//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2017] FCA 1589
Federal Court of Australia
2017-12-21
Siopis J
Original judgment source is linked above.
background 20 By reason of the nature of the claims which are pleaded and the relief sought by the applicants in the proposed substituted originating application and statement of claim, it is necessary to set out some background. I have been assisted in setting out this summary by the reasons for decision of Barker J in Frigger v Banning [2016] FCA 359, and the reasons for decision of the Court of Appeal of the Supreme Court of Western Australia (the Court of Appeal) in Frigger v Professional Services of Australia Pty Ltd [2016] WASCA 68 and in Frigger v Kitay [No 2] [2017] WASCA 139. 21 In 2003, at a time when the applicants, as the only shareholders and directors, were in control of CAT, CAT commenced an action in the Magistrates Court against PSA (the third respondent to the proposed substituted originating application) and Mr Martin Banning, a director of PSA, and Banning Holdings Pty Ltd (the fourth respondent to the proposed substituted originating application) for losses resulting from the purchase by CAT of a service station property in Armadale, Western Australia. That action was ultimately transferred to the Supreme Court as CIV 2265 of 2006, where the action was tried before Simmonds J. 22 CAT was successful in the action at first instance and was awarded as damages various amounts totalling $967,202.50 plus interest against PSA and Mr Banning (Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133). This judgment was delivered by Simmonds J on 9 July 2008. 23 I observe that, in their proposed substituted statement of claim, the applicants pleaded that on 1 September 2003, the applicants executed a "contract for litigation" with CAT for the purposes of issuing a writ against PSA and Mr Banning for losses resulting from the purchase by CAT of the property in Armadale. 24 On 25 July 2008, PSA and Mr Banning instituted an appeal against the judgment and orders of Simmonds J in CIV 2265 of 2006. Mr Banning died on 8 September 2008. Mr Donald Campbell-Smith, the second respondent to the proposed substituted originating application, was appointed as the executor of Mr Banning's estate. 25 On 24 September 2008, Buss JA dismissed an application by PSA and Mr Banning's estate for a stay of the execution of the orders to pay the damages and interest awarded against them by Simmonds J in CIV 2265 of 2006, pending the outcome of the appeal. In dismissing the application, Buss JA relied on an affidavit by Mrs Frigger dated 23 September 2008 that CAT had the funds to repay any monies which the Court of Appeal may order to be repaid to PSA and to Mr Banning's estate should CAT lose the appeal (Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222 at [27]). 26 On 20 March 2009, whilst the appeal was pending, PSA entered into a deed of company arrangement with its creditors. Mr Kim Holbrook was appointed the deed administrator. 27 On 6 May 2009, Simmonds J made costs orders in CIV 2265 of 2006 in favour of CAT against PSA and Mr Banning's estate. Simmonds J ordered that PSA and Mr Banning's estate pay 90% of CAT's costs if not agreed. 28 On 2 June 2009, CAT lodged a bill of costs for taxation in the amount of $701,000 consequent upon the costs orders of Simmonds J in CIV 2265 of 2006. However, this bill of costs has never been taxed. 29 Between 2 June and 9 June 2009, CAT's solicitors received two cheques totalling $1,165,661.54 from the solicitors for PSA and Mr Banning's estate in respect of the orders made in CAT's favour by Simmonds J in CIV 2265 of 2006. The Friggers then immediately caused those monies to be paid into an account under their control. 30 On 22 July 2009, the appeal by PSA and Mr Banning's estate against the judgment and orders of Simmonds J in CIV 2265 of 2006 was heard by the Court of Appeal and judgment was reserved. 31 On 27 August 2009, CAT commenced an application in the Supreme Court for orders to the effect that the deed of company arrangement be terminated (CIV 2001 of 2009). Mrs Frigger filed an affidavit dated 27 August 2009 in support of that application. In that affidavit, Mrs Frigger claimed that the deed of company arrangement was oppressive, unfairly prejudicial and discriminated against CAT. 32 I observe in passing that this application remained in abeyance for a number of years. The application was subsequently resurrected and finally dismissed by orders made on 18 September 2015 by Simmonds J. This was almost three years after the deed of company arrangement was terminated by order of Simmonds J on 6 November 2012 (see [54] below). 33 On 22 October 2009, the Court of Appeal provided to the parties' solicitors its reasons for decision in advance of delivering judgment in the appeal on 23 October 2009. This was done to facilitate the making of orders by the Court of Appeal on the following day disposing of the appeal. The reasons for decision disclosed that the Court of Appeal would allow the appeal and set aside that part of Simmonds J's orders providing for damages to be payable to CAT in the sum of $675,078 and, also, reduced the damages by a further $6,500 together with a corresponding reduction in interest awarded at first instance on those sums. 34 On 23 October 2009, the Friggers caused CAT to register with the Australian Securities and Investments Commission a fixed charge over its property in favour of the applicants. The applicants pleaded in their proposed substituted statement of claim that the charge was executed on or about 10 September 2009. This charge was alleged to secure CAT's indebtedness to the Friggers, including its indebtedness under the contract of litigation. 35 When the Court of Appeal convened on 23 October 2009 for the making of orders in the appeal, the parties could not agree on the appropriate orders for the repayment by CAT of the excess monies attendant upon the Court of Appeal's decision to reduce the damages payable to CAT. The Court of Appeal, accordingly, gave directions for the filing of further submissions. 36 On 29 October 2009, Mr David Lenhoff, a solicitor representing PSA and Mr Banning's estate in the appeal, filed written submissions. These submissions contended that his clients had paid CAT the original judgment sum ordered by Simmonds J; and that consequent upon the appeal decision, the Court of Appeal should make an order requiring the repayment to his clients of the excess monies (the repayment sum). The submissions contended that the Court of Appeal should make that order rather than the order proposed by CAT in court on 23 October 2009. The order that had been proposed by CAT on that day was that CAT should repay a sum representing the difference between the repayment sum to PSA and Mr Banning's estate, less the taxed costs in favour of CAT pursuant to Simmonds J's costs orders. 37 On 11 November 2009, CAT filed its written submissions in response to PSA's and Mr Banning's estate's written submissions of 29 October 2009. CAT's responsive submissions included the following paragraph: 4. The Deed of Company Arrangement stipulates that any reduction in the judgment sum on Appeal is to be paid to Banning Holdings Pty Ltd and is to be offset against the respondent's costs. 38 However, CAT did not put the deed of company arrangement into evidence before the Court of Appeal. Further, CAT's submissions also sought a stay of the final orders for repayment pending it making a High Court special leave application. Those submissions were founded upon the premise that the Court of Appeal would order that CAT pay the repayment sum to PSA and Mr Banning's estate. CAT's submissions contended that any payment of the repayment sum and costs would be "rendered nugatory" as PSA and Mr Banning's estate would by then have dissipated the funds, if CAT's High Court appeal was ultimately successful. 39 On 3 December 2009, which was before the Court of Appeal had made its orders, the Friggers as shareholders of CAT resolved to place CAT into voluntary liquidation, and subsequently, on 12 December 2009, passed a members voluntary winding up resolution appointing Mr Glenn Trinick as liquidator. 40 On 4 December 2009, PSA and Mr Banning's estate filed an urgent interlocutory application in CIV 2265 of 2006 for the making of freezing orders against CAT and the Friggers. 41 On 7 December 2009, the Court of Appeal ordered that CAT pay PSA and Mr Banning's estate $775,822.72 plus interest and ordered that CAT pay 80% of the appellant's taxed costs of the appeal; and set aside the original costs orders made by Simmonds J on 6 May 2009 (see [27] above). The Court of Appeal remitted the question of costs at first instance to Simmonds J for reconsideration in light of the findings and orders of the Court of Appeal. I will refer to these orders as the December 2009 Court of Appeal orders. 42 In its reasons for decision, the Court of Appeal referred to the reference to the deed of company arrangement in para 4 of CAT's submissions, and went on to say: [N]either the Deed of Company Arrangement, nor the assertions in respect of outstanding costs orders have been put in evidence before this court. 43 The Court of Appeal rejected CAT's application that the orders should be stayed pending an application for special leave to appeal to the High Court. CAT's special leave application was subsequently brought, but dismissed by the High Court on 28 May 2010. 44 CAT did not pay the sum of $800,917.08 to PSA and Mr Banning's estate in compliance with the December 2009 Court of Appeal orders. The Friggers seek in this proceeding, a permanent injunction precluding PSA and Mr Banning's estate from enforcing these orders against them and/or CAT. 45 On 10 December 2009, there was a hearing before Simmonds J of the freezing orders application. At that hearing, Mrs Frigger appeared for herself and for Mr Frigger. Simmonds J delivered an ex tempore judgment which was subsequently recorded in writing (Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (CAT [No 3])). Simmonds J made freezing orders which enjoined the Friggers from dealing with or diminishing the value of certain assets and from enforcing payment of any amounts claimed to be owing to them by CAT. 46 It is apparent from the judgment of Simmonds J that it was the discovery of the registration of the fixed charge and caveats over the assets and real property of CAT, which led PSA and Mr Campbell-Smith to apply for the freezing orders. 47 On 16 December 2009, PSA and Mr Banning's estate served a statutory demand on CAT for $800,917.08, being the judgment sum payable by CAT pursuant to the December 2009 Court of Appeal orders. CAT did not comply with the statutory demand. 48 On 8 January 2010, PSA and Mr Banning's estate applied to the Supreme Court in COR 2 of 2010 for the appointment of Mr Mervyn Kitay as the provisional liquidator of CAT. 49 On 21 January 2010, Simmonds J appointed Mr Mervyn Kitay the provisional liquidator of CAT (Professional Services of Australia Pty Ltd v Computing Accounting and Tax Pty Ltd [2010] WASC 38). 50 There followed a number of directions hearings in respect of the return date for the hearing of argument in respect of the freezing orders made against the Friggers. The freezing orders were extended by consent on each of these occasions. 51 On 6 May 2010, Master Sanderson, also in COR 2 of 2010, made an order that CAT be wound up in insolvency. Mr Mervyn Kitay was appointed as the liquidator of CAT (Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93). 52 On 7 July 2010, there was a further hearing before Simmonds J in relation to the freezing orders. At the hearing, the parties, after having conferred, agreed that orders could be made by Simmonds J that the freezing orders be discharged with effect from 4:00 pm on 14 July 2010. 53 Also, in 2010, the Friggers commenced a proceeding (CIV 2765 of 2010) against Mr Kitay in his capacity as the liquidator of CAT in the Supreme Court. Mr Kitay has made a counterclaim against the Friggers. That proceeding is still on foot. In that proceeding, among other claims made, Mr Kitay challenges the Friggers' claim that the September 2003 litigation contract and the charge executed by CAT and the Friggers on 23 October 2009 are effective to give the Friggers any entitlement to the proceeds of the original judgment of Simmonds J in CIV 2265 of 2006. One of the allegations made by Mr Kitay is that the charge was entered into during the "relevant period" and so is void against the liquidator. 54 On 6 November 2012, Simmonds J made orders on the application of the deed of company arrangement administrator, Mr Kim Holbrook, in COR 205 of 2011, terminating the deed of company arrangement (Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444 (Holbrook)). In his reasons for decision, Simmonds J considered whether there were any unpaid creditors of PSA. Simmonds J accepted that CAT may have a claim for costs in respect of CIV 2265 of 2006 arising from his reconsideration of that question on remittal to him by the Court of Appeal. However, Simmonds J went on to order the termination of the deed of company arrangement because he accepted that on the evidence, it was likely that any such order for costs in favour of CAT that he may make on remittal, would be exceeded by CAT's liability to pay PSA pursuant to the December 2009 Court of Appeal orders. 55 On 5 August 2014, Mr Banning's estate applied to the Supreme Court for a means inquiry in relation to the Friggers, following their refusal to pay an order for costs taxed in the amount of $31,599.72 made by Simmonds J in CIV 2265 of 2006. 56 On 22 August 2014, on the return of the summons for the means inquiry, Mrs Frigger applied on behalf of herself and Mr Frigger for a suspension of the costs judgment and for a suspension of the means inquiry. This application was subsequently transferred to Simmonds J for hearing. 57 On 29 May 2015, Simmonds J made costs orders in CIV 2265 of 2006 pursuant to the remittal orders made by the Court of Appeal. Simmonds J reduced the award of costs in favour of CAT in CIV 2265 of 2006 ordering that PSA and Mr Banning's estate pay 50% of the trial costs. However, Simmonds J also ordered that CAT pay the costs of PSA and Mr Banning's estate in respect of a number of chamber summonses in the action. 58 On 2 October 2015, the Court of Appeal heard an application brought by Mr and Mrs Frigger for leave to set aside the December 2009 Court of Appeal orders. The Friggers had, of course, not been parties to that appeal proceeding. The Friggers claimed that the December 2009 Court of Appeal orders were inconsistent with a term of the deed of company arrangement. The Friggers claimed to have standing and relied upon O 21 r 10 of the Rules of the Supreme Court 1971 (WA). This rule is referred to as the "slip rule". The Court of Appeal reserved its decision. 59 On 9 October 2015, Mrs Frigger's application for the suspension of the means inquiry was dismissed (Computer Accounting and Tax Pty Ltd (in liquidation) v Professional Services of Australia Pty Ltd [No 10] [2015] WASC 380). 60 As mentioned, on 19 October 2015, the applicants commenced proceeding WAD 607 of 2015 in this Court. 61 On 10 December 2015, the Court of Appeal delivered judgment (Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 4] [2015] WASCA 253 (PSA [No 4])) and rejected the Friggers' application to set aside the December 2009 Court of Appeal orders. 62 The Court of Appeal declined to grant the Friggers leave to be heard on the basis that the Friggers did not have a sufficient interest in the December 2009 Court of Appeal orders. 63 In their application to the Court of Appeal for leave to be heard, the Friggers had contended that they were creditors of CAT and, thereby, had a direct interest in the December 2009 Court of Appeal judgment. The Court of Appeal found that it was CAT as a party to the proceeding, that was the beneficiary of the judgment under appeal to the Court of Appeal in December 2009, and that the Friggers did not have a direct interest in the subject-matter of the proceeding, on the basis of their claim to be creditors of CAT. 64 Further, the Court of Appeal said that in bringing the claim to set aside the December 2009 Court of Appeal orders, the Friggers were seeking to usurp the liquidator's control over CAT and its affairs. The Court of Appeal observed that this was an "improper objective" and would for that reason not exercise a discretion, even if the Court of Appeal had such a discretion, in favour of permitting the Friggers to be "heard in relation to the revocation of orders made in an appeal to which they were not a party". 65 Further, at [30]-[31], Martin CJ observed: 30 These principles preclude the application of the slip rule to the circumstances of this case. First, it cannot be said that the failure to draw the attention of the court to the deed of company arrangement (upon which the current application is based) was inadvertent or accidental. As I have noted, the attention of the court was in fact drawn to the deed of company arrangement in the written submissions which preceded the making of the orders which the Friggers now seek revoked. However, no argument of the kind now advanced was brought based upon the terms of the deed of company arrangement, nor was the deed adduced in evidence. The court refused to act upon the assertions made with respect to the deed for those reasons. Omissions of that kind cannot be characterised as accidental or inadvertent, but are more properly characterised as a failure to provide any basis for, or to substantiate by evidence, the proposition advanced. The slip rule does not permit arguments or contentions that have been poorly or inadequately advanced to be bolstered by further argument or evidence after final orders have been made. Further, there is a fair inference that the failure to produce in evidence and advance detailed submissions based upon the deed of company arrangement may have well been a deliberate forensic decision on the part of the Friggers and/or their legal advisers. That is because CAT had commenced proceedings in the Supreme Court of Western Australia seeking orders to the effect that the deed of company arrangement was either void or had been terminated according to its terms. Those proceedings were on foot at the time written submissions were provided to this court on behalf of CAT, and at the time this court made the orders which the Friggers now seek to have revoked. 31 Second, the consequences which the Friggers assert flow from the terms of the deed of company arrangement are neither obvious nor compelling, and are matters upon which there is great scope for argument and for the formation of differing views. To the contrary, the legal reasoning said to underpin the Friggers' application is convoluted and at points circuitous. 66 The means inquiry, referred to in [55], [56] and [59] above, was held on 15 April 2016. The Friggers did not appear. In their proposed substituted statement of claim, the Friggers seek a permanent injunction under s 1324(1) of the Corporations Act restraining the respondents from enforcing the Supreme Court order for the means inquiry. 67 The aforegoing outline refers only to some of the litigation in the Supreme Court in which the Friggers have been involved. There are many other proceedings. In a number of the proceedings in the Supreme Court costs orders have been made against the Friggers or CAT (before it went into liquidation). Some of these proceedings are referred to in the proposed substituted statement of claim. The Friggers by their proposed substituted statement of claim, also seek a permanent injunction under s 1324(1) of the Corporations Act precluding the beneficiaries of the costs orders from enforcing those costs orders.
the applicants' proposed substituted originating application and proposed substituted statement of claim 68 The content of the applicants' proposed substituted statement of claim is set out in detail in the reasons for decision of the primary judge. This relieves me of the need to do more than set out in outline the nature of the claims made by the applicants in the applicants' proposed substituted originating application and proposed substituted statement of claim. 69 I deal first with the claims which the applicants contend attract the jurisdiction of the Federal Court, namely, the first cause of action made by reference to the Corporations Act. 70 At the heart of the Friggers' Corporations Act claim is the plea that the written submissions, which were filed by PSA and Mr Banning's estate on 29 October 2009 at the direction of the Court of Appeal (see [35] and [36] above), are to be regarded as "purported variations" to the deed of company arrangement. 71 The Friggers pleaded that the submissions were to be characterised as "purported variations" because they argued for orders that the repayment sum should be repaid to PSA and Mr Banning's estate without deduction of the costs orders which had been made by Simmonds J at first instance in favour of CAT. This was said to be a "variation" to the deed of company arrangement, primarily, because cl 6.1.3 of the deed of company arrangement contemplated that any repayment sum would be paid by CAT to Banning Holdings Pty Ltd after deduction of any sums due as costs to CAT. 72 The Friggers then pleaded that s 445A of the Corporations Act required that an amendment to the deed of company arrangement be approved by resolution of creditors at a meeting called under s 445F of the Corporations Act. The Friggers pleaded that no such meeting was called. Accordingly, pleaded the Friggers, the written submissions were made in contravention of s 445A of the Corporations Act with the consequence that the submissions had no effect and were void. The Friggers went on to plead that "resulting from the submissions, the Court of Appeal ordered that CAT pay PSA and Mr Banning's estate $800,917.08". 73 The Friggers then plead in para 25 of the proposed substituted statement of claim that "in the premises" PSA and Mr Banning's estate "were not entitled to" the December 2009 Court of Appeal orders. 74 Further, the Friggers plead as a particular to para 21, that in July 2010, Mr Campbell-Smith prepared a statement of assets and liabilities which did not describe PSA as "Professional Services of Australia Pty Ltd (subject to a deed of company arrangement)". In the proposed substituted statement of claim, the Friggers referred to these words as the "Statutory Words". The Friggers contend that in failing to include the Statutory Words on the documents, there was a contravention of s 450E of the Corporations Act. 75 The Friggers then plead at para 47 that "in the premises of the contraventions of the Corporations Act 2001 in paragraphs 21-26" (being the paragraphs in which the aforementioned allegations of contraventions are pleaded) the Friggers are entitled to a permanent injunction and damages pursuant to s 1324 of the Corporations Act. The Friggers also claim an interlocutory injunction. 76 Further, the Friggers also plead in para 27, that the application for the freezing orders did not contain the Statutory Words, and in para 35, that the application for the winding up of CAT did not contain the Statutory Words. 77 The Friggers seek declarations that the legal practitioners who prepared the impugned court documents were by reason of s 1324 of the Corporations Act knowingly concerned in the contravention of s 450E of the Corporations Act. 78 As to the damages claimed by the Friggers under s 1324(10), as I understand the claim, as explained by Mrs Frigger in her oral submissions, the Friggers allege that the respondents and their legal practitioners have used the December 2009 Court of Appeal orders to which they were not entitled, to "drag" the Friggers into a maelstrom of litigation brought without just cause, with the object of harming the Friggers and earning unwarranted legal fees for the legal practitioners involved. The Friggers say that the consequence is that the Friggers have suffered economic and reputational loss and damage. 79 As to standing to bring the Corporations Act claims, the Friggers plead that by reason of the litigation support agreement which they entered into with CAT, they were entitled to the benefits of the proceeds of CAT's claim against PSA and Mr Banning's estate in CIV 2265 of 2006. Further, the Friggers claim that the right to the proceeds of that litigation are secured pursuant to the charge which CAT registered in their favour on 23 October 2009. These circumstances, say the Friggers, give them a right under s 447A(4)(f) of the Corporations Act as interested persons to apply for an order under s 447A(1) of the Corporations Act for an order as to how Pt 5.3A of the Corporations Act is to operate in relation to the deed of company arrangement entered into by PSA. 80 Relying upon that standing, the Friggers apply for a number of declarations, purporting to be made by reference to s 447A(1) of the Corporations Act. In summary, the declarations sought are: (a) the written submissions/purported variations to the deed of company arrangement were made in contravention of s 445A and s 445F of the Corporations Act, and are void; (b) that "each and every document" filed by the respondents in a number of nominated proceedings did not contain the Statutory Words; (c) the failure to include the Statutory Words contravened s 450E of the Corporations Act and the persons who prepared those documents were knowingly concerned in a contravention of s 450E of the Corporations Act. 81 In addition, the Friggers also rely upon causes of action (the second to fifth causes of action) which allege that PSA and Mr Banning's estate engaged in tortious conduct by conducting proceedings against CAT and the Friggers for collateral purposes. These "proceedings" are the making of the 29 October 2009 written submissions in the appeal proceedings, the bringing of an application for freezing orders affecting the Friggers, the issue of a statutory demand to CAT and the application for the appointment of Mr Kitay as the provisional liquidator of CAT. 82 In addition, as mentioned, a separate cause of action is alleged against a legal practitioner, Mr Lenhoff, who is not a respondent to the substituted originating application, for interference in contractual relations. 83 There is a seventh cause of action. That cause of action is, as the primary judge found, unintelligible. However, it appears to relate to the conduct of the Supreme Court proceeding CIV 2765 of 2010.
THE PRIMARY JUDGE'S REASONS 84 The primary judge has set out in great detail his reasons for decision. There is a paragraph by paragraph analysis by the primary judge of the proposed substituted statement of claim. 85 It is not necessary for me to descend into the same detailed analysis engaged in by the primary judge. I set out below a broad outline of the main aspects of the primary judge's reasons for decision. 86 The primary judge found that the first cause of action, namely, the Corporations Act claim, was an abuse of process. 87 As mentioned, the first cause of action is founded on the allegation that the December 2009 Court of Appeal orders are invalid and unenforceable because the written submissions filed by PSA and Mr Banning's estate, and accepted by the Court of Appeal, had not been approved by a meeting of creditors of PSA called under s 445F of the Corporations Act; and that, accordingly, there should be a permanent injunction pursuant to s 1324(1) of the Corporations Act precluding them from enforcing those orders. 88 The primary judge found that the first cause of action was an abuse of process because it was a collateral attack on the judgment and orders of the Court of Appeal in the original December 2009 appeal (see [41] above) and also on the Court of Appeal judgment and orders made in 2015 dismissing the Friggers' application to set aside the December 2009 Court of Appeal orders (see [61] above). 89 The primary judge also found that the Friggers' pleaded claim in para 12 that, because CAT had assigned and charged to them "the fruits of the litigation" against PSA in CIV 2265 of 2006, they were persons whose economic interests were affected by the deed of company arrangement and so were "other interested persons" for the purposes of s 447A(4)(f) of the Corporations Act, to be an abuse of process. 90 The primary judge observed that the only monetary benefit that could at the commencement of WAD 607 of 2015, comprise "the fruits of the litigation", the subject of the litigation contract or the charge would be the reduced costs orders made by Simmonds J in CAT's favour on 29 May 2015 on the remittal of the costs issue to him by the Court of Appeal (see [57] above). 91 The primary judge went on to observe that any alleged entitlement by CAT to those costs would have to be set-off against the December 2009 Court of Appeal orders. The primary judge said that it was plain that the Supreme Court had accepted on more than one occasion that there would be no balance due to CAT. The primary judge referred specifically to the findings of Simmonds J in Holbrook (see [54] above). 92 In any event, said the primary judge at [22] of his reasons for decision, there were in fact no monies due to CAT from PSA and Mr Banning's estate consequent upon the reduced costs orders in favour of CAT made by Simmonds J on remittal in CIV 2265 of 2006. This was because the liquidator of CAT had not taxed the costs, and so no debt had accrued in respect of those costs in favour of CAT. 93 The primary judge went on to find that the Friggers did not have even an arguable case that they had standing to seek relief under s 1324 of the Corporations Act. The primary judge went on to observe that the Friggers' standing to sue was integral to the Court's jurisdiction. 94 Further, in support of the Friggers' claim to be entitled to "the fruits of the litigation" against PSA and Mr Banning's estate by way of the litigation contract or charge from CAT, the Friggers' pleaded that they were the beneficial owners of the Armadale property, albeit, that this property was registered in the name of CAT. 95 The primary judge found that this element of the Friggers' claim was, also, an abuse of process because the question of whether CAT owned the Armadale property in its own right, or on behalf of the Friggers, was the subject of proceedings in the Supreme Court in CIV 2765 of 2010 to which the liquidator of CAT was a party. The primary judge said it was an abuse of process for the Friggers to litigate this issue when the proper parties (namely, the liquidator of CAT and the Friggers) were not before the Court and the same matters were being litigated in the Supreme Court. 96 Further, the primary judge found that s 447A of the Corporations Act could not be used to seek the relief sought by the Friggers because, inter alia, there was not a sufficient nexus between the proposed orders sought by the Friggers and the operation of Pt 5.3A of the Corporations Act. 97 The primary judge also found that the plea in para 16 and para 17 of the proposed substituted statement of claim that the deed of company arrangement "automatically" terminated on 30 August 2009, was inconsistent with, and amounted to a collateral attack on, the findings of Simmonds J in Holbrook. Accordingly, said the primary judge, the plea to that effect constituted an abuse of process. 98 The primary judge also found that the second cause of action was an abuse of process in that it was a collateral attack on the judgment and orders of the Court of Appeal in CACV 76 of 2008. 99 The primary judge found that the third cause of action was a collateral attack on the judgment of Simmonds J in CAT [No 3] and on the decision of the Court of Appeal in Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69 which had ordered that the Friggers pay the costs of PSA and Mr Banning's estate on an indemnity basis because of their conduct in the litigation. 100 The primary judge found that the fourth cause of action was a collateral attack on the decision of Master Sanderson in the liquidation proceedings in which the validity and service of the statutory demand was accepted as well as the failure to comply with it by CAT and CAT's insolvency; and, therefore, comprised an abuse of process. 101 The primary judge found that the pleading in the fifth cause of action comprised a collateral attack on the decision of Simmonds J appointing a provisional liquidator to CAT and removing the liquidator appointed by CAT itself and the decision of Master Sanderson to wind up CAT insolvency in the liquidation proceedings; and, therefore the pleading amounted to an abuse of process. 102 The primary judge found that the sixth cause of action was made against Mr Lenhoff who was not a party to "the proceeding" and pleaded a common law claim which was not within the jurisdiction of the Federal Court. 103 By referring to "the proceeding", I take it that the primary judge was referring to the proposed substituted originating application. 104 The primary judge found that the pleas in the seventh cause of action were not reasonably intelligible but appeared to place in issue in this proceeding matters that were being litigated in CIV 2765 of 2010 in the Supreme Court when the parties to that claim were not before this Court and were engaged in litigation elsewhere on the same issues. The primary judge found that the seventh cause of action was on that basis an abuse of process.
Leave to Appeal 105 An applicant for leave to appeal from an interlocutory decision of a judge is required to establish that the decision of the primary judge is attended with sufficient doubt to justify the grant of leave to appeal. Further, the applicant must show that he or she would suffer a substantial injustice if a decision of the primary judge was wrong but was not overturned. 106 The Friggers contended that the primary judge's decision was attended by sufficient doubt. In their draft notice of appeal, the Friggers pointed to what they described as a number of factual errors by the primary judge. In their written submissions, the Friggers made a number of factual assertions in support of the claims made in the proposed substituted statement of claim and added that there was "no doubt" as to the validity of the claims made. The Friggers also took issue with the primary judge's finding that they had not demonstrated an arguable case that they had the standing to pursue the claims which they made for the permanent injunction and damages under s 1324 of the Corporations Act. 107 I should also observe that, in their written submissions filed with the leave of the Court, shortly after the hearing, the Friggers also sought particularly to impugn the findings of the primary judge that the pleading in para 16 of the proposed substituted statement of claim, being that the deed of company arrangement had terminated "automatically" on 31 August 2009, was a collateral attack on the decision of Simmonds J who made orders terminating the deed of company arrangement with effect from 6 November 2012 (see [54] above). In making these submissions, the Friggers made a number of unpleaded factual assertions in support of their contention, which ignored completely the fact that Simmonds J had made orders determining that the date of the termination of the deed of company arrangement was 6 November 2012, years later than the date of termination pleaded. 108 Further, the Friggers contended that they would suffer a substantial injustice because the primary judge had refused them leave to replead their claims, and in so doing, the primary judge had in effect dismissed their originating application. In my view, there is substance in this submission. The Friggers' submission is an acknowledgement by the Friggers that they have abandoned their reliance upon earlier versions of the originating application and statement of claim, and, therefore, that the viability of proceeding WAD 607 of 2015, depended upon the Court giving leave to file the proposed substituted originating application and proposed substituted statement of claim. The Friggers have, therefore, satisfied this limb of the requirements for leave to appeal. 109 However, in my view, the decision of the primary judge is, for the reasons which he gave, not attended with sufficient doubt to grant leave to appeal. Accordingly, the Friggers have failed to satisfy this limb of the requirements for leave to appeal. I set out below some of the findings of the primary judge with which I particularly agree. 110 I agree, in particular, that the pleas upon which the Friggers rely in an attempt to demonstrate that they have standing, as assignees from CAT of a debt due by PSA, to rely upon s 447A(4)(f) of the Corporations Act are untenable and that the pleas are an abuse of process. 111 I also agree with the primary judge's decision that each of the first to five causes of action comprises a collateral attack upon the decisions and orders of the Supreme Court and Court of Appeal referred to by the primary judge, and, therefore, each is an abuse of process. 112 Further, I agree that the sixth cause of action is pleaded against a non-party to the substituted originating application and pleads a common law claim that falls outside of the jurisdiction of this Court. 113 I also agree that the seventh cause of action is not reasonably intelligible and does not disclose a reasonable cause of action and that, insofar as its content is discernible, the cause of action is an abuse of process as it concerns the conduct of Supreme Court proceeding CIV 2765 of 2010 and not all parties to that proceeding are before this Court. 114 However, I also make the following additional observations as to why, in my view, the decision of the primary judge is not attended by sufficient doubt to warrant the grant of leave to appeal, and why there is a serious question as to whether the Corporations Act claim pleaded by the Friggers is colourable such that the Federal Court would not have jurisdiction to entertain the proposed substituted originating application (Cook v Pasminco Limited (2000) 99 FCR 548). 115 As previously mentioned, the fundamental premise underlying the Friggers' claims in the first five causes of action pleaded in the proposed substituted statement of claim is that the December 2009 Court of Appeal orders for the repayment of the excess monies by CAT and costs, are invalid and unenforceable; and that PSA and Mr Banning's estate, as well as their legal representatives, have, in treating the orders as valid and enforceable, and, in taking consequential legal action against CAT and the Friggers, acted for the collateral purpose of harming the Friggers. 116 Thus, the Friggers allege in their Corporations Act claim that the December 2009 Court of Appeal orders are invalid and unenforceable because they were obtained as a consequence of contraventions of the Corporations Act; and that, accordingly, they are entitled to obtain a permanent injunction pursuant to s 1324(1) of the Corporations Act restraining PSA and Mr Banning's estate from enforcing those orders; and also damages under s 1324(10) for the economic and reputational loss they have suffered as a consequence of the respondents treating the orders as valid and enforceable and "dragging" the Friggers into a plethora of litigation. 117 As mentioned, it is this Corporations Act claim, which the Friggers say gives this Court jurisdiction to hear and determine that claim, as well as the common law claims founded on collateral abuse of process, and tortious interference with contract. 118 It appears that in the context of the Friggers' pleaded Corporations Act claim, s 1324(1) relevantly reads as follows: Where a person has engaged…in conduct that constituted… (a) a contravention of this Act; or … (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or … the Court may, on the application of…a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. 119 Assuming, contrary to the primary judge's finding, that the Friggers have an arguable case for standing, for the Friggers to succeed on their Corporations Act claim under s 1324 of the Corporations Act, and by extension, the common law claims, it would be incumbent upon the Friggers to establish, as an essential element of the relief claimed, that PSA and Mr Banning's estate, the beneficiaries of the December 2009 Court of Appeal orders, acted in contravention of the Corporations Act, or were knowingly concerned in a contravention, in obtaining those orders. 120 As mentioned, in support of their claim for relief under s 1324 of the Corporations Act, the Friggers contend that the 29 October 2009 written submissions which were filed by PSA and Mr Banning's estate are to be characterised as a "purported variation" of the deed of company arrangement, such that, for the submissions/purported variations to be "valid", they had to be approved by the creditors of PSA in a general meeting called under s 445F of the Corporations Act. It is then alleged, as I understand it, that because the written submissions had not been approved in such a manner, the submissions were "void" on the basis that they constituted a purported variation to the deed of company arrangement which had not been approved by the creditors in a general meeting; and so contravened s 445A of the Corporations Act. 121 At the relevant time, s 445A of the Corporations Act stated: A deed of company arrangement may be varied by a resolution passed at a meeting of the company's creditors convened under section 445F, but only if the variation is not materially different from a proposed variation set out in the notice of the meeting. 122 In my view, these contentions by the Friggers are entirely untenable and are founded on artificial and far-fetched constructs. 123 Such formalities as attend the making, and filing, of written submissions before the Court of Appeal are prescribed by the orders of the Court of Appeal or by the rules of the Supreme Court and Court of Appeal of Western Australia, and not the Corporations Act. 124 There is, in my view, no prospect that a trial Court would characterise the 29 October 2009 written submissions as a purported variation of the deed of company arrangement, whose "validity" depended upon the written submissions being approved by a meeting of creditors called under s 445F of the Corporations Act. There is, therefore, no prospect that a trial Court would find that PSA and/or Mr Banning's estate contravened the Corporations Act in the manner alleged, or was knowingly concerned in any such contravention. 125 Therefore, on that ground alone, there is no prospect that the Friggers would succeed at trial in obtaining the permanent injunction sought under s 1324(1) of the Corporations Act, nor indeed, the damages claimed under s 1324(10) of the Corporations Act. 126 However, there is another reason why a trial Court would not grant the permanent injunction preventing the respondents from enforcing the December 2009 Court of Appeal orders. 127 The Friggers contend that the December 2009 Court of Appeal orders are invalid and unenforceable because the Court of Appeal entertained and acted upon submissions which were "void" as being made in contravention of the Corporations Act. 128 In this regard, it should be observed that, as mentioned (see [37] above), before the Court of Appeal in December 2009, CAT did refer in its submissions to a term of the deed of company arrangement dealing with the payment of the judgment sum. However, at no time before the Court of Appeal did CAT suggest that the written or oral submissions made by PSA and Mr Banning's estate could, or should, not be entertained, or acted upon, by the Court of Appeal because the submissions were "void" because they had not been approved under s 445F of the Corporations Act. 129 In December 2009, the Court of Appeal did not act on the reference in CAT's submissions to the payment provisions in the deed of company arrangement. Nor was the Court of Appeal attracted by the submission that the December 2009 Court of Appeal orders should be set aside as being contrary to the deed of company arrangement, when the Friggers, acting in their own right, advanced that submission before the Court of Appeal in 2015. Martin CJ referred to that issue in his observations, set out at [65] above, in dismissing the Friggers' attempt in 2015 to set aside the December 2009 Court of Appeal orders. 130 However, undeterred, the Friggers now seek in this Court in WAD 607 of 2015 again to impugn the validity and enforceability of the December 2009 Court of Appeal orders based on contentions that seek to invoke the artificial and untenable propositions involving the deed of company arrangement to which I have already referred. It is plain that the Corporations Act claim pleaded by the Friggers is an impermissible collateral attack on the 2009 December Court of Appeal orders and the orders of the Court of Appeal in 2015, and is, accordingly, an abuse of process. 131 There is, therefore, no prospect that a trial Court would grant a permanent injunction under s 1324(1) of the Corporations Act restraining the respondents from enforcing the December 2009 Court of Appeal orders on the basis of the Friggers' pleaded claim that orders were obtained in contravention of s 445A and s 445F of the Corporations Act. 132 As mentioned, the Friggers' Corporations Act claim for a permanent injunction under s 1324(1) enjoining the respondents from enforcing the December 2009 Court of Appeal orders also appears to rely upon an allegation that there was a contravention of s 450E of the Corporations Act. 133 In the particulars (iii), (iv) and (v) to para 21, the Friggers allege that Mr Campbell-Smith, in July 2010, which was seven months after the December 2009 Court of Appeal orders, prepared a statement of assets and liabilities which, in contravention of s 450E of the Corporations Act did not contain the so-called "Statutory Words". 134 There is nothing pleaded - nor could there be, in light of the fact that the alleged contravention post-dated the making of the December 2009 Court of Appeal orders - identifying a causal connection between this alleged contravention of the Corporations Act and the making of the December 2009 Court of Appeal orders. 135 There is absolutely no prospect that any trial Court would, on the basis of the pleaded contravention of s 450E of the Corporations Act, grant a permanent injunction under s 1324(1) of the Corporations Act precluding the respondents from enforcing orders obtained from the Court of Appeal seven months earlier. 136 I observe in passing that the Friggers' proposed substituted statement of claim contains other allegations, in pleading their common law claims, that there was a failure to include the Statutory Words in court documents. (See para 27 regarding the application for the freezing orders, and para 34 regarding the application for the appointment of a provisional liquidator.) Even if it can be said that s 450E(3) of the Corporations Act applies to documents filed in legal proceedings, s 450F of the Corporations Act states that a contravention of that section does not affect the validity of the documents which contained the incorrect or incomplete heading, and so any such contravention could not have affected the validity of the orders made in those impugned Supreme Court proceedings. 137 As to the applicants' claim for damages as part of their Corporations Act claim, s 1324(10) of the Corporations Act provides as follows: Where the Court has power under this section to grant an injunction restraining a person from engaged in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person. 138 It has been held that s 1324(10) does not establish an additional statutory basis for the awarding of damages for any contravention of the Corporations Act, and that the ambit of s 1324(10) is limited to the awarding of damages in circumstances where damages would otherwise be payable under statute or at common law, in addition to or in substitution for the grant of an injunction pursuant to s 1324(1). 139 In Executor Trustee Australia Ltd v Deloitte Haskins & Sells (1996) 135 FLR 314 (Deloitte) at 323, Perry J observed in relation to a provision in similar terms to s 1324(10) in predecessor company legislation: It would be a strange result if, as though by some kind of side wind, some general power to award damages with respect to contraventions of the Code could be regarded as having been created by s 574(8) other than in circumstances in which a liability to pay damages is expressly provided for in the other substantive provisions of the Code, or possibly by the general law This is particularly so, given that s 574 is, for the reasons which I have indicated, a section which must be regarded as focusing upon the manner in which the jurisdiction to grant injunctions is created and falls to be exercised. 140 This approach was adopted by the Queensland Court of Appeal in McCracken v Phoenix Constructions (Qld) Pty Ltd [2013] 2 Qd R 27 in relation to the construction of s 1324(10) of the Corporations Act. 141 For the reasons which I have given, there is no prospect that a trial Court would find that the December 2009 Court of Appeal orders are or were invalid or unenforceable by reason of the contraventions of the Corporations Act relied upon by the Friggers. 142 In any event, even if the conduct pleaded by the Friggers was found to have contravened the Corporations Act as alleged by the Friggers, none of the provisions of the Corporations Act relied upon by the Friggers, provide that damages or compensation is payable, in the event that the provision is contravened. Thus, on the basis of the decision in Deloitte, no remedy in damages would, in any event, be available under s 1324(10) of the Corporations Act. 143 It follows from the foregoing, that there is no prospect that a trial Court would on the basis of the alleged contraventions of the Corporation Act, award damages to the Friggers under s 1324(10) of the Corporations Act in respect of the losses they allege. 144 It follows that the application for leave to appeal against order 1 of the orders of the primary judge of 8 March 2017 is dismissed. 145 It also follows that as the Friggers have not been able to demonstrate that they have a viable claim capable of going to trial, there is no basis upon which to claim an injunction precluding the named legal practitioners from representing the respondents on the basis that they will be witnesses at the trial. It follows that the Friggers' application for leave to appeal against order 2 of the primary judge's orders dismissing the Friggers' injunction application is also refused. 146 In their draft notice of appeal, the Friggers also foreshadowed an appeal against order 3 of the orders of the primary judge which ordered the Friggers to pay the respondents' costs of the two applications to be taxed and paid forthwith. The Friggers contend that the primary judge did not give reasons why the costs order should be payable forthwith. 147 In my view, although the primary judge did not expressly state why the costs order was to be payable forthwith, the reasons for this order, namely, the untenable nature of the two applications made by the Friggers, were implicit in the whole of his reasons for judgment. 148 For the reasons given above, it was plainly open to the primary judge to make that costs order. 149 Accordingly, leave to appeal from order 3 of the primary judge's orders is dismissed. 150 Finally, for the sake of completeness, I record that on 7 December 2017 my Chambers received a letter from Mrs Frigger purporting to raise extraneous further matters which she contended affected the Friggers' application for leave to appeal. No leave was given to the Friggers to make such further submissions (NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at [192]). I have, accordingly, not had regard to that letter. I certify that the preceding one hundred and fifty (150) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.
SCHEDULE OF PARTIES WAD 178 of 2017 Respondents Fourth Respondent: BANNING HOLDINGS PTY LTD (ACN 009 006 437)
Frigger
Banning
PROCEDURAL BACKGROUND 4 On 19 October 2015, the applicants filed an originating application and a statement of claim in this Court in proceeding WAD 607 of 2015. 5 In that originating application, the applicants sought orders that legal costs incurred by the applicants in a number of legal proceedings in the Supreme Court, the District Court of Western Australia and the Magistrates Court of Western Australia (Magistrates Court) be paid by the respondents; and also that losses and other damages incurred by the applicants and losses incurred by the applicants' self-managed superannuation fund, known as the Frigger Super Fund, be paid by the respondents. The four respondents are Mrs Sandra Banning, Mr Donald Campbell-Smith, Professional Services of Australia Pty Ltd (PSA) and Banning Holdings Pty Ltd. 6 The applicants also sought by way of interlocutory relief orders that certain named legal practitioners be restrained from representing the respondents in the proceeding on the grounds that they would be material witnesses at the trial of the application. 7 On 30 December 2015, the applicants filed an amended statement of claim. 8 On 25 January 2016, the applicants filed an interlocutory application seeking leave to amend the originating application filed on 19 October 2015 and for leave to amend the amended statement of claim filed on 30 December 2015. 9 On 25 February 2016, the respondents filed an interlocutory application seeking the summary dismissal of the originating application on the basis that the applicants had no standing to pursue the proceeding or alternatively that the Court had no jurisdiction to entertain the proceeding. Alternatively, the respondents claimed that the statement of claim be struck out as disclosing no reasonable cause of action. The respondents also sought orders for security for costs. 10 The primary judge listed the Friggers' application for leave to amend the originating application and the amended statement of claim, the respondents' application for summary dismissal and security for costs and the Frigger's interlocutory injunction application to restrain the named legal practitioners from acting for the respondents, for hearing on 5 April 2016. 11 However, on 5 April 2016, the primary judge did not hear the applicants' amendment application and the respondents' corresponding application for summary dismissal because shortly prior to the hearing, the Friggers foreshadowed that they would now advance their amendment application on the basis of a new minute which contained a proposed substituted originating application and a proposed substituted statement of claim. 12 The primary judge then made orders that the applicants file and serve a minute of proposed amended originating application and proposed substituted statement of claim by 4 May 2016 and adjourned the respondents' interlocutory application for summary judgment to 3 June 2016. The applicants' interlocutory application to restrain the named legal practitioners from representing the respondents in the proceeding was also adjourned. 13 At the hearing on 5 April 2016, the primary judge did hear the parties on the respondents' application for security for costs. The primary judge subsequently ordered that the applicants within seven days pay $75,000 as security for costs in relation to the first stage of the proceeding up to and including a hearing and determination of any interlocutory application for the summary dismissal of the proceeding and the applicants' interlocutory application to restrain the named legal practitioners from acting for the respondents (Frigger v Banning [2016] FCA 359). 14 On 3 May 2016, the Friggers, in accordance with the primary judge's directions, filed and served their proposed substituted originating application and their proposed substituted statement of claim. 15 However, the applicants' amendment application and the respondents' application for summary dismissal were not heard on 3 June 2016. This is because, on that day, there was a further hearing in relation to the question of security for costs (Frigger v Banning (No 2) [2016] FCA 749). 16 Subsequently, the primary judge made directions that the applicants' amendment application, the respondents' summary dismissal application and the applicants' interlocutory injunction application, all be heard on 12 August 2016. 17 In a judgment delivered on 8 March 2017, the primary judge refused the applicants leave to amend in accordance with the minute of proposed substituted originating application and the minute of proposed substituted statement of claim. Further, the primary judge dismissed the application for an interlocutory injunction restraining the named legal practitioners from acting on behalf of the respondents in the proceeding. However, the primary judge did not make any orders in relation to the respondents' summary dismissal application. 18 The jurisdictional basis upon which the proposed substituted originating application is brought in this Court is that the applicants rely upon a cause of action, and claim relief, under the Corporations Act. In this regard, the applicants seek declarations and a permanent injunction pursuant to s 1324(1) of the Corporations Act and damages pursuant to s 1324(10). 19 In addition, in their proposed substituted statement of claim, the applicants pleaded causes of action which alleged that the respondents have engaged in tortious conduct by engaging in litigation against the applicants or CAT for a collateral purpose. The applicants also pleaded in their proposed substituted statement of claim, a claim against a legal practitioner, not named as a respondent in the proposed substituted originating application, who acted on behalf of the respondents in a number of legal proceedings in the Supreme Court variously against CAT and against the applicants.
[2016] WASCA 68
[2017] WASCA 139
[2008] WASC 133
[2008] WASCA 222
[2010] WASC 2
[2010] WASC 38
[2010] WASC 93
[2012] WASC 444
[2015] WASC 380
[2015] WASCA 253
[2014] WASCA 69
(2000) 99 FCR 548
(1996) 135 FLR 314
(2004) 219 CLR 90