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[2024] FCA 1438
Federal Court of Australia
2024-12-13
Logan J
Original judgment source is linked above.
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Date of last submission/s: 9 December 2024
Date of hearing: 14 - 15 November 2024
Counsel for the Applicants: The applicants appeared in person
Counsel for the First Respondent: Mr S Majteles
Solicitor for the First Respondent: Johnson Winter & Slattery
Solicitor for the Second Respondent: Herbert Smith Freehills
ANGELA CECILIA THERESA FRIGGER BETWEEN: First Applicant HARTMUT HUBERT JOSEF FRIGGER Second Applicant KELLY TRENFIELD First Respondent AND: MERVYN JOHN KITAY Second Respondent HERBERT SMITH FREEHILLS Prospective Respondent
order made by: LOGAN J DATE OF ORDER: 13 DECEMBER 2024
THE COURT ORDERS THAT:
First proposition 23 The first proposition is that on 17 June 2014, there was a costs judgment in COR 2 of 2010 in favour of "the Applicants": see item 1 of the schedule of frauds annexed to the statement of claim filed on 10 June 2024 by Mr and Mrs Frigger (schedule of frauds). Strictly, the position on the evidence is that the relevant costs judgment in COR 2 of 2010 was given on 12 June 2014 with the order being taken out on 17 June 2014. "The Applicants" in whose favour that costs order was made were Mr Kitay (in his capacity as liquidator of CAT) and CAT. There is no reason on the evidence to depart from the like position as found by Colvin J in the sequestration judgment at [180].
Second proposition 24 The second proposition is that on 19 January 2015, a bill of costs was filed by "the Applicants": see item 2 of the schedule of frauds. There is no reason to depart from the position as found by Colvin J in the sequestration judgment, at [92] and [181]. As a sequel to the order of 12 June 2014, a bill of costs was presented to the Western Australia Supreme Court on 19 January 2015 by Mr Kitay and CAT for the assessment of costs by a registrar.
Third proposition 25 The third proposition is that on the bill of costs so filed was for $63,000, above the estimated $10,000 to $25,000 in the "Second HSF Costs Agreement": see item 3 of the schedule of frauds. The "Second HSF Costs Agreement" is that referred to at [46] and [47] of the WASC approval judgment: 46. On 29 October 2013, HSF sent a further letter to Mr Kitay, as Principal of Crowe Horwath, setting out the terms of their engagement and the basis on which HSF proposed to charge Mr Kitay for the engagement described in the letter (Second HSF Costs Agreement). The schedule to the letter states, under the heading 'Scope of our legal services', that the scope of the engagement constituted: (a) drafting and issuing a letter to Mrs Frigger demanding that:
Fourth proposition 27 The fourth proposition is that on the bill of costs presented on 19 January 2015 claimed for the "Originating Application", rather than an interlocutory process: see item 4 of the schedule of parties. There is no reason to depart from the conclusions reached by Colvin J at [162] and [163] of the sequestration judgment. The bill of costs so presented did state "originating application" but the schedule of work in that bill related to the interlocutory application and was assessed accordingly by the registrar for its reasonableness.
Fifth proposition 28 The fifth proposition is that on 29 August 2016 Kitay applied to the Official Receiver for issue of Bankruptcy Notice No 196967 naming Kitay and CAT as joint creditors: see item 5 of the schedule of frauds. The position is as stated by Siopis J in the bankruptcy notice judgment, at [1]: 1 On 29 August 2016, the respondents, Mr Mervyn Kitay, as liquidator of Computer Accounting and Tax Pty Ltd (in liquidation) (Mr Kitay) and Computer Accounting and Tax Pty Ltd (in liquidation) (CAT) caused a bankruptcy notice to issue to Mrs Angela Cecilia Theresa Frigger and her husband, Mr Hartmut Frigger. The bankruptcy notice demanded that Mr and Mrs Frigger (whom I will refer to as the applicants or the Friggers) pay the amount of $61,000.42 within 21 days. The bankruptcy notice was served on 2 September 2016.
Other propositions 29 Mr and Mrs Frigger pressed a further six propositions. These propositions are related to the ones outlined above in that they involve Mr Kitay, either himself or through his solicitor Mr John, making submissions or deposing to both himself and CAT being joint debtors or being jointly liable to HSF for the legal fees subject to the costs order: see items 6-11 of the schedule of frauds. These propositions are also answered by the position on the evidence identified above in that they are consequential on the position taken by Mr Kitay in pursuing the costs judgment, which has explained and approved in the above judgments. 30 Mr and Mrs Frigger alleged that, in "circumstances of Kitay's 30 years' experience and knowledge in insolvency matters it is to be implied Kitay knew that Certificate of Assessment was not a valid final order or judgment pursuant to which the Bankruptcy Notice could issue". The reference to "Certificate of Assessment" is a reference to a certificate of assessment issued by the Supreme Court of Western Australia on 6 July 2015. The allegation then was that, knowing this, it was a fraud to procure the issuing of the bankruptcy notice and subsequently to present and prosecute to judgment the creditor's petition. Mr John was alleged to have aided and abetted such a fraud. The present was therefore said to fall within the class of case identified in r 39.05(b) of the Federal Court Rules 2011 (Cth) in which the Court is empowered to set aside a judgment, namely the sequestration order, obtained by fraud. 31 There is no basis on the evidence for any such "implication" or, for the avoidance of doubt, any such inference, especially considering the observations made above concerning the proof of cases where a grave allegation such as fraud is made. Moreover, the underlying premise of invalidity of the certificate of assessment is wrong in law. 32 Mr and Mrs Frigger alleged that the certificate of assessment was not authenticated by Registrar S Boyle's signature as required by O 43 r 3(2) of the Rules of Supreme Court 1971 (WA) (WASCR). That rule provides: 3. Authentication of judgments and orders (1) Every judgment or order shall be marked to show by whom it was made. (2) An order is sufficiently authenticated if signed by the registrar and sealed with a seal of the Court. 33 The error in this submission by Mr and Mrs Frigger is that identified in the submissions made on behalf of Mr Kitay. In short, the costs assessment certificate is not a judgment for the purposes of this Rule but it is enforceable as a judgment. The latter follows from O 66, r 57 of the WASCR, which provides: 57 . Taxing officer's certificate enforceable as judgment The costs allowed by the taxing officer on any interim or final certificate of taxation shall be deemed to be a judgment of the Court, and shall be recoverable accordingly. 34 A like conclusion was earlier reached by Colvin J in the sequestration judgment, at [2]. The present application is not a vehicle by which Mr and Mrs Frigger may overturn conclusions in law already finally determined against them. I have adverted to their allegation about the costs assessment certificate solely because it was yet another plank in their allegation of fraud. That the point has already been finally decided against them itself means that this plank is misconceived. 35 Mr and Mrs Frigger also claimed that the costs assessment certificate was not proved to be that of the registrar of the Western Australia Supreme Court. The document in evidence at least purports to bear the seal of that Court. In these circumstances, the copy in evidence is sufficiently proved to be an act of that Court by s 80 of the Evidence Act 1906 (WA) (Evidence Act (WA)), which provides: 80. Judgments, orders etc., proof of Evidence of any judgment, decree, rule, order, or other judicial proceeding of any court in any part of Her Majesty's dominions, or in any foreign State, including any affidavit, pleading, or legal document filed or deposited in any such court, may be given in all courts and before all persons acting judicially by the production of a document purporting to be a copy thereof, and - (a) proved to be an examined copy thereof; or (b) purporting to be sealed with the seal of the court; or (c) purporting to be certified as a true copy by a registrar or chief officer of the court; or (d) purporting to be signed by a judge of such court, with a statement in writing attached by him to his signature that such court has no seal, and without proof of his judicial character or of the truth of such statement. 36 This provision was applicable to the application to set aside the bankruptcy notice and to the hearing of the creditor's petition and is applicable to the present proceeding by virtue of the operation of s 79(1) of the Judiciary Act 1903 (Cth). In the absence of some contrary provision in the Constitution or another federal statute, and there is none, that subsection makes the laws of a State relating, materially, to evidence, binding "on all Courts exercising federal jurisdiction" in that State. On its face, the copy of the costs assessment certificate in evidence bears, at least purportedly, the seal of the Supreme Court of Western Australia. That engages with the means of proof prescribed in s 80(b) of the Evidence Act (WA). 37 For reasons set out in the WASC approval judgment, Hill J came to make the following declarations: (a) It is declared that Mr Mervyn Jonathan Kitay (Mr Kitay) was not required to seek approval of the court under s 477(2B) of the Corporations Act 2001 (Cth) (Corporations Act) to enter into the costs agreement with Freehills, as the predecessor firm to Herbert Smith Freehills (HSF) dated 8 February 2010 which is MJK1 to the affidavit of Mr Kitay sworn 3 August 2021 (Kitay Open Affidavit). (b) It is declared that Mr Kitay was not required to seek approval of the court under s 477(2B) of the Corporations Act to retain HSF to act on his behalf and (where relevant) on behalf of Computer Accounting and Tax Pty Ltd (in Liquidation) (CAT) behalf in advising him in relation to the conduct of the liquidation of CAT, in Supreme Court Action COR 2 of 2010, including seeking the Confidentiality Orders described at [16] of the Kitay Open Affidavit, in Supreme Court Action CIV 2765 of 2010, or in relation to these proceedings. (c) It is declared that Mr Kitay was not required to seek approval of the court under s 477(2B) of the Corporations Act to retain HSF to act on his and CAT's behalf in issuing a bankruptcy notice to the defendants, in Federal Court Proceedings WAD 428 of 2016, to issue a Creditors Petition to the defendants or in Federal Court Proceedings WAD 616 of 2017. (d) To the extent that Mr Kitay was required to seek the approval of the court under s 477(2B) of the Corporations Act to enter into the costs agreement with HSF dated 23 August 2019 which is MJK3 to the Kitay Open Affidavit and to retain HSF to act on his and CAT's behalf on the application to have Mrs Frigger committed for contempt and associated orders in Supreme Court Action COR 2 of 2010, approval for this agreement (and the associated retainer) be given nunc pro tunc effective from 23 August 2019. (e) To the extent that Mr Kitay was required to seek the approval of the court under s 477(2B) of the Act to enter into the costs agreement with HSF dated 9 November 2020 which is MJK15 to the Second Affidavit of Mervyn Jonathan Kitay dated 27 August 2021 and to retain HSF to act on his and CAT's behalf to defend the application by the first defendant to set aside the orders of Acting Master Chapman dated 17 January 2012 and Master Sanderson dated 15 May 2014, approval for the agreement (and the associated retainer) be given nunc pro tunc. (f) To the extent that Mr Kitay was required to seek the approval of the court under s 477(2B) of the Act to retain Lenhoff & Hotz to act on his and CAT's behalf in Federal Court Proceedings WAD 40 of 2021, approval be given nunc pro tunc from December 2020 (the date on which Lenhoff & Hotz were first instructed by Mr Kitay). (g) Pursuant to s 477(2B) of the Act, Mr Kitay's entry into the costs agreement with Lenhoff & Hotz dated 26 July 2021 (which is MJK14 to the confidential affidavit of Mr Kitay filed 3 August 2021) and the retainer of Lenhoff & Hotz to act for Mr Kitay and CAT in Supreme Court Action CIV 2765 of 2010 be approved, effective from 26 July 2021. 38 The first three of these declarations are pertinent in relation to the present proceedings. Also pertinent are the reasons given by Hill J in the WASC approval judgment, at [195] to [201], for declining to make additional declarations sought by Mr Kitay and CAT concerning the validity of steps taken by them in earlier proceedings in, materially, this Court. Her Honour declined to make such declarations for these reasons: 195. In [16] of the originating summons, the plaintiffs seek declarations that various proceedings in the Supreme Court as well as the Federal Court, including orders made by various judges of these courts, are 'valid, effective and enforceable, and are not a nullity'. 196. The plaintiffs say these declarations should be made because of the contentions made by the defendants in the various proceedings that the proceedings and formal court orders made are a nullity. 197. While I accept this contention has been made, for the following reasons, I consider there is no proper basis on which the defendants can advance the submission that any steps taken by HSF or Lenhoff & Hotz (or their predecessor firms) in the various proceedings are unauthorised or otherwise a nullity. 198. First, Mr Kitay as liquidator of CAT is an agent of CAT. He has the express power, pursuant to s 477(2)(b) of the Act, to appoint (that is, retain) solicitors to assist in commencing proceedings or defending any proceedings on behalf of CAT. Where a legal practice has been retained by Mr Kitay as liquidator of CAT, the retainer (and any costs agreement entered into between the legal practice and Mr Kitay as liquidator) authorises the legal practice to take steps in the proceedings on behalf of both Mr Kitay and his principal, CAT. 199. Second, Mr Kitay's ability to authorise solicitors to take steps in proceedings is not dependent on whether approval (if required) has been given under s 477(2B) of the Act for entry into the relevant agreement with the solicitors. This is because, as set out above at [76], any failure to obtain approval under s 477(2B) of the Act is only relevant to the question as to whether the liquidator can seek to recover the costs of the relevant solicitors from the company. It does not affect the existence of the agreement or have any impact on third parties, including both the solicitors and defendants in these proceedings. 200. Finally, orders that have been made by this court or the Federal Court, as superior courts, are valid and enforceable unless and until the orders are set aside. 201. In these circumstances, I do not consider that declarations to the effect sought by the plaintiffs are required nor am I convinced that this court has power to make any declarations in respect of the validity of orders of the Federal Court. [Footnote reference omitted] 39 As can be seen, Hill J's reasons for declining to grant these particular declarations were multi-factorial. One reason related to the validity of an order of a superior court of record unless and until set aside. But others recognised, contrary to a theme in submissions made by Mr and Mrs Frigger more than once over the years, that Mr Kitay was entitled to, and did, enter into a binding costs agreement with HSF (or a predecessor firm). That accords, precisely, with a like conclusion reached by Colvin J in the sequestration judgment, at [136]. Mr Kitay was under a liability to pay the costs of HSF. 40 In the proceedings before Colvin J, Mr and Mrs Frigger claimed that there had been fraud, collusion or a miscarriage of justice in the manner in which the costs assessment was undertaken in the Supreme Court of Western Australia. That submission was rejected by Colvin J for reasons given in the sequestration judgment, at [155] to [169]. In essence, his Honour was persuaded that there had been no miscarriage of justice and certainly no fraud visited on Mr and Mrs Frigger by the process of assessment. All that had occurred was that, after permitting Mr and Mrs Frigger to lodge grounds of opposition, the registrar (Registrar Boyle) who conducted the assessment concluded that a costs agreement was in place and that the amount as assessed was reasonable. 41 That a creditor's petition was later presented by both Mr Kitay and CAT on the basis of an act of bankruptcy founded upon a debt resultant from the costs assessment certificate (enforceable as a judgment) does not mean that Mr Kitay effected any fraud on the Court (or earlier on the Western Australia Supreme Court). Given that, as has been repeatedly determined against Mr and Mrs Frigger, there was a debt owed to Mr Kitay in the sum assessed in respect of costs, it is nothing to the point that he or anyone acting for him may have been mistaken as to CAT also being a party to a costs agreement with HSF. Having regard to the observations which I have already made as to the standard of proof in relation to grave allegations such as fraud, there is just no basis whatsoever for drawing any inference as to fraud on the part of Mr Kitay or Mr John, flowing from the additional presence of CAT as a petitioning creditor. 42 It bears repeating that an allegation of fraud is not one which ought lightly to be made. For those in practice at the Bar, such an allegation must not be made unless there are reasonable grounds for a belief that, on the available material, the allegation can be supported: see r 64, Conduct Rules of the Australian Bar Association. Here, there are no such grounds on the evidence. It is by no means unique to Mr and Mrs Frigger to see an applicant litigant in person allege that actions of a respondent, which have affected them adversely, were tainted by fraud. However, fraud is not to be found in the animus of litigants in person or their conspiracy theories, no matter how much those individuals are convinced of its existence. There is just no basis for a conclusion that Mr Kitay (or anyone acting on his behalf) perpetrated a fraud on the Court and as against Mr and Mrs Frigger by presenting, and prosecuting to judgment, the creditor's petition. 43 When the allegation of fraud is rejected as baseless, all that remains is a bankruptcy notice (which, for reasons set out by Siopis J in the bankruptcy notice judgment, was not set aside on the application of Mr and Mrs Frigger) and a creditor's petition grounded in an act of bankruptcy constituted by a failure by them to comply with that bankruptcy notice within the time allowed. HSF held the requisite instructions from Mr Kitay both to apply for and then serve the bankruptcy notice and later to present and prosecute the creditor's petition. 44 The opposition by Mr and Mrs Frigger to that petition also failed, for reasons set out by Colvin J in the sequestration judgment. The orders of dismissal to the challenges made by Mr and Mrs Frigger to both the bankruptcy notice and the creditor's petition are final judgments, never set aside by a subsequent appeal. Subject to proof of a fraud perpetuated on the Court in the seeking and obtaining of the sequestration order, those orders of dismissal finally determined issues which Mr and Mrs Frigger raised or could have raised in their challenges. Given that the allegation of fraud which they make in the present proceeding is baseless, it is singularly important in the administration of justice that the integrity of what is otherwise the finality of the orders of dismissal be respected and upheld. 45 That conclusion also eliminates the principal reason why, for the purposes of their application under s 153B of the Act, Mr and Mrs Frigger submitted that the sequestration order ought not to have been made and thus that the first step in the two-step process was satisfied. 46 In relation to the creditor's petition, one petitioner (Mr Kitay) was owed a debt and, after non-compliance with a valid bankruptcy notice (the validity of which was finally determined by Siopis J in the bankruptcy notice judgment), there was an act of bankruptcy. For the reasons set out in the sequestration judgment, Colvin J was satisfied as to the commission of that act of bankruptcy. His Honour's reasons for judgment reveal he understood his conclusion about the commission of an act of bankruptcy did not mean that he was obliged to make a sequestration order. His Honour was aware that he retained a discretion as to whether to make that order: see sequestration judgment at [108], where the root authority as to the existence of a discretion, Sarina v Wollondilly Shire Council (1980) 48 FLR 372 (Sarina), at 377, is pertinently cited. 47 The discretion concerned arose under s 52(2) of the Act, which materially provides: If the Court … is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition. 48 As is revealed by [126] of the sequestration judgment, Colvin J was satisfied that Mr and Mrs Frigger were able to pay their debts by reason of the funds available to them from the Frigger Superannuation Fund. His Honour's further conclusion, also at [126], was "However, those are the only funds available to a creditor. The petitioning creditors are unable to resort to the monies in the Frigger Superannuation Fund. The petitioning creditors have sought to levy execution, but have been unsuccessful in doing so." His Honour had, with respect correctly, earlier observed (at [107]), "Where it is shown that there are assets to which a judgment creditor might readily resort under civil judgment enforcement proceedings then it is those processes which should be followed, not sequestration." 49 In the original jurisdiction to Sarina (Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163), the Court exercised a discretion against sequestrating the estate of a solvent, but recalcitrant, debtor. The existence of a discretion was upheld in a subsequent appeal to the Full Court, in which it was also held that, in the circumstances, the exercise of that discretion had not miscarried. 50 It might be thought that such an outcome meant that, in this case, in light of the conclusion as to Mr and Mrs Frigger's ability to pay their debts, the discretion ought to have been exercised against the making of a sequestration order. But such a thought could not survive an explanation of s 52(2)(a) of the Act offered in the later judgment of the Full Court in Trojan v Corporation of Hindmarsh (1987) 16 FCR 37 (Trojan), another case cited by Colvin J, at [109]. 51 In Trojan, at 48, having referred to Sarina, the Full Court observed of s 52(2)(a) of the Act: Section 52(2)(a) envisages a situation which will probably bear fruit in payment. It is not easy to see any other reason why the legislature saw fit to make a demonstration of ability to pay only a discretionary ground of dismissal of a petition, and not an absolute bar to its success. 52 On the facts found by Colvin J, which remain materially the same on the evidence before me, the situation as at the time the sequestration order was made was not one which would probably bear fruit in the payment of the debt based on the costs assessment certificate. The case was therefore one which entailed nothing more and nothing less than an unremarkable exercise of a discretion informed by pertinent authority. 53 In Clyne v Deputy Commissioner of Taxation (1985) 5 FCR 1, which was an appeal against the making of a sequestration order, the Full Court recognised (at [5]), in the context of a discretionary decision not to refuse to sequestrate on the basis of the "other sufficient cause" alternative in s 52(2)(b) of the Act, that it would exercise the discretion afresh only if there were demonstrated an error of principle of the kind described in House v The King. 54 An annulment application is not an appeal against the original sequestration order but the same approach must, in my view, follow in deciding whether a sequestration order ought not to have been made. If the evidence as to the prevailing position at the time of sequestration is no different to when the order was made, the Court ought only to conclude that the order ought not to have been made if some error of principle attended the exercise of the discretion. Of course, it would be different if evidence led on the annulment application showed that the sequestration order ought not in any event to have been made. But that is not this case. 55 In my view, Mr and Mrs Frigger have failed to demonstrate any error of principle in the exercise of the discretion to sequestrate. They have failed to prove that the Court was bound not to make the sequestration order. 56 What follows therefore is that not only is there no reason to set aside the sequestration order on the basis that it was obtained by fraud but also that it has not otherwise been demonstrated that that order ought not to have been made. Thus, the application to set aside the sequestration order must fail and, further, the annulment application fails at the first step. 57 Because the annulment application has failed at the first step, it is, strictly, not necessary to advert to considerations which would arise in addressing the second step in an application under s 153B for annulment. However, such considerations were the subject of evidence and related submissions. Further, not to address them would do less than justice to the trustee, Mrs Trenfield, who filed a comprehensive report and was cross-examined upon her related affidavit by Mrs Frigger on behalf of the applicants. 58 In opposing the annulment application, Mr Kitay drew attention to the lapse of more than six years between the date when the sequestration order was made (20 July 2018) and the date when the application came to be heard. Some of that period is referable to the length of time it took to resolve COR 131 of 2021 in the Western Australian Supreme Court. 59 Particularly if it were shown that Mr and Mrs Frigger were presently solvent and that there were arrangements in place in respect of the payment of the bankruptcy trustee's fees and their debts, the period of some three years which elapsed between when COR 131 of 2021 was filed and when it was resolved, coupled with when thereafter it was possible to hear, in person, in this Court the annulment application ought not in my view to count against the granting of annulment. 60 Of more significance in terms of delay is the period approaching three years which elapsed between the making of the sequestration order and the filing of the present application. During this period: (a) Mr and Mrs Frigger applied later in 2018 to the then Federal Circuit Court of Australia for the annulment of their bankruptcy. That application was dismissed for want of jurisdiction. (b) Mr and Mrs Frigger applied in September 2018 for an extension of time within which to appeal against the sequestration order. That application became the subject of an order for payment of security for costs, which was never paid. 61 As against this, when an order for payment of security for costs was made in respect of the present proceeding, it was paid relatively promptly by Mr and Mrs Frigger. Even so, once alerted to their initial jurisdictional mistake, well in excess of two years passed before they corrected that mistake by filing their application in this Court. There is no satisfactory explanation offered by them for this delay. That remains so even if one measures delay just from May 2020 when their application to appeal out of time was finally dismissed for want of payment of security for costs as ordered: Frigger v Kitay (No 2) [2020] FCA 497. 62 Aside from unexplained delay, whether or not Mr and Mrs Frigger are solvent and whether or not they have made full disclosure of their financial affairs are relevant considerations: Bulic, at [12(8)]. 63 Mrs Trenfield (initially jointly with Mr Paul Allen) became the trustee on 31 August 2018 in succession to the Official Trustee. She became a registered trustee in bankruptcy in 2006, a registered liquidator in 2007 and an official liquidator in 2008. She is also a qualified chartered accountant. She has very lengthy experience in insolvency administration, both personal and corporate. I have the benefit, and benefit it truly is, of a comprehensive report from her in her affidavit filed on 5 August 2024 concerning her administration, of the bankrupt estates of Mr and Mrs Frigger. Notwithstanding a cross-examination in which Mrs Frigger's antipathy towards her was all too evident, Mrs Trenfield's oral evidence was noteworthy for its dispassionate, clinical calm and detachment. I have no reason to doubt that the opinions she expresses in the report in her affidavit are anything other than genuine, well-grounded and credible. 64 From Mrs Trenfield's report, it emerges that, following the making of the sequestration order, the Official Trustee identified the following realty as assets of either Mr and Mrs Frigger or Mrs Frigger: (a) 29 Gairloch Street, Applecross WA 6153 (Applecross Property) - the registered owners being Mr and Mrs Frigger; (b) 2A Union Street, Bayswater WA 6053 (Bayswater Property) - the registered owner is Mrs Frigger; and (c) Unit 3, 61 Cale Street, Como WA 6053 (Como Property) - the registered owner is Mrs Frigger. 65 The Official Trustee had also identified bank accounts in the names of either or each of Mr and Mrs Frigger: (a) a Bankwest account in the name of Mr and Mrs Frigger (BW1); (b) a Bank of Queensland (BOQ) account in the name of Mr Frigger (BOQ1); and (c) a BOQ account in the name of Mrs Frigger (BOQ2) (BOQ1 and BOQ2 are, collectively, referred to as the BOQ Accounts) 66 In March 2019, Mr and Mrs Frigger commenced proceedings in this Court (the Main Proceedings) in which they sought, among other things, various orders in relation to the funds held in the BOQ Accounts, the Bayswater Property and the Como Property. They contested that these assets formed part of the property divisible amongst their creditors. In around September 2019, the Mr and Mrs Frigger amended their claim to include a Comsec Share Portfolio. That was said by them to have been transferred to their superannuation fund, the Frigger Superannuation Fund (FSF) in 1997. The existence of the Comsec Share Portfolio came to the attention of Mrs Trenfield not by way of any statement of affairs of Mr and Mrs Frigger or any other revelation by them to the Official Trustee but rather by a reference to it in affidavit material filed and served by them in March 2019 in support of their application in the Main Proceedings. 67 On 1 December 2021, Jackson J delivered judgment in the Main Proceedings: Frigger v Trenfield (No 10) (2021) 397 ALR 24; [2021] FCA 1500. Jackson J found that neither the BOQ Accounts, the Bayswater Property, the Como Property, nor the ComSec Share Portfolio formed part of the FSF, but instead formed part of the property divisible amongst the creditors of the bankrupt estates of Mr and Mrs Friggers: see [11], [370] (BOQ Accounts), [458] (ComSec Share Portfolio), [530]-[531] (the Bayswater Property and the Como Property), [532]-[533] (summary). Another feature of the Main Proceedings was the rejection by Jackson J, at [634], of a complaint by Mr and Mrs Frigger concerning Mrs Trenfield's conduct in requesting ComSec to suspend all transactions concerning the ComSec Share Portfolio. 68 An appeal by Mr and Mrs Frigger against the orders made in the Main Proceedings failed: Frigger v Trenfield (No 3) [2023] FCAFC 49, as did a subsequent application by them for special leave to appeal to the High Court: Frigger v Trenfield [2023] HCASL 110. 69 Having regard to Mrs Trenfield's report, as well as the outcome of the Main Proceedings, it is evident that Mr and Mrs Frigger have been less than candid both in their statements of affairs and in their subsequent dealings initially with the staff of the Official Trustee and later with Mrs Trenfield and those working to her in relation to the administration of the bankrupt estates; for example: (a) the statements of affairs disclosed that Mr and Mrs Frigger each had $3,000 in cash but no bank account details were provided despite the Official Trustee's investigations revealing several bank accounts in their names; (b) the Bayswater Property and the Como Property were not reported in the statements of affairs. (c) repeated failures to provide information concerning the FSF, its assets and how and why particular assets did or did not form part of that fund; (d) repeated failures by Mr and Mrs Frigger, on request by or on behalf of Mrs Trenfield, to provide details of their income and expenses; (e) repeated failures by Mr and Mrs Frigger, on request by or on behalf of Mrs Trenfield, to provide information to assist with the adjudication of proofs of debt; (f) failure to provide their bankruptcy trustee on request with details of their alleged debtors, said to form part of their assets; (g) failure by Mrs Frigger to furnish Mrs Trenfield, as trustee, with details of her interest as a beneficiary of the deceased estate of Evelyn Reid and her related receipt of a distribution from the estate of $111,315.05 on or around May 2021, an interest and a sum which prima facie at least, would appear to be after acquired property forming part of her bankrupt estate, by virtue of s 58(1)(b) of the Act (it being no part of these proceedings to adjudicate that, only to record the absence of candour in respect of what reasonably appears to be an asset in the bankrupt estate); and (h) repeated failures by Mr and Mrs Frigger to provide details to their bankruptcy trustee concerning alleged mortgage security interests held by H & A Frigger Pty Ltd, the share ownership interests in that company and an amount allegedly owed to them by that company. This was most recently manifest in May, June and July this year relation to an attempted sale, initially, seemingly, by Mrs Frigger and then purportedly by H & A Frigger Pty Ltd as mortgagee exercising a power of sale in respect of the Bayswater Property. Given the conclusion reached in the Main Proceedings as to the vesting of the Bayswater Property in Mrs Trenfield as trustee, both the attempted sale and the absence of candour about alleged mortgage security interests held by H & A Frigger Pty Ltd are deeply troubling. In my view, Mrs Trenfield, as trustee, was not just acting within her rights but responsibly in terminating this contract and declining to remove the caveat over this property. 70 Mrs Trenfield stated in her affidavit (at 3.6.12) that: If the bankruptcies are not annulled and there is a shortfall in estate assets presently under my control (the funds held in the Bank Account and the Share Portfolio) to cover the costs of the administration, my remuneration and to pay creditors' admitted claims in full, then it is my intention to challenge the H & A Frigger Pty Ltd claim and the validity of its mortgage and seek to remove the mortgage from the titles of the Real Properties for the benefit of the creditors of the Bankrupt Estates. 71 Having regard to the judgment in the Main Proceedings, the absence of candour by Mr and Mrs Frigger concerning alleged mortgage security interests held by H & A Frigger Pty Ltd, the share ownership interests in that company and an amount allegedly owed to them by that company, this is a responsible position for a bankruptcy trustee to take. 72 For present purposes, were it necessary to consider the second step in the annulment application, and for the reasons given it is not, I consider that absence of candour by Mr and Mrs Frigger in their dealings with their successive trustees in bankruptcy since 2018 would tell against any annulment of their bankruptcies. Indeed, absence of candour is something of an understatement in relation to Mrs Frigger. Mrs Trenfield quite properly as trustee related in her affidavit (at section 4.2) instances of what she aptly described as "false or manipulated evidence" by Mrs Frigger, flowing from conclusions reached by Jackson J in the Main Proceedings. She offered the following, accurate, summary in her report, referencing conclusions reached by his Honour: 4.2.1 … Jackson J found that Mrs Frigger: (a) had knowingly altered a St George Bank statement for an account ending in 718 (STG1). Mrs Frigger had presented a version of this statement in her affidavit which included the notation "Frigger Super Fund" in the account name. However, evidence revealed this notation was not present on the original bank statement. His Honour held at [65]: "I do not accept Mrs Frigger's evidence that the St George bank statement she downloaded had no account name on it, and she mistakenly put her name on it, along with the reference to the FSF. It is an explanation proffered in an attempt to dispel the obvious inference arising from the different versions of the statement in evidence, that Mrs Frigger altered the document so that it no longer showed Jessica Frigger as the account holder, and then put it into evidence in an attempt to persuade the court that it was an asset of the FSF." (b) had deliberately altered a CommSec Financial Year Summary for the year ending 30 June 2018. The altered version included the words "FRIGGER SUPER FUND" under the account name, which did not appear in the original document. At [84], his Honour held: "I draw the inference the first respondent puts, namely that Mrs Frigger altered the CommSec statement shortly before annexing it to affidavit ACTF 1 with the intention of convincing the court that it was an asset of the Frigger Super Fund." (c) displayed a readiness to change her evidence to suit her interests. Mrs Friggers evidence about the FSF's ownership of $80,000 held in a St George Bank account was different to what she had said in previous proceedings before Colvin J (WAD 616 of 2017) where she had claimed this was a personal asset to avoid bankruptcy. At [87], Jackson J observed: "She admitted that she had told Colvin J that it was a personal asset 'from the bar table and I was doing it in my desperation not to be put into bankruptcy' (ts 381 In 25). She then tried to resi/e from that evidence, or at least qualify it, in re-examination in this proceeding (ts 469). She then attempted to give a further explanation in closing submissions which was, with respect, incomprehensible (ts 960-961). All this displays a readiness on Mrs Frigger's part to change what she tells the court in order to suit what she perceives to be her interests on the particular occasion." (d) had created false meeting minutes purportedly from a meeting held on 1 July 2014. However, his Honour found significant issues with the authenticity of these minutes. At [472], his Honour held: "I am, once again, conscious that any finding that Mrs Frigger did deliberately create the 2014 Minutes for the purposes of putting them into evidence is a serious one and that it is a matter of which I should be firmly persuaded if I am to make a finding to that effect. The accumulation of circumstances summarised in the previous two paragraphs, along with Mrs Frigger's history of producing altered documents to the court in this proceeding, does so persuade me." His Honour went on explain the minutes appeared to have been created after 22 May 2020, specifically for the purpose of the court proceedings, rather than being genuine contemporaneous records from 2014. This finding was based on various inconsistencies and the timing of when these minutes were first produced in evidence. 73 A considerable degree of uncertainty attends any determination of the present financial position of Mr and Mrs Frigger. As far as their bankruptcies are concerned, Mrs Trenfield correctly stated in her affidavit evidence the effect of s 110 of the Act, which, in the circumstances, is: (a) the assets of their joint estate must be applied to their joint debts; (b) the separate assets of each Mrs Frigger's estate and Mr Frigger's estate must be applied to their separate debts; (c) if there is a surplus in either Mrs Frigger's estate or Mr Frigger's estate, it must be dealt with as part of the joint estate; and (d) if there is a surplus in the joint estate, it must be dealt with as part of the respective separate estates in proportion to the right and interest of each joint debtor in the joint estate. 74 Mrs Trenfield's evidence is the only reliable evidence as to the present financial position of Mr and Mrs Frigger and their bankrupt estates. She set out in her report in considerable, explained detail, both optimistic and pessimistic estimated positions as to their joint and several assets and liabilities. Necessarily, her estimates had to be qualified. However, her opinions and the related qualifications are those of an experienced bankruptcy trustee and chartered accountant. They are admissible in evidence. From her evidence (at section 7.2), the following emerges: Mr Frigger Mrs Frigger Joint Estate (Optimistic) Joint Estate (Pessimistic) Total assets $10,413,733 $10,687,269 $6,391,793 $5,802,806 Total liabilities ($2,722,648) ($2,722,648) ($3,259,711) ($9,622,019)
Note: Mr and Mrs Friggers' respective superannuation fund balances are included in the total assets of their respective estates. 75 In relation to each of Mr and Mrs Frigger, the total assets figure includes alleged debtors to them in a total amount, in each instance, of $5,926,869. On Mrs Trenfield's analysis, the debtors listed are in fact creditors of their bankrupt estates. Although requested by or on behalf of Mrs Trenfield, Mr and Mrs Frigger have failed to provide her with documents to justify their claims against the individuals said to be indebted to them. Mrs Trenfield's opinion (at 7.3.5), which I accept, is that, "these amounts do not represent crystallised debts which are due and payable but rather claims requiring litigation to realise. As such, I consider these amounts to be overstated and not commercially recoverable." 76 In detailing her optimistic and pessimistic scenarios, Mrs Trenfield highlighted Mr and Mrs Friggers' querulous disposition. It is certainly apt to take that into account. Unfortunately, based on past litigation, there is no reason to think that Mr and Mrs Frigger will co-operate in the finalisation of the administration of their bankrupt estates. I am inclined to think that the pessimistic scenario is the more likely. 77 In the context of the second step of an annulment application and insofar as present solvency is a relevant consideration, it is for Mr and Mrs Frigger to prove that fact. 78 Looking at the asset and liability position as set out above and discounting (for the reasons given by Mrs Trenfield) the worth of debts claimed to form part of their estates, as well as superannuation fund assets prima facie not divisible amongst creditors, I am not satisfied that there is a surplus of assets over liabilities in their individual bankrupt estates. The pessimistic position looks to be the more likely in relation to their joint estate. 79 In summary, the more likely position looks to be that the joint and several bankrupt estates of Mr and Mrs Frigger will not yield a surplus. Instead, large shortfalls are in prospect. 80 Prima facie, Mr and Mrs Frigger do have substantial superannuation assets which do not form property divisible amongst creditors. In light of interrogative notes sounded by Mrs Trenfield in her report, I refrain from making any finding other than on a prima facie basis. These sums could doubtless yield a reasonable income stream for each of them. But quite what their living expenses might be (including on the basis that Mrs Frigger were released from her present incarceration) is unclear. 81 Mr and Mrs Frigger have made no arrangements for the payment of their creditors and the costs of the trustee. As to the latter, they dispute Mrs Trenfield's claim for remuneration, although the arrangement for the performance of services for her by a service company, FTI, has been approved by creditors. They have made an application to the Court for Mrs Trenfield's removal as trustee of the bankrupt estates for, inter alia, alleged conflicts of interest by reason of her being an employee of FTI (WAD 128 of 2023). WAD 128 of 2023 is presently docketed to Colvin J and listed for hearing in February 2025. It would not be appropriate in these proceedings to make any finding as to whether removal on that basis is warranted. However, I do consider it appropriate to find, and do, on the evidence before me, that there is no reason to remove the trustee's remuneration expense, in whole or in part, from consideration in relation to whether there is a surplus in any of the joint or several bankrupt estates. 82 In the end, it only comes to this: were it necessary to proceed to the second step in the annulment application, Mr and Mrs Frigger would not have persuaded me that their case is one for annulment. Rather, having regard to their abject failure to co-operate in the administration of their bankrupt estates and the likely large shortfalls in those estates, the case would not be one for the annulment of either of their bankruptcies. 83 Looking at the long history of litigation which has followed a refusal by Mr and Mrs Frigger to return a confidential affidavit which had come into their hands, it is apparent that Mr and Mrs Frigger have become obsessed with the righteousness of their claim that nothing is owed by them in respect of the costs sequel to the interlocutory application brought to secure the return of that document. The present is but the most recent endeavour to secure vindication of their claim. In reality, it is nothing other than a contrived endeavour, under the guise of a baseless allegation of fraud, to reagitate issues long ago finally determined against them. It is, in truth, a vexatious proceeding. 84 For the above reasons, the application is dismissed. 85 It will be necessary to hear from the parties in respect of costs. I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.
Frigger
Trenfield
[2023] HCASL 110
[2024] WASC 113
[2014] WASC 169
(1938) 60 CLR 336
(2018) 264 CLR 165
(1985) 5 FCR 1
(2021) 397 ALR 24
(1936) 55 CLR 499
(1988) 19 FCR 347
(1987) 16 FCR 396
(1980) 43 FLR 163
(1980) 48 FLR 372
(1987) 16 FCR 37
(1970) 16 FLR 420
(1968) 13 FLR 10