Frigger v Banning

1. Pursuant to r 2.27(e) of the Federal Court Rules 2011 (Cth) the proposed interlocutory application by the applicants received by the Registry on 1 October 2019 not be accepted for filing. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 Mr and Mrs Frigger are undischarged bankrupts. On 1 October 2019, they sought to file in these proceedings a document described as an interlocutory application. The document states that the interlocutory orders sought are leave to make the application and a declaration pursuant to r 40.06 of the Federal Court Rules 2011 (Cth) that certain costs were improperly incurred and charged to Donald Campbell-Smith or his deceased estate by two named lawyers at a time when Mr Campbell-Smith was under a legal incapacity and that the lawyers acted without instructions and are personally liable for the costs. The costs orders are orders made in these proceedings. A further order is sought that each of the other three respondents have no liability to pay the costs. 2 Mr and Mrs Frigger are the persons liable under each of the costs orders. 3 The proposed application states that it is based on the evidence of Ms Campbell-Smith sworn 25 July 2019. The affidavit was filed on behalf of the respondents in the proceedings and was in support of an application for Ms Campbell-Smith in her capacity as executor of the estate of her late husband Mr Donald Campbell-Smith to be named as a respondent in the proceedings in place of Mr Campbell-Smith. That application was granted: Frigger v Banning (No 8) [2019] FCA 1319 at [79]-[80]. The affidavit was also sworn in support of an application to dismiss the proceedings. The dismissal application has been adjourned to a date to be fixed: Frigger v Banning (No 9) [2019] FCA 1611. 4 These proceedings, which have been ongoing since 2015, claim the legal costs incurred and ordered to be paid in each of seven separate proceedings in the Supreme Court of Western Australia, two proceedings in the District Court and one proceeding in the Magistrates Court and liquidation costs and expenses of Computer Accounting & Tax Pty Ltd (CAT), a company formerly controlled by Mr and Mrs Frigger but now in liquidation. They also claim alleged losses of the Frigger Superannuation Fund, 'reputation damages' and 'aggravated damages'. There is no pleading, but there have been various failed attempts to plead a case. Those attempts have sought to change the case significantly from the original form of pleading which has been abandoned. Therefore, it is difficult to state with any real clarity what the claims are that are sought to be raised, save that they complain about the course of other court proceedings and the costs liabilities and other consequences that have arisen. 5 The current state of these proceedings is that it has been determined that there is a statutory stay of the proceedings by operation of s 60 of the Bankruptcy Act 1966 (Cth) and they are deemed to have been abandoned by the trustee in bankruptcy of Mr and Mrs Frigger. It has been held that the proceedings are not an action in respect of a personal injury or wrong done to either of Mr and Mrs Frigger that they may maintain by reason of s 60(4) of the Bankruptcy Act: Frigger v Banning (No 8). By other applications, Mr and Mrs Frigger are seeking to advance an appeal against the making of sequestration orders against them and to challenge the decision in Frigger v Banning (No 8). 6 In the above circumstances, the proposed application has been brought to my attention as the case managing judge in respect of these proceedings. 7 Rule 2.27(e) of the Federal Court Rules provides that a document will not be accepted for filing if the Court has given a direction that the document not be accepted. The nature of the power was considered by Kerr J in McDonald v Federal Court of Australia [2017] FCA 1216. On 2 October 2019, the Court invited Mr and Mrs Frigger to make submissions on the question whether it is appropriate for an order to be made under r 2.27(e) in circumstances where there was a statutory stay of the proceedings. 8 Mrs Frigger has lodged submissions which are expressed to be made on behalf of both Mr and Mrs Frigger. Amongst other things, the submissions say that it is appropriate for leave to be granted for the declaratory relief the subject of the proposed interlocutory application to be sought. Reliance is placed upon Allanson v Midland Credit Ltd [1977] FCA 14. However, that was a case concerned with the taking of further steps in proceedings commenced by a creditor and the application of s 58(3)(b) of the Bankruptcy Act. These proceedings have been commenced by Mr and Mrs Frigger and it has been determined that they are not proceedings of a kind that Mr and Mrs Frigger can pursue. What they are seeking to do is to raise matters in proceedings that the trustee is deemed to have abandoned. 9 Reliance was also placed upon a statement by Katzmann J in James v Commonwealth Bank of Australia [2015] FCA 582; (2015) 236 FCR 379, where her Honour was concerned with an application for an extension of time for compliance with a bankruptcy notice and an order suspending the operation of a sequestration order. The application relied upon the fact that Mr James had lodged an appeal against the judgement the subject of the bankruptcy notice. In deciding to grant the orders Katzmann J found that if the orders were not made then in all likelihood there would be irremediable prejudice because the trustee would not pursue the appeal. There is no equivalence to the present application which does not seek any such orders. 10 The submissions also referred to Adamopoulos v Olympic Airways SA [1990] FCA 280. It too was a case concerned with the appropriate orders to be made where the judgment founding a bankruptcy notice is the subject of an appeal. 11 It would defeat the effect of the statutory stay if Mr and Mrs Frigger were able to commence an interlocutory application seeking to revisit the appropriateness of the costs orders made in these proceedings in circumstances where no order has been made suspending the operation of the sequestration orders in respect of their estates and those orders have been in operation for some time. If their applications challenging the sequestration orders are successful then it may possibly be the case that it would be appropriate for an application of some kind concerning the costs orders to be received. Even then, it would not be appropriate for an interlocutory application for declaratory relief of the kind set out in the application to be entertained. It is not for Mr and Mrs Frigger to seek final declaratory relief as to the rights that the lawyers may have to charge the respondents for legal fees and to do so by an interlocutory application. At its highest, the interest they might have would be confined to whether the costs orders against them could and should be varied or discharged on the basis of some contention about whether there was indeed any costs liability that could be the subject of the indemnity afforded by a costs order. 12 The submissions made also allege conflict of interest by the lawyers. They say that Mrs Campbell-Smith and another respondent, Mrs Banning, should be referred by the Court to other lawyers for legal representation. The Court does not have power to make any such order. Mrs Frigger also provided an affidavit in which it was contended that the material indicated a conflict of interest and professional negligence on behalf of the two lawyers. It was said that the matters raised enlivened the Court's inherent jurisdiction to control its officers and make the orders sought. In the course of these proceedings, Barker J has already dismissed claims of conflict of interest on the part of the two lawyers: Frigger v Banning (No 3) [2017] FCA 221. 13 Finally, as the costs orders benefit all respondents jointly and severally it is not evident how there is anything in the affidavit of Ms Campbell-Smith that might provide a basis for a variation of the costs orders insofar as they benefit the other respondents. 14 For all those reasons, I am satisfied that the proposed application should be not be accepted for filing. I will direct the Registrar pursuant to r 2.27(e) that the application not be accepted for filing. In doing so, I apply the view of Kerr J in McDonald v Federal Court of Australia as to the nature and extent of such a power. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.