Federal Court of Australia

Frigger v Banning (No 11) [2020] FCA 1257

ORDERS

THE COURT ORDERS THAT:

1.    The proceedings be dismissed.

2.    The applicants do pay the costs of the proceedings including reserved costs to be assessed if not agreed.

3.    If it is necessary to assess costs then:

(a)    the respondents may file and serve an affidavit constituting a Costs Summary in accordance with the Court's Cost Practice Note (GPN-COSTS);

(b)    within 14 days of service of the Costs Summary the applicants do file and serve any costs proposal in accordance with GPN-COSTS; and

(c)    the quantum be assessed on a lump sum basis by a Registrar and the time for payment of the costs as assessed be determined by a Registrar.

THE COURT DIRECTS THAT:

4.    The applicants' notice of discontinuance dated 27 August 2020 not be accepted for filing.

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

REASONS FOR JUDGMENT

COLVIN J:

1    These proceedings have their origin in a claim brought by Computer Accounting & Tax Pty Ltd (CAT) in the Supreme Court of Western Australia many years ago. Since then, there have been numerous court proceedings involving Mr and Mrs Frigger and their related entities. A number of those proceedings resulted in cost orders being made against Mr and Mrs Frigger which they did not meet. In these proceedings, Mr and Mrs Frigger seek compensation calculated to include the amount of those costs that they have been ordered to pay. They have also sought to raise other claims.

2    I have previously dealt with the history of the attempts by Mr and Mrs Frigger to file a statement of claim in these proceedings: Frigger v Banning (No 8) [2019] FCA 1319. At that time, I found that there is a statutory stay of these proceedings by reason of the bankruptcy of Mr and Mrs Frigger and that these proceedings also have been deemed to be abandoned by their trustee in bankruptcy: at [5], [27]-[34], [62]-[69]. An application to allow the latest version of the statement of claim proposed by Mr and Mrs Frigger to stand as the statement of claim in the proceedings was refused. The current position is that there is no statement of claim.

3    On 20 July 2018, sequestration orders were made against the estates of Mr and Mrs Frigger: see my reasons in Kitay, in the matter of Frigger (No 2) [2018] FCA 1032. In November 2018, Mr and Mrs Frigger sought an extension of time within which to appeal from the sequestration orders. On 6 May 2019, McKerracher J ordered that Mr and Mrs Frigger provide security for the respondents' costs of defending that application.

4    On 24 July 2019, the respondents brought an interlocutory application in these proceedings in which they sought, amongst other things, an order that the proceedings be dismissed. On 26 September 2019, the dismissal application was adjourned to a date to be fixed: see my reasons in Frigger v Banning (No 9) [2019] FCA 1611. The application was not determined at that time because of the pending application for an extension of time in which to appeal against the making of the sequestration orders.

5    On 17 April 2020, Charlesworth J ordered that if Mr and Mrs Frigger did not comply with the order for security for costs made by McKerracher J on or before 15 May 2020, then the application for an extension of time would be dismissed: Frigger v Kitay (No 2) [2020] FCA 497. Mr and Mrs Frigger did not provide security and the application was dismissed.

6    Therefore, it remains the position that Mr and Mrs Frigger are undischarged bankrupts.

The competing positions on the application to dismiss the proceedings

7    The respondents now press their application to dismiss these proceedings. They maintain that by a series of decisions the Court has found that many of the claims that Mr and Mrs Frigger have sought to advance in these proceedings are an abuse of process and a collateral attack on earlier court decisions. They also rely upon submissions to the following effect to support that application:

(1)    The proceedings cannot be maintained by Mr and Mrs Frigger as bankrupts and the proceedings have been abandoned by their trustee.

(2)    There is no suggestion that there is a party interested in taking an assignment of any cause of action that might be the subject of the present proceedings.

(3)    After five years, Mr and Mrs Frigger have been unable to produce a viable statement of claim in the proceedings.

(4)    Delay in the proceedings can be laid squarely at the feet of Mr and Mrs Frigger.

(5)    The matters that Mr and Mrs Frigger seek to ventilate in the proceedings mostly occurred between nine and 10 years ago and one of the persons involved in the events, Mr Campbell-Smith, has since died.

(6)    As there is no statement of claim there is no way to determine whether the claims would be statute barred if they were to be the subject of fresh proceedings.

8    In response, Mrs Frigger has deposed to a number of matters by way of affidavit. In essence, they are:

(1)    Mr and Mrs Frigger have sought to appeal my decision in Frigger v Banning (No 8) (where I decided that these proceedings are stayed and that the proposed statement of claim does not comply with previous orders of the Court and for both those reasons leave should not be given to file the proposed pleading). They have sought to appeal but notices of appeal have not been accepted for filing by Registrars of this Court. The decisions of the Registrars have been challenged by proceedings in which Jackson J is reserved.

(2)    The respondents' claims against Mr and Mrs Frigger in the bankruptcy are to costs and the amount of those costs is substantially exceeded by the value of the claims that Mr and Mrs Frigger seek to bring in these proceedings which Mrs Frigger has calculated to be approximately $1,300,000. As these claims are mutual debts, the respondents will owe a substantial amount to Mr and Mrs Frigger in the bankruptcy and there could be no prejudice if the respondents were unable to proceed to have costs of these proceedings assessed.

(3)    Mr Campbell-Smith was diagnosed with advanced dementia in March 2015 prior to the commencement of these proceedings.

(4)    Mrs Frigger has an appeal on foot in the Supreme Court in which she challenges the refusal of her application to stay the liquidation of CAT.

(5)    Dismissal of the proceedings will mean that personal injury claims that Mr and Mrs Frigger seek to advance in these proceedings will become statute barred.

9    Mr and Mrs Frigger appeared on their own behalf. Mrs Frigger made submissions that were adopted by Mr Frigger. In addition to matters in her affidavit, Mrs Frigger raised the following by way of oral submission:

(1)    It was premature to dismiss the proceedings because Jackson J was reserved on applications in which my decision in Frigger v Banning (No 8) was sought to be challenged on appeal (or factual findings in that decision as to whether the application as originally framed included a claim to personal injuries were challenged) and the proper course was to allow these proceedings to continue to be stayed (without being dismissed) pending the outcome of the decisions by Jackson J. I note that the submission was framed by Mrs Frigger as an application for a stay, but I take the view that in substance it was a submission that the proceedings not be dismissed and the existing statutory stay continue.

(2)    These proceedings had always included claims for personal injury because the originating application included claims for 'reputation damages and aggravated damages'.

(3)    As to the appeal on foot in the Supreme Court (which is in respect of the decision in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 5] [2020] WASC 39), it was not said that those proceedings were related to the present proceedings but rather that they were relevant to the standing of Mr and Mrs Frigger to bring the claims that they seek to advance in these proceedings insofar as they relate to the liquidation of CAT.

(4)    In my decision in Frigger v Banning (No 9), I had found that the claims that Mr and Mrs Frigger seek to advance in these proceedings had arguable merit.

(5)    There was pending the prospect that a new trustee in bankruptcy might be appointed to the estates of Mr and Mrs Frigger and the new trustee might take a different view as to the abandonment of these proceedings.

(6)    There would be no prejudice to the respondents if the proceedings continued to be stayed, at least until the outcome of the applications before Jackson J was known.

10    For present purposes only, I will proceed on the basis that the death of Mr Campbell-Smith will not have any adverse impact on the ability of the respondents to defend these proceedings and that there are mutual debts of the kind submitted by Mr and Mrs Frigger. In doing so I express no view as to the merits of the parties' competing positions as to those matters. Even so, for the following reasons I am satisfied that there should be an order dismissing these proceedings.

Reason why application to dismiss should be allowed

11    First, by reason of the bankruptcy of Mr and Mrs Frigger, these proceedings have been stayed by operation of statute for some time.

12    Second, these proceedings have been ongoing for a number of years, since well prior to the bankruptcy of Mr and Mrs Frigger, and despite numerous efforts they have not been able to produce a viable statement of claim.

13    Third, for reasons that I gave in Frigger v Banning (No 8) at [63]-[68] there is no claim of personal injury brought in these proceedings. The claims that Mr and Mrs Frigger describe as personal injury claims are claims that do not form part of these proceedings and their application to introduce those claims into these proceedings has been refused. The application as originally filed (which has never been amended) included claims for reputation damages and aggravated damages. However, for reasons that I gave in Frigger v Banning (No 8) at [43]-[48] there was no claim made in the statement of claim filed with the application of a kind that might give rise to damages on the basis of alleged personal injury. That continued to be the position as at the time that Mr and Mrs Frigger were made bankrupt.

14    Fourth, I adjourned the application for dismissal of these proceedings pending the outcome of applications by Mr and Mrs Frigger by which they sought to challenge the sequestration orders made as to their estates. Those applications have now been dismissed.

15    Fifth, on the material before me there is no evidence of a notice of appeal (whether by leave or otherwise) concerning my decision in Frigger v Banning (No 8) having been given or any application for an extension of time in which to appeal. Certain applications which appear to seek to challenge my earlier decision have been refused to be accepted for filing. One application seeks a declaration that my decision is not interlocutory and it is not necessary for leave to appeal to be sought against the decision. The other application was styled as an application for injunctive relief and seems to seek to challenge factual findings made in my earlier decision. Assuming those steps were taken with a view to bringing an appeal, it is now more than a year since my decision in Frigger v Banning (No 8) and there is no appeal on foot.

16    Nevertheless, insofar as Mr and Mrs Frigger rely upon the prospect of an appeal (or other challenge) to my earlier decision refusing to allow a proposed statement of claim to stand as the claim and finding that there is a stay of the proceedings, the same broad considerations arise as where a stay or injunction is sought pending an appeal. This is not a case where any appeal right would be rendered nugatory if the present application was upheld. Even if Mr and Mrs Frigger were able to bring an appeal despite the passage of time, it would be open to them to seek to have any related appeal concerning the outcome of the present application dealt with at the same time. The hearing of the present application has already been delayed for almost a year to enable Mr and Mrs Frigger to challenge the making of the sequestration orders. The dismissal of these proceedings is an order of a kind that could be reversed on appeal without any prejudicial consequence to Mr and Mrs Frigger in respect of the conduct of these proceedings which, at this point, are stayed in any event. In those circumstances, given the passage of time, the prospect of an appeal against my decision in Frigger v Banning (No 8) is not a reason why the present application should be refused.

17    Sixth, whether there are claims that might be proved in the bankruptcy and whether there are mutual debts in the bankruptcy are not reasons why these proceedings should not be dismissed.

18    Seventh, the claims are not representative claims, such as a claim by a trustee on behalf of beneficiaries.

19    Eighth, the trustee in bankruptcy of Mr and Mrs Frigger has abandoned the claims in these proceedings. It has not been demonstrated that the claims the subject of the application (as distinct from new claims that Mr and Mrs Frigger now seek to introduce) are claims that do not form part of the bankruptcy. Therefore, it is a matter for the trustee to determine whether to pursue the claims. I express no view concerning the merits of the proposed new claims which were articulated in a proposed pleading which has not been allowed.

20    Ninth, there is no suggestion that steps have been taken by any party to acquire the causes of action the subject of these proceedings (if there be any) from the trustee in bankruptcy.

21    Tenth, for reasons that I gave in Frigger v Banning (No 8) at [43]-[50], Mr and Mrs Frigger now seek to use these proceedings to seek new relief.

22    Eleventh, the prospect that there might be a change of trustee in bankruptcy who might take a different view in relation to these proceedings was a matter of conjecture which Mrs Frigger herself described as a thought that occurred to her in the course of oral submissions.

23    Twelfth, contrary to the submissions by Mrs Frigger, in Frigger v Banning (No 9) I did not find that the claims in these proceedings had merit. Rather, in the course of deciding that it was appropriate to adjourn the hearing of the respondents' application to dismiss these proceedings until a time when the outcome of the challenge by Mr and Mrs Frigger to their sequestration orders was known, 'I indicated to the parties in the course of argument that I would proceed on the basis that, given the current state of disputation between the parties as to the matters relied upon to support some aspects of the claims that Mr and Mrs Frigger wish to advance in these proceedings, I would accept for present purposes that there was arguable merit as to some part of the claims that Mr and Mrs Frigger seek to bring in these proceedings': at [11]. I made no finding to that effect. It is simply the case that, as matters presently stand, there is no statement of claim in the proceedings which makes any meaningful assessment of merit virtually impossible. The reason there is no statement of claim is because Mr and Mrs Frigger have been unable to prepare a viable statement of claim despite having many years to do so. What can be said is that there is no claim for personal injury raised by the proceedings and therefore no merit in a claim of that kind.

24    Thirteenth, the events the subject of the claims occurred many years ago and the respondents are entitled to have the proceedings brought to a formal conclusion in circumstances where no evident purpose is served by their continuation. There is obvious prejudice to the respondents in not having these proceedings finalised after so many years without any progress.

25    For those reasons the application for orders that these proceedings should be dismissed should be allowed and there should be an order that Mr and Mrs Frigger pay the costs of that application and of the proceedings including all reserved costs. I will make orders for those costs to be assessed if not agreed.

The application for costs on an indemnity basis should be refused

26    The respondents seek an order that the applicants pay the costs of the proceedings on an indemnity basis. They say that the Court has made a number of decisions in which it has been concluded that the matters raised in various iterations of a statement of claim were an abuse of process or were claims in respect of which Mr and Mrs Frigger lacked standing. I note that costs orders as to the various applications concerning the statement of claim have been made and I have already made orders allowing those costs to be assessed forthwith. I see no basis upon which I should revisit those cost orders that have been made. Therefore, the costs now sought are the costs of the proceedings not covered by earlier orders.

27    It is well established that indemnity costs orders will only be made in exceptional cases. Putting to one side instances where a Calderbank offer has been made, orders of that kind are made to mark the Court's disapproval in cases where there has been improper or unreasonable conduct. Examples of the circumstances in which such an order might be made were given in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225. There must be conduct deserving of criticism resulting in greater expense to the innocent party: Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112 at [31].

28    Broad and sweeping submissions were made as to the motives of Mr and Mrs Frigger and as to what they should have known, properly advised, and to the effect that they have proceeded as a result of a wilful disregard of known facts. However, the submissions did not condescend to particularity. The respondents bear the burden of demonstrating a proper basis for an order for indemnity costs and I am not satisfied that they have done so. I am not satisfied that by the general submissions they have made or the evidence that they have provided concerning costs incurred that they have demonstrated a proper basis for such an order. As to the latter, the affidavit evidence did not condescend to particularity, nor did it deal with the costs to date. Therefore, I decline the application insofar as it seeks indemnity costs.

Postscript: notice of discontinuance by Mr and Mrs Frigger

29    After a draft of these reasons had been prepared, Mr and Mrs Frigger sought to file a notice of discontinuance of the proceedings. Rule 26.12(2)(a)(ii) of the Federal Court Rules 2011 (Cth) allows for discontinuance by notice without leave where the notice is filed before the pleadings have closed. By r 16.12(1), 'pleadings close at the end of the latest of the times fixed by these Rules for filing a defence or reply'. The proceedings brought by Mr and Mrs Frigger were commenced by application and statement of claim. Under the Rules, a respondent must file a defence within 28 days after service of the statement of claim: r 16.32. If there is to be a reply it must be filed within 14 days after the filing of the defence: r 16.33.

30    Not long after these proceedings were commenced, an application was brought to strike out the statement of claim which was ultimately successful. Since then there have been attempts by Mr and Mrs Frigger to provide a new pleading but the various iterations have been objected to by the respondents and no proposed statement of claim has been allowed to stand.

31    Throughout the proceedings, there has been no order extending the time for filing a defence and a defence has not been filed.

32    In the above circumstances, an administrative issue arises as to whether the notice of discontinuance should be accepted for filing where leave has not been obtained to discontinue. Mr and Mrs Frigger were invited to provide any reason they advance as to why the notice of discontinuance may be filed without leave. In response, they maintained that by reason that the pleadings have never closed and the way in which the proceedings were case managed, leave is not required.

33    In my view, the pleadings have closed. In circumstances where there was no order made extending the time for filing a defence, the pleadings closed when a defence was not filed within 28 days after the filing of the statement of claim with the originating application. From that point on, a defence could not be filed without an extension of time in which to do so. The time for filing the defence had closed. Thereafter, the statement of claim was struck out. After that, if Mr and Mrs Frigger had prepared a pleading that was accepted then the time for filing a defence would have re-commenced in respect of the new statement of claim. Whether a notice of discontinuance could have been filed within that period without leave need not be considered.

34    It follows that the Rules do not permit Mr and Mrs Frigger to discontinue these proceedings without leave and for that reason I will direct that their notice of discontinuance not be accepted for filing.

Associate:

Dated:    2 September 2020