Frigger v Kitay

Federal Court of Australia|2020-04-15|Before: Colvin J

The application be dismissed.
The plaintiff do pay the defendant's costs of the application to be assessed if not agreed.
There be liberty to the plaintiff to apply within 14 days to vary the terms of order 2. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 Computer Accounting & Tax Pty Ltd (in liq) (CAT) was formerly the trustee of the Frigger Superannuation Fund (Fund). CAT is in liquidation and Mr Mervyn Kitay is its liquidator. The present trustee of the Fund is H & A Frigger Pty Ltd (HAF). Mrs Angela Frigger and her husband Mr Hartmut Frigger are members of the Fund and the directors of HAF. 2 Mrs Frigger has commenced the present proceedings against Mr Kitay in his capacity as liquidator of CAT claiming that certain property under his control as liquidator is property of the Fund. She seeks various orders to effect the transfer of property to the Fund and damages payable to the Fund for a lost opportunity to sell a service station property in 2016 and the lost opportunity to earn further returns on funds held in bank accounts said to be property of the Fund. 3 Mr and Mrs Frigger are now bankrupts. They have made application to seek to set aside the sequestration orders as to their estates, but no such order has been made. In October 2019 they were given leave by Jackson J to manage HAF subject to the condition that HAF must not engage in any activity other than as trustee of the Fund and do things that are reasonably incidental to so acting: Frigger; in the matter of an application by Frigger [2019] FCA 1730. Mr and Mrs Frigger also claim that some of the property held by their trustees in bankruptcy is property of the Fund. An application for summary judgment brought by Mr and Mrs Frigger based on that claim was unsuccessful: Frigger v Trenfield (No 2) [2019] FCA 2009. Their proceedings against their trustees in bankruptcy in respect of those claims are ongoing. 4 Prior to the first case management hearing in the present proceedings, those acting for Mr Kitay raised a number of objections to the proceedings. Having regard to those objections, I made directions for the following matters to be determined on 25 March 2020: (1) whether the proceedings should be dismissed on the basis that the plaintiff has demonstrated no reasonable basis upon which she is entitled to bring the application; (2) whether leave is required for the plaintiff to commence and continue these proceedings on the basis of her claim to be a beneficiary of the Fund and if so whether leave should be given; (3) whether the proceedings should be dismissed because the plaintiff as an undischarged bankrupt has no standing to bring the proceedings or because the proceedings can only be brought with leave and leave should not be given to allow the plaintiff to continue with the proceedings; (4) whether the application to join HAF as a plaintiff and to dispense with the requirement that a corporation must not proceed in court without a lawyer and for the plaintiff to appear in the future conduct of the proceedings for HAF should be granted; and (5) whether the proceedings should be dismissed as an abuse of process because action CIV 2765 of 2010 is stayed. 5 The reference to CIV 2765 of 2010 is to proceedings that have been on foot for many years in the Supreme Court of Western Australia (Supreme Court Proceedings). They concern the affairs of CAT and the conduct of Mr Kitay. In the Supreme Court Proceedings, claims are made, amongst other things, that particular property being administered by Mr Kitay is property of the Fund. Mr Kitay has brought a counterclaim in those proceedings seeking relief on the basis, amongst other things, that the disputed property belongs to CAT or, if it was transferred to the Fund, then that was done to defeat creditors.

The nature of the application 6 Mrs Frigger brings her application under s 90-20 of the Insolvency Practice Schedule (Corporations) which provides that a person with a financial interest in the external administration of a company may apply for an order under s 90-15. Section 90-15 confers a power upon the Court to make such orders as it thinks fit in relation to the external administration of a company. Those orders include an order determining any question arising in the external administration of the company: s 90-15(3)(a). 7 Mrs Frigger submits that she can bring her application under s 90-20 as a vested beneficiary of the Fund. She says that the Fund is now operating in the retirement phase as to her position as a member and the position of her husband. She says they both receive an accumulated pension from the Fund which is being met from entitlements allocated to each of them within the Fund. She submits that as a result she has a financial interest in the external administration of CAT because Mr Kitay is claiming monies that form part of the Fund that has been allocated to her and from which her pension is being paid. Even if there is no jurisdiction under s 90-20, Mrs Frigger says that she has a separate 'common law entitlement' to bring the application.

Affidavits in support of application 8 Mrs Frigger has provided an affidavit in support of the substantive application and a brief affidavit concerned with the alleged abandonment of the Supreme Court Proceedings by the bankruptcy trustees. Mrs Frigger refers to the following property in her affidavit as being property of the Fund: (1) real property in East Perth; (2) real property in Armadale; (3) a service station business known as BP South-West conducted from the Armadale Property; (4) an amount of $1,330,000 received at settlement of the sale of the Armadale property and paid into the bank account said to be a bank account of the Fund; (5) a term deposit provided as security for the supply of fuel by BP, presumably to the business of BP South-West, which amount is claimed to have been contributed to the Fund; and (6) a filing fee of about $16,000 on a bill of costs for which a refund has been claimed which amount is also claimed to have been contributed to the Fund. 9 In the course of oral submissions, Mrs Frigger clarified that some of the assets were claimed to form part of what she said was her vested interest in the Fund and other assets were claimed to form part of her husband's interest. She accepted that if the matter was to proceed in respect of all of the claims made then it would be appropriate for Mr Frigger to be joined as a plaintiff in seeking relief as to the property in which he claimed an interest and there would be no difficulty with Mr Frigger being joined as a plaintiff. 10 Mrs Frigger also explained that Mr and Mrs Frigger's two children were also members of the Fund, but their interest in the Fund was limited to the extent of about $150,000 and neither of them was retired. 11 By way of explanation as to why the present proceedings were commenced by Mrs Frigger and not by HAF, Mrs Frigger deposes 'I have not joined [HAF] as a plaintiff because I have been unable to obtain legal representation'. By a further affidavit Mrs Frigger has deposed to those difficulties. I accept that on the evidence before me it has been demonstrated that Mr and Mrs Frigger have had difficulty in obtaining legal representation in the various proceedings brought by them over many years. I accept for present purposes that HAF faces the same difficulty by reason of its association with Mr and Mrs Frigger. I express no view as to allegations made by Mrs Frigger as to the reasons why there have been those difficulties.

Main contentions of the parties 12 The position of Mrs Frigger is that she should be allowed to continue with the present proceedings in this Court as a member of the Fund in circumstances where she contends that HAF is unable to secure legal representation and therefore is unable to bring the proceedings. Having originally applied to join HAF as a plaintiff she now seeks to have HAF joined as a defendant on the basis that it will abide the outcome. She claims to have a right to bring the proceedings without leave. She also says that the Supreme Court Proceedings are not pending because they have been stayed and were abandoned by the trustees in bankruptcy of the estates of Mr and Mrs Frigger. Therefore, she submits that the proceedings in this Court are not an abuse. 13 Mr Kitay contends that the current proceedings are an abuse of process by reason of the Supreme Court Proceedings which he says remain on foot. He says that the Supreme Court Proceedings have been ongoing for many years. Mr Kitay says that he will seek to proceed with his counterclaim in the Supreme Court Proceedings if, as he submits should occur, the present proceedings are brought to an end. 14 The Supreme Court Proceedings were brought at a time when Mr and Mrs Frigger claimed to be the trustees of the Fund, but those proceedings are not confined to claims in that capacity. Much of the Supreme Court Proceedings concern events that occurred at a time when CAT was the trustee of the Fund and there are issues joined between the parties in the Supreme Court Proceedings as to the extent to which it held property and undertook activities as trustee of the Fund or in its own right. 15 Mr Kitay says that the proper course is for HAF as trustee of the Fund to seek to be substituted in the Supreme Court Proceedings (or otherwise advance any claims against Mr Kitay in those proceedings). For those reasons, he submits that the current proceedings should be stayed permanently. Mr Kitay also submits that the leave given by Jackson J does not extend to allowing Mrs Frigger to bring the current proceedings and specific leave would be required to continue with the proceedings if they are not stayed as an abuse.

The Supreme Court Proceedings and the bankruptcy of Mr and Mrs Frigger 16 The Supreme Court Proceedings were commenced in 2010. In her principal affidavit in these proceedings Mrs Frigger says that she commenced the Supreme Court Proceedings 'and made the same claims that I now make in this application' (being the substantive application in this Court). Mrs Frigger also says that the Fund had legal representation for some of the time in the Supreme Court Proceedings and paid costs in a specified amount, being about $350,000. She says that orders were made that the Fund pay the defendant's costs of $59,604.87 and security for costs of $80,000. It appears that the security has been provided. It is apparent from this evidence that substantial steps have been undertaken in the Supreme Court proceedings over a considerable period of time. 17 Mrs Frigger has deposed that on or about 25 October 2019 she applied to Allanson J in the Supreme Court to substitute HAF as the second plaintiff in those proceedings. At that time, Mr and Mrs Frigger were named as the second plaintiff 'in their capacities as trustees of the Frigger Superannuation Fund'. However, it is to be noted that Mr and Mrs Frigger in their personal capacities are the first plaintiffs in those proceedings. Allanson J dismissed the application to substitute HAF as the second plaintiff: Frigger v Kitay [No 15] [2019] WASC 384. In doing so, Allanson J: (1) noted the action had been stayed as a result of sequestration orders against Mr and Mrs Frigger; (2) observed that a minute of proposed orders had been lodged in which orders were sought (a) dispensing with the requirement that HAF be represented by a lawyer; (b) allowing HAF to appear by its directors; and (c) substituting HAF as the second plaintiff; (3) observed that the Supreme Court did not have power to dispense with the requirement that a body corporate may not carry on proceedings otherwise than by a solicitor; and (4) identified a fundamental difficulty with the application that arose because where one plaintiff became bankrupt the entire action was stayed and control of the action passed to the trustee in bankruptcy until an election was made by the trustee to prosecute or discontinue. 18 Mrs Frigger also says that she sent a letter to the trustee in bankruptcy for her estate 'informing him' of the Supreme Court Proceedings. She says that he did not make an election to continue those proceedings and therefore abandoned the proceeding. It is not entirely clear how this sits with other material to the effect that there are two trustees in bankruptcy and that the Supreme Court Proceedings have been stayed rather than abandoned. However, even assuming that the trustees in bankruptcy have abandoned the Supreme Court Proceedings, the causes of action the subject of those proceedings remain: Freeman v Joiner [2005] FCAFC 149 at [14] and the further authorities to which I referred in Frigger v Banning (No 8) [2019] FCA 1319 at [34]. 19 The stay of the Supreme Court Proceedings by reason of the bankruptcy of Mr and Mrs Frigger (being the first plaintiffs in those proceedings) could not deprive a new trustee of the Fund of the rights to property consequent upon appointment as trustee. The property of the Fund may be subject to a lien on the part of Mr and Mrs Frigger that might be exercised to exonerate claims by creditors in the bankruptcy. Otherwise, the new trustees could claim the property for the benefit of members of the Fund. If the statutory provisions concerning superannuation funds do not impose any different consequence to that operating at general law (as to which there is no suggestion in the submissions) then, subject to any lien, the property of the Fund vests in the new trustee upon appointment (save for certain cases where the new trustee's rights are confined to a right to call for a conveyance and to sue for and recover the property): s 10 of the Trustees Act 1962 (WA). In that regard, I note that members of superannuation funds have the same rights as a beneficiary of a trust to due consideration and due administration of the fund: Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366 at [75] (French CJ). 20 There is no suggestion that the Supreme Court Proceedings have been dismissed unconditionally such that any claim that may be brought by a new trustee of the Fund may have merged in the judgment dismissing the claim. Whether the proceedings should be dismissed is a separate and subsequent question to whether there is a statutory stay or an abandonment of a claim by a trustee in bankruptcy: Frigger v Banning (No 8) at [27]-[34]; and Frigger v Banning (No 9) [2019] FCA 1611 at [17]-[20]. 21 Therefore, the current position is that the claims by the plaintiffs in the Supreme Court Proceedings are (a) stayed in their entirety; or (b) have been abandoned as to the claims by Mr and Mrs Frigger personally and stayed as to the claims by Mr and Mrs Frigger as former trustees of the Fund. In either case, they have not been dismissed. 22 Further, even if an order had been obtained substituting HAF as trustee of the Fund as the second plaintiff in the Supreme Court proceedings, then those proceedings (including the claims by HAF as trustee) would continue to be stayed: Duckworth v Water Corporation [2012] WASC 30. The stay is a continuing consequence of the terms of s 60 of the Bankruptcy Act 1966 (Cth) which puts in place a statutory stay of the whole proceedings and then an abandonment if there is no election to prosecute any action that is on foot when a person becomes bankrupt. Where only some of the plaintiffs have been made bankrupt then those other plaintiffs are unable to continue with those proceedings by reason of the terms of s 60(2): see the analysis by Kenny J in Garrett v Commissioner of Taxation [2015] FCA 665; (2015) 233 FCR 226. However, unless and until there is an unconditional dismissal, the causes of action in respect of property alleged to form part of the Fund remain. 23 Finally, there is no provision of the Bankruptcy Act that would prevent a new trustee of the Fund such as HAF (or indeed Mr and Mrs Frigger had they continued to be the trustees of the Fund) from commencing proceedings to recover the property of the Fund. The bankruptcy of Mr and Mrs Frigger imposes no barrier to HAF commencing a new claim to the property it says is property of the Trust. Indeed, it appears that such a claim could only be advanced by commencing new proceedings. 24 Of course, issues would arise as to the appropriate procedure for doing so and whether it was an abuse for those proceedings to be commenced in this Court in circumstances where Mr Kitay's counterclaim remains on foot in the Supreme Court. As Mrs Frigger's own affidavit makes plain, the claims the subject of the present application are the same as those that were raised by Mr and Mrs Frigger in the Supreme Court Proceedings. Therefore, it is to be expected that, if they were allowed to proceed in this Court, they would be met by the same matters that are the subject of the counterclaim. The prospect of inconsistent findings would arise as a result.

The status of the counterclaim in the Supreme Court Proceedings and abuse of process 25 Mrs Frigger describes the claims that she seeks to advance in the proceedings in this Court as being claims that were made in the Supreme Court Proceedings. However, those proceedings include a counterclaim. Save for the claim to a refund of filing fees sought in the proceedings in this Court, the counterclaim concerns the property the subject of the claims sought to be made in this Court. It makes the following claims that are relevant for present purposes: (1) Mr and Mrs Frigger owed fiduciary duties to CAT and had breached those duties by their dealings on behalf of CAT with property the subject of claims sought to be made in this Court (paras 110, 130-135); (2) if CAT received any of the property the subject of the claims sought to be made in this Court as trustee of the Fund then it did so as a knowing recipient of property transferred in breach of fiduciary duty (paras 136-137); (3) whilst CAT was insolvent, Mr and Mrs Frigger caused it to transfer assets out of CAT (para 111); (4) if Mr and Mrs Frigger had validly declared certain property to form part of the Fund as they alleged (being the claim sought to be made in this Court and a claim denied by Mr Kitay) then those declarations were invalid and ineffective as unfair preferences or transactions made with the intent to defraud creditors (paras 112-124); and (5) Mr and Mrs Frigger had received unfair preferences from CAT (paras 125-128). 26 On the counterclaim, Mr Kitay seeks relief that includes declarations to the effect that the property the subject of the claim sought to be made in this Court is owned by CAT in its own right or that any transfer to CAT as trustee of the Fund is not binding and various orders that would facilitate the property in dispute being treated as property available for distribution to creditors of CAT in its winding up. 27 For present purposes it is important to recognise that the counterclaim is a distinct proceeding by way of cross-action: McDonnell & East Ltd v McGregor [1936] HCA 28; (1936) 56 CLR 50 at 60; and Aurel Forras Pty Ltd v Graham Karp Developments [1975] VR 202 at 218. In this Court the distinct nature of a cross-claim is expressly recognised by the Federal Court Rules 2011 (Cth): Carna Group Pty Ltd v The Griffin Coal Mining Company [2019] FCA 1276 at [15]. 28 A stay or discontinuance of the principal action does not bring the counterclaim to an end: Century Insurance Ltd (in provisional liq) v The New Zealand Guardian Trust Ltd [1997] FCA 1020. The counterclaim may need to be amended to reflect the position in relation to the main action, but it remains on foot. 29 The commencement of subsequent proceedings in respect of the same controversy involving the same parties is prima facie vexatious and oppressive: Henry v Henry [1996] HCA 51; (1996) 185 CLR 571 at 591; and Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 at 411. It produces a multiplicity of proceedings and raises the prospect of inconsistent findings being matters which the courts seek to avoid. It is vexatious and oppressive for the same issues to be raised in this Court while those matters are pending in another Court: Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 56. In such circumstances, the appropriate course is to permanently stay the proceedings in this court: Sterling Pharmaceuticals Pty Ltd v Boots Company (Australia) Pty Ltd [1992] FCA 71; (1992) 34 FCR 287 at [15]. 30 In this instance the multiplicity of proceedings can be readily avoided. If HAF (or Mr and Mrs Frigger as beneficiaries having established exceptional circumstances) was to commence proceedings in the Supreme Court then those proceedings could be consolidated with the long standing proceedings in that Court (being the ongoing counterclaim). The intervention of the bankruptcy of Mr and Mrs Frigger has consequences for the claims that they have brought personally. They can no longer be advanced by them. However, the only consequence that their bankruptcy has for the claims to property of the Fund is that there is a procedural bar to the continuation of the proceedings in which the plaintiffs bring claims both on their own behalf and as trustees of the Fund. The claims themselves have not been dismissed and can be advanced in appropriate proceedings. 31 In circumstances where the counterclaim has been ongoing for many years at considerable cost and there is a procedure by which the claims that Mrs Frigger seeks to raise in this Court may be readily brought in the Supreme Court in a manner that would avoid a multiplicity of proceedings, it is an abuse of process to commence a separate and subsequent claim in this Court raising the very same issues.

The management of the Fund by HAF 32 Ordinarily, HAF would be the party to pursue any claim to property of the Fund. Even though Mr and Mrs Frigger are bankrupts, they have been given leave to manage HAF. As has been noted, the orders granting that leave are subject to the condition that HAF 'must not engage in any activity other than to act as trustee of [the Fund]'. I am satisfied that if Mr and Mrs Frigger were to cause HAF to commence proceedings to recover property of the Fund then that would fall within the leave granted by the order of Jackson J made on 21 October 2019. It is evident from the reasons of Jackson J that his Honour contemplated that steps to pursue the claims to property on behalf of the Fund would be taken by Mr and Mrs Frigger in the course of their management of HAF: Frigger; in the matter of an application by Frigger at [45]. Therefore, appropriate action by HAF in respect of those claims was plainly within the scope of the leave given by Jackson J. 33 However, it is not HAF that now seeks to advance the present proceedings in this Court. Rather, it is Mrs Frigger in her capacity as a member of the Fund (together with Mr Frigger as a proposed further plaintiff). 34 As was noted by Perram J in Mercedes Holdings Pty Limited v Waters (No 2) [2010] FCA 472; (2010) 186 FCR 450 at [105], '[i]t has long been recognised that where a trustee refuses to institute proceedings relating to trust property the beneficiaries may, in certain circumstances, commence such a proceeding themselves'. However, there must be special circumstances. The general principle is that as long as the trustee is ready and willing to take proceedings, the beneficiaries cannot bring a claim to relief based upon parties acting adversely to the trustee: Alexander v Perpetual Trustees WA Limited [2004] HCA 7; (2004) 216 CLR 109 at [55] (Gleeson CJ, Gummow and Hayne JJ). 35 The following passage from Hayim v Citibank NA [1987] AC 730 at 748 was cited with approval by Leeming JA (Beazley P and Emmett AJA agreeing) in TAL Life Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439 at [54]: These authorities demonstrate that a beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate. 36 If there are special circumstances, then the beneficiary can sue directly, in the name of the beneficiary: Mercedes Holdings at [105]. However, it is the rights of the trustee, not the beneficiary, that are being enforced: at [107]. Further, any action by a beneficiary to enforce the trustee's rights can be exercised only by joining the trustee (and usually any other beneficiaries or a representative of them) as parties to the proceedings in order to ensure all interested parties are bound and thereby avoid a multiplicity of proceedings. Usually an unwilling trustee is joined as a defendant: Fried v National Australia Bank Limited [2001] FCA 907; (2001) 111 FCR 322 at [193]. 37 The issue with the application brought by Mrs Frigger is that, on the evidence, there is no lack of willingness on the part of HAF to bring those claims. It has not refused to bring the application. Mrs Frigger, a director of HAF, wants those claims to be brought and there is no evidence to suggest that HAF, under the management of both Mr and Mrs Frigger, is unwilling to do so. Rather, the only justification advanced for Mrs Frigger bringing the claim is that HAF cannot secure legal representation. If it cannot secure legal representation then, at least in this Court, it may seek dispensation from the requirement that a corporation must not proceed in the Court other than by a lawyer. There must be 'special or exceptional circumstances' for that dispensation to be given: Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289 at [15]-[16]. The cases identify a range of considerations that may be relevant in determining whether to dispense with the requirement: Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241; Enviro Pak Pty Ltd v New Horticulture Pty Ltd [2013] FCA 306; and Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12). However, even though Mrs Frigger initially proposed the joinder of HAF on the basis that there be a dispensation in the requirements of the Federal Court Rules to enable her to represent the company, that course is no longer proposed. 38 Unless and until it has been shown that HAF, though willing, is unable to bring the proceedings, the proper basis to invoke the principle that a claim to property of a trust may be brought by a beneficiary has not been demonstrated. 39 Mrs Frigger placed reliance upon s 90-15 as affording a separate basis for her application that did not depend upon the right of a beneficiary in exceptional circumstances to bring a claim to enforce the rights of the trustee. She submitted that she had sufficient interest to bring a claim for substantive determination of the rights of HAF as trustee because, so it was submitted, she had an equitable interest in the Fund as a retiree with a vested interest. It may be accepted that s 90-15 confers a power to determine substantive rights: Frigger v Trenfield [2019] FCA 1746 at [10] (Jackson J). Even assuming that Mrs Frigger has demonstrated a sufficient financial interest in the administration of CAT, the power conferred by s 90-15(1) is discretionary. The following reasons count against the Court exercising its discretion to determine the questions raised by Mrs Frigger's application: (1) any claim by Mrs Frigger would not be to enforce her own interest in the property, it would be to enforce HAF's interest as trustee of the Fund; (2) HAF is the proper applicant for the claim that Mrs Frigger seeks to raise; (3) HAF has not been shown to be unwilling to bring the claims the subject of the application; (4) there have been long standing proceedings brought by the former trustees of the Fund; (5) those long running proceedings concern the same issues that Mrs Frigger now seeks to raise in this Court; (6) those issues are the subject of the counterclaim by Mr Kitay in those long running proceedings, which counterclaim he seeks to maintain; (7) the present application is not brought in the Supreme Court and therefore is a proceeding that cannot be consolidated with the counterclaim in the Supreme Court Proceedings such that there is a risk of competing findings; and (8) security had been provided for Mr Kitay's costs in the Supreme Court proceedings.

The status of Mrs Frigger as a bankrupt 40 Aside from the operation of s 60(2) of the Bankruptcy Act, the consequence of a sequestration order is that property of the bankrupt including choses in action, vests in the bankrupt's trustee. There is an exception for claims of personal injury which may give rise to complexities in the case of mixed claims: see the analysis of Tottle J in Berryman v Zurich Australia Ltd [2016] WASC 196. However, where a bankrupt seeks to pursue a claim in respect of rights or property that does not form part of the bankrupt estate then such a claim may be pursued: Nugawela v Deputy Commissioner of Taxation [2018] FCA 1457 at [15]. No leave is required to do so. 41 A proceeding brought by a beneficiary to recover the property right of the trust is not a personal claim to the property. If the action is successful then the property will have been demonstrated to be trust property impressed with the terms of the trust. Therefore, the bankruptcy of Mrs Frigger does not mean that any right in exceptional circumstances to bring a claim to recover property of a trust of which she is a beneficiary would be property of the bankruptcy.

The objections raised by Mr Kitay 42 The first objection is that Mrs Frigger has failed to demonstrate a reasonable basis upon which she can bring the application. For reasons I have given, the trustee of the Fund is able to pursue claims to property of the Fund even though the Supreme Court Proceedings have been stayed and the personal claims by Mr and Mrs Frigger in those proceedings may have been abandoned. However, for Mrs Frigger to advance the claims of the trustee to property of the Fund there must be exceptional circumstances. I am not satisfied that there are exceptional circumstances that permit Mrs Frigger to do so. 43 To the extent that Mrs Frigger relies upon s 90-15, the Court must be satisfied that it should exercise its discretion to exercise its statutory power to determine those claims. I am not satisfied that there is a reasonable basis upon which the discretion should be exercised. In part that is because these proceedings seek to raise the same issues that are the subject of Mr Kitay's counterclaim in the Supreme Court Proceedings, a claim that is ongoing. That is one of a number of reasons, when taken together, as to why the discretion to determine the claims raised by the application should not be determined in this Court. Alternatively, it means that the proceedings are an abuse of process. In either case, there is no reasonable basis for the application to the extent that it is based on s 90-15. Therefore, the first objection should be upheld. 44 The second objection is to the effect that Mrs Frigger requires leave to bring the claim. The leave given by Jackson J concerned the management of the Fund by HAF. In my view, the order made was in terms that would have allowed HAF to commence the application (or take any other steps concerning claims to property of the Fund). However, HAF is not seeking to bring the application. 45 Leave is not required for a claim to be brought by Mrs Frigger as a member of the Fund. Further, the standing of Mrs Frigger as an undischarged bankrupt, of itself, is not a barrier to her advancing a claim as a member of the Fund in circumstances where it is demonstrated that there is a proper basis to invoke the extraordinary jurisdiction to allow claims to trust property to be brought by a beneficiary rather than a trustee. 46 Mr Kitay raises concerns about the manner in which Mrs Frigger has conducted other court proceedings. He relies in particular upon observations made by Kenneth Martin J in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 5] [2020] WASC 39 at [31]. Were the claims that Mrs Frigger sought to advance as a beneficiary in respect of alleged trust property claims in which other beneficiaries unrelated to Mrs Frigger had an interest then that may be a matter that the Court would bring to bear in considering whether Mrs Frigger alone could advance those claims. However, the peculiar nature of the Fund means that no such issues arise. Further, the Court has other powers in order to ensure that these proceedings are not conducted in a manner that is unfair or unjust. It is important to differentiate between the exercise of those powers to ensure that litigation is conducted in a manner that is fair and in accordance with the interests of justice and the distinct question whether there is a right to bring a particular claim. The former considerations do not bear upon the latter. 47 The third objection concerns Mrs Frigger's status as an undischarged bankrupt. For reasons I have already given, that status does not mean that leave is required for Mrs Frigger to bring the application. 48 Submissions advanced for Mr Kitay were to the effect that there was a history of Mr and Mrs Frigger failing to meet cost orders. It was also said that in the absence of any security for costs, the prospect of adverse cost orders would have no consequence. These submissions assume that security for costs could not be ordered when that is not the case. If indeed Mr Kitay is able to demonstrate a proper basis for security then orders can be made. If not, then the Court will have concluded that the interests of justice are served by not making such an order. In either case, the Court should not pre-empt that decision by, in effect, denying the right to bring the application. 49 As to the fourth objection, there is no longer any application for HAF to be joined as a plaintiff and for Mrs Frigger to act on its behalf in these proceedings. 50 The fifth objection is that the course now proposed by Mrs Frigger seeks to raise issues that are already before the Supreme Court on the counterclaim in the Supreme Court Proceedings. I am satisfied that it would be an abuse of process to allow the same issues to be raised in this Court while the determination of those matters was pending in the Supreme Court. The principal claims in those proceedings have been stayed. However, the counterclaim is not stayed. Mr Kitay seeks to proceed with the counterclaim and he is entitled to do so. Indeed, it is difficult to see how the administration of CAT could be brought to a conclusion unless the dispute as to the claims to the property was resolved in some way. Mr Kitay has a duty to bring those matters to a conclusion. Given the position that he has adopted in this Court through counsel I expect that he will do so with due expedition. Mrs Frigger expresses concern that despite her efforts it is now 10 years since those proceedings were commenced by Mr and Mrs Frigger and they have not been determined. I am not in a position to examine the history of the conduct of those proceedings. However, if steps are not taken by Mr Kitay to proceed with the administration of CAT then the Court has powers of supervision over the conduct of the liquidation. The fact that the proceedings have been on foot for a considerable period is not a justification for Mrs Frigger to open up another front in this Court in which she seeks to agitate the same matters that have been ongoing in the Supreme Court Proceedings for a considerable period. 51 Therefore, the issues that Mrs Frigger seeks to raise on the present application are pending between the same parties (namely the trustee of the Fund and Mr Kitay) in ongoing proceedings in the Supreme Court. The claims as formulated in this Court can be advanced in the Supreme Court. The proper course is for HAF to advance its claim in a manner that will not give rise to a multiplicity of proceedings concerning the same issues. 52 In the circumstances, the present proceedings are vexatious and oppressive.

Conclusion and appropriate orders 53 For the above reasons, it has been demonstrated that there is no reasonable basis for the claims that Mrs Frigger seeks to advance. Therefore, the appropriate order is for the application to be dismissed. Further, if I had concluded that there was a reasonable basis for the claims then it would have been appropriate for there to be a permanent stay of these proceedings on the basis that they are an abuse of process. 54 No submissions were advanced by the parties concerning appropriate cost orders. There is no material before me to suggest that costs should not follow the event. In those circumstances, I propose to order that Mrs Frigger do pay the costs of the application but I will reserve liberty to Mrs Frigger to apply within 21 days to vary those orders. Any such application should be made by filing an outline of submissions specifying the different costs order that is sought and the contentions advanced as to why that order should be made. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.

Sterling Pharmaceuticals Pty Ltd v Boots Company (Australia) Pty Ltd [1992] FCA 71; (1992) 34 FCR 287 TAL Life Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439 Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378

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