Federal Court of Australia

Frigger v Trenfield (Application for Stay Pending Appeal) [2021] FCA 1605

ORDERS

THE COURT NOTES:

1.    The undertaking of the respondent in her capacity as trustee of the bankrupt estates of the first and second appellants to take no steps to dispose of, transfer or otherwise deal with the shares held by Commonwealth Securities Limited in Portfolio 270815 without first giving 30 days prior notice to the first and second appellants such undertaking being subject to the respondent complying with any court order concerning those shares and the respondent having liberty to apply on notice to vary or be released from the undertaking.

THE COURT ORDERS THAT:

2.    The application for a stay of the appeal be dismissed.

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

REASONS FOR JUDGMENT

COLVIN J:

1    Mrs Angela Frigger and Mr Hartmut Frigger are married. They are now both retired. On 20 July 2018 a sequestration order was made against their respective estates. Although their bankruptcies have come to an end, their estates continue to be administered. The trustee of the bankrupt estates is Ms Kelly-Anne Trenfield.

2    Mrs and Mr Frigger maintain that certain of the assets being administered by Ms Trenfield as trustee in bankruptcy form part of the assets of the Frigger Super Fund (Fund) of which they are members. The current trustee of the Fund is H & A Frigger Pty Ltd (HAF). Relying upon their interests as members of the Fund, Mrs and Mr Frigger brought proceedings in this Court seeking declarations to the effect that the disputed assets form part of the assets of the Fund, compensation for certain losses and orders disentitling Ms Trenfield to remuneration and costs in relation to the administration of the disputed assets.

3    HAF was joined as a party to those proceedings and filed a submitting appearance.

4    On 1 December 2021, orders were made dismissing the application: Frigger v Trenfield (No 10) [2021] FCA 1500. The reasons were published following a hearing that occupied some 12 days. They are detailed and traverse a considerable amount of evidence concerning the disputed assets. In those reasons, the assets the subject of the application are referred to as the disputed assets and are described in the following terms at [2]:

(1)    two bank accounts with Bank of Queensland Limited, one of which holds more than $2.8 million (BOQ1), the other of which holds just over $50 (BOQ2);

(2)    shares held in a share portfolio (Main Portfolio) administered by the share broker, Commonwealth Securities Limited (CommSec); and

(3)    two parcels of residential land in suburbs of Perth, one in Bayswater (Bayswater Property) and the other in Como (Como Property, together the Residential Properties).

5    Mrs and Mr Frigger have brought an appeal against the decision dismissing their application. They now seek an order in the appeal that the decision dismissing the application be stayed pending the resolution of the appeal. HAF does not join in that application.

6    Mrs and Mr Frigger act on their own behalf, but are very experienced litigants having conducted numerous proceedings in this and other courts over many years. They say that the stay is necessary in order to preserve the right of appeal. Although the form of the application is for a stay, it is apparent from the affidavit of Mrs Frigger in support of the stay application and the submissions in support of the application that they seek an injunction restraining Ms Trenfield from selling the shares in the Main Portfolio, from paying amounts from the estates in respect of the costs of their administration, from doing anything that would affect their claim that the assets form part of the Fund and from making any distribution to creditors from the estates. The distinction arises because Mrs and Mr Frigger do not seek orders which would mean that orders of the Court would not be given effect pending the appeal (a stay) but rather seek affirmative orders preventing Ms Trenfield from taking certain steps pending the appeal (an injunction). For present purposes, the principal considerations that bear upon whether there should be an injunction pending an appeal are substantially similar to those that would bear upon whether there should be a stay of any order (see below).

7    Complaints are also made by Mrs and Mr Frigger about (a) steps allegedly taken by Ms Trenfield to freeze assets held as part of the administration of the estates which are said to have resulted in the loss of additional returns that might have been generated from the investment of funds and trading in shares; (b) the alleged failure of Ms Trenfield to have made a claim on her personal indemnity insurance; and (c) the alleged withdrawal of almost $3,000,000 from BOQ1 without informing Mrs and Mr Frigger where those funds are invested.

8    Mrs and Mr Frigger also dispute the levels of remuneration claimed by Ms Trenfield and her entitlement to make any payment from the assets under administration in respect of her remuneration.

9    In separate proceedings, Mrs and Mr Frigger seek to challenge the validity of the sequestration order and seek the annulment of those bankruptcies.

10    In Barngarla Determination Aboriginal Corporation RNTBC v District Council of Kimba [2019] FCA 1585 at [27]-[38], I reviewed the authorities concerning the general principles to be applied when considering whether to grant an injunction pending the hearing of an appeal. Prima facie, a successful party is entitled to the fruits of its success. A stay or injunction pending appeal is granted to protect the right to an appeal. Therefore, there must be shown to be some risk of an event occurring that may jeopardise the subject matter of the appeal and there must be merit in the appeal. Some cases, especially those in Western Australia (which have been approved of in this Court) use the term 'special circumstances' to describe what is required. Having regard to the approach in the decided cases, I summarised the required approach at [39]-[40]:

Therefore, it is necessary for the applicant for injunctive relief pending the outcome in an appeal to demonstrate (a) the ultimate benefit of a successful exercise of the appeal right is in jeopardy if there is no injunction; (b) there is sufficient strength in the argument to the effect that there was error in the primary decision to contemplate a restraint upon its being given effect; and (c) a sufficiently serious consequence for the applicant if an injunction was not granted to justify depriving a party until the outcome of the appeal is known of the benefit of what is a considered determination of the issues after a final hearing. Whether these matters together be described as a requirement that there be 'special circumstances' may be a matter of semantics.

Finally, whether an appeal right would be rendered nugatory if an injunction were not granted is a matter to be adjudged in a practical way having regard to the consequences to the appellant if the appeal was to succeed in circumstances where the respondent had taken steps on the basis of the correctness of the decision of the primary judge.

11    Where, as here, the subject matter is money and invested funds, there must be shown to be some real risk that funds will be dissipated in circumstances where there will be difficulty or undue delay in being able to recover those funds if the appeal is successful.

12    Assuming in favour of Mrs and Mr Frigger and only for present purposes that there is sufficient strength in the arguments to be advanced to the effect that there was error in the decision to dismiss their application (but without expressing any view in that regard), for the following reasons, I am not persuaded that there has been demonstrated to be a real risk that steps will be taken on the basis of the correctness of the decision of the primary judge that would mean that funds could not be recovered if the appeal was successful of that would otherwise jeopardise the appeal.

13    First, as to the payment of remuneration to Ms Trenfield as trustee, Ms Trenfield is an officer of the Court. There are processes that must be followed in relation to the approval and payment of remuneration to a trustee. If Mrs and Mr Frigger have concerns about whether those processes have been followed (as is suggested by their claims on the present application) then they can raise those matters by separate application. The proceedings under appeal did not concern those procedures. Rather, it appears that the claim made in respect of remuneration of the trustee was on the basis that there could be no claim for the administration of assets that, on the case advanced by Mrs and Mr Frigger, did not form part of the estates being administered.

14    Further, the affidavit evidence is to the effect that the amount that may be paid is $133,981.40. Even if there is some basis upon which part or all of that remuneration may be said to relate to the disputed assets and Mrs and Mr Frigger succeed on appeal, there is no evidence upon which it may be concluded that there is a risk that Ms Trenfield would not be in a position to repay that amount if ordered to do so.

15    Also, on 29 November 2021, Ms Trenfield deposed to an affidavit concerning the steps that were proposed to be taken in the administration of the bankrupt estates if the application for declaratory and other relief was unsuccessful. The affidavit referred to the intention to pay the remuneration as well as certain other costs and expenses (see para 18). However, there is no basis on the evidence to conclude that the amounts involved or the circumstances of the proposed payments may mean that the subject matter of the appeal would be jeopardised.

16    Second, as to the sale of the shares comprising the Main Portfolio, Mrs Frigger deposes to a concern that if the Main Portfolio is sold there will be substantial unnecessary brokerage fees and potentially thousands of dollars in lost capital. It is said that it will be 'difficult, if not impossible, to recoup or value those losses'. Why that may be so is not explained. It was also claimed that steps may be taken by Ms Trenfield that will result in the Fund becoming either non-complying or will trigger a large tax liability. These are matters of mere assertion without evidence to support them. However, behind them appears to be a concern that some step might be taken which would mean that the claims by Mrs and Mr Frigger that the disputed assets are assets of the Fund would be prejudiced by steps taken in relation to the administration of the assets pending the outcome of the appeal. In effect, it is claimed that by reason of the nature of the Fund and its taxation status, it may not be possible to reinstate its character if the appeal is successful.

17    In the course of oral submissions on the application it emerged that Ms Trenfield has no present intention to deal in any way with the shares the subject of the Main Portfolio. Rather, it is proposed that the shares continue to be held by CommSec until proofs of debt from creditors have been called for and adjudicated. In the course of the hearing counsel for Ms Trenfield indicated the terms of an undertaking to that effect. On the basis of that undertaking there is no imminent threat of steps being taken that may call into question whether any right of appeal would be jeopardised.

18    Third, as to the allegation that distributions could be made to creditors one of the complaints made by Mrs and Mr Frigger is that Ms Trenfield has refused or failed to adjudicate claims by creditors. There is affidavit evidence from Ms Trenfield that there is a substantial process to be undertaken in relation to creditor claims before there could be any distribution to them. That includes the adjudication of proofs of debt. Having regard to that position, it is difficult to see how there could be some form of imminent distribution to creditors from the estates. There is simply no evidence to suggest that such a distribution might occur before the determination of the appeal.

19    As to the funds in BOQ1, the complaint made is that the funds have been withdrawn from the account and Mrs and Mr Frigger do not know where those funds are held. It is not suggested that the funds do not remain in the hands of Ms Trenfield as trustee or that there is some reason to believe that the funds are about to be distributed. In the affidavit of 29 November 2021, Ms Trenfield deposed to her intention to transfer the funds into a bank account in her name within one business day of judgment in the proceedings (being the judgment the subject of the appeal). It appears that those steps have been taken. On the evidence, those steps are consistent with the trustee performing her duty to get in the assets of the estates and preserve them for distribution to creditors. In any event, to the extent that the transfer itself has consequences, that is a matter that has occurred (after the intention to do so was disclosed to Mrs and Mr Frigger). Otherwise, for reasons that have been given, there is no evidence of an imminent distribution of a kind that would call into question whether a successful appeal by Mrs and Mr Frigger might not be able to be given effect.

20    Other matters raised on the application concern complaints about past conduct of Ms Trenfield as trustee and do not concern the prospect of some form of conduct that will affect the subject matter of the appeal such that the appeal right may be jeopardised.

21    For those reasons, based upon the undertaking given by Ms Trenfield in the course of the hearing, I am not satisfied that as matters presently stand, any injunctive relief should be granted pending the appeal.

Associate:

Dated:    16 December 2021