACV56/2015 pending the resolution of that appeal.

55)     In the premises of the matters in this document Mr & Mrs Frigger are not better off under the voluntary administration of PSA being the object of part 5.3A the Act.

56)     Had PSA been wound up in insolvency Mr & Mrs Frigger would have received $650,000 sale proceeds of 11 Lacey Street, Perth pursuant to Property (Seizure and Sale) Order dated 15 August 2008 and any remaining balance still owing on the judgement sum and Taxed Costs would have been paid from the sale of assets of the Deceased Estate, being a 50% share in Banning Holdings Pty Ltd.

57)     Instead Mr & Mrs Frigger have been subjected to:

a.     Continuous litigation since 2003 against the respondents;

b.     Litigation against Mr Kitay since 2010;

c.     Humiliation, embarrassment and loss of reputation

d.     The stress of defending a claim by Mr Kitay for $14,500,000 and the threat of losing $6,000,000 of Mr & Mrs Frigger’s retirement savings to insolvent litigation funder.

e.     The stress of dealing with an extremely hostile and cunning liquidator.

f.     The stress of dealing with Mr Lenhoff, Mr Stephenson and Mr Eastwood since December 2009.

88    For the reasons advanced by the respondents, which I essentially adopt because I agree with them, leave to plead in these terms should be refused.

89    Paragraph 53 – In order to claim these “costs”, which are payable but presently unpaid, as “losses”, this Court would have to entertain collateral attacks on the decisions giving rise to the costs liabilities. To allow this would be to sanction an abuse of process.

90    Paragraph 54(i) – This appears to invite the Court to decide an issue which is presently live between the liquidator of CAT and the Friggers in CIV 2765 of 2010 and so is an abuse of process.

91    Paragraph 54(ii) – This invites the Court to allow a collateral attack on the decision of Simmonds J refusing the Friggers’ application to be joined as parties to CIV 2265 of 2006 and awarding costs against them. See [2014] WASC 360. As such it is an abuse of process.

92    Paragraph 54(iii) – This aspect of the claim is unclear and embarrassing. There is no evidence filed by the Friggers to justify its inclusion.

93    Paragraph 54(iv) – This aspect of the claim is unclear and embarrassing. There is no evidence filed by the Friggers to justify its inclusion.

94    Paragraph 54(v) – This aspect of the claim is unclear and embarrassing. No evidence has been filed by the Friggers to justify its inclusion. What is known, however, is that BBV solicitors previously acted for CAT in CIV 2265 of 2006, so it is difficult to understand how the losses could be those of the Friggers. They cannot have been “caused” by any actions of the first to fourth respondents, which have all taken place after the conclusion of CACV 76 of 2008. Any such costs are the subject of the orders of Justice Simmonds made in 2015 on the remitter.

95    Paragraph 54(vi) – This aspect of the claim is unclear and embarrassing. No evidence has been filed by the Friggers to justify its inclusion. What is known is that what the accounting practice referred to was the subject of an affidavit of Mrs Frigger in early 2010, in which she deposed it was an asset of CAT, and it is therefore a matter for the liquidator to pursue.

96    Paragraph 54(vii) and (viii) – This aspect of the claim is unclear and embarrassing. No evidence has been filed by the Friggers to justify its inclusion. What is known is that District Court action CIV 1221 of 2011 was a claim between the Friggers and their former lawyer, Mr Clavey; and CACV 56 of 2015 is their appeal against the decision of Herron DCJ refusing their claim for damages against their former solicitor. See Frigger v Clavey Legal Pty Ltd [No 3] WADC 21. None of the present respondents were parties to the action and it is impossible to see how this unrelated proceeding can provide any basis for any of the matters referred to in the balance of the proposed substituted statement of claim.

97    Paragraph 55 – This aspect of the claim is unclear and embarrassing. No evidence has been filed by the Friggers to justify its inclusion. It is not clear what matters in the “document” would be relied upon for this purpose.

98    Further, as previously observed, the Friggers were not at any material time creditors entitled to anything pursuant to the DOCA.

99    Paragraph 56 – This plainly suffers from the same problem identified above and is embarrassing.

100    Further, to the extent that para 56 presumes that the Friggers were entitled to something from CAT (the actual creditor of PSA and the second respondent prior to the appeal orders) due to their alleged entitlements under the “litigation contract” or as creditors of CAT, to maintain that the entitlement still exists is to maintain an abuse of process due to either or both of a collateral attack against the appeal orders, or by seeking a trial in this Court on the issues alive between them and Mr Kitay in CIV 2765 of 2010.

101    Paragraph 57 – This aspect of the claim is unclear and embarrassing. No evidence has been filed by the Friggers to justify its inclusion or relationship to any of the causes of action identified. For example, regarding para 57(a), there is no evidence of litigation involving the first to fourth respondents and the Friggers since 2003. Paragraph 57(b), (d) and (e) are all issues between them and the liquidator of CAT, which do not involve the first to fourth respondents and appear to refer to proceeding CIV 2765 of 2010, which the Friggers commenced against the liquidator.

102    Unless what is now being asserted is to be taken as a claim either for “defamation”‘ (para 57(c)) or “personal injuries” (para 57(d), (e) and (f)) these claims have nothing to do with the matters raised under s 447A or s 1324 of the Corporations Act 2001.

Paragraphs 58-61 of the proposed substituted statement of claim

103    Paragraphs 58 to 61 of the proposed substituted claim state:

58) `In the circumstances of the matters in this document pursuant to legal professional privilege Mr & Mrs Frigger are not able to ascertain circumstances that may make Mr Tim Stephenson and Mr Cameron Eastwood concurrent wrongdoers in this claim.

59) `In the circumstances of the matters in this document without knowledge of the conduct of the Deed Administrator Mr & Mrs Frigger are not able to ascertain circumstances that may make Mr Kim David Holbrook a concurrent wrongdoer in this claim.

60)     In the premises of the matters in paragraphs 58 and 59 should the respondents have reasonable grounds to believe that Mr Tim Stephenson, Mr Cameron Eastwood and Mr Kim Holbrook are concurrent wrongdoers the respondents are required to provide Mr & Mrs Frigger with written notice of the information pursuant to s 5AKA Civil Liability Act 2002.

61)     In the premises of the matters in this document Mr Campbell-Smith and Mr Lenhoff are Excluded Concurrent Wrongdoers under s 5AJA Civil Liability Act 2002.

104    I accept the respondents’ submissions in respect of the Civil Liabilities Act 2002 (WA) pleaded in these paragraphs and essentially adopt them.

105    Paragraphs 58 and 59 – There is no claim of tort made against any of the first to fourth respondents and therefore the claim is unintelligible and embarrassing. No evidence has been filed by the Friggers to justify its inclusion.

106    Even if there were such evidence, it would not appear to be within the jurisdiction of this Court to hear such a claim as a standalone action.

107    Paragraphs 60 and 61 – These appear to relate to an, as yet, unpleaded claim for tort.

The claim generally

108    In relation to the claim generally, the respondents submit:

94.    The 1st- 4th Respondents also say that the prayer for relief at B, E, F, & G and the maters deposed to in the affidavit of Ms Doray sworn 5 August 2016 make plain that these proceedings have been issued for, and, are being used as the basis for delaying the enforcement of the costs Orders owing by the Applicants to the 1st - 4th Respondents as such they are an abuse of process pursuant to Flower & Hart’s case (op. cit.@ [57] hereof). It is not necessary to find that the Applicants’ claim is ‘unarguable’ before finding that, nevertheless, it is an abuse because it is plainly intended to cause that delay. The amendments sought should be refused on that basis, and, the proceedings dismissed.

109    I would not, without evidence adduced at a hearing, formally rule out this submission, although there appears to be some basis to it.

Other submissions

110    Following the hearing of the application and the making of oral submissions by the parties on 12 August 2016, Mrs and Mr Frigger were permitted to put further submissions. For self-represented parties this appeared appropriate in light of the significant issues raised on behalf of the respondents.

111    In their further written submissions, filed 15 August 2016, Mrs and Mr Frigger relevantly submitted:

2.    At the hearing on 12 August 2016, His Honour first allowed the respondents’ counsel to make oral submissions opposing the applicants’ application to file an amended statement of claim and originating summons (‘the Amendments Application’). Mrs Frigger on behalf of the applicants then made responsive submissions, and Mr Stephenson responded.

3.    At approximately 2.30pm Mrs Frigger was directed to make oral submissions in the Restraint Application, Mr Stephenson made responsive submissions and Mrs Frigger responded.

4.    During Mr Stephenson’s responsive submissions in the Restraint Application, he again made further and new oral submissions in the Amendments Application. Because of the long hearing and pressure to comply with the time restriction, Mrs Frigger was unable to respond to those submissions.

5.    The new submissions were:

(a)    Clause 6.1.3 of the DOCA required the ‘excess amount’ to be immediately repaid to Banning Holdings Pty Ltd, and the set-off of CAT’s legal and enforcement costs (‘the Set-off Amount’) allowed under clause 6.13 was of no effect.

(b)    If CAT/the applicants had paid the ‘excess amount’ to Banning Holdings, the causes of action in this proceeding would not have arisen.

6.    In response the applicants say:

(a)    The word ‘notwithstanding’ in clause 6.13 applies to all matters in that clause, including PSA/Estate of Banning’s right of appeal, and ‘the Set-off Amount’;

(b)    Mr Stephenson’s statement in paragraph 5(b) is false:

(i)    On 20 January 2010 the applicants offered to secure funds which was $23,000 more than the ‘excess amount’, less an amount to be estimated by Simmonds J as the Set-off Amount; Mr Stephenson submitted in open court the respondents would not accept such an arrangement: Frigger Affidavit 30-3-16 @ AF8;

(ii)     On 21 January 2010 Mr Lenhoff demanded at least $1,200,000; plus CAT’s application to set aside the DOCA be dismissed and the applicants had to pay the costs of that application: Frigger Affidavit 30-3-16 @ AF8 page 44;

(iii)    A similar and extended demand was made by Mr Lenhoff on 17 February 2010: Frigger Affidavit 30-3-16 @ AF8 page 45;

(iv)    A similar and extended demand was made by Mr Lenhoff on 21 May 2010: Frigger Affidavit 30-3-16 @ AF8 page 48.

7.    The applicants also rely on Frigger Affidavit dated 7 April 2016, which gave evidence about false submissions made by Mr Stephenson on 5 April 2016. In those circumstances the applicants submit that Mr Stephenson cannot be trusted to tell the truth to this Honourable Court and is a further reason for him to be restrained.

112    In the interests of fairness, the respondents were then given the opportunity to respond to those further written submissions, which they did and in which they submit as follows:

1.    Paragraph 5(a) - No such submission was made nor intended and the fact the Applicants have chosen to construe the submission as such does not make it so. The submission that made was that (assuming cl 6.1.3 were properly construed):-

(a)    The circumstance provided for by the first sentence of cl 6.1.3 (p.27 of the affidavit of Mrs Frigger sworn 26 November 2015) did not ever eventuate because CAT’s costs have never been taxed.

(b)    The circumstance provided for by the second sentence of cl 6.1.3 did come to pass, but, CAT never made any payment to PSA as required which supported the further submission that in fact it was CAT via the actions of its directors (the present Applicants) which chose this clear and fundamental breach of the DOCA to occur (which was why it was submitted to be galling to the 1st - 4th Respondents to hear from the Applicants that PSA & the 2nd Respondent were in breach of the DOCA notwithstanding they had overpaid the amount due to CAT and had never been reimbursed by CAT when it was required to do so!!).

(c)    The circumstance provided for by the third sentence of cl 6.1.3 never came to pass either for the same reasons as in [l(a)] above because CAT’s costs were never taxed, and, therefore it never had any right to set-off an amount of taxed costs against the amount immediately repayable by virtue of the appeal decision (whether to Banning Holdings or PSA is immaterial) as provided in clause 6.1.3. It was further submitted there was no warrant for the clause to be read as Mrs Frigger maintained in oral submissions, namely, that the right to immediate repayment in clause 6.1.3 was required to be postponed until CAT’s costs were actually taxed.

(d)    Further, it is plain from its terms that cl 6.13 was of overriding effect and would have overrode cl 6.1.3 to the extent necessary and that was the submission made at the hearing - see more below in regards paragraph 6 of the Submissions dated 15 August 2016.

2.    Paragraph 5(b) - No such submission was made nor intended and the fact the Applicants have chosen to construe the submission as such does not make it so. The submission made was that in the case of the Statutory Demand and the liquidation proceedings based on it (COR 2 of 2010), and, arguably in the case of the ‘Freezing Orders’ none of those steps would have been necessary had CAT complied with the Appeal Orders (see annexure “CVE 2” to the affidavit of Mr Eastwood sworn 9 December 20 15). It was also submitted that, after those actions had been taken by PSA & the 2nd Respondent, the proper way to stop them (if there had been no agreement made pursuant to the various offers - see more below) was to make a payment into Court. It is the ultimate sophistry to submit that the deliberate failure/refusal of the Applicants to make the payment-in by or on behalf of CAT (or even on their own behalf in the case of the ‘Freezing Orders’) was a matter showing that the proceedings were ‘unnecessary’ as was submitted by Mrs Frigger.

3.    Paragraph 6(a) - It is clear, and, was expressly stated in submissions that clause 6.13 gave rights to the Appellants in the Appeal (CACV 76 of 2008) and not to CAT. Those rights were clearly intended to be paramount to anything else provided in the DOCA (that is even to the extent of any perceived conflict with the rest of the DOCA) and enabled the Appellants to proceed with the Appeal notwithstanding the payment of the Original Judgment (by the loan from Banning Holdings) to CAT provided by the DOCA. That is, any payment to CAT was accepted by all parties to the DOCA as ‘without prejudice’ as opposed for example to a final settlement of the judgment owing to CAT. The clause then went on to provide that, if the Appeal was successful, there would be a right to set-off any amount which by virtue of that success became payable to the Appellants against any other sums payable by them to CAT (e.g. CAT’s taxed costs - of which there was never any such costs to be set-off as has already been demonstrated). Clearly, none of those matters affected the immediate obligation on CAT to comply with the Appeal Orders.

4.    Paragraph 6(b) - Although the 1st - 4th Respondents maintain their objection to the use of the offers to settle the proceedings COR 2 of 2010 (and perhaps other matters mentioned in the correspondence) on the basis that they are ‘without prejudice’, and, further due to the futility of using the same where there is no allegation that they gave rise to any concluded agreement, if the Court rules otherwise, they say as follows:-

(a)    The offer of 21 January 2010 (p.35 of the affidavit of Mrs Frigger sworn 30 March 2016) was for payment of only $285,317.08 into a joint interest bearing deposit. There is therefore no warrant for the submission that his amount was ‘$23,000 more’ than the $850,000 or so then owing to PSA & the 2nd Respondent by CAT. The offer was properly rejected.

(b)    It is not accepted by the writer on the information available to Eastwood Sweeney Law (which does not include the files of M  Lenhoff) that the offer of 5 February 2010 was ever sent or was sent in the form suggested in the copy produced at p.36 of the affidavit of Mrs Frigger sworn 30 March 2016. Even if it was actually sent (which is not admitted) the offer provided in effect that all of the various proceedings, such as the COR 2 of 2010 and of the freezing orders needed to be first dismissed or set aside before the Applicants would make any funds available to CAT to be placed on deposit, and, even then the payment of them to any party was to be subject to the agreement of the parties or to further Order of the Court. In other words there is no warrant for the submission that the funds were to be paid into Court, or, that they were being made available unconditionally to satisfy the Appeal Orders (and the then costs incurred in pursuing the judgment including those of the provisional liquidator). The offer was properly rejected.

(c)    There cannot be any doubt that the email of 21 January 2010 is ‘without prejudice’ as it says so in the text at the top of the document at p.44 of the affidavit of Mrs Frigger sworn 30 March 2016. There is no warrant on the face of the letter for the claim in submissions    that the offer was a ‘demand’     for ‘at least $1,200,000’.

(d)    There is no warrant on the face of the letter at p.45 of the affidavit of Mrs Frigger sworn 30 March 20 I6 for the claim in submissions that the offer of I 7 February 2010 was an ‘extended demand’.

(e)    There cannot be any doubt that the letter of 21 May 2010 is ‘without prejudice’ as it says so in the text at the top of the document at p.47 of the affidavit of Mrs Frigger sworn 30 March 2016. There is no warrant on the face of the letter for the claim in submissions that the offer of 21 May 2010 was a ‘similar and extended demand’.

5.    Paragraph 7 - His Honour has already ruled that the Applicants cannot rely on the affidavit sworn 7 April 2016 for the purposes of an earlier application. The Applicants did not in any submissions made in writing, or, orally at the hearing of the applications on 12 August 2016 indicate that this affidavit was to be relied upon. There has been no proper opportunity to address those matters in submissions, or, in evidence given the lack of advice until after the said hearing of the Applicants’ intention to rely upon the affidavit and that should be refused. These new matters are plainly not put forward in response to the submissions of the writer at the hearing and leave to rely on the affidavit sworn 7 April 2016 should be refused.

6.    If the affidavit is allowed to be referred to by the Applicants the 1st - 4th Respondents seek a proper right of reply including by the provision of evidence in rebuttal of the contents of the affidavit.

113    I accept and adopt the respondents’ submissions, because I consider them to be correct.

Conclusion on amendment application

114    For these various reasons, leave to amend the originating process and statement of claim as proposed is refused.

Are the Friggers entitled to an order restraining practitioners?

115    In relation to the Friggers’ application for an order to restrain practitioners, Mrs and Mr Frigger submit as follows:

10.    The court enjoys an inherent jurisdiction to determine which of its officers are allowed to represent parties to argue cases, which is directed at preserving the proper administration of justice. In so doing, the court takes account of the appearance to a reasonably informed member of the public, and inquires into whether such a person would conclude that justice requires the lawyer be prevented from action.

11.    The jurisdiction to disqualify lawyers has been exercised in circumstances such as where the lawyer is likely to be called as a material witness in the case or where the subject matter of the litigation was likely to involve an evaluation of the lawyer’s conduct.

12.    Because of the potential for conflicting interests, and consequent implications for the integrity of the trial process, the court’s inherent jurisdiction to protect the proper administration of justice can operate to disqualify one of its officers from acting as both lawyer and witness. The court views the issue from the perspective of what a air- minded, reasonably informed member of the public would conclude about the requirements for the proper administration of justice: Halsburys Laws of Australia 250-5120

13.    The court’s exercise of this jurisdiction depends upon both the likelihood that the lawyer will be called as a witness on a material contentious matter, and also the impact of this upon the integrity of the trial process. Due weight is also given to the public interest that a litigant should not be deprived of counsel of choice without good cause, which in the balance may be impacted upon by the level of cost, inconvenience or even impracticability of the lawyer ceasing to act. The lawyer’s disqualification may be justified where, for instance, a fair-minded reasonably informed observer would perceive that in acting as a witness there arises the potential for the misuse of confidential information,8 there is the prospect that the lawyer is seen as having a personal interest in the outcome of the case, that the independence and objectivity of the lawyer may be otherwise compromised or that for some other reason the administration of justice would otherwise be imperilled. Delay in making the application to disqualify can, where prejudice will ensue, incline the court against disqualifying the lawyer. At the same time, an application made at a stage too early to determine whether the lawyer may be called as a witness may likewise be denied.

14.    Bahonko v Nurses Board of Victoria (No 3) [2007] FCA 491; BC200702374 at [15]-[18] (where the    applicant had made serious criminal allegations against a solicitor representing the first respondent, Middleton J ordered that the solicitor be restrained from acting in the proceedings because there was ‘a real likelihood of an evaluation of the conduct of [the solicitor] in the proceedings, and a real likelihood that [the solicitor] will need to justify or defend herself in the proceedings’,

15.    The applicants submit that the respondents’ solicitors were each involved in the matters in paragraph 9 above for their own personal benefit and their evidence will be necessary to prove those matters.

Cameron Eastwood

16.    Mr Eastwood will be a material witness in the following issues at trial:

a.    The circumstances surrounding the automatic termination of the DOCA on 30 August 2009;

b.    His affidavit of 9 September 2015 where he states:

i.    ‘there was no need for the creation of a third DOCA and I have never seen one;

ii.    ‘I have never represented that such a further document exists and know of no occasion when Mr Holbrook (Deed Administrator) has ever made such a claim;

iii.    ‘I am informed by Mr Lenhoff and also by the Second Applicant (Mr Campbell-Smith) and verily believe that at no time have they ever created any third version of the DOCA;

iv.    ‘any amended versions of the DOCA that were prepared were made by Mr Holbrook and/or his solicitors Hotchkin Hanly;

In circumstances where he prepared an affidavit of Mr Campbell Smith dated 10 September 2010 and attached a third version of DOCA.

(A Frigger Affidavit page 90 – 121)

17.    In [2012] WASC444 at [16] Simmonds J found that no further amendments had been made to the DOCA other than the amendments contained in the June Version-two.

18.    Mr Eastwood’s letter of 7 May 2014 to the liquidator of CAT, where he alleged (A Frigger Affidavit page 87-89):

a.    ‘the original judgment was based on evidence given by (the applicants)…as to the beneficial ownership of a property…and trading results of CAT…in proof to have suffered loss and damage’

The trial judge found that his award of damages would have been made even if CAT held the property on trust, and the award of damages was not based on CAT’s trading results subsequent to purchase: [2008] WASC 183.

b.    ‘Mrs Frigger has provided on oath regarding the underlying ownership of the property…which is completely inconsistent with the evidence given at trial;

c.    ‘the re-drafted historical financial statements…are entirely inconsistent with the evidence at trial’ in circumstances where the judgment in [2008] WASC 183 was not based on the trading results of CAT.

d.    ‘It is our opinion that the original decision…was obtained by…false evidence…where had the evidence now maintained to be true been given…the judgment would not have been given at all.

e.    ‘Our clients have suffered substantial loss and damage as a consequence of the fraud;

f.    ‘Assuming an admission of liability we trust that the calculation of loss and damage could be made within…(by) negotiation of our clients’ proof of debt;

The above were said to be opinions of Mr Eastwood and not of his clients and Mr Eastwood will be called to give material evidence in what he was trying to achieve with the liquidator, and is material to the applicants’ pleading in the statement of claim.

19.    The third material issue which Mr Eastwood will be required to give evidence is in relation to the claim for costs made in CIV2265/2006 in respect of Banning Holdings Pty Ltd, in circumstances where that firm had no separate representation at any of the hearings and there are no legal costs shown to be owing by BH personally: (A Frigger affidavit page 76 - 86)

20.    The fourth material issue which Mr Eastwood will be required to give evidence is in relation to bills of costs and costs disclosure where Mr Campbell-Smith’s Statement of Assets and Liabilities (A Frigger affidavit page 76 and 77) shows that the deceased estate has a contingent asset of $350,000 in legal costs which is exactly the same amount said to be owing to CAT).

21.    The fifth material issue which Mr Eastwood will be required to given evidence is a matter that has arisen recently in CIV2265/06, where he obtained an indemnity cost order against the applicants for $44,000 for an interlocutory application for stay in circumstances where none of the respondents have any funds or assets and whether cost disclosure had been given and accepted by Mr Campbell-Smith for that amount of legal costs and whether Mrs Sandra Banning was also privy to that cost disclosure.

22.    The above matters relate to the applicants claims for loss and damage at paragraphs 1, 8 and 9 in the Originating Summons and in Statement of Claim paragraphs 7, 9, 10, 11, 15, 27(f), (g), (h), 32, 33, 38, 39, 40, 41, 42, 44, 45, 48.

Timothy Stephenson

23.    Mr Stephenson will be required to give evidence in relation to:

a.    His knowledge of the terms and effect of the DOCA and his involvement in:

i.    the issue of the statutory demand in the knowledge that the Appeal Judgment was obtained by fraud,

ii.    freezing orders against the assets of the Frigger Super Fund totalling $4,000,000 in the knowledge that the Appeal Judgment was obtained by fraud,

iii.    application for liquidator appointment in December 2009 in the knowledge that the Appeal Judgment was obtained by fraud,

iv.    application for provisional liquidator appointment in January 2010 on the just and equitable ground based on the unsubstantiated allegations of criminality and wrong-doing: (A Frigger affidavit page 127 and 169);

v.    application for insolvent winding up of CAT in January 2010 on the just and equitable ground based on the unsubstantiated allegations of criminality and wrong-doing: (A Frigger affidavit page 127 and 169);

b.    His written and oral submissions alleging:

i.    ‘$2m of CAT’s assets had disappeared’ (A Frigger affidavit page 127,129,131,134,141,142,144,163,165,166, );

ii.    ‘one possible purpose of the trip overseas is to sequester that money overseas’ (A Frigger affidavit page 129, 131);

iii.    ‘and the mismanagement that may flow from that’ (A Frigger affidavit page 129);

iv.    ‘to freeze assets that may be under the control of Mr & Mrs Frigger to stop them from acting in relation to the matter. It is just an awful lot of money to have gone missing (A Frigger affidavit page 130);

v.    ‘in November 2009 all of the real estate assets that belonged to the company were removed (A Frigger affidavit page 131);

vi.    ‘so what has been left…is a patent or trademark worth $350,000 (A Frigger affidavit page 131);

vii.    ‘the next reference of course is to the fixed charge…to frustrate the orders of the court (A Frigger affidavit page 131. 161,);

viii.    ‘so we waited that period before issuing any further statutory demand (A Frigger affidavit page 132);

ix.    ‘depending upon which audience…she believes it appropriate to sway…she will tell one story….and a different audience…a different story...and she is quite prepared to actually do that on oath: (A Frigger affidavit page 134);

x.    ‘has sought to convince the court that her husband and herself were appointed as trustees of (Frigger Super Fund) (A Frigger affidavit page 136, 137, 143, 156, 157,158,159, 160, 161,168,169,);

‘that this is actually a lie’ (A Frigger affidavit page 143);

xi.    ‘a non-trustee…is holding on to a sum of $900,000, that is Mr Frigger, of course: (A Frigger affidavit page 136);

xii.    ‘it leaves the court with the impression the company has been stripped of all its assets (A Frigger affidavit page 137);

xiii.    ‘now..Mr Kitay tells the court he has been ‘pursuing and pursuing to obtain information from (the applicants) (A Frigger affidavit page 138)

xiv.    ‘well Mrs Frigger is not well and she can’t comply with your request but I note that a new and improved version of that story has come out in the most recent affidavit; (A Frigger affidavit page 138, 150);

xv.    ‘now a very grave concern that (the applicants) are purporting to run a business which belongs to the company: (A Frigger affidavit page 139,141,);

xvi.    ‘(the applicants) don’t know what their corporate responsibilities stop and their personal rights begin…and that ties in neatly with the just and equitable ground’ (A Frigger affidavit page 139, 140);

xvii.    ‘well if you have a guarantee for a business that doesn’t belong to you, how does that work?’ (A Frigger affidavit page 139);

xviii. ‘pursuant to a lease….which is not stamped’ (A Frigger affidavit page 140); stamp duty on leases was abolished from 1 July 2008, the lease commenced on 1 July 2009.

xix.    ‘first of all the rather lavish claim is made,…(the applicants) have funded from their personal funds the cash flow (A Frigger affidavit page 141);

xx.    ‘even if (the applicants) wish to meet the company’s liabilities, they will meet them from money they have already stripped, (A Frigger affidavit page 142);

xxi.    ‘the liability under the judgment is due and payable (A Frigger affidavit page 129); in circumstances where the judgment was obtained by fraud;

xxii. ‘when they had an opportunity at short notice to argue the matter before the Court of Appeal, (the applicants’ solicitor) fronted up and asked for an adjournment; (A Frigger affidavit page 142); in circumstances where through the tortious interference of Mr Lenhoff, the applicants’ solicitor Clavey Legal had withdrawn from the retainer on 30 March 2010 and the applicants’ had no competent and experienced solicitor to argue the matter;

xxiii.    ‘in your reasons you might want to refer to some earlier paragraphs, (A Frigger affidavit page 143);

xxiv.    ‘Mrs Frigger was using company debts to her own hands (A Frigger affidavit page 144);

xxv.    ‘Management of the corporation by (the applicants) was in appropriate, that they are not appropriate managers (A Frigger affidavit page 145);

xxvi.    ‘The company was placed in members voluntary liquidation and Mr Trinick was not pursuing the issues which the creditors would like him to pursue, (A Frigger affidavit page 145);

xxvii.    ‘the company had been stripped…there was no way forward other than to take those proceedings’; in circumstances where the judgment was obtained by fraud and Mrs Sandra Banning was not provided with the applicants’ 7 offers to secure $850,000;

xxviii.    ‘(the applicants) have never sought the stay of the judgment; (A Frigger affidavit page 147); in circumstances where through the tortious interference of Mr Lenhoff, the applicants’ solicitor Clavey Legal had withdrawn from the retainer on 30 March 2010 and the applicants’ had no competent and experienced solicitor to argue the stay application on 16 April 2010.

xxix.    ‘they are not the type of people to be placed back in the management of their company; (A Frigger affidavit page 150);