Supreme Court of WA|2014-08-22|Before: Mr J, Simmonds J

COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 6] [2014] WASC 105 (22 August 2014)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 6] [2014] WASC 105

BETWEEN : COMPUTER ACCOUNTING AND TAX PTY LTD (in liq)

DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING

Civil procedure - Enforcement of judgments - Application for directions under Civil Judgments Enforcement Act 2004 (WA) s 104 claiming compensation or damages under s 105 in relation to receivership order - Whether application lies where receivership order has been ended by discharge of receiver

Civil procedure - Enforcement of judgments - Application for order under s 105 - Standing for purchaser where receiver sold share under receivership order

Civil procedure - Enforcement of judgments - Application for order under s 105 - Meaning of 'irregularity' in s 105

Civil procedure - Enforcement of judgments - Application for order under s 105 - Meaning of 'order needed to correct the irregularity'

Civil procedure - Enforcement of judgments - Application for order under s 105 - Whether power to make order under s 105 is discretionary

Civil procedure - Enforcement of judgments - Application for order under s 105 - How discretionary power under s 105 is to be exercised

Mrs A C T Frigger & Mr H H J Frigger : Mr S K Shepherd

Mrs A C T Frigger & Mr H H J Frigger : David Thompson

1 This is the hearing of an application styled an application for directions pursuant to Civil Judgments Enforcement Act 2004 (WA), s 104 (the application for directions). That characterisation of this hearing comes from the document by which, under programming orders I made for the hearing, the application for directions was to proceed. It will become apparent that the application for directions has undergone significant changes over the course of these proceedings since then. However, I will throughout refer to it as the application for directions, for convenience.

(a) I begin by providing background to the making of the application for directions, including the programming orders for the hearing of it;

(b) I then describe the application for directions in some detail;

(e) the final section of these reasons is my conclusions and orders.

3 The following for the most part is not in contest between the parties. Where there is a contest I indicate its nature and my findings with the reasons for them.

4 The claimants, Angela Theresa Cecilia Frigger (Mrs Frigger) and Helmut Hubert Joseph Frigger (Mr Frigger), are husband and wife. I call them together the Friggers. The Friggers are directors and shareholders of the plaintiff in CIV 2265 of 2006, Computer Accounting and Tax Pty Ltd (CAT). CAT is now in liquidation.

5 On 21 November 2008 CAT obtained orders (the receiver orders) pursuant to Civil Judgments Enforcement Act s 86(1) appointing Mr G T Lean, the respondent, as receiver of one 50% share (the share) of Banning Holdings Pty Ltd (Banning Holdings). The share is an asset of the second defendant, the late Martin Paul Banning (Mr Banning). Mr Banning's personal representative is Donald CampbellSmith (Mr CampbellSmith). Mr CampbellSmith is the second defendant in CIV 2265 of 2006. CAT had an unsatisfied judgment in that action (the judgment debt). The judgment debt was principally for the sum ordered in that judgment to be paid (the judgment sum), against the first defendant, Professional Services of Australia Pty Ltd (PSA), a company then in voluntary administration, and against Mr Banning. The receiver orders also provided (O 2) that the respondent for the purposes of the receiver orders was:

[A]ppointed in this action to appropriate and realise [the share] so as to satisfy the judgment debt.

6 At all material times there has been only one other shareholder in Banning Holdings. That shareholder was Mrs Sandra Banning (Mrs Banning).

7 On 16 December 2008, a transfer of the share to the respondent was registered in the register of members of Banning Holdings.

8 The corporate constitution of Banning Holdings (the corporate constitution) at all material times contained a provision (Article 22A of its articles of association) prohibiting the sale or transfer of any share in Banning Holdings until the requirements in the rights of preemption conferred by the provision (the preemptive rights provision) in favour of the existing shareholders of the company had been complied with. Those requirements included that a shareholder desiring to sell or transfer a share first give written notice to the directors so as to constitute them the shareholder's agent for sale at a price to be agreed between the shareholder and the directors or, failing such agreement, a price to be determined by the auditor of Banning Holdings.

9 The corporate constitution also contained a provision (Article 22) stating that the directors of Banning Holdings might decline to register any transfer without giving any reason for doing so.

10 On or about 10 February 2009 in The West Australian the respondent advertised the share for sale and invited expressions of interest.

11 On or about the same date, 10 February 2009, the Friggers lodged with the respondent a written expression of interest in purchasing the share.

12 On or about 27 February 2009 the respondent held a meeting for parties interested in purchasing the share. Approximately 15 interested parties, including the Friggers, attended the meeting. The respondent provided the meeting with certain information in relation to the share.

13 At that meeting, the respondent indicated that there was no copy of the corporate constitution of Banning Holdings to hand.

14 On 6 March 2009 a number of persons made offers to purchase the share. The Friggers made the highest offer (the Friggers' offer to purchase of 6 March 2009), for a consideration of $730,000. The next highest offer was for a consideration of $201,000.

15 It is convenient to set out here the terms of the Friggers' offer to purchase of 6 March 2009. Each of the offers to purchase was in this form. It was common ground that the respondent provided the form of offer all the offerors completed.

OFFER TO PURCHASE ONE SHARE IN BANNING HOLDINGS PTY LTD (ACN 009006437)

I/We [the Friggers] Of [address] are prepared to purchase One Share in Banning Holdings Pty Ltd

For $730,000

I/We are prepared to settle and pay this amount by 31 March 2009 subject to receiving simultaneously a copy of One Share in the Company and registered in the following name/names

'[the Friggers]'

Dated this 6th day of March 2009.

Signed By: [the Friggers]

Representing: [blank]

16 By letter dated 9 March 2009 from the respondent to the Friggers (the respondent's letter of acceptance of 9 March 2009) he stated that their 'offer to purchase' had been accepted by him as 'the highest bid'. The letter went on to ask them to 'remit your cheque to me for $730,000 and I will hand you the assigned share'.

17 On 10 March 2009 the Friggers and the respondent signed what both appeared to accept was a confirmation in writing of an agreement for a purchase of the share by the Friggers (the written confirmation of 10 March 2009) for a consideration of $730,000, with the Friggers having paid the deposit of $20,000 provided for in the written confirmation of 10 March 2009.

18 It is convenient to set out here the terms of the written confirmation of 10 March 2009 in full:

To Whom It May Concern:

We, [Mr Frigger and Mrs Frigger], both of [address], confirm;

(1) We have purchased from [the respondent] as Receiver One (1) Share in Banning Holdings Pty Ltd for $730,000.

(2) We have paid the Receiver $20,000 Deposit for this Share on 10th March 2009.

(3) We, undertake to pay the balance of funds being $710,000 to the Receiver on or before 31st of March 2009.

(4) We will indemnify you against any further legal fees or costs.

Yours faithfully

[signed by the Friggers and dated 10 March 2009]

AGREED as above

[Signed by the respondent, who is shown as 'Court Appointed Receiver' and dated 10 March 2009.]

19 There was some apparent contest before me as to what was or were the document or documents recording what was sold. It was common ground there was a contract for the share to be sold to and purchased by the Friggers (the contract for the sale and purchase of the share). It is convenient for me to deal with that contest at this point.

20 The Friggers submitted the contract for the sale and purchase of the share was recorded by the Friggers' offer of 6 March 2009 and the respondent's letter of acceptance of 9 March 2009. The written confirmation of 10 March 2009 was at most a supplementation of that contract that did not displace it.

21 The respondent submitted that the contract for the sale and purchase of the share was solely the written confirmation of 10 March 2009.

22 While I prefer the submission of the respondent, I will indicate why in my view the difference is not significant for my purposes.

23 I begin by noting there was uncontested evidence before me of a dispute, on or about 10 March 2009, between the parties as to the terms on which the purchase of the share by the Friggers would go forward. See affidavit of the respondent sworn on 24 August 2012 (exhibit 11) [32] and attachment GTL 19 (page 48). That attachment is an email sent 10 March 2009 at 1.55 pm from Mrs Frigger to Mr Lean requiring him to transfer the share by 4.00 pm that day. This requirement is stated after a reference to an opinion of the then solicitor for Mr Lean, a Mr Carles, which the respondent had sent to Mrs Frigger. Mrs Frigger states she does not agree with that opinion, adding that she would not spend 'unnecessary legal costs' to 'protect' him, apparently a reference to obtaining court approval of any sale and referring also to having been told by 'Chris Stokes' that the respondent might sell the share without the approval of the court. Mr Stokes was at the relevant time the solicitor for CAT.

24 The opinion referred to, which is not included with attachment GTL 19 or otherwise exhibited in evidence, appears to be in a letter of advice from Mr Carles to the respondent dated 10 March 2009 which the respondent in crossexamination (3 July 2013, ts 3618) acknowledged he received and which was to the effect the sale should be made subject to court approval. The respondent further acknowledged there was 'no follow-up on that advice' (crossexamination, ts 3619). These acknowledgements were not followed up in reexamination.

25 I note that the requirement in Mrs Frigger's email for transfer of the share by 4.00 pm on 10 March 2009 does not readily accord with the terms of the Friggers' offer of 6 March 2009. I further note that the exchange of views between the parties that email appears to refer to, as to whether or not there should be court approval of the sale, goes to a matter not apparent from the terms of the Friggers' offer of 6 March 2009 and the respondent's letter of acceptance of 9 March 2009.

26 I consider those circumstances indicate there was a measure of lack of finality that the parties understood to exist as to the terms of the contract for the sale and purchase of the share as at 10 March 2009, notwithstanding the coincidence of the Friggers' offer of 6 March 2009 and the respondent's letter of acceptance of 9 March 2009.

27 I further note that the terms of the written confirmation of 10 March 2009 are not on all fours with the terms of the Friggers' offer of 6 March 2009, most notably in the latter referring to a deposit of $20,000 having been paid where the former makes reference to payment of the total price but makes no reference to any deposit; the lack of any reference in the former to the receipt by the Friggers of the share registered in their joint names; and the latter stating '[w]e will indemnify you against any further legal fees or costs' where the former has no statement as to indemnification of any sort.

28 I would find from those differences, considered against those circumstances, that the written confirmation of 10 March 2009 was the form of the contract for the sale and purchase of the share at which the parties arrived as at that date. Whether it was a variation of, by substitution for, a previous contract represented by the Friggers' offer of 6 March 2009 and the respondent's letter of acceptance of 9 March 2009, or the culmination of negotiations of which those two documents formed a part, is not in my view significant.

29 I note in passing that my finding accords with the case statement of the Friggers dated 24 October 2011 [14] (see also [15]). I return to that document below.

30 However, the difference of position between the Friggers and the respondent in that respect is not in my view significant for my purposes. That is because it appeared to be common ground between the parties that it was a term of the contract for the sale and purchase of the share as at 10 March 2009 that the Friggers would receive a share registered in their joint names in return for the payment of the total consideration.

31 However, as I will explain below that, there are difficult issues in respect of the nature of that term, both as at 10 March 2009 and as at later dates.

32 On 20 March 2009 the then solicitor for the respondent received a letter from the solicitor for Banning Holdings and its directors of that date (the letter from the solicitor for Banning Holdings dated 20 March 2009) which in material part said this:

Further to recent communications I confirm that it has now come to my attention that the share in Banning Holdings Pty Ltd over which your client was appointed receiver is the subject of pre-emptive rights. I enclose herewith for your reference a copy of the Memorandum and Articles of Association of Banning Holdings Pty Ltd and refer you to Article 22A thereof.

It is trite that the appointment of your client as Receiver of the share gives them no greater rights in respect of its sales than those enuring to the owner of the share.

I would observe that it is abundantly clear that your client has not followed the process provided in the Memorandum and Articles of Association with respect to the sale of the share, and, on that basis the purported sale to Mr and Mrs Frigger may be set aside, and, that an injunction can be granted to restrain the purported sale. Further, the directors of Banning Holdings Pty Ltd are quite within their rights to refuse to register any purported transfer of the share to Mr and Mrs Frigger - which I am instructed they will continue to do.

I am further instructed by Mrs Banning that, if the share had ever been offered to her (which it has not), she would have wished to purchase it, and, may still wish to do so if your client is inclined to properly undertake the process proscribed [sic] in Article 22A.

The corporate constitution of Banning Holdings was enclosed with that letter.

33 It was not in contest that this was the first occasion on which the respondent or anyone acting for him was made aware of that corporate constitution and the import of Article 22 and Article 22A.

34 On 25 March 2009, the Friggers completed the payment of the consideration for the share by paying $710,000 to the receiver. The Friggers completed a share transfer form apparently dated by them that date. As will be seen the respondent completed the form on 27 March 2009.

35 Also on 25 March 2009, the Friggers received a letter from the solicitors for Banning Holdings (the letter from the solicitor for Banning Holdings dated 23 March 2009) stating that the directors would not approve the registration of a transfer of the share to the Friggers. This was stated to be because the respondent had not complied with the procedures in the preemptive rights provision.

36 There is a sharp contest between the parties as to whether or not the letter from the solicitor for Banning Holdings dated 23 March 2009 was received by the Friggers on 25 March 2009 before or after the time they had completed the payment for the share. I will reach that contest later in these reasons.

37 On 26 March 2009 the Friggers received from the respondent's then solicitor a document styled a Deed of Indemnity, prepared the previous day on the respondent's instructions (the Deed).

38 The Deed among other things recited the payments of the deposit on the balance of the purchase price to the receiver under the contract of sale of the share and that the directors of Banning Holdings had through their solicitors advised in writing they would not agree to register a transfer of the share into the names of the purchasers. The Deed provided that:

the respondent agreed to apply the total purchase price in reduction of the judgment debt, after retaining $47,951 to be applied towards the respondent's fees and expenses;
the Friggers acknowledged the refusal of the directors of Banning Holdings to register any transfer of the shares;
the inability of the respondent to transfer a registered shareholding to the Friggers unless a court order to that effect were obtained;
the Friggers agreed not to make any claim against the respondent for a refund of any part of the purchase price paid by them arising from or relating to the inability of the respondent to pass a registered title to the Friggers, thereby releasing the respondent from any such claim; and
that the Friggers indemnified the respondent from any claims or demands that might be made against him by any party as a result of the respondent agreeing to apply the total purchase price in the manner provided for.

39 After receiving the Deed the Friggers by email of 27 March 2009 to the respondent (the Friggers' 27 March 2009 email) stated among other things that they did not agree to sign the Deed; and that they required a transfer of shares document signed by the receiver to be given as the consideration for the '$730,000 which he has taken for such share'.

40 As I previously indicated on 27 March 2009 the receiver completed the transfer of shares document signed by the Friggers.

41 Subsequently, but also on 27 March 2009, the respondent refunded to the Friggers the amount of $710,000 and informed them that settlement under the written confirmation of 10 March 2009 would be deferred because of the declared refusal by the directors of Banning Holdings to register any share transfer.

42 On 30 March 2009 the solicitor for the respondent sent an email to the Friggers (the email of 30 March 2009) in which he said this:

We maintain our view that it is now appropriate for the Friggers to bring a court application under separate proceedings to compel the directors to register [the share transfer].

This email was part of an email chain which included the Friggers' 27 March 2009 email.

43 On or about 20 April 2009 the Friggers commenced proceedings in CIV 1727 of 2009 seeking orders including ones to have effect given to the transfer. The respondent was named as coplaintiff in CIV 1727 of 2009.

44 On 21 May 2009 orders were made removing the respondent as coplaintiff and adding him as the fourth defendant in CIV 1727 of 2009.

45 On 13 August 2009 PSA and Mr CampbellSmith applied to have the respondent discharged from his receivership (the application for discharge from the receivership).

46 On 23 October 2009, the Court of Appeal delivered its decision in the appeal from my trial judgment in CIV 2265 of 2006. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (PSA [No 2] WASCA).

47 Following the decision in PSA [No 2] WASCA the Court of Appeal made orders, dated 16 December 2009 (the WASCA orders of 16 December 2009), including orders to the effect that the judgment sum be substantially reduced, and that CAT pay the first defendant and Mr CampbellSmith certain amounts including amounts in respect of the taxed costs of the appeal.

48 On 10 September 2010 a hearing was held on the motion of the judge managing CIV 1727 of 2009, Kenneth Martin J, to determine whether or not proceedings on the statement of claim in CIV 1727 of 2009 should be permanently stayed. At the end of the hearing his Honour reserved his decision.

49 On 10 November 2010 I delivered my judgment on the application for discharge from the receivership. See Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318 (CAT v PSA [No 2] WASC). For the reasons set out there I determined that the application for discharge from the receivership should be granted, with effect from 10 November 2010: see [100]. On that date orders were made, including an order to that effect.

50 On 2 December 2010 Kenneth Martin J delivered his judgment. See Frigger v CampbellSmith [2010] WASC 353. For the reasons set out there he determined that an order should be made permanently staying the proceedings in CIV 1727 of 2009.

51 By letter dated 2 December 2010 from the Friggers, signed by Mrs Frigger, to the respondent and referring to the judgment of Kenneth Martin J, the Friggers demanded a refund of the deposit together with interest from 10 March 2009 to 3 December 2010.

52 On 21 January 2011 Mrs Frigger signed a receipt for the refund of the deposit plus interest, albeit the amount of the interest paid was less than the interest the Friggers had claimed.

53 On 9 February 2011 Kenneth Martin J made orders permanently staying the proceedings in CIV 1727 of 2009 and that the Friggers pay certain of the respondent's costs of those proceedings. On 27 March 2012 the Court of Appeal delivered its judgment on the Friggers' appeal against those costs orders. See Frigger v Lean [2012] WASCA 66. For the reasons set out there the Court of Appeal dismissed the appeal.

54 At the end of a hearing on 26 September 2011, which had followed the making of orders on 16 June 2011, I made programming orders (the programming orders of 26 September 2011) for a hearing for what subsequently became the application for directions.

55 It is not in contest that the programming orders of 26 September 2011 were superseded by orders I made on 26 September 2012. However, for reasons which will become apparent I should indicate the following as to the programming orders of 26 September 2011.

56 By the programming orders of 26 September 2011, the following were provided for, amongst other things:

the document entitled 'Amended Submissions - Claim for Compensation', handed up by the Friggers at the hearing of 26 September 2011, be treated as an application by summons within CIV 2265 of 2006 and be filed accordingly;
the Friggers file and serve a case statement setting out what facts in contention were relied upon by the Friggers, such filing and service to be by 24 October 2011;
the respondent file and serve a response to the case statement of the Friggers that addressed the matters that were and were not in dispute between the parties, by 21 November 2011;
the Friggers file and serve the affidavits upon which they intended to rely by 19 December 2011; the respondents file and serve such affidavits or affidavit as responded to the Friggers' affidavit or affidavits by 30 January 2012;
the parties file and serve written submissions by 13 February 2012; and
following compliance with the last order either party might apply to list the matter to be heard by special appointment.

57 On 25 October 2011 a Case Statement for the Friggers was filed (the Friggers' Case Statement).

58 On 23 November 2011 the respondent's response to the Friggers' Case Statement was filed.

59 On 25 January 2012, a document entitled 'Claimants Submissions on the Issue Stated at Paragraph One of the Order of the Honourable Justice Simmonds in Chambers on 16 June 2011' was filed. This document is in all other respects identical with the document 'Amended submissions - claim for compensation ordered to be filed', and I call it the application document for the application for directions.

60 On 17 April 2012 an affidavit of Mrs Frigger in support of the application for directions, sworn 11 April 2012 but dated 29 March 2012, was filed (the affidavit of Mrs Frigger of 11 April 2012).

61 On 22 June 2012, following a hearing on that date, I made orders for discovery by the Friggers and for mediation. This mediation was unsuccessful.

62 On 24 August 2012 an affidavit of the respondent, sworn on that date, was filed (the affidavit of the respondent of 24 August 2012).

63 On 26 September 2012, I made programming orders for what became the present hearing (the programming orders of 26 September 2012). It is necessary that I describe some of those orders in some detail.

64 The programming orders of 26 September 2012 provided, amongst other things, as follows:

the application for directions be listed for a hearing with an estimated duration of two days on a date to be fixed, subject to compliance with the order for submissions below;
the respondent file and serve any amended response to the Friggers' Case Statement by 15 October 2012;
each of the parties file and serve written submissions on or before 29 October 2012;
the affidavits filed and served by the Friggers and the respondent stand as those parties' witness statements in the application for directions; and
any party intending to object to the admissibility of any affidavit or any part thereof by 29 October 2012 advise the party serving the affidavit of the objections and the grounds for them; and by 12 November 2012 the party serving the affidavit inform the other party whether any of the objections were conceded; and if any dispute concerning admissibility of any affidavit or any part of any affidavit had not been resolved the parties confer in an attempt to resolve the dispute.

It was not in dispute that the programming orders of 26 September 2012 superseded the programming orders of 26 September 2011.

65 On 15 October 2012 the respondent filed an amended response to the Friggers' Case Statement (the respondents' amended response to the Friggers' Case Statement).

66 On 29 October 2012 a schedule of objections to the affidavit of Mrs Frigger of 17 April 2012 was provided to the Friggers' then solicitors by the respondent.

67 On 27 March 2013 written submissions bearing that date for the respondent were provided to the court and the Friggers (the respondents' opening written submissions).

68 Also on 27 March 2013 an updated schedule of objections to the affidavit of Mrs Frigger of 17 April 2012 was provided to the court and to the Friggers (the respondent's updated objections to the affidavit of Mrs Frigger of 17 April 2012).

69 Finally, on 3 April 2013 the Friggers provided the court with written submissions for the Friggers dated 2 April 2013 (the Friggers' opening written submissions). The Friggers' opening written submissions also adopted the outline of submissions for the applicant dated 16 September 2011, which I took thereby to be incorporated by reference into the Friggers' opening written submissions.

70 The application document for the application for directions says this, in material part (numbering in the original):

The [Friggers] seek directions from this Honourable Court pursuant to section 104 Civil Judgments Enforcement Act ... as persons affected by an order made by this court.
The [Friggers] wish to claim compensation from the respondent for losses they have suffered resulting from irregularities in the carrying out of the order pursuant to section 105 Civil Judgments Enforcement Act.

The respondent sold the share the subject of the Receiver orders contrary to [the pre-emptive rights] attached to the share.

Further the respondent failed to perform his duty as receiver whilst carrying out the orders made by this Honourable Court.

3.1 failed to report to this Honourable Court and the judgement creditor regarding the nature and details of [the share];

3.2 failed to provide accurate information to potential purchasers;

3.2 [sic] failed in his duty of care under [the written confirmation of 10 March 2009];

3.3 acted in bad faith in related proceedings CIV 1727/2009.

As will become apparent, the Friggers did not pursue the matters in 3.

71 There are two further matters in respect of the application document for the application for directions I should note here.

72 One is that the remainder of the application document for the application for directions consists of a table of factual matters by date, with some of the descriptions containing what appear to be elements of an argument with respect to claims arising out of the matter in question.

73 The other is that, with those exceptions, the application document for the application for directions contains no submissions for the Friggers.

The hearings, the evidence and the parties' written submissions concerning these

74 The application for directions came on for hearing over two days, on 4 and 5 April 2013, at the end of which the hearing was adjourned to 7 May 2013.

75 At the hearing on 7 May 2013, there was a further adjournment, to 3 July 2013. This was the result of the condition of Mr Lean, who was to enter hospital the following day.

76 At the hearing on 3 July 2013, the hearing resumed and concluded with the making of programming orders (the programming orders of 3 July 2013) - which provided for the provision of written closing submissions by both parties and scheduled a hearing for oral closing submissions on 26 July 2013.

77 Written closing submissions for the Friggers, dated 25 July 2013 (the Friggers' written closing submissions), were filed on 26 July 2013. Written closing submissions for the respondent, dated 22 July 2013 (the respondent's written closing submissions), were filed and served in accordance with the programming orders of 3 July 2013.

78 I now briefly describe the proceedings and evidence given at the hearings on 4 and 5 April and 3 July 2013.

79 At the hearing on 4 April 2013, after I had determined the objections by the respondent to the affidavit of Mrs Frigger of 11 April 2012 including matters incorporated by reference into that affidavit, and counsel for the Friggers had made his opening, Mrs Frigger was sworn and gave as her examinationinchief the contents of her affidavit sworn 11 April 2012, as amended to reflect the result of my determination of the objections. This amended affidavit ultimately became, with its attachments, exhibit 9. Additionally, a document headed 'Francois Carles' beginning with an email sent 30 March 2009 and marked up by Mrs Frigger was tendered into evidence as exhibit 1.

80 Mrs Frigger was crossexamined beginning on 4 April 2013.

81 On 5 April 2013 Mrs Frigger's crossexamination concluded. During that crossexamination on 4 and 5 April 2013 a number of documents were tendered into evidence through Mrs Frigger:

a document described as a reamended statement of claim pursuant to the order of Kenneth Martin J in CIV 1727 of 2009 was tendered into evidence as exhibit 2;
a document described as an amended statement of claim in CIV 1727 of 2009 was tendered into evidence as exhibit 3;
a document described as a defence and counterclaim of first, second and third defendants in CIV 1727 of 2009 was tendered into evidence as exhibit 4;
a document described as the fourth defendant's defence to counterclaim in CIV 1727 of 2009 was tendered into evidence as exhibit 5;
a document described as the plaintiff's reply in defence to counterclaim in CIV 1727 of 2009 was tendered into evidence as exhibit 6;
a document described as a letter from Chris Stokes & Associates to Eastwood Law dated 6 July 2009 was tendered into evidence as exhibit 7;
a document described as the plaintiff's further and better particulars of par 11.2 of reply and defence to counterclaim in CIV 1727 of 2009 was tendered into evidence as exhibit 8; and
the affidavit of Mrs Frigger sworn 11 April 2012 with changes accepted by the deponent was tendered into evidence as exhibit 9.

82 On 5 April 2013 pursuant to leave I had granted arising out of my determination of the objections to the affidavit of Mrs Frigger sworn 11 April 2012 I permitted counsel for the Friggers to have Mrs Frigger in effect enlarge her examinationinchief to include an affidavit of hers sworn 5 April 2013 and its attachments, which became exhibit 10, after which I permitted her to be further crossexamined. She was then reexamined.

83 Also at the hearing on 5 April 2013, after counsel for the respondent had made his opening, the respondent, Mr Lean, was sworn and gave as his examinationinchief the contents of the affidavit of the respondent of 24 August 2012, which with its attachments became exhibit 11.

84 At the hearing on 3 July 2013 Mr Lean was resworn and was crossexamined. During that crossexamination a number of documents were tendered into evidence:

a document described as the order for appointment of the receiver in CIV 2265 of 2006 setting out the receiver order was tendered into evidence at exhibit 12;
a document described as the March 2009 draft report to the Supreme Court was tendered into evidence at exhibit 13;
a document described as a GT Lean and Associates time sheet data in detail document 23 January 2010 was tendered into evidence at exhibit 15;
a document described as an email chain headed 'Francois Carles 12 August 2009 11:52am' was tendered into evidence at exhibit 16;
a document described as the defence of fourth defendant dated 30 June 2009 in CIV 1727 of 2009 was tendered into evidence at exhibit 17;
a document described as the receiver's report to the court dated 10 March 2009 was tendered into evidence at exhibit 18; and
a document described as the receiver's third report pursuant to order 5 of 21 November 2008 dated 10 March 2009 was tendered into evidence at exhibit 19.

85 A brief reexamination of the respondent concluded the evidence for the respondent.

86 On 26 July 2013 the parties presented oral closing submissions and I reserved my judgment.

87 By letter dated 31 October 2013 from solicitors for the respondent the Court's attention was drawn to Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 [18] [23] (Le Miere J) as providing 'further guidance' on the respondent's written closing submissions.

88 I provided the parties with an opportunity to make further submissions in writing as to the relevance of that decision to the present proceedings.

89 The respondent provided such written submissions dated 22 November 2013 (the respondent's written submissions on Huntingdale), while the Friggers also provided such written submissions, also dated 22 November 2013 (the Friggers' written submissions on Huntingdale).

90 These are the issues as defined by the Friggers' opening written submissions and the respondent's opening written submissions and the ensuing proceedings.

91 I note that those written submissions referred to a number of the earlier written submissions and case statements I have listed.

Does the court have jurisdiction under Civil Judgments Enforcement Act s 104 alone, read with s 105, or s 105 alone, to entertain the application for directions, particularly given that the Friggers are seeking by these proceedings compensation in respect of orders now cancelled?
If the answer to the question in issue 1 is yes, is there such jurisdiction notwithstanding Frigger v CampbellSmith and Frigger v Lean?
If the answer to the question in issue 2 is yes, did the conduct of the respondent in the respects identified by the Friggers represent an 'irregularity' as to any of those respects in connection with the carrying out of the receiver orders within Civil Judgments Enforcement Act s 105?
If the answer to the question in issue 3 is yes, what is the power of the court to make orders in this case, and in particular is this power discretionary?
Did the conduct of the respondent cause the Friggers jointly or solely to suffer any loss or damage of which the Friggers have provided adequate evidence?
Is recovery of damages liable to be reduced for any failure of the Friggers to take reasonable care?
Is the liability of the respondent under an order under Civil Judgments Enforcement Act s 105 by virtue of Civil Liability Act 2002 (WA) s 5AK to be fixed at an amount the court considers just having regard to the conduct of the Friggers' then solicitors (Mr Stokes) in the respects the respondent alleges?

93 For reasons which will appear, it seems to me that the issues of determinative significance, for the present application, are issues 3 and 4.

94 I note the respondent's contention that the present application so far as it seeks any orders for Mr Frigger should be dismissed, on the basis that Mr Frigger provided no evidence, and in particular none as to reliance or causation.

95 I do not uphold this contention. As will become apparent the evidence from Mrs Frigger and from other sources included evidence relevant to the position of Mr Frigger. It did so not least because on the evidence before me the contract of sale and purchase of the share was entered into by both Mr and Mrs Frigger and the consideration provided under it moved from both of them. In my view that body of evidence indicates there is no distinction to be drawn between Mr and Mrs Frigger material to the disposition of the application for directions.

96 For the Friggers, as indicated by the application document for the application for directions, their case was initially put in terms of Civil Judgments Enforcement Act s 104 and s 105.

97 However, as I understood their case it came to be put as an application for directions under s 104 where the directions sought were those provided for in s 105, or alternatively as an application under s 105 without reliance on s 104.

98 I begin by noting that neither counsel was able to find, and my research did not produce, any authority on the matters I discuss in respect of this issue.

99 While I have my doubts that the application is one that can be put in terms of s 104, in whole or in part, I do not need to determine whether there is jurisdiction in terms of that provision, in whole or in part.

100 That is because I have determined there is jurisdiction which can be put in terms of s 105 without reliance on s 104.

102 Civil Judgments Enforcement Act s 104 and s 105, read at all material times, as follows:

(1) Any of the following persons may apply to a court for directions in respect of a matter arising under or in connection with the operation or carrying out of an order issued under this Act -

(d) a person who is affected by, or whose property is affected by, the order; or

(e) a person who in the opinion of the court has a sufficient interest in the matter.

(a) if the order relates to personal property, to the court that issued the order;

(i) to the Supreme Court if the order was issued by the Supreme Court;

(ii) to the District Court if the order was issued by the District Court or the Magistrates Court.

(b) make any order as to the payment of the costs of the application as are just.

Irregular enforcement, courts' powers as to

If the court that made an order under Part 4 or 5 or section 101 is satisfied that an irregularity has occurred in connection with the making or carrying out of the order, the court may make any order needed to correct the irregularity including an order -

(a) that sets aside the order or an act done under the order;

(b) that requires the restitution of property or the payment of money, compensation or damages.

103 I consider that the language of Civil Judgments Enforcement Act s 104 does not contemplate the making of orders for directions where, as here, orders had been made for the discharge from the receivership.

104 It was not in contest that the discharge had the effect of bringing the receiver orders to an end, although without prejudice to any liability of the receiver in respect of the carrying out of those orders.

105 While it might be thought there is power under s 104 to make orders for directions with respect to that liability, the language of 'directions' would not appear to me to be apt for the purpose. Further, much of the language of s 104 (see s 104(b) (d)) is in the present tense.

106 Still further, to the extent it was contended that the language of s 104 permits the making of an order at least under s 105, it may be noted the language of the two provisions does not readily marry. Compare the 'order' described in s 104 with the 'order' described in s 105.

107 It seems to me the language of s 105 is apt to include a power to make an order even in respect of 'an order under Part 4 or Part 5 or section 101' which has come to an end. As I have previously indicated, the receiver orders were made under s 86, which falls under pt 4.

108 Further, I note the reference in the Explanatory Memorandum for the Civil Judgments Enforcement Bill 2003 (WA) with respect to 'Clause 105 Irregular enforcement, courts' powers as to' that one of the circumstances referred to as allowing the court to address irregularities is 'seizing property after the judgement debt has been satisfied'.

109 True it is there is no provision for standing to make an order under s 105: compare s 104(1). However, it is not in contest in this case that the Friggers have standing under s 105.

110 Further, it seems to me that standing should be regarded as appropriate for at least a person who has an arguable case that they have suffered from an 'irregularity' for which the court might make 'any order needed to correct the irregularity'. I note again, but in the present context, the circumstance from the Explanatory Memorandum previously quoted. It seems to me that that circumstance is meant to refer to the possibility of a corrective order at the suit of the person from whom the property was seized.

111 I would be satisfied the answer to the question in issue 1 is yes, and that the court has jurisdiction.

112 However, in view of my conclusions with respect to issues 3 and 4, it is not necessary for me to reach a final view on the resolution of this issue.

Issue 2: are these proceedings open notwithstanding Frigger v CampbellSmith and Frigger v Lean?

113 For the respondent it was put to me that these proceedings should be seen as an abuse of process in view of the issues addressed in those two decisions. I understand the submission as follows.

114 The proceedings in Frigger v CampbellSmith had addressed matters of the liability of the receiver to the Friggers in respect of the attempted sale of the share, including the liability of the receiver to them in negligence. I was referred to pleadings for the Friggers in CIV 1727 of 2009, both in draft form and as filed, as so indicating. See exhibit 3 and exhibit 2, respectively. Accordingly the respondents submitted it was an abuse of process for the Friggers to seek to have those issues, or ones like them, addressed again, in the present proceedings.

115 Further, the decision in the appeal as to costs in Frigger v Lean had addressed in particular one of the forms of irregularity relied upon by the Friggers. This was said to be the participation of the respondent in CIV 1727 of 2009. At the very least their reliance upon that form of irregularity in the present proceedings was an abuse of process.

116 The respondent did not indicate any line of authority in support of his submission as to the abuse of process. The categories of what constitutes of abuse of process are not closed, of course. See Civil Procedure in Western Australia, vol 1 (LexisNexis 1990) [1.0.5] (referring to Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23, 74 among other authorities).

117 However, I understood the respondent to be making his submission by reference to the proposition, supported by Idoport Pty Ltd v National Australia Bank Ltd [2006] NSWCA 202 [107] [108], [110], [119], and as formulated in Civil Procedure in Western Australia [1.0.5], that 'it is an ... abuse of process when a litigant changes the form of the proceedings to set up the same case again'.

118 It seems to me that, for the reasons which will become apparent from my discussion of issue 3, I should not uphold the respondent's submission so understood. The matters addressed in Frigger v CampbellSmith and Frigger v Lean do not make the present proceedings an abuse of process when the nature of the irregularities relied upon by the Friggers is compared with those matters.

119 I would be satisfied the answer to the question in issue 2 is yes.

120 However, in view of my conclusions with respect to issues 3 and 4, it is not necessary for me to reach a final view on the resolution of this issue.

Issue 3: was there an irregularity within s 105?

121 For the Friggers, it was put to me that 'irregularity' in s 105 should be understood by reference to the literal or ordinary meaning of that word.

122 So understood, on their submission 'irregularity' described the six matters on which they relied.

123 For the respondent, it was put to me that 'irregularity' needs to be understood in a more limited sense, and so understood was not apt to describe that on which the Friggers relied.

124 I consider that the meaning for which the Friggers contend is to be preferred to that put by the respondent.

125 However, on that meaning, it is not apparent to me that there is sufficient evidence before me of an irregularity in respect of any of the matters the Friggers relied upon.

127 There is no authority on the meaning of 'irregularity' in Civil Judgments Enforcement Act s 105 of which counsel were aware or which my own research produced.

128 In CAT v PSA [No 2] WASC [102] [124] I expressed my views as to what might be irregularities within that provision. However, that expression was for the purposes of determining whether or not such irregularities as I was prepared to accept might have been present were sufficient, individually or in combination, to warrant an order to dismiss the receiver. I concluded they were not. I do not consider those views should be taken as indicating a final view as to the meaning of 'irregularity'.

129 The meaning of 'irregularity' upon which the Friggers relied was that given in The New Shorter Oxford English Dictionary on Historical Principles (Oxford 1990) 'irregularity' as follows:

A breach of rule or principle; an irregular, lawless, or disorderly act. The lack of conformity to rule, law, or principle; deviation from what is usual or normal; abnormality, anomalousness.

130 For the respondent it was put to me, as I understood the submission, that the meaning of 'irregularity' should be understood as conduct which would ground a known cause of action. What the Friggers relied upon did not ground a known cause of action because what in substance they relied upon was conduct in the making of the contract of sale and purchase that was a breach of a duty of care owed by a seller to a purchaser. There was no such duty in law.

131 I consider that the meaning of 'irregular', at least as identified from the quotation from the Oxford English Dictionary, is to be preferred to the more restricted meaning contended for by the respondent. I do so by reference to the fact it is an ordinary meaning confirmed by the legislative history.

132 For consideration of the legislative history of a provision like Civil Judgments Enforcement Act s 105 in the ascertainment of the meaning of that provision, see Interpretation Act 1984 (WA) s 19(1)(a), and in this case s 19(2)(e).

133 I have already referred to a part of the account of what is now Civil Judgments Enforcement Act s 105 in the Explanatory Memorandum for the Civil Judgments Enforcement Bill 2003. For present purposes I should set out that account in full:

Clause 105 Irregular enforcement, courts' powers as to

This clause provides that if the court issues an enforcement order and is satisfied that an irregularity has occurred with either the making of the order or its carrying out, the court can correct the irregularity including setting aside its previous order as well as ordering any necessary restitution of property, payment of money, compensation or damages.

Circumstances could arise such as seizing property at the wrong address, seizing property after the judgment debt has been satisfied or seizing in a manner that constitutes noncompliance with the rules of court or regulations made under the Act. The clause therefore allows the court to address irregularities and is necessary for the good administration of justice.

134 I also note the following from Western Australia, Parliamentary Debates, Legislative Assembly, 4 December 2003, 14278 (Second Reading Speech, Mr JA McGinty, Attorney General):

This Bill assists in achieving the objective of providing an efficient, flexible, unified and statewide civil judgements enforcement system in the Magistrates, District and Supreme Courts.

135 It seems to me, from the examples given in the second paragraph of the Explanatory Memorandum read with the statement of the Attorney General quoted above, that s 105 should be read as the Friggers contend, and not as counsel for the respondent's meaning would indicate.

136 I turn now to the six matters or forms of irregularity on which the Friggers relied. Those matters were the following:

offering to sell the share without first having identified the limitations in the Articles of Association of Banning Holdings represented by Article 22 and Article 22A;
failing to comply with Article 22A;
failing to obtain the directions of the court before contracting to sell the share, or failing to make the contract subject to such directions;
contracting to sell the share where, as circumstances transpired, the Friggers were unable to obtain the share registered in their names;
promoting the participation of the Friggers in the proceedings in CIV 1727 of 2009 to obtain the registration of the share in their names in which he was initially a co-plaintiff who then became a defendant; and
being a coplaintiff or being otherwise involved in the proceedings in CIV 1727 of 2009 without first obtaining the directions of the court.

137 I should note that for the Friggers it was confirmed that there was no claim of irregularity put in terms of a breach of a duty of care owed by the respondent to the Friggers, either generally or in relation to any of the six forms of irregularity just described. That confirmation was made in oral closing submissions (see particularly 26 July 2013 ts 3693) and in my view rather more clearly made in the Friggers' written submissions on Huntingdale.

138 I accept that Huntingdale (see especially [18] [23]), decided after I reserved my decision in the present matter, represents authority which did not have a counterpart among the authorities previously cited to me and which offers strong support for the view that a court appointed receiver does not, as such, owe a person in the position of the Friggers a duty of care of any kind.

COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 6] [2014] WASC 105 (28 March 2014)

At a glance

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Judgment (502 paragraphs)

COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 6] [2014] WASC 105 (22 August 2014)

Legislation Cited (5)

Cases Cited (5)