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[2025] FCA 71
Federal Court of Australia
2025-02-06
Mr P, Colvin J
Original judgment source is linked above.
COLVIN J: 1 Ms Kelly-Ann Trenfield is the trustee of the bankrupt estates of Mrs Angela Frigger and Mr Hartmut Frigger. They have been discharged from their bankruptcy, but the administration of their bankrupt estates is ongoing. 2 Ms Trenfield is an employee of FTI Consulting (Australia) Pty Ltd (FTI). For some time, work required to be undertaken in the course of the administration of the estates has been performed by Ms Trenfield as well as by other employees of FTI. The nature of the arrangements between Ms Trenfield and FTI concerning work that is required to be undertaken as part of the administration of the bankrupt estates, as well as the extent of the allocation of work as between Ms Trenfield and other employees of FTI, are matters that are in issue in these proceedings. However, it can be observed that much of the work that has been undertaken in the administration of the estates has involved the defence of proceedings brought by Mrs and Mr Frigger concerning the nature and extent of the assets that form part of the estate. There has also been other litigation brought by Mrs and Mr Frigger concerning the bankrupt estates in which Ms Trenfield has been involved. 3 In June 2023, after various proceedings had concluded and orders had been made for legal costs incurred by Ms Trenfield to be paid out of the estates, Mrs and Mr Frigger commenced proceedings seeking the removal of Ms Trenfield as trustee. In addition to an order for removal, they claimed orders that Ms Trenfield and FTI reimburse remuneration or income from their bankrupt estates. They also claimed orders to the effect that Ms Trenfield and FTI were personally liable for all the costs of the legal proceedings that had been brought by Mrs and Mr Frigger. There was also a claim that Ms Trenfield and FTI 'make good losses' that the bankrupt estates had allegedly sustained 'because of a breach of duty' by Ms Trenfield. 4 It is the position of Ms Trenfield that although liabilities have been incurred for work done by FTI there have been no payments made to FTI. Ms Trenfield has communicated to the Court her intentions as to the obtaining of approvals in due course as to fees and remuneration, including as to work undertaken by FTI. 5 Issues arose as to whether FTI was a necessary party to the proceedings given the terms of the relief sought. Mrs and Mr Frigger made clear that no relief was sought against FTI: see Frigger v Trenfield (Application to Amend) [2024] FCA 508 at [14]-[16]. Since then, the proceedings have been conducted on the basis that they are advanced only against Ms Trenfield. Nevertheless, there have been appearances from time to time for FTI in relation to attempts by Mrs and Mr Frigger to obtain documents from FTI. 6 In May 2024, the Court heard and determined an application by Mrs and Mr Frigger to further amend their statement of claim and their originating application. Until those amendments were sought, the proceedings had focussed on the terms upon which Ms Trenfield had been employed by FTI and the circumstances of her registration as a trustee in bankruptcy. The extent of the amendments sought by Mrs and Mr Frigger at that time were summarised in reasons given on the application (noting that amendments that were not objected to were allowed and in one limited respect an aspect of the contentious amendments was allowed): Frigger v Trenfield (Application to Amend) at [20]. 7 Significantly, the amendments proposed at that time would have expanded the proceedings to introduce various complaints as to the manner in which the administration had been conducted. In particular, they sought to introduce complaints about the way in which Ms Trenfield handled a portfolio of shares that had been determined to form part of the bankrupt estates (as to the determination by this Court that the portfolio formed part of the assets of the estates: see the summary in Frigger v Trenfield (Application to Amend) at [1]. 8 At the time of that earlier amendment application, I observed as follows (at [22]-[23]): … this is not an instance where Ms Trenfield, in opposing the amendments, suggests that Mrs and Mr Frigger will be unable to bring proceedings (assuming them to be competent) in which they raise issues as to the administration of the bankrupt estates based upon complaints as to matters that are unrelated to the terms upon which Ms Trenfield is employed by FTI or the circumstances of her registration as a trustee. Rather, the course for which Ms Trenfield contends is to confine the existing proceedings to the controversy presently addressed by them. 9 The submission for Ms Trenfield on that occasion was that the proposed amendments 'would introduce a raft of new issues…of a kind that would fundamentally alter the nature of the proceedings and be likely to cause delay to and prejudice the prompt administration of the estates': at [19]. 10 The submissions for Ms Trenfield were substantially accepted. That is to say, the amendment application was determined on the basis that these proceedings should be confined to the controversy as to whether the arrangements between Ms Trenfield and FTI, or the basis upon which she had obtained her registration as trustee, or both, were reasons why she should be removed as trustee and the further relief sought by Mrs and Mr Frigger should be granted. 11 Amendments to the statement of claim that were not opposed as well as one further amendment were allowed. Otherwise, as I have indicated, the amendment application was refused. At the same time, I also made orders to the effect that no further documents should be filed in the proceedings unless an order had been made requiring the document to be filed or leave of the case managing judge had been given to file the document. 12 On 25 June 2024, I made orders for the filing of an amended defence and any amended reply as well as a timetable for the filing of affidavit evidence. I also provisionally listed the final hearing of all issues other than the quantum of any loss and damage or compensation for five days commencing on 10 February 2025. 13 On 23 October 2024, I made orders for the filing of outlines of submissions and confirmed that the matter was set down for final hearing for five days commencing 10 February 2025. Submissions have since been filed. 14 At a case management hearing on 30 January 2025, I refused an application by Mrs and Mr Frigger for subpoenas to be issued to employees of FTI on the basis that it had not been demonstrated that the documents sought were of sufficient relevance to the issues in the proceedings. At the time Mrs and Mr Frigger foreshadowed that they would seek to amend the proceedings, in effect, to raise issues that would mean (on their submission) that the documents sought would be relevant. They also indicated that they may need to seek an adjournment of the final hearing on the basis that Mrs Frigger was imprisoned, and she faced considerable difficulties in being able to prepare for the hearing. Whether the adjournment was to be sought depended upon whether Mrs Frigger would be released on parole in the next few days. 15 Mrs and Mr Frigger conduct these (and other) proceedings on their own behalf, as is their right. I have had occasion to preside at many hearings in which they have acted on their own behalf. They are very experienced litigators. They have considerable familiarity with the processes of the Court, the preparation of affidavits and submissions, and the presentation of evidence. Although they are not legally trained, they have demonstrated considerable ability to research points of law and present arguments based upon a consideration of the relevant authorities. Usually, the detailed arguments have been prepared and presented by Mrs Frigger. However, Mr Frigger has also participated in many hearings. 16 Recently, Mrs and Mr Frigger indicated that they wished to bring an interlocutory application seeking the following orders: 1. Trial to commence on 10 February 2025 be vacated. 2. FTI Consulting Pty Ltd be joined as second respondent. 3. The Applicants have leave to further amend the re-amended statement of claim. 4. The subpoenas of Maria Duta and Paris Parasadi be reconsidered 17 The application was supported by an affidavit in which Mr Frigger deposed that Mrs Frigger is subject to severe restrictions whilst imprisoned. Those restrictions as explained to the Court by Mrs Frigger on 30 January 2025 include lock down on many days for 23 hours a day without access to any materials, no access to a computer or internet, and cancellation of visits by Mr Frigger. Mr Frigger says that Mrs Frigger will be eligible for parole on 8 March 2025. 18 A proposed further re-amended statement of claim was provided to the Court. It proposed the joinder of FTI as a party to the proceedings and sought to make the following additions to the statement of claim: (1) Particulars of an existing allegation (para 12) to the effect that Ms Trenfield and FTI executed an employment agreement when FTI purchased Korda Mentha Qld. The particulars refer to particular aspects of the employment agreement. (2) A new plea (as para 12A) to the effect that FTI 'fraudulently took over control from the official trustee of the Applicants' estates'. The plea is said to be based upon earlier pleas to the effect that Ms Trenfield provided a declaration of independence to the creditors of the estate 'that contained false statements' and the particulars to be added concerning aspects of the employment agreement. (3) Detailed particulars to proposed new para 12A listing various things allegedly done in the course of the administration, particularly matters in relation to the administration of the share portfolio. (4) A plea based upon para 12A to the effect that Ms Trenfield and FTI 'deliberately and fraudulently delayed and/or prevented the resolution and termination of the Applicants' bankruptcy'. (5) A plea (para 28A) that in its report to creditors FTI admitted it is a related entity of Trenfield. (6) An expansion of the relief to include FTI. 19 I gave leave for the interlocutory application and associated papers to be filed. The interlocutory application was listed for hearing on an urgent basis. After hearing the parties, I determined that there should be no leave to amend the proceedings in the terms sought and that, consequently, the applications to join FTI and for leave to issue the proposed subpoenas should be refused. I upheld the application to adjourn the final hearing. At the time of making those orders I indicated that I would provide my reasons. These are my reasons.
Proposed amendments to the statement of claim 20 In my reasons in Frigger v Trenfield (Application to Amend), I set out the principles to be applied in considering an application to amend 21 In support of the present application to amend, Mrs and Mr Frigger contended that evidence that had been recently received 'crystallized' the extent of FTI's involvement in the administration of their bankrupt estates. Reference was made to the terms of reports to creditors that had been issued concerning the conduct of the administration and copies of two invoices that had been received in January 2025. It was said that the invoices indicated on their face that they were directed to Mrs and Mr Frigger personally (and not to their estates) and that they supported a claim that FTI had 'illegally' taken over the conduct of the administration on the basis that Mrs and Mr Frigger were their customers and monies had been paid to FTI from the bank accounts maintained by Ms Trenfield as trustee. 22 The Court was taken to copies of the invoices relied upon as part of the explanation for the amendment application. They had been provided to Mrs and Mr Frigger in response to a request by them. The invoices were provided to them under cover of a letter from Ms Trenfield which said that the invoices were for external disbursements incurred by Ms Trenfield in the administration of the bankrupt estates. In particular, the letter said: The majority of the disbursements are legal fees, including counsel fees, incurred by me in defending proceedings commenced by you. The external disbursements were paid on my behalf by FTI Consulting as is the usual practice of FTI Consulting where its employees do not have funds in the estates they are administering in their personal capacities. These costs were then reimbursed to FTI Consulting from the funds in the administration accounts. 23 The invoices were from FTI and were addressed to: Hartmut Hubert Josef/Angela Cecilia Frigger (Former Bankrupts) c/- FTI Consulting [Address] 24 The invoices described the amounts as 'Trustees' external disbursements'. They appended details for disbursements, principally legal fees incurred in relation to proceedings brought by Mrs and Mr Frigger against Ms Trenfield. They did not include any amount for fees for work undertaken by FTI. 25 Further, it was said that the reports to creditors stated that the fees incurred in the administration of the estate had been determined by reference to FTI's usual commercial rates. This was said to indicate, in some way, that the administration of the bankrupt estates had been taken over by FTI on the basis that it was treating Mrs and Mr Frigger as commercial clients of FTI. Reliance was also placed upon information to the effect that most of the work undertaken in the administration of the bankrupt estates to date was carried out by a particular employee of FTI. 26 It was the above matters that were said to justify the introduction of claims against FTI. They were advanced as being matters that were recently discovered that provided a basis for a claim of fraud against FTI, to the effect that FTI had actually been conducting the administration of the estate for FTI's own personal benefit on the basis that Mrs and Mr Frigger were their clients. 27 I express no view as to the significance or otherwise of the above matters for the existing claims made in the proceedings which are to the effect that Ms Trenfield is not conducting the administration and that her purported remuneration is 'in truth and reality income of FTI' (see para 22), that the arrangements between Ms Trenfield and FTI mean that there is a profit or advantage to FTI which is a 'related entity' of Ms Trenfield (paras 28, 28A) and that Ms Trenfield does her work as trustee on bankruptcy 'subject to the control' of FTI (para 36). 28 The issue is whether the contentions now advanced might support a claim of fraud in the terms now proposed to be added by way of further amendment as a basis for recovery of monies allegedly received by FTI. As I explain below, in my view the materials to which Mrs and Mr Frigger propose to refer to support the claims of fraud which they wish to allege against FTI are an insufficient foundation for these claims. 29 The following reasons deal sequentially with each of the proposed amendments as listed above at [18] of these reasons: (1) The amendment to introduce the particulars is not necessary. The applicants are entitled to refer to particular provisions in the employment agreement in support of their case. To the extent that the amendments are proposed in order to support a proposed new plea of fraud, I deal with those matters below. (2) The proposed pleading is insufficient to provide a basis for a claim of fraud. Material facts must be pleaded to support a serious allegation of that kind. They must expose a basis upon which a conclusion of fraud may be reached. Further, as Mrs and Mr Frigger act in person the Court must be satisfied that there is some evidentiary basis for the claims made (in circumstances where the Court cannot act on the basis that the duties of counsel are being discharged). The particulars and other matters raised are an insufficient basis for an allegation of fraud. The material to which reference was made in submissions was an insufficient foundation for a case to the effect that FTI has taken over the administration of the bankrupt estates (that is, completely usurped any involvement by Ms Trenfield in the administration) and is purporting to undertake work for Mrs and Mr Frigger as its own clients. (3) The proposed addition of claims in relation to the administration of the share portfolio was rejected by detailed reasons given in Frigger v Trenfield (Application to Amend) and no reason has been demonstrated as to why the proceedings should be expanded to include some form of complaint about the way the share portfolio has been administered as part of proceedings which concern whether the circumstances of Ms Trenfield's employment by FTI (or the matters advanced in support of her registration) provide a basis for her removal as trustee. (4) The proposed pleading is insufficient to provide a basis for a claim of fraud which requires material facts to be pleaded to support a serious allegation of that kind. (5) The matter the subject of proposed new plea 28A is a matter for evidence. (6) As has been explained, these proceedings have been conducted on the basis that the relief sought concerns Ms Trenfield and not FTI. Until now, a case against FTI has been expressly disavowed. The controversy in the proceedings is whether Ms Trenfield should be allowed to continue as trustee and whether the estate of Mrs and Mr Frigger should have to bear certain costs, fees and charges. FTI is not a necessary party to proceedings in which relief of the kind presently alleged is sought because that relief is directed to Ms Trenfield's conduct as trustee. The relief sought in the current proceeding extends to the reimbursement of any charges to the estates for work done by Ms Trenfield as well as other employees of FTI. There is also a claim that Ms Trenfield make good any losses to the estates. Ms Trenfield does not seek to involve FTI in the proceedings when it comes to the consequences of relief of that kind were it to be upheld. That is to say, Ms Trenfield does not seek, in the present proceedings, some form of indemnity or to make some other form of claim against FTI that would be contingent upon success by Mrs and Mr Frigger. 30 Further, as has been mentioned, there is an existing claim to the effect that Ms Trenfield has undertaken and is undertaking her duties as trustee subject to the control of FTI, and the proposed new plea must be approached on the basis that it seeks to go further than that existing case. As has been explained, until this point, Mrs and Mr Frigger have disavowed any claim against FTI consequent upon allegations to the effect that FTI have controlled the actions of Ms Trenfield and the administration has been conducted for the benefit of FTI. The proceedings have reached the stage where they are ready for final hearing on the basis that the only relief sought based upon FTI's alleged control of Ms Trenfield is the relief sought against Ms Trenfield. 31 Therefore, no sufficient basis was demonstrated for allowing the application to add FTI as a party and there was no reason to allow the other amendments to the relief sought.
Leave to issue proposed subpoenas 32 Mrs and Mr Frigger renewed their application to issue subpoenas addressed to two employees of FTI. As has been explained, leave to issue those subpoenas was refused on 30 January 2025 on the basis that it had not been demonstrated that the documents sought were of sufficient relevance. Their request was renewed on the basis of the further amendments proposed to the statement of claim. As those amendments were refused it followed that there was no basis to revisit the earlier refusal of leave to issue the subpoenas to the employees of FTI.
Proposed adjournment of the final hearing 33 There was no real issue that Mrs Frigger faced considerable difficulties in preparing for the final hearing given the restrictions that applied whilst she was being held in custody. These circumstances had changed recently with Mrs Frigger being moved to a different prison with greater limitations. 34 As at the time of the application, the final hearing was to commence the following week. Mrs Frigger did not have access to hard copies of the relevant materials in a proceeding where there are quite a number of affidavits with exhibits. She did not have access to a computer or to the internet for undertaking research. Although written submissions have been filed, Mrs Frigger will be called upon to make oral submissions and to cross-examine deponents over the course of a hearing that will take a number of days. Also, the opportunities for Mrs Frigger to discuss matters of preparation with Mr Frigger would be very limited. Whilst Mrs Frigger accepted that these were matters of her own making, she asked the Court to take those circumstances into account. In effect, her submission was that there would be considerable prejudice to her in advancing her case (and the case of Mr Frigger) if she was not given more time to allow for preparation, particularly to make arrangements to have access to the relevant materials in hard copy. 35 It was submitted for Ms Trenfield that arrangements might be made whereby Mrs Frigger could have access to materials when she was brought up to Court for the hearing, and the Court might sit reduced hours so that Mrs Frigger would have time for preparation in the precincts of the Court before and after the hearing. There were issues between the parties as to the feasibility of arrangements of that kind being made. Even if they could, they were by no means ideal and introduced the possibility that the proceedings might be extended over additional hearing days with consequences for other litigants before the Court. I was not satisfied that arrangements of that kind might be able to be made in a way that would ameliorate the difficulties faced by Mrs Frigger, particularly as the final hearing was imminent and the issues had arisen because of the change in Mrs Frigger's place of imprisonment. In my view, these were significant matters in support of the adjournment application. 36 On the other hand, there were the interests of creditors of the estates of Mrs and Mr Frigger. The administration of their estates has already been delayed for many years. Without determining where the responsibility for all of that delay lies, there is no doubt that a considerable part of the delay has been caused by unsuccessful proceedings brought by Mrs and Mr Frigger against Ms Trenfield, which called into question her authority to administer many of the assets which have now been found to form part of their estates. During the duration of those proceedings there were undertakings in place as to dealings with those assets. However, although the issues raised in these proceedings call into question the authority of Ms Trenfield, there have been no orders made which would hold up the further administration of the estates pending the determination of the application. That is to say, it was difficult to see any particular prejudice to creditors if there was an adjournment of the final hearing for a period of a few months. 37 Finally, it was not suggested that there was prejudice to Ms Trenfield beyond costs. The assets in the estates are considerable. The availability of those assets provides a likely protection against any adverse financial consequences to Ms Trenfield, if an order for costs thrown away by reason of any adjournment was to be made. 38 In the above circumstances, I was persuaded that the prejudice to Mrs and Mr Frigger was sufficient to justify a short adjournment of the final hearing. As certain witnesses were not available for a hearing at the end of March, given availability for relisting that necessitated an adjournment until June. 39 I note that in the course of the hearing it was proposed that orders might be made to facilitate the provision by Ms Trenfield of a bundle of hard copy materials to Mrs Frigger on the basis that the costs of doing so would be met by Mrs and Mr Frigger. That opportunity was not taken up by Mrs and Mr Frigger. Therefore, it will be a matter for them to take prompt steps to seek to provide Mrs Frigger with the documents that she requires. It will be a matter for them to raise with the Court any further difficulties that may arise and to do so promptly so that the final hearing can proceed in June.
Costs 40 Ms Trenfield sought an order that Mrs and Mr Frigger pay the costs of the interlocutory application and the costs thrown away by reason of the adjournment. As to the costs of the application, much of it was unsuccessful. Although orders were made for the adjournment of the final hearing, that was in the nature of an indulgence. There was no conduct on the part of Ms Trenfield that could be said to have contributed to the need for the adjournment. Mrs Frigger suggested that the application to adjourn had been foreshadowed and should have been accepted as an application that would succeed and for that reason costs should be in the cause. I do not accept that it was inappropriate for Ms Trenfield to make submissions as to why the final hearing should proceed, particularly having regard to the need for Ms Trenfield to be taking steps to advance the completion of the administration. As the adjournment was brought about by the circumstances of Mrs Frigger, I was persuaded in all the circumstances that it was appropriate to make the costs order sought by Ms Trenfield. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.
Frigger
Trenfield