FEDERAL COURT OF AUSTRALIA

Frigger v Trenfield (No 6) [2020] FCA 934

ORDERS

THE COURT ORDERED ON 25 JUNE 2020 THAT:

1.    By 2 July 2020, and save to the extent that a document has been annexed to an affidavit filed in the proceedings before the date of this order, the applicants must provide particular discovery of documents, verified by affidavit, in the following categories:

(a)    All documents that evidence the holding, purchase, sale, transfer, subscription or other conveyance of, and the identity of the legal and beneficial owner of, the securities identified in the Commonwealth Securities Ltd portfolio that is referred to in the affidavit of Angela Frigger sworn 16 September 2019 at annexure AF6, page 14, which documents include, but are not limited to:

(i)    Account opening forms or applications;

(ii)    Financial accounts, statements, summaries or transaction listings;

(iii)    Buy and sell notes;

(iv)    Holding statements (CHESS or issuer sponsored);

(v)    Correspondence;

(vi)    Dividend statements;

(vii)    Invoices;

(viii)    Receipts;

(ix)    Off-market transfers;

(x)    Security registration documents; and

(xi)    Tax lodgements and assessments.

(b)    All bank statements for the St George Bank account identified in the affidavit of Kelly-Anne Trenfield sworn 1 June 2020 at annexure KAT-8, pages 42 to 43, whether in the name of Jessica Frigger or any other person (excluding pages 1 and 2 of the statement of account for the period 26 February 2017 to 7 July 2017).

(c)    All bank statements for the Citibank account identified in the affidavit of Kelly-Anne Trenfield sworn 1 June 2020 at annexure KAT-8, page 44, in the name of 'Angela Frigger & Hartmut Frigger ATF Frigger Super Fund' (excluding page 3 of 3 for the statement for 1 November 2018 to 30 November 2018).

2.    There is liberty to apply on 24 hours' written notice in relation to the time for compliance with paragraph 1 of these orders.

3.    Costs reserved.

THE COURT ORDERED ON 1 JULY 2020 THAT:

1.    Paragraph 1 of the orders made on 25 June 2020, being the orders which set out the method for the provision of oral submissions at the interlocutory hearing on 1 July 2020, is vacated.

2.    For the purposes of today's interlocutory hearing, and pursuant to s 47B of the Federal Court of Australia Act 1976 (Cth), the applicants and counsel for the respondent must deliver oral submissions by way of audio link.

3.    The time for the respondent to comply with paragraph 6 of the orders made on 26 May 2020 is extended to 12 July 2020.

4.    The applicants have leave to amend the originating application in terms of the draft fourth amended originating application that is annexed to the affidavit of Angela Frigger sworn 15 June 2020, with the following further amendments:

(a)    the orders sought at paragraphs 1, 2 and 8 of the relief sought are to be sought pursuant to s 30 of the Bankruptcy Act 1966 (Cth) or s 90-15(3)(a) of Bankruptcy Act 1966 (Cth) Schedule 2 Insolvency Practice Schedule (Bankruptcy), as the case may be, alternatively s 21 of the Federal Court of Australia Act 1976 (Cth); and

(b)    proposed paragraphs 17 and 18 are to be deleted.

5.    The applicants must file and serve an amended originating application that complies with paragraph 4 above on or before Friday 3 July 2020.

6.    Henceforth and in compliance with rule 2.16(1)(a) of the Federal Court Rules 2011 (Cth), all documents filed by the applicants must state the capacities in which the applicants apply at the foot of the front page of the document.

7.    The applicants' interlocutory application filed on 9 June 2020 is otherwise dismissed.

8.    Pursuant to rule 9.05 of the Federal Court Rules 2011 (Cth), H & A Frigger Pty Ltd in its capacity as trustee of the Frigger Super Fund is joined as the second respondent to these proceedings.

9.    Henceforth, Kelly-Anne Lavina Trenfield is styled first respondent.

10.    Judgment on the first respondent's interlocutory application dated 2 June 2020 is otherwise reserved.

11.    The first respondent's interlocutory application dated 15 June 2020 is dismissed.

12.    The matter is listed for a case management hearing on Monday 20 July 2020 at 3.00 pm AWST.

13.    Costs reserved.

THE COURT NOTES THAT:

1.    The reference in paragraph 8 above to the capacity in which the second respondent is joined to these proceedings is a reference to its capacity as former trustee or as present trustee, as the case may be.

THE COURT ORDERS THAT:

1.    Save as set out in the orders of 25 June 2020 and 1 July 2020, the first respondent's interlocutory application dated 2 June 2020 is dismissed.

2.    Costs reserved.

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

REASONS FOR JUDGMENT

JACKSON J:

1    These reasons concern numerous interlocutory applications the parties (mostly Ms Trenfield - who as a result of this judgment is now the first respondent) brought recently. They are: an application by the applicants for leave to amend their originating application in terms of a minute of fourth amended application; an application by the first respondent for the joinder of certain parties as additional respondents; an application by the first respondent for leave to file a cross-claim out of time; and an application by the first respondent for discovery. They are brought in circumstances where the proceeding has been set down for a five day hearing at the end of July 2020.

2    On 25 June 2020 I made orders on the application for discovery. On 1 July 2020 I made further orders disposing of the balance of the applications save in one respect which required further consideration. These are the reasons for the orders made on those two dates as well as the further orders made at the same time as the publication of these reasons.

3    I have described the issues in the proceeding in detail in Frigger v Trenfield [2019] FCA 1746 and Frigger v Trenfield (No 2) [2019] FCA 2009. The applicants, Mr and Mrs Frigger, are bankrupts and the first respondent, Ms Trenfield, is their trustee in bankruptcy. The Friggers seek declarations that certain assets are held on trust on the terms of a trust deed which established a superannuation fund known as the Frigger Super Fund (FSF), and are not property divisible among the creditors of their bankrupt estates. Other orders that may be incidental on findings to that effect are also sought, such as an order to make good losses said to have been caused by the Friggers' inability to deal with some of the assets, and for the removal of a caveat over real property.

Application for leave to amend the originating application

4    If leave is given to amend in terms of the proposed fourth amended originating application, there will in effect be three changes. The first will make it clear that the applicants are suing both in their capacities as regulated debtors (bankrupts) and in their capacities as trustees of the FSF. The second is to amend certain declarations sought so that assets that are the subject of the declarations are no longer described as being held by the applicants as 'bare' trustees. The third is to seek additional orders requiring the first respondent to remove a 'stop' said to have been placed on a bank account which appears to be associated with a share portfolio that is in issue in the proceeding, and to seek 'pre-judgment statutory interest' on the money in that account.

5    The first respondent does not oppose the first of these changes. For reasons that appear below in relation to the application for joinder of additional respondents, it is appropriate to permit an amendment in those terms, and I will do so.

6    The first respondent does not consent to the second change, relating to the nomenclature of 'bare' trustee. The first respondent claims to be concerned that the applicants are seeking 'some form of further declaration as to whether they hold the property as de jure trustees' which, according to the first respondent, may somehow draw her into an issue about whether the applicants are the current validly appointed trustees of the FSF. With respect, I do not consider these concerns well-founded. The purpose of the proposed amendment is obvious enough. Previously, when a company called H & A Frigger Pty Ltd (HAF) was the trustee, the applicants claimed that to the extent that trust assets were still in their names, jointly or separately, they only held them on a 'bare trust' to transfer them to the new trustee. Now, as will be described further below, they claim that they are the duly appointed trustees of the FSF, and that HAF is not. If that is so, then the description 'bare' trustee would no longer be correct.

7    But even if that is wrong, in my view it does not matter whether the applicants are described as 'bare' trustees or not in this part of the application. The word is used in the proposed declarations, not in order to express a legally binding finding about the nature of the trusteeship, but merely by way of a description identifying the asset in question. For example, a declaration is sought that a Bank of Queensland account with a specified account number:

in the name of Hartmut Frigger, as bare trustee of the Frigger Super Fund, is an asset held in the Frigger Super Fund on trust for the beneficiaries of the Frigger Super Fund, including the applicants, and is not an asset divisible among creditors pursuant to s 116(2)(d)(iii)(A) [sic] Bankruptcy Act 1966.

The proposed amendment strikes out the word 'bare'. I do not consider that this affects the substance of the issue raised by the declaration sought. So I consider that this proposed change is appropriate and I grant leave to amend in those terms.

8    The third proposed change seeks to add an order under s 30 of the Bankruptcy Act 1966 (Cth) requiring the first respondent to 'remove the stop placed' on a Commonwealth Bank of Australia account. According to bank statements annexed to an affidavit by Mrs Frigger, the account is in the name of Angela and Hartmut Frigger (with no reference to any trustee capacity). The account contains three dividends which appear to have been paid on shares in QBE Insurance Ltd. While it is not clear from the evidence, the account may be linked to a Commonwealth Securities Limited (CommSec) share portfolio. The applicants claim that the shares in that portfolio are held on trust on the terms of the FSF (Portfolio 1). Shares in QBE are held in that portfolio.

9    The first respondent opposes the application for leave to add these claims.

10    Ms Trenfield has provided an affidavit about the circumstances in which the Commonwealth Bank account came to be 'frozen', meaning that the named account holders were unable to withdraw money from it. It appears that the bank may have frozen the account as a result of learning of the bankruptcy of the account holders, or in response to a standard letter from the first respondent in her capacity as trustee in bankruptcy which referred to existing freezes but did not request a 'stop' on the account in direct terms.

11    But for one matter, the question of whether to grant leave to amend would have been finely balanced. The first respondent submits that the claims have little to no prospects of success, because she has not placed any 'stop' on the account, and cannot remove any stop. But even if that is so, it is a matter of the wording of the order and does not affect the substance of the claim.

12    The first respondent also points to the modest amount of money in the account ($3,225) and the small amount of pre-judgment statutory interest claimed on that amount. Both points are relevant to the exercise of the discretion as to whether to grant leave to amend. But on the face of the evidence, the new claim is likely to turn on whether the QBE shares are assets of the FSF. The QBE shares are in CommSec Portfolio 1 and the capacity in which they are held is already in issue in the proceeding. It is likely that the outcome in relation to the shares will dictate the outcome in relation to the dividends. If the dividends are trust assets, that may justify a direction requiring the first respondent to write to the bank requesting that the freeze on the account be lifted. If the proposed claims were truly new and not closely connected with the subject matter of the existing claims, a disproportion between their value and the likely time and cost spent in determining them would be a strong factor against granting leave. But as matters stand, I do not consider that it does weigh strongly in the balance.

13    There may be additional work required if the amendment is allowed, although the applicants have indicated they will not put on any more evidence on the point and in any event I would not give leave to them to adduce further evidence on the matter at this late stage.

14    But there is one further powerful factor against a grant of leave. It is that the first respondent offered in writing that if the application for leave to amend were withdrawn, she would undertake that if the shares in CommSec Portfolio 1 are found to be assets of the FSF, she would write to the bank asking that the freeze on the account be removed. That result is likely to be the best possible outcome that the applicants could obtain if they establish that the QBE shares are held by them on trust on the terms of the FSF. There would be nothing more that the first respondent could do in that regard; she has no power to compel the bank to permit withdrawals from the account. Conversely, if the shares are assets divisible among the creditors of the bankrupt estates, the dividends in the account will be too, so no such communication to the bank will be warranted.

15    Nevertheless, the applicants have not accepted the undertaking. The only reason they gave is that there was no undertaking to compensate them for loss of the use of the money. That part of the claim has led to a calculation of 'pre-judgment statutory interest' to 31 December 2019 of $47.67. That is, of course, trivial. On no sensible view does it afford a reasonable explanation for not accepting the undertaking the first respondent proffered. Rather than agree to that sensible way of resolving this relatively minor issue without needing to trouble the court, the applicants have chosen to pursue an amendment which will give them no better outcome.

16    The discretion to grant leave to amend is to be exercised in a way which best promotes objectives that include the efficient use of the judicial and administrative resources available for the purposes of the court, the efficient disposal of the court's overall caseload and the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute: Federal Court of Australia Act 1976 (Cth) s 37M(1), s 37M(2) and s 37M(3). Those objectives are reflected in judgments of members of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 which place some emphasis on the resources of the courts as public resources, efficient use of which is a concern that transcends the interests of the parties: see at [5], [23]-[27], [34], (French CJ), [113] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). Section 37N of the Federal Court Act effectively imposes obligations to further those objectives on the parties.

17    A party who is seeking the indulgence of the court to grant leave to amend at a late stage does not have an absolute right to raise claims which, on any objective view, do not need to be pursued in court. In my view, permitting the claim to be raised when the applicants were offered a sensible way of resolving it without having to take up the resources of the court, and have refused to take that option for no good reason, will not promote the resolution of disputes efficiently, and in a way proportionate to their importance, in the interests of all concerned, including the public interest. For that reason, I will not grant leave.

Application for joinder

The identity of the trustees and members of the FSF

18    The first respondent seeks an order adding the present applicants, Angela and Hartmut Frigger, to the proceeding as respondents in their capacity as trustees of the FSF. The first respondent also seeks orders adding what appear to be former trustees of the FSF as respondents, namely HAF and the applicants' adult children, Jessica Frigger and Michael Frigger.

19    The need to consider the joinder of additional parties arises because the trustee of the FSF was not an applicant when the proceeding commenced, and because of apparent changes in the identity of trustees between the time of the bankruptcy and the present date.

20    There is in evidence a document entitled 'Deed of Amendment - Frigger Super Fund' which bears the date 1 July 2018. On the face of the document, its effect was to remove the applicants, Angela and Hartmut Frigger, as well as Jessica Frigger and Michael Frigger, as trustees of the FSF, and to replace them with HAF as sole trustee. The sequestration order by which the Friggers were made bankrupt was made on 20 July 2018. There is evidence that a resolution to change the trustees was in fact made on 21 July 2018: see Frigger v Trenfield (No 2) at [25].

21    This proceeding was commenced on 12 March 2019. The sole applicant at that time was Angela Frigger. Hartmut Frigger was subsequently added as an applicant. At that time the applicants were claiming in their capacity as regulated debtors (that is, the bankrupts), not in any capacity as trustees. Assuming that HAF was the trustee at that time, the trustee of the FSF was not a party.

22    On 21 October 2019, in a different proceeding, I made orders authorising the applicants to manage HAF for the purpose of its activities as trustee of the FSF. It was also necessary to make an order that they as individuals were not disqualified persons under the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) as, if they were, they would be committing an offence under that Act if they acted as directors of the trustee company of the FSF: see Frigger, in the matter of an application by Frigger [2019] FCA 1730 at [14].

23    There is evidence that on 20 April 2020, HAF was removed as trustee of the FSF and replaced by Angela, Hartmut, Jessica and Michael Frigger. It seems that all of these individuals were at that time members of the FSF.

24    On 2 June 2020, Ms Trenfield filed the present interlocutory application for joinder of all those individuals and HAF, each in their capacity as trustee of the FSF. There is evidence that on 5 June 2020, Jessica Frigger and Michael Frigger ceased to be members of the FSF and resigned as trustees. It is open to infer that this was prompted by the interlocutory application, but nothing turns on that for present purposes.

25    It is possible that the question of who has been trustee of the FSF, and when, will be in issue at the trial of this proceeding. It is therefore not appropriate that I make any firm findings about it for the purpose of this interlocutory application. It is enough to say that there is evidence which suggests that since the time of the sequestration order in July 2018, the trustees of the FSF have variously been: Angela Frigger, Hartmut Frigger, Jessica Frigger and Michael Frigger; then HAF; then Angela Frigger, Hartmut Frigger, Jessica Frigger and Michael Frigger; then Angela Frigger and Hartmut Frigger only. The evidence also suggests that throughout that period, Angela and Hartmut Frigger have been members of the FSF, and that Jessica and Michael Frigger were members until around 5 June 2020.

Principles

26    Ms Trenfield relies on r 9.05 of the Federal Court Rules 2011 (Cth), which provides as follows:

9.05    Joinder of parties by Court order

(1)    A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person:

(a)    ought to have been joined as a party to the proceeding; or

(b)    is a person:

(i)    whose cooperation might be required to enforce a judgment; or

(ii)    whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or

(iii)    who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

(2)    A person must not be added as an applicant without the person's consent.

(3)    If a person is joined as a party under this rule, the start date of the proceeding for the person is the date on which the order is made.

(4)    An application under subrule (1) need not be served on any person who was not served with a copy of the originating application.

    Note: The Court may make an order for any of the following:

    (a)    service of the order and any other document in the proceeding;

    (b)    amendment of a document in the proceeding;

    (c)    the filing of a notice of address for service by a party.

27    These provisions, in particular r 9.05(2), are worded in a form that became common after the judicature reforms of the 19th century. The public policy of avoiding multiplicity of proceedings and promoting finality of litigation lies at their heart: see Main-Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2007] VSC 43 at [21] (Bell J). Their wording is wide enough to encompass modern notions of case management and the desire of the justice system to minimise time and costs in litigation, and they should be given a beneficial interpretation affording them the widest interpretation which their language will permit: see Woodings v Stevenson [2001] WASC 174; (2001) 24 WAR 224 at [24]-[25] (Owen J).

28    Sub-rules 9.05(1)(b)(ii) and 9.05(1)(b)(iii) convey broad concepts of completeness, finality and avoidance of multiplicity: Crocker v Toys 'R' Us (Australia) Pty Ltd [2015] FCA 588 at [32] (Reeves J). Considering whether, under r 9.05(1)(b)(ii), the joinder of a person 'is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined' requires a primary focus on the issues in dispute in this proceeding: Crocker at [32]. It emerges from Woodings v Stevenson that the requirement of 'necessity' does not refer to some kind of absolute or logical necessity; after all, a party wishing to ensure that a dispute is determined against non-parties can always commence separate proceedings and seek to have them heard in tandem with the existing one.

29    The Full Court articulated certain principles underlying the predecessor rules to r 9.05 in News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 523-525 (News v ARL). In summary:

(1)    These provisions reflect an intention, which now receives more emphasis than in the past, to avoid where reasonably practicable a multiplicity of proceedings.

(2)    Exercise of the powers they confer may be necessary in order to prevent injustice being done to a person whose rights will be affected by its judgment in the proceeding which may occur if the person has not received an opportunity to be heard, and in that case the question can be framed as whether the person's rights against or liabilities to any party to the action in respect of the subject matter of the action will be directly affected by any order which may be made in the action (here, the court was relying on the often cited observations of Lord Diplock in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56).

(3)    If an order is made that directly affects a third person's rights against or liabilities to a party, if the person is not joined as a party, the order will be set aside.

(4)    Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest.

(5)    In other cases the test involves matters of degree and judgment having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected.

(6)    Attention must be directed to the orders sought in the proceedings. It is the effect of the orders on the third party that must be determined.

Consideration

30    The application to join the applicants, Angela and Hartmut Frigger, as respondents in their capacity as trustees of the FSF can be disposed of briefly. They submit that they cannot be joined as respondents in a proceeding to which they are already applicants. However they do not suggest that they should not be bound to the result of the proceeding in their capacities as trustees. Rather, they say that the appropriate way to deal with that is to amend the originating application to make it clear that they sue in that capacity and in their capacity as 'regulated debtors' (i.e. bankrupts).

31    I accept the applicants' submission. No one can be both plaintiff and defendant in an action, even in different capacities: Re Phillips; Public Trustee v Meyer [1931] WN 271; and Re Wood (decd); ACF & Shirleys Fertilizers Ltd v Wood [1949] St R Qd 17 at [44]. But if the applicants were found to be applying in the present proceeding in a certain capacity, they would not be bound by res judicata or issue estoppel in a different capacity: see McDonald v State of South Australia [2011] FCA 297; (2011) 126 ALD 488 at [36] (Besanko J) citing Leggott v Great Northern Railway Co (1876) 1 QBD 599. I agree that this can be adequately dealt with by making it clear, in the identification of the parties in the originating application, that the applicants are suing in their capacity as trustees as well as their capacity as regulated debtors. I have already indicated why I have granted leave to amend in those terms.

32    Turning to the joinder of the three prospective respondents, HAF, Jessica Frigger, Michael Frigger, in this proceeding the applicants seek declarations that assets, which appear to have a substantial value, are assets held on trust on the terms of the FSF. The first respondent submits that if the assets are held not to be trust assets, then the rights of the trustees of the FSF will be directly affected. The first respondent says she is unsure whether the replacement of HAF as trustee was valid, which she says will turn on the proper construction of the orders made on 21 October 2019 and the operation of the SIS Act. She also relies on the principle articulated in News v ARL that where orders sought establish or recognise a proprietary interest in assets, all persons who claim an interest in the subject matter are necessary parties.

33    The first respondent also relies on the risk of multiplicity of proceedings. In her written submissions she suggested that even former trustees of the FSF might commence new claims against her if they are not joined to the proceeding. In that respect she points to rights of indemnity in the former trustees which, she says, will be affected by a determination that certain assets are not assets of the FSF.

34    The applicants oppose the application in respect of all three prospective respondents. They say that those prospective respondents have been removed as trustees and therefore have no interest in the outcome of the proceeding.

35    The Friggers also say that Ms Trenfield decided earlier in the proceeding not to press for HAF to be joined at a time when the company was trustee. But that is not what happened. I raised the possible need to join HAF to the proceedings with the parties at an early stage, because it appeared at that time to be the trustee. There were reservations held on all sides about joining HAF, because the applicants claimed that the company would not be able to find legal representation, and it cannot represent itself. Eventually, however, the applicants applied for leave to add HAF as an applicant, and HAF provided its consent to do so. The first respondent then provided a minute of orders at a case management hearing which included an order adding HAF as a party. The applicants then decided to oppose that order - the order for which they had initially applied - alleging ulterior motives against the first respondent; that is, ulterior motives for proposing an order for which the applicants had applied, and which had been prompted by the court. That is extraordinary conduct by the applicants. This course of events provides no ground to dismiss the application the first respondent now makes to join HAF.

36    In making the submission that the interests of the trustees or former trustees will be directly affected by the orders, the first respondent relies on r 9.05(1)(a), which permits the joinder of persons who ought to have been joined as a party. In referring to the risk of multiplicity of proceedings, she relies on r 9.05(1)(b)(ii).

37    As to the first of these bases for joinder, in News v ARL the Full Court made it clear that the focus needs to be on the orders sought in the proceeding to which the prospective respondents will be joined. The question, after all, is whether those persons ought to have been respondents in the first place. At present, the orders sought, if made, would mean that the relevant assets would be found to be assets of the trust. That would clearly have affected HAF, because it was the trustee of the FSF at the time the application was commenced. So r 9.05(1)(a) provides a basis to exercise the discretion to join that company.

38    I consider that discretion should be exercised in favour of joining HAF. The company is an immediate former trustee of the FSF who was trustee when relevant events such as the freeze put on alleged trust assets occurred and when the proceeding was commenced. It undoubtedly should have been joined to the proceeding at that time. Its directors and shareholders are the present applicants, who are already involved in the proceeding. It is difficult to imagine what it might say that the present applicants will not say anyway, so there can be no prejudice to it for it to be joined at this late stage. In those circumstances it is preferable that HAF be a party to the proceeding, where it should have been a party from the outset.

39    The position is different in relation to Jessica Frigger and Michael Frigger. In so far as r 9.05(a) is concerned, the orders sought will not affect them in any prejudicial way. If the orders the applicants seek are made, that will mean that there are more assets available for any claims that Jessica and Michael may have, as present or former trustees or members of the FSF. It could not be said that it would be unfair to make those orders in their absence. That kind of unfairness is the concern underlying the court's observations in News v ARL. Conversely, if the orders sought are dismissed, that will not bind Jessica and Michael at all. I do not consider that r 9.05(1)(a) is satisfied in respect of them.

40    I also do not consider that the particular rule referred to in News v ARL, which applies when orders are sought to recognise a proprietary interest in assets, is applicable here (see [29(4)] above). The rationale for saying that all persons who have or claim an interest in the asset are necessary parties is that an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest. But an order in favour of the applicants here will not be detrimental to Jessica or Michael Frigger. To the contrary, findings that certain assets are trust assets can only benefit the former trustees, to the extent that, in that capacity, they have any interest in the assets.

41    Turning to the criterion found in r 9.05(1)(b)(ii) - that a person may be joined as a party to a proceeding if their joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined - the first respondent has raised doubts about whether the removal of Jessica Frigger and Michael Frigger as trustees is valid. The doubts are said to arise because the resignation or removal of Jessica and Michael Frigger as trustees may have led the FSF to be in breach of the SIS Act, and so may have been invalid.

42    Even if Jessica and Michael Frigger's resignation did cause the FSF to be in breach, it is doubtful that the SIS Act would operate so as to invalidate their resignation. There may be other consequences for non-compliance with the Act, for example the loss of favourable tax rates (see Income Tax Rates Act 1986 (Cth) s 26(2)) or the issue of an 'education direction' requiring the trustee to undertake a specified approved course of education (SIS Act s 160(2)(a)). However, there is no express provision in the Act which would render an apparently valid resignation of a trustee unlawful but also ineffective. Nor is it easy to see how that implication could be drawn from the legislation. To the contrary, it would be odd for Parliament to establish a compliance regime addressing the consequences of a resignation if its legislative intention was also that the resignation should be ineffective. The adverse consequences of non-compliance follow from falling outside important definitions (see especially SIS Act s 17A and s 19), not from breach of any obligation.

43    As for possible claims that Jessica and Michael Frigger may have due to rights of indemnity as former trustees, in oral submissions counsel for the first respondent accepted that former trustees are adequately represented by the current trustee in the proceeding in respect of any rights of indemnity. Counsel referred to r 9.23(1) of the Federal Court Rules, which relevantly provides that a proceeding dealing with property that is subject to a trust may be started by or against a trustee without joining as a party a person who has a beneficial interest in the trust. In my view there would be a strong case for saying that to the extent that the former trustees have any claims on trust assets, the current trustees are bringing the claim as their privies, so the former trustees will be bound by the outcome: see Gleeson v J Wippell & Co Ltd [1977] 3 All ER 54 at 60; and Tomlinson v Ramsey Food Processing Ltd [2015] HCA 28; (2015) 256 CLR 507.

44    There is a further issue which arises in respect of Michael Frigger in particular. The evidence suggests that as at 5 June 2020, he was located in Vietnam. Mrs Frigger said that he is still there and cannot travel to Australia from Vietnam during the current public health crisis. While that was said from the bar table, the court can take judicial notice of the current circumstances of the SARS-CoV-2 pandemic and infer that what she says is correct. So if Michael Frigger is added as a respondent, that will require him to be served and for leave to be sought to do so out of the jurisdiction. Arrangements will then need to be made for him to be served in that country. Even if one assumes that he and his parents will cooperate in all this in order not to delay the trial, that will all take time. It is too close to the trial to entertain those sorts of logistical difficulties. While the first respondent only became aware of the reintroduction of Jessica and Michael as trustees relatively recently, they have been trustees in the past, including possibly at the time of the sequestration order, and their joinder to avoid multiplicity of proceedings should have been considered then.

45    The first respondent relies on Re Beechworth Land Estates Pty Ltd (In Liq) and Griffith Estates Pty Ltd (In Liq) [2018] NSWSC 1703 at [29], where Black J held that a former trustee could properly remain as a defendant in proceedings after the present trustee had been joined. His Honour noted that the former trustee may have rights arising from rights of indemnity and any associated lien. But no party sought an order removing the previous trustee as a defendant in the proceedings before his Honour, and considerations relevant to whether a person should remain as a defendant are different to those that arise on an application to join a new defendant. That case does not therefore provide much assistance.

46    On balance I do not consider that the possibilities that Jessica and Michael Frigger are still trustees, or will be able to commence their own proceedings to reagitate the issues in this proceeding, are more than theoretical. For that reason, and for the other reasons I have given above, I will order the joinder of HAF as a respondent but not any of the other prospective respondents.

Leave to cross-claim

47    The first respondent applies for leave to add a cross-claim, against the applicants only, for declarations that the two Bank of Queensland accounts that are already in issue in the proceeding, the two parcels of land that are already in issue in the proceeding, and the shares in the CommSec Portfolio 1, are assets that are divisible among the creditors of the applicants and have vested in the first respondent as the applicants' trustee in bankruptcy.

48    Rule 15.04 of the Federal Court Rules relevantly provides that a notice of cross-claim must be filed at the same time as the filing of the first respondent's affidavit in reply to the applicant's affidavit in the principal proceeding. Rule 15.05 authorises an application for leave to file a cross-claim out of time. In Rush v Nationwide News Pty Ltd (No 2) [2018] FCA 550; (2018) 359 ALR 564 at [87], Wigney J helpfully summarised relevant factors guiding the exercise of the discretion as including:

whether the subject matter of the claim fell within the Court's jurisdiction; the extent of the delay; whether an acceptable explanation has been provided for the delay; any prejudice to the other party or parties occasioned by the delay; the merits or strength of the proposed cross-claim; the degree of connection between the proposed cross-claim and the subject matter of the principal proceedings; and the desirability that all disputed matters between the parties connected with the subject matter of the proceedings be dealt with in the main trial.

49    The first respondent says that she only filed her affidavit in reply to the applicants' affidavit in the principal proceeding on 22 May 2020. She applied for leave to file the cross-claim on 15 June 2020, so she says she is only 24 days out of time. There is cause to doubt whether that is correct, since the first respondent has filed numerous affidavits before then, and while she says they were only in relation to interlocutory matters, many contain evidence going to issues that will be in dispute at trial. In Frigger v Trenfield (No 2) at [21] I observed that some of the affidavits respond in substance to the affidavit accompanying the originating application. But it is not necessary to determine the correctness of the first respondent's argument. On any view the first respondent requires leave to make the cross-claim, and on any view she is applying for leave at a late stage in the proceeding, close to trial. This focusses attention on connection with the present subject matter of the claim, any effect on the trial, and prejudice to the applicants as the key discretionary factors to be assessed.

50    As to the first of these, the first respondent submits that the declarations she seeks are just the 'corollary' of the declarations the applicants already seek. I have set out the form of the applicant's declarations at [7] above. In my view it is largely correct to say that the declarations sought by the first respondent seek to confirm the consequences if the court finds that a given asset, to adapt the words of the applicant's declarations, is not an asset held in the FSF on trust for the beneficiaries of the FSF, including the applicants, and is an asset divisible among creditors pursuant to s 116(1) of the Bankruptcy Act. To that extent, they can be described as a mirror image of the applicants' declarations. So there is a very close connection between the subject matter of the present proceeding and the subject matter of the proposed cross-claim.

51    That leads to the second and third key questions: what effect the cross-claim will have on the trial; and the related question of whether the addition of the cross-claim at this stage in the proceeding will prejudice the applicants. In my view, it is likely that prejudice will arise. The first respondent emphasised that the declarations she would seek in the cross-claim would raise no new issues; the questions of the capacity in which the applicants hold the various assets will be the same. That is correct, as far as it goes. But what it overlooks is that there would be a shift in the onus of proof between the claim and the cross-claim which could well put a different complexion on the issues facing the applicants. Unless and until the cross-claim is made, the first respondent will succeed if she is able to persuade the court that the applicants have failed to discharge their onus of proving that the assets are trust assets. But for the first respondent to succeed on the cross-claim, she will need to positively establish on the evidence that the applicants did not hold the assets as trustees. To be sure, it may be expected that such evidence as the first respondent was able to adduce to that effect would already have been relied on in the applicants' existing claim. But the emphasis put on that evidence, and the precise manner in which the first respondent will establish the positive allegations she would need to prove to make out the cross-claim, may well change the nature of the case the applicants need to meet. In those circumstances the applicants would be entitled to insist on, at least, an articulation (perhaps by way of pleading) of what that positive case would be. They have already filed written submissions for trial and await the first respondent's submissions in reply. It is simply too late at this stage to entertain further procedural steps that would be necessary to ensure that no injustice is done to the applicants.

52    To frame the issue in a different way, the court should not, in my view, give leave to the first respondent to introduce substantial claims this close to trial unless it can be confident that no injustice to the applicants will result. That degree of confidence might have been achievable if the issues in the proceeding had been clearly defined by pleadings and the court could be satisfied that the evidence and submissions presented in relation to the new claims would be identical in content and emphasis. But this matter has not proceeded that way. There is a mass of detailed evidence and the precise way in which the first respondent will present it will, at the earliest, not be revealed until she files her outline of written submissions. So the court cannot be confident that the matter can proceed to trial without injustice to the applicants if the cross-claim is added now.

53    While the parties disagree about many aspects of this proceeding, they at least agree that the trial should not be delayed past the end of this month. For those reasons, I am not persuaded that leave to add the cross-claim should be granted.

Discovery

54    The first respondent also sought particular discovery of certain miscellaneous documents.

55    I briefly stated the principles applicable to applications for particular discovery in Frigger v Trenfield (No 2) at [19]-[20], and need not repeat them here.

Share portfolios

56    The first category of documents of which discovery is now sought is documents evidencing ownership of, and relevant transactions in, any securities identified in CommSec Portfolio 1. That portfolio is centrally relevant to issues in the proceeding because it holds shares which the applicants claim are trust assets, but in which Ms Trenfield asserts an interest in her capacity as trustee in bankruptcy. On 29 November 2019, I ordered discovery in relation to Portfolio 1 and other categories of documents.

57    Ms Trenfield says there is evidence of the existence of at least one other CommSec portfolio, in which Mr Frigger actively trades. Discovery in relation to that is said to be necessary because the existence of other share accounts, including when they were opened and when they were closed (if closed) will be relevant to the beneficial ownership of the shares in Portfolio 1. Also, active trades that may have occurred since August 2019 in other share accounts are said to be relevant to losses claimed by the applicants in relation to their inability to trade shares in Portfolio 1 because of a lock which has been placed on it as a result of Ms Trenfield's assertion of ownership of the shares.

58    In my view, Ms Trenfield has made out a case for discovery of a subset of this category of documents. She relies on evidence from Mrs Frigger that in 1997, she and her husband transferred shares held in their personal name to the trustee of the FSF. Contrary to a submission made on behalf of Ms Trenfield, that evidence does not say anything about a CommSec portfolio. But there is one letter showing that in 1999, the then trustee of the FSF did have a CommSec portfolio, with a different account number to Portfolio 1. Mrs Frigger has said in an affidavit that 'we had two separate portfolios when FSF had a corporate trustee' (by which I take her to be referring to the original corporate trustee, Computer Tax and Accounting Pty Ltd, and not HAF). That gives rise to the possibility (I put it no higher than that) that the other CommSec portfolio, the existence of which is evidenced in the letter from 1999, was in fact used by the trustee of the FSF to trade shares held in that capacity. Evidence of that may shed light on whether the shares in the First Portfolio have at any time also been held in that capacity.

59    There is also a suggestion in Mrs Frigger's evidence that there is a CommSec portfolio other than Portfolio 1, in which Mr Frigger actively trades. It is not clear whether that is the same portfolio that was in the name of the corporate trustee in 1999. In any event I do not see how the fact that there has been in recent times a second (or third) actively traded portfolio can be relevant to the issues in the proceedings. It will not shed any light on the beneficial ownership of the shares in Portfolio 1, nor can it have any bearing on what losses, if any, have been suffered by the inability to trade in shares in that portfolio. The extent of those losses, if any, will follow from evidence as to fluctuations in the value of shares in Portfolio 1 and what trades would have been made if the lock had not been in place.

60    The orders I have made therefore require discovery only in relation to the portfolio that was in the name of the corporate trustee in 1999. The applicants appeared to resist discovery of it because the evidence dates from so long ago. But they have relied on that evidence, and on what they say was the transfer of a share portfolio into the trustee's name in 1997. It is therefore likely to be relevant, at least to the extent necessary to warrant an order for discovery.

Notices from Computershare

61    The second category of discovery sought concerns notices from a share registry, Computershare. It seems that on about 1 May 2020, Computershare sent automatically generated notices to the applicants saying that it had recently requested an update to the power of attorney details on some 40 share holdings held in Portfolio 1. It seems that Mrs Frigger inferred that this was related to Ms Trenfield claiming to hold a power of attorney and issued a notice to produce under the Insolvency Practice Schedule. This revealed that Ms Trenfield had not made any such claim to CommSec.

62    Mrs Frigger has put a copy of one of the notices into evidence. It is wholly uninformative. The episode seems to have been caused by an error on the part of Computershare and a mistaken inference on the part of Mrs Frigger. I do not see that the notices are likely to have any relevance to the proceeding and will not order discovery of them.

Bank statements

63    The final category of discovery sought concerns certain bank statements. In November 2019, in Frigger v Trenfield (No 2), I ordered that a St George bank account with a specified account number be discovered. It appears from the evidence that two pages of one statement from the account have been discovered, showing that it is in Jessica Frigger's name. That is inconsistent with a page from a statement for what appears to be the same account that was annexed to Angela Frigger's affidavit sworn on 6 March 2019, which purports to show the statement as being in Angela Frigger's name as trustee for the FSF.

64    Whose bank account, exactly, this is, may be relevant in the proceedings as it is claimed to be the source of trust funds traceable into other accounts. Numbering on the St George statement pages suggests that there was at least one other statement. The applicants assert that there are no further statements for the account but the evidence on which they rely, an email exchange between Angela and Jessica Frigger, is not strong support for that contention. In any event, the St George account has already been the subject of an order for discovery, albeit on the assumption that it was in Angela Frigger's name. Lest there be any doubt that the statements were discoverable by the applicants under the previous orders (assuming that the statements are or were once in their control), I will make an order confirming that.

65    The applicants have also discovered a single page of a Citibank statement for a bank account which appears to date from November 2018 and appears to be in their name as trustees for the FSF. The first respondent seeks discovery of the other pages of that statement as well as any further statements for the account. The applicants resist discovery of these on the basis that they were not included in the previous discovery orders of November 2019. That is incorrect. While the account may not be among the accounts specifically listed in that order, the order required discovery of 'the transfer of the funds or any part of them from accounts held in the name of any or all of the applicants and the trustees (including the former trustees) of the Frigger Super Fund accounts including' the specified accounts (emphasis added). So the discovery order was not limited to the specified accounts. On the face of the one page that has been discovered, the Citibank account now in issue falls within that order. The applicants merely assert that the Citibank accounts are not relevant to the issues before the court. A bald assertion of that kind cannot bring about any alteration in the obligations arising from the discovery order already made. Lest there be any doubt, I will make a specific order that statements in relation to the Citibank account be discovered.

Costs

66    Since the parties have had mixed success on these various applications, there is no doubt much scope for further disputation between them on the subject of costs. I do not consider that they should be distracted from preparing for trial by such disputation. The question of the costs of the interlocutory applications has been reserved to trial.

Associate:

Dated:    6 July 2020