Frigger v Banning

Federal Court of Australia|2020-09-02|Before: Kerry J, Colvin J

The application for costs on an indemnity basis should be refused 26 The respondents seek an order that the applicants pay the costs of the proceedings on an indemnity basis. They say that the Court has made a number of decisions in which it has been concluded that the matters raised in various iterations of a statement of claim were an abuse of process or were claims in respect of which Mr and Mrs Frigger lacked standing. I note that costs orders as to the various applications concerning the statement of claim have been made and I have already made orders allowing those costs to be assessed forthwith. I see no basis upon which I should revisit those cost orders that have been made. Therefore, the costs now sought are the costs of the proceedings not covered by earlier orders. 27 It is well established that indemnity costs orders will only be made in exceptional cases. Putting to one side instances where a Calderbank offer has been made, orders of that kind are made to mark the Court's disapproval in cases where there has been improper or unreasonable conduct. Examples of the circumstances in which such an order might be made were given in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225. There must be conduct deserving of criticism resulting in greater expense to the innocent party: Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112 at [31]. 28 Broad and sweeping submissions were made as to the motives of Mr and Mrs Frigger and as to what they should have known, properly advised, and to the effect that they have proceeded as a result of a wilful disregard of known facts. However, the submissions did not condescend to particularity. The respondents bear the burden of demonstrating a proper basis for an order for indemnity costs and I am not satisfied that they have done so. I am not satisfied that by the general submissions they have made or the evidence that they have provided concerning costs incurred that they have demonstrated a proper basis for such an order. As to the latter, the affidavit evidence did not condescend to particularity, nor did it deal with the costs to date. Therefore, I decline the application insofar as it seeks indemnity costs.

Postscript: notice of discontinuance by Mr and Mrs Frigger 29 After a draft of these reasons had been prepared, Mr and Mrs Frigger sought to file a notice of discontinuance of the proceedings. Rule 26.12(2)(a)(ii) of the Federal Court Rules 2011 (Cth) allows for discontinuance by notice without leave where the notice is filed before the pleadings have closed. By r 16.12(1), 'pleadings close at the end of the latest of the times fixed by these Rules for filing a defence or reply'. The proceedings brought by Mr and Mrs Frigger were commenced by application and statement of claim. Under the Rules, a respondent must file a defence within 28 days after service of the statement of claim: r 16.32. If there is to be a reply it must be filed within 14 days after the filing of the defence: r 16.33. 30 Not long after these proceedings were commenced, an application was brought to strike out the statement of claim which was ultimately successful. Since then there have been attempts by Mr and Mrs Frigger to provide a new pleading but the various iterations have been objected to by the respondents and no proposed statement of claim has been allowed to stand. 31 Throughout the proceedings, there has been no order extending the time for filing a defence and a defence has not been filed. 32 In the above circumstances, an administrative issue arises as to whether the notice of discontinuance should be accepted for filing where leave has not been obtained to discontinue. Mr and Mrs Frigger were invited to provide any reason they advance as to why the notice of discontinuance may be filed without leave. In response, they maintained that by reason that the pleadings have never closed and the way in which the proceedings were case managed, leave is not required. 33 In my view, the pleadings have closed. In circumstances where there was no order made extending the time for filing a defence, the pleadings closed when a defence was not filed within 28 days after the filing of the statement of claim with the originating application. From that point on, a defence could not be filed without an extension of time in which to do so. The time for filing the defence had closed. Thereafter, the statement of claim was struck out. After that, if Mr and Mrs Frigger had prepared a pleading that was accepted then the time for filing a defence would have re-commenced in respect of the new statement of claim. Whether a notice of discontinuance could have been filed within that period without leave need not be considered. 34 It follows that the Rules do not permit Mr and Mrs Frigger to discontinue these proceedings without leave and for that reason I will direct that their notice of discontinuance not be accepted for filing. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.

COLVIN J: 1 These proceedings have their origin in a claim brought by Computer Accounting & Tax Pty Ltd (CAT) in the Supreme Court of Western Australia many years ago. Since then, there have been numerous court proceedings involving Mr and Mrs Frigger and their related entities. A number of those proceedings resulted in cost orders being made against Mr and Mrs Frigger which they did not meet. In these proceedings, Mr and Mrs Frigger seek compensation calculated to include the amount of those costs that they have been ordered to pay. They have also sought to raise other claims. 2 I have previously dealt with the history of the attempts by Mr and Mrs Frigger to file a statement of claim in these proceedings: Frigger v Banning (No 8) [2019] FCA 1319. At that time, I found that there is a statutory stay of these proceedings by reason of the bankruptcy of Mr and Mrs Frigger and that these proceedings also have been deemed to be abandoned by their trustee in bankruptcy: at [5], [27]-[34], [62]-[69]. An application to allow the latest version of the statement of claim proposed by Mr and Mrs Frigger to stand as the statement of claim in the proceedings was refused. The current position is that there is no statement of claim. 3 On 20 July 2018, sequestration orders were made against the estates of Mr and Mrs Frigger: see my reasons in Kitay, in the matter of Frigger (No 2) [2018] FCA 1032. In November 2018, Mr and Mrs Frigger sought an extension of time within which to appeal from the sequestration orders. On 6 May 2019, McKerracher J ordered that Mr and Mrs Frigger provide security for the respondents' costs of defending that application. 4 On 24 July 2019, the respondents brought an interlocutory application in these proceedings in which they sought, amongst other things, an order that the proceedings be dismissed. On 26 September 2019, the dismissal application was adjourned to a date to be fixed: see my reasons in Frigger v Banning (No 9) [2019] FCA 1611. The application was not determined at that time because of the pending application for an extension of time in which to appeal against the making of the sequestration orders. 5 On 17 April 2020, Charlesworth J ordered that if Mr and Mrs Frigger did not comply with the order for security for costs made by McKerracher J on or before 15 May 2020, then the application for an extension of time would be dismissed: Frigger v Kitay (No 2) [2020] FCA 497. Mr and Mrs Frigger did not provide security and the application was dismissed. 6 Therefore, it remains the position that Mr and Mrs Frigger are undischarged bankrupts.

The competing positions on the application to dismiss the proceedings 7 The respondents now press their application to dismiss these proceedings. They maintain that by a series of decisions the Court has found that many of the claims that Mr and Mrs Frigger have sought to advance in these proceedings are an abuse of process and a collateral attack on earlier court decisions. They also rely upon submissions to the following effect to support that application: (1) The proceedings cannot be maintained by Mr and Mrs Frigger as bankrupts and the proceedings have been abandoned by their trustee. (2) There is no suggestion that there is a party interested in taking an assignment of any cause of action that might be the subject of the present proceedings. (3) After five years, Mr and Mrs Frigger have been unable to produce a viable statement of claim in the proceedings. (4) Delay in the proceedings can be laid squarely at the feet of Mr and Mrs Frigger. (5) The matters that Mr and Mrs Frigger seek to ventilate in the proceedings mostly occurred between nine and 10 years ago and one of the persons involved in the events, Mr Campbell-Smith, has since died. (6) As there is no statement of claim there is no way to determine whether the claims would be statute barred if they were to be the subject of fresh proceedings. 8 In response, Mrs Frigger has deposed to a number of matters by way of affidavit. In essence, they are: (1) Mr and Mrs Frigger have sought to appeal my decision in Frigger v Banning (No 8) (where I decided that these proceedings are stayed and that the proposed statement of claim does not comply with previous orders of the Court and for both those reasons leave should not be given to file the proposed pleading). They have sought to appeal but notices of appeal have not been accepted for filing by Registrars of this Court. The decisions of the Registrars have been challenged by proceedings in which Jackson J is reserved. (2) The respondents' claims against Mr and Mrs Frigger in the bankruptcy are to costs and the amount of those costs is substantially exceeded by the value of the claims that Mr and Mrs Frigger seek to bring in these proceedings which Mrs Frigger has calculated to be approximately $1,300,000. As these claims are mutual debts, the respondents will owe a substantial amount to Mr and Mrs Frigger in the bankruptcy and there could be no prejudice if the respondents were unable to proceed to have costs of these proceedings assessed. (3) Mr Campbell-Smith was diagnosed with advanced dementia in March 2015 prior to the commencement of these proceedings. (4) Mrs Frigger has an appeal on foot in the Supreme Court in which she challenges the refusal of her application to stay the liquidation of CAT. (5) Dismissal of the proceedings will mean that personal injury claims that Mr and Mrs Frigger seek to advance in these proceedings will become statute barred. 9 Mr and Mrs Frigger appeared on their own behalf. Mrs Frigger made submissions that were adopted by Mr Frigger. In addition to matters in her affidavit, Mrs Frigger raised the following by way of oral submission: (1) It was premature to dismiss the proceedings because Jackson J was reserved on applications in which my decision in Frigger v Banning (No 8) was sought to be challenged on appeal (or factual findings in that decision as to whether the application as originally framed included a claim to personal injuries were challenged) and the proper course was to allow these proceedings to continue to be stayed (without being dismissed) pending the outcome of the decisions by Jackson J. I note that the submission was framed by Mrs Frigger as an application for a stay, but I take the view that in substance it was a submission that the proceedings not be dismissed and the existing statutory stay continue. (2) These proceedings had always included claims for personal injury because the originating application included claims for 'reputation damages and aggravated damages'. (3) As to the appeal on foot in the Supreme Court (which is in respect of the decision in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 5] [2020] WASC 39), it was not said that those proceedings were related to the present proceedings but rather that they were relevant to the standing of Mr and Mrs Frigger to bring the claims that they seek to advance in these proceedings insofar as they relate to the liquidation of CAT. (4) In my decision in Frigger v Banning (No 9), I had found that the claims that Mr and Mrs Frigger seek to advance in these proceedings had arguable merit. (5) There was pending the prospect that a new trustee in bankruptcy might be appointed to the estates of Mr and Mrs Frigger and the new trustee might take a different view as to the abandonment of these proceedings. (6) There would be no prejudice to the respondents if the proceedings continued to be stayed, at least until the outcome of the applications before Jackson J was known. 10 For present purposes only, I will proceed on the basis that the death of Mr Campbell-Smith will not have any adverse impact on the ability of the respondents to defend these proceedings and that there are mutual debts of the kind submitted by Mr and Mrs Frigger. In doing so I express no view as to the merits of the parties' competing positions as to those matters. Even so, for the following reasons I am satisfied that there should be an order dismissing these proceedings.

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