IN THE MATTER OF COMPUTER ACCOUNTING AND TAX PTY LTD (In Liq) [No 8] [2024] WASC 258 (17 July 2024)

1. The origins of the present application can be traced to the interlocutory process filed on 28 October 2022 by Mrs Angela Frigger and Mr Hartmut Frigger (who I will refer to as the Applicants for convenience), as trustees of the Frigger Super Fund. That application was filed under the Corporations Act 2001 (Cth) (Corporations Act), Schedule 2 Insolvency Practice Schedule (Corporations) s 90 ‑ 15 and/or s 1324(1) of the Corporations Act for orders and damages against the Liquidator. This interlocutory process was later amended on 6 December 2022.
2. The Liquidator and CAT then filed an application dated 15 January 2023 seeking orders that the Applicants' interlocutory process be stayed and seeking security of costs. The application sought security in the amount of $30,000 from the Applicants, to secure the costs of bringing a strike‑out application or application for summary judgment.
3. The complete history of this matter and its related proceedings is set out in prior decisions of this Court and need not be replicated in detail in these reasons. It is sufficient to observe that, on 24 March 2023, her Honour Justice Smith made orders as sought in the application referred to in the preceding paragraph, which had been initiated by the Liquidator and CAT.
4. Among other orders, her Honour ordered that:

1. Pursuant to Order 25 of the Supreme Court Rules 1971 (WA), Mr and Mrs Frigger (together, the Applicants) are to provide Mr Kitay and Computer Accounting and Tax Pty Ltd (In liquidation) (together, the Defendants) with security for costs of bringing a strike out application / application for summary judgment (Strike Out Application) with respect to the Applicants' interlocutory process filed on 28 October 2022 and the amended interlocutory process filed on 6 December 2022 (together, the Interlocutory Process), in the sum of $30,000, by way of payment of that amount into Court in this proceeding. 2. The Interlocutory Process be stayed until:

(a) security is provided in accordance with Order 1; and
>
> (b) the Applicants pay $28,259.10 into court in proceeding COR 126 of 2020, being the amount the subject of the provisional assessment of costs in proceeding COR 126 of 2020.

5. Her Honour gave detailed reasons for making these orders: In the matter of Computer Accounting & Tax Pty Ltd [No 4].[1]
6. The connection between the present proceeding and COR 126 of 2020 (which is referred to in order 2(b) above) is that the claim and relief in the present proceedings is substantially the same as the claim and relief sought in COR 126 of 2020.[2]
7. Subsequently, the Liquidator and CAT progressed the assessment process in relation to the costs in COR 126 of 2020, which had been the subject of order 2(b) above. The history of that assessment process is detailed in my reasons published in February 2024: Frigger v Mervyn Jonathan Kitay as liquidator of Computer Accounting & Tax Pty Ltd [No 2].[3] The conclusion I reached was that the Applicants should be refused leave for an extension of time to review the assessment undertaken by the Learned Registrar, and the application to suspend enforcement of the costs order should be dismissed.
8. Accordingly, the practical result was that the Registrar's certification, made on 8 August 2023, that he had taxed the bill of costs filed by the Liquidator and CAT on 25 November 2022 in the amount of $26,231.75, would stand as effective. Following the dismissal of the challenge to the costs assessment process, the Liquidator and CAT issued a demand to the Applicants for payment of the sum in question. No such amount was paid, either to the Liquidator or to CAT, or into Court.

1. The present application was first heard by me on 16 May 2024, and directions were made to program the matter to a final hearing. There was no appearance at that initial directions hearing by the Applicants, however arrangements were made for the orders and the transcript to be provided to them following the hearing.
2. There was, thereafter, a deafening silence from the Applicants as to the listing of the application. As a result, I acceded to the request to list the matter for final hearing today.
3. Again, there has been no appearance today by the Applicants.
4. I am satisfied the Applicants had proper notice of the hearing and satisfied given the history of the matter it was appropriate to proceed with the hearing in their absence.
5. I turn now to the orders sought by the Liquidator and CAT.

1. As to the first order, the Liquidator and CAT seek to vary order 2(b) of the orders made by Smith J, to reflect the actual assessment of costs undertaken by the Registrar, as certified on 8 August 2023. That is plainly an order which this Court has power to make,[4] and one that it should make to reflect the outworking of the cost assessment process. The defendants submit that the amount required to be paid pursuant to the orders of Smith J ought to be amended so that the figure is reduced in line with the actual amount of the taxed costs.
2. This, in my view, is a material change in circumstances, brought about by the orthodox operation of the costs assessment process, which should now be reflected in the terms of the interlocutory costs order previously made by this Court. Although the initial order was made by Smith J, I have power to vary that interlocutory order in the interests of justice in order to reflect the evident intention of that order.[5]
3. Additionally, the Liquidator and CAT seek an amendment to the orders of Smith J such that the amount is to be paid to Mr Kitay and not into Court, given that those costs have now been assessed. I accept in this regard the defendants' submission that, where the costs the subject of the previous order in COR 126 of 2020 have been assessed, the reason for previously ordering that the amount be paid into Court as security for the potential liability for costs (given the actual quantum had not been quantified at that time) has been overtaken. The actual amount payable to the Liquidator has been finally determined. The variation of the order will also render it unnecessary for a further order to be sought to authorise a payment out of Court, had the original order stood.
4. I will therefore make the first order sought by the defendants.

1. The second substantive order sought by the Liquidator and CAT is a springing order. The target of the springing order, so to speak, is the interlocutory process filed by the Applicants which had been brought on for hearing before Smith J in March 2023. The effect of the springing order, if there is continued non-compliance, is that the Applicants' interlocutory process would be dismissed.
2. Some procedural background is needed at this point, which I draw from the submissions filed by the Liquidator and CAT.
3. The Applicants sought to appeal the orders made by Smith J to the Court of Appeal (being CACV 41 of 2023). On 26 October 2023, the Court of Appeal ordered that the Applicants pay into court the sum of $18,000 as security for the respondents' costs of the appeal and if such security for costs was not paid by 16 November 2023, the appeal would be dismissed and the Applicants were then to pay the respondents' costs of the appeal.
4. The Applicants did not make payment of the ordered security for costs and the appeal in CACV 41 of 2023 was thereby dismissed.
5. The Liquidator and CAT assert (and I accept) that there has been non‑compliance with the orders of Smith J made on 24 March 2023. No amount has been paid into Court in these proceedings as security for costs pursuant to paragraph 1 and no amount has been paid into court in proceedings COR 126 of 2020 pursuant to paragraph 2(b). I refer to the First John Affidavit in this regard, which verifies these matters.
6. The Liquidator and CAT have also drawn my attention to the prior conduct of the Applicants in connection with the non-payment of orders for security for costs and the payment of costs. The history was detailed by Smith J in her prior reasons.[6] That history is also verified in the Second John Affidavit (at [63] onwards). The Liquidator and CAT also observe that the Applicants have been put on notice in writing that an application for a springing order would be made in the face of non-compliance with the orders for security for costs.[7]
7. As to the relevant principles, the defendants refer to the principles summarised by Archer J in Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3].[8] Her Honour drew upon the decisions of the Court of Appeal in Durolek v Pier (WA) Pty Ltd [No 2][9] and Firmware Technologies Inc v Asia Platinum Group Ltd[10] in setting out those principles.
8. In Durolek v Pier (WA) Pty Ltd [No 2] the Court of Appeal adapted the five matters set out in the earlier decision of the Court in Firmware Technologies Inc v Asia Platinum Group Ltd as follows:[11]

(1) Where the basis for the springing order is non-compliance with an order of the court consideration should be given to whether the delay has been inordinate. A springing order should ordinarily only be made where a party has, by its conduct, shown a contumelious disregard to compliance with orders of the court.

(2) A springing order should only be made where there is no other available sanction which is appropriate and sufficient to enable the court to determine the matter consistently with the goal and objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) - in particular the fair and just determination of the litigation. The fair and just determination of the litigation encompasses the concern of procedural fairness expressed in Firmware. The concept acknowledges that a point will be reached where a litigant will have been accorded a sufficient opportunity and that no litigant has an absolute right to avail itself of procedural steps when it has failed to take advantage of its opportunity.[110]

(3) A springing order sought by way of an enforcement order to secure compliance with a pre-trial case management direction should not be made if its execution would prevent the party from advancing an argument unrelated to the procedural step the subject of the intended springing order.

(4) A springing order should only be made if the criterion for compliance is clear and unequivocal.

(5) Springing orders should ordinarily only be made as a last resort when necessary to enable the court to fairly and justly determine the substantive matter in dispute. In that regard, before making a springing order, a case manager should take into account the fact that the self-executing nature of a springing order is such that, once made and absent an extension of time for compliance, the only question is whether the order has been complied with. There is no further assessment of the merits of the case or whether it is in the interests of justice for judgment to be entered.

1. The Liquidator and CAT submit that the circumstances in which springing orders may be made are not limited to cases of contumacy, persistent dilatory behaviour, or where it can be inferred that a litigant will not or is unlikely to take steps as required, but submit that those circumstances are present in this case.
2. In brief, having regard to those principles, the Liquidator and CAT submit the Court should be satisfied that a springing order is appropriate for, at least, the following reasons:

(a) The basis for the springing order in this case is non-compliance with an order of the Court in circumstances where the delay has been inordinate.

(b) The Applicants have not sought to explain the failure to comply with the orders of Smith J which were made more than 15 months ago on 24 March 2023.

(c) The period that has elapsed since security for costs was ordered is significant.

(d) The Applicants have been on notice of this application.

(e) The Applicants are not unable to meet the costs order in COR 126 of 2020 or the order for security for costs in these proceedings, if they chose to make payment. I accept this is apparent from the matters set out in the reasons for decision of Smith J at [101] and [102],[12] and I accept this is a relevant factor for the purposes of the present application, weighing in favour of the making of the order sought.

(f) There is continuing prejudice to the Liquidator and CAT if the process remains on foot, albeit stayed at present, without finality.

1. In my view, there is considerable force in these submissions.
2. The orders made by Smith J have not been the subject of compliance and some time has passed since they were made. The original orders were made some 15 months ago, in March 2023. That said, the orders which resolved the costs assessment process were not made until late February 2024, which is only some 4 months ago. However, it is the former delay which is more significant, in the sense that the Applicants have been well aware since Smith J made orders in March 2023 that they were required to pay the sum of $30,000 by way of security for the costs of the defendants in COR 2 of 2010.
3. No explanation has been offered by the Applicants for the non-compliance.
4. This latest non-compliance with the orders of the Court by these parties is also no aberration. These parties have a lengthy history of non‑compliance. This history is highly relevant to the exercise of the Court's discretion.
5. The orders of this Court, whether as to costs or otherwise, are not to be disregarded by parties and should be treated with appropriate respect and authority.
6. Further, considerable resources of the Court have been devoted to the hearing and determination of the Applicants' interlocutory process filed in October 2022, and the related proceedings in COR 126 of 2020. Numerous hearings have been listed, together with an appeal process which stalled following the Applicants' failure to pay security for costs in that regard.
7. On my assessment, the point has been reached where the Applicants have had sufficient opportunity to take the necessary procedural steps to comply with the orders of this Court, which would thereby have permitted them to continue with the interlocutory claims which they filed almost two years ago (in October 2022).
8. The pendency of these proceedings is apt to cause a degree of prejudice to the Liquidator and CAT, even while stayed, in the sense that those parties must continue to engage and instruct solicitors to monitor and consider the proceedings, waiting for the Applicants to determine whether they will comply with the costs orders. That prejudice weighs in favour of the making of the springing order such that the parties will then have certainty as to the status of these proceedings.
9. In all of these circumstances, I am satisfied that the springing order sought by the Liquidator and CAT should be made, although I will extend the time for compliance to 21 days, rather than 14 days.

1. I will hear from counsel as to the orders which should now be made.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] In the matter of Computer Accounting & Tax Pty Ltd [No 4] [2023] WASC 90.

[2] As explained by Smith J in In the matter of Computer Accounting & Tax Pty Ltd [No 4] [86].

[3] Frigger v Mervyn Jonathan Kitay as liquidator of Computer Accounting & Tax Pty Ltd [No 2] [2024] WASC 50.

[4] Commonwealth v Albany Port Authority [2006] WASCA 185 [23] - [25] (Steytler P) and Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115 [9] (Corboy J).

[5] Gething M, Curwood M and Joseph R, Civil Procedure : Western Australia (vol 1), [43.3.10] and see also the discussion in Kirman v Delta Resource Management Pty Ltd [2023] WASC 266 [30] - [34].

[6] In the matter of Computer Accounting & Tax Pty Ltd [No 4] [45] - [53].

[8] Kalx Capital Securities Pty Ltd v Richardson 1 Pty Ltd [No 3] [2021] WASC 414 [22] - [28].

[9] Durolek v Pier (WA) Pty Ltd [No 2] [2019] WASCA 138 [107] - [113].

[10] Firmware Technologies Inc v Asia Platinum Group Ltd [2016] WASCA 179 [44] - [48].

[11] Durolek v Pier (WA) Pty Ltd [No 2] [113].

[12] In the matter of Computer Accounting & Tax Pty Ltd [No 4] [101] - [102].