FEDERAL COURT OF AUSTRALIA Frigger v Banning [2016] FCA 359 File number: WAD 607 of 2015 Judge: BARKER J Date of judgment: 13 April 2016 Catchwords: PRACTICE AND PROCEDURE – application for security for costs – relevant factors in exercise of discretion to order security for costs – order for security for costs made Legislation: Corporations Act 2001 (Cth) s 447A Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules 2011 (Cth) R 19.01 Cases cited: Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972; [1989] FCA 361 Mecrus Pty Ltd (ACN 088 126 756) v Industrial Energy Pty Ltd (ACN 080 687 681) and Another (2015) 327 ALR 523; [2015] FCA 103 Professional Services of Australia Pty Ltd and Another v Computer Accounting and Tax Pty Ltd (No 2) (2009) 261 ALR 179; [2009] WASCA 183 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 4] [2015] WASCA 253 Southern Equity Pty Ltd v Timevale Pty Ltd [2015] FCA 1364 Date of hearing: 5 April 2016 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 80 Counsel for the Applicants: Mr D Crennen Solicitor for the Applicants: Hoe Lawyers Counsel for the Respondents: Mr TR Stephenson Solicitor for the Respondents: Eastwood Sweeney Law ORDERS WAD 607 of 2015 BETWEEN: ANGELA CECILIA THERESA FRIGGER First Applicant HARTMUT HUBERT JOSEF FRIGGER Second Applicant AND: SANDRA MAY BANNING First Respondent DONALD CAMPBELL-SMITH Second Respondent PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD ACN 082 879 641 (and another named in the Schedule) Third Respondent JUDGE: BARKER J DATE OF ORDER: 13 APRIL 2016 THE COURT ORDERS THAT: 1. The applicants do pay into Court within seven (7) days of the date of this order the sum of $75,000 by way of security for costs in relation to the first stage of this proceeding up to and including a hearing and determination of any interlocutory application by the respondents for summary judgment and the hearing and determination of any interlocutory application of the applicants to restrain the named lawyers from acting in the proceeding, with liberty to the respondents thereafter to apply for further security. 2. The applicants do pay the respondents' costs of this interlocutory application for security for costs to be taxed, if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BARKER J: 1 On 20 October 2015, the applicants, Mrs and Mr Frigger (who may also be referred to as the Friggers) commenced this proceeding in the Federal Court of Australia against the four respondents claiming, in effect, the payment to them of legal costs "incurred and ordered to be paid" in various concluded proceedings in the Supreme Court of Western Australia, as well as in a proceeding in the Magistrates Court of Western Australia and an appeal in the District Court of Western Australia and a further action in the District Court. 2 Additionally, Mrs and Mr Frigger seek the payment of liquidation costs and expenses of Computer Accounting & Tax Pty Ltd (in liquidation), losses of their self-managed superannuation fund known as the Frigger Super Fund, "reputation damages" and aggravated damages. The basis of their claim, as currently pleaded, is that, in essence, the respondents' conduct in related proceedings in the Supreme Court, including the Court of Appeal, was motivated by collateral purposes, contravened a deed of company arrangement (DoCA) to which Professional Services of Australia Pty Ltd (PSA) and Banning Holdings Pty Ltd were parties, and contravened statutory provisions of the Corporations Act 2001 (Cth) (which are not particularised). As a result, they claim the orders made by the Court of Appeal on 7 December 2009 (repayment orders) are also in contravention of the DoCA. 3 By way of interlocutory relief, they seek to restrain solicitors David Abraham Lenhoff, Cameron Victor Eastwood, Timothy Richard Stephenson and Stewart Vivyan Forbes, who have variously been involved in the above litigation against them, from representing the respondents in the proceeding on the ground they will be material witnesses at the trial of this proceeding. Background to this proceeding 4 An abbreviated background to this proceeding follows. 5 In February 2003, the Friggers, in their capacity as directors of Computer Accounting & Tax, contacted the late Mr Martin Banning about the purchase of a service station and workshop in Osborne Park, which were owned by PSA, of which Mr Banning was the sole director. 6 At the time of the negotiation for the purchase, the service station and workshop premises were leased to separate tenants – each lease the subject of renewal rights. On 10 March 2003, copies of the leases were provided to the Friggers. 7 On 13 March 2003, Computer Accounting & Tax contracted to purchase the service station for a total price of $665,000. 8 Settlement occurred on 1 May 2003. 9 The very next day, on 2 May 2003, PSA commenced proceedings against the lessee of the service station, claiming payment of rates and taxes due under the lease. 10 On 3 May 2003, Computer Accounting & Tax wrote to Mr Banning requesting a reduction of $20,000 in the purchase price by reason of the dispute with the lessee. 11 On 10 July 2003, the lessee vacated the service station, causing Computer Accounting & Tax – which understood it had a continuing lease agreement with the lessee – to give it a notice of default on 16 July 2003. 12 On 31 July 2003, Computer Accounting & Tax terminated that lease by reason of the lessee's failure to remedy the default. 13 On 15 July 2003, Mr Frigger agreed to reduce the rental paid by the second lessee, in respect of the workshop, to $1,200 per month, pursuant to the request in his letter dated 25 June 2003. 14 On 6 August 2003, Mr Frigger informed that lessee the reduction of rent due under his lease no longer applied. 15 On 15 September 2004, Computer Accounting & Tax gave notice of default to that lessee as a result of his failure to punctually pay rent. 16 After Computer Accounting & Tax recovered possession of the workshop, it remained vacant until June 2006, when it was leased to a new lessee for a term of seven months. After that term expired, subsequent attempts to lease the workshop were not successful. 17 In 2003, in what became CIV 2265/2006 in the Supreme Court, the Friggers sued PSA and Mr Banning personally for damages for misleading and deceptive conduct under consumer legislation. 18 On 9 July 2008, the trial judge, Simmonds J, found that Mr Banning, acting on behalf of PSA, made misleading and deceptive representations to Computer Accounting & Tax in contravention of the Trade Practices Act 1974 (Cth) and/or the Fair Trading Act 1987 (WA) during the course of those negotiations. 19 In the result, Simmonds J ordered damages in Computer Accounting & Tax's favour in the sum of $675,078 together with interest (trial judgment sum) payable by PSA and Mr Banning. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133. 20 On 8 September 2008, Mr Banning passed away, with the result that Mr Donald Campbell-Smith was appointed executor of his estate. 21 In 2008, in CACV 76/2008, PSA and Mr Campbell-Smith, on behalf of Mr Banning's estate, appealed to the Court of Appeal of the Supreme Court from the judgment of Simmonds J. 22 Soon after this, on 7 November 2008, PSA was placed into voluntary administration. On 27 November 2008, Mr Holbrook was appointed administrator of PSA. 23 On 20 March 2009, a DoCA was executed, the effect of which was to bring the administration of PSA to an end. The DoCA was between PSA, Banning Holdings Pty Ltd, Mr Holbrook and Baystar Holdings Pty Ltd. 24 Before this Court, cl 6.13 of the DoCA is said by the parties to be at the "core" of the matters in issue. Clause 6.13 provided that: That notwithstanding anything contained in this Deed appearing to the contrary, the payments to be made to [Computer Accounting & Tax] by Banning Holdings shall be 'without prejudice' to the rights of [PSA] and the estate of [Mr Banning] to pursue the Appeal [being the appeal to the Court of Appeal against the decision of Simmonds J]. Should the Appeal result in a reduction of the judgment sum payable to [Computer Accounting & Tax] any amount owing to [PSA] and/or the estate of [Mr Banning] by [Computer Accounting & Tax] as a result may be set-off against any other amount which would otherwise be payable pursuant to this Deed. 25 One of the pre-administration creditors was Computer Accounting & Tax, in respect of the trial judgment sum, plus the taxed costs of the proceeding before Simmonds J. 26 On 2 and 5 June 2009, PSA paid to Computer Accounting & Tax the sum of $1,165,661.54 as the trial judgment sum. 27 On 24 June 2009, at a meeting of PSA's creditors, the DoCA was amended. 28 On 23 October 2009, in Professional Services of Australia Pty Ltd and Another v Computer Accounting and Tax Pty Ltd (No 2) (2009) 261 ALR 179; [2009] WASCA 183, the Court of Appeal allowed the appeal and made the following orders with the parties' consent: 1. The appeal against the judgment of Simmonds J be allowed. 2. Order 1 of the orders made by Simmonds J on 10 July 2008 be set aside. 3. In lieu of the order referred to in paragraph 2 hereof, it is ordered that: 1. The defendants do forthwith pay to the plaintiff: 1.1 The sum of $280,625.00 together with the sum of $87,370.48 being interest at the rate of 6 per cent per annum from 1 May 2003 to 9 July 2008, and thereafter $46.13 per day from 9 July 2008 to the date of payment. 1.2 The sum of $4,999.50 together with the sum of $1,444.24 being interest thereon at the rate of 6 per cent per annum from 15 September 2003 to 9 July 2008, and thereafter $0.82 per day from 9 July 2008 to the date of payment. … 7. The amount of $38,000.00 paid into court by the appellants on 10 December 2008 as security for the respondent's costs of the appeal to be paid out of court to the appellant's solicitors forthwith. 29 On the same day the Court of Appeal published its reasons, 23 October 2009, the Friggers registered a charge against Computer Accounting & Tax dated 10 September 2009, over property of Computer Accounting & Tax described as "all of the proceeds from legal proceedings Supreme Court and Magistrates Court" to secure repayment of all loans allegedly made by the Friggers to Computer Accounting & Tax in the sum of $2,000,000. 30 Before the orders of the Court of Appeal were extracted, Computer Accounting & Tax's solicitor also indicated that Computer Accounting & Tax no longer consented to orders in those terms, causing Martin CJ to make directions for written submissions at a hearing on 13 November 2009. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) at [4]-[6]. 31 On 23 November 2009, the Friggers lodged two absolute caveats over the title to three pieces of real estate registered in the name of Computer Accounting & Tax. These declared the property was held by Computer Accounting & Tax as trustee for the Frigger Super Fund. 32 On 3 December 2009, the Friggers, in their capacity as members of Computer Accounting & Tax, resolved to put Computer Accounting & Tax into voluntary liquidation. 33 On 7 December 2009, the Court of Appeal ordered that Computer Accounting & Tax pay to PSA the amount overpaid by PSA (repayment orders). The amount Computer Accounting & Tax had to repay, including the estimated costs of the appeal, was approximately $850,000. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) at [21]. 34 On 28 May 2010, the High Court of Australia refused Computer Accounting & Tax's application for special leave to appeal against the Court of Appeal's decision. See Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd & Anor [2010] HCATrans 139. 35 Upon discovering the registration of the charge and lodgement of the caveats referred to above, PSA brought an urgent application in the Supreme Court for freezing orders on 3 December 2009, to prevent the Friggers taking steps to enforce payment to them of money due under the deed of charge or to diminish the value of Computer Accounting & Tax's real estate. 36 On 10 December 2009, in CIV 2265/2006, Simmonds J made freezing and ancillary orders, the first of which were to cease to have effect if Computer Accounting & Tax paid the sum of $850,000 into Court or otherwise secured the payment of that sum. Undertakings as to damages were given by Mr Holbrook and Mr Campbell-Smith. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2. 37 Freezing and ancillary orders in their final form were made on 16 December 2009. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S). 38 Those freezing and ancillary orders, as extended, were discharged, if they had not already ceased to have effect, by consent orders made on 7 July 2010 by Simmonds J, effective 14 July 2010. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) at [59]. 39 On 16 October 2012, Simmonds J released Mr Holbrook and Mr Campbell-Smith from their undertakings, and dismissed the Friggers' application for "compensation" pursuant to the undertakings. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd and Another (No 5) (2012) 92 ACSR 1; [2012] WASC 382. 40 On 12 December 2009, a resolution for a members' voluntary winding-up of Computer Accounting & Tax and the appointment of a liquidator, Mr Glenn Douglas Trinick, was passed by the Friggers. 41 On 21 January 2010, however, Simmonds J made orders for the appointment of a provisional liquidator of Computer Accounting & Tax, being Mr Mervin Jonathan Kitay in COR 2/2010. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38. 42 The Friggers' application to have the liquidator removed was dismissed on 15 February 2010. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113. 43 Upon Computer Accounting & Tax's subsequent failure to comply with the Court of Appeal's repayment orders, PSA served a statutory demand on Computer Accounting & Tax, which was also not complied with. As a result, PSA and Mr Campbell-Smith commenced proceedings for an order that Computer Accounting & Tax be wound up. 44 On 6 May 2010, Master Sanderson ordered that Computer Accounting & Tax be wound up in insolvency. See Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93. 45 On 6 November 2012, in COR 205/2011, Simmonds J made orders terminating the DoCA on the basis that it had been wholly effectuated. See Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444. 46 Just over three years after this, on 10 December 2015, in CACV 76/2008, the Court of Appeal dismissed the Friggers' application for leave to be heard in a further appeal from Simmonds J's decision in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (in which they were not parties) and to set aside the repayment orders made 7 December 2009. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 4] [2015] WASCA 253. 47 With regard to the Friggers' application for leave to be heard, the Court of Appeal held they did not have a direct interest in the repayment orders made by the Court. Even if the Friggers' assertion that they were creditors of Computer Accounting & Tax was established on the evidence, which the Court considered it was not, the Court held it was not sufficient to establish they had a direct interest in the repayment orders, which were against Computer Accounting & Tax, and only directly affected its rights and obligations, not those of its creditors. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 4] [2015] WASCA 253 at [23] 48 The Court of Appeal further stated, at [24], that there was no reason why it should exercise any discretion it may have to allow persons indirectly affected by proceedings to be heard, in circumstances where what the Friggers sought to do was to achieve the "improper objective" of usurping the liquidator's control of Computer Accounting & Tax and its affairs. In this regard, the Court noted that the Friggers had not requested the liquidator to take the action which they purported to take on behalf of Computer Accounting & Tax. 49 The Court further notes that, on 2 March 2016, in CIV 1606/2015, Le Miere J in the Supreme Court refused the Friggers' leave to commence, or continue, proceedings against the liquidator of Computer Accounting & Tax on the bases that the action constituted an abuse of process and had no real prospect of success. His Honour made orders that the proceedings be permanently stayed. See Frigger v Kitay [2016] WASC 60. 50 As explained below, a number of costs orders were made against the Friggers with regard to these proceedings. Interlocutory hearing on 5 April 2016 51 On 5 April 2016, following earlier careful case management of the proceeding, in which Mrs and Mr Frigger had at material times been self-represented, with Mrs Frigger as the speaking party, Mrs and Mr Frigger's claim for interlocutory relief that the lawyers be restrained from representing the respondents, and the interlocutory application of the respondents for summary judgment in the proceeding and security for costs, came on for hearing. 52 When they did, it transpired that the Friggers had recently engaged a solicitor to act for them, who had gone on the record on 4 April 2016, who had, in turn, instructed counsel from the Melbourne Bar to appear for them. 53 On behalf of Mrs and Mr Frigger it was represented that they now wished to proceed by reference to proposed amendments to their originating application and statement of claim attached to an affidavit made by Mrs Frigger on 30 March 2016. Regrettably, however, the originating application and statement of claim provided electronically to the solicitors for the respondents was corrupted and could not be read by them until 4 April 2016. 54 At the hearing on 5 April 2016, counsel for the respondents indicated he had assumed that the hearing would proceed by reference to the current materials and not those foreshadowed in Mrs Frigger's recently filed affidavit. Counsel for the Friggers, however, indicated that was not so and that his clients wished to proceed on the basis of the foreshadowed reformulated claim. 55 The Court expressed considerable displeasure with this turn of events, having regard to the prior careful case management of the proceeding and the time provided to the parties to prepare for the hearing of the various interlocutory applications on the basis of the current originating application and statement of claim. 56 In the result, following conferral between counsel, orders were made providing for a minute of a proposed amended originating application and proposed amended statement of claim, prepared by the newly appointed lawyers, to be filed and served on the respondents by 4 May 2016, and the interlocutory applications for summary judgment and restraint of the lawyers to be adjourned to 3 June 2016. Costs of the adjournment were awarded to the respondents, in any event, to be paid forthwith, if not agreed then taxed. 57 The parties agreed, however, that the Court should hear and determine the respondents' application for security for costs. The balance of this judgment deals with the respondents' security for costs application. 58 The Court should add, by way of postscript that on the afternoon of 5 April 2016, after judgment on the security for costs application had been reserved, the solicitor who had gone on the record for the Friggers on 4 April 2016, went off the record. security for costs application 59 The Court has power to make an order requiring Mrs and Mr Frigger to provide security for the costs of the parties' interlocutory applications under s 56 of the Federal Court of Australia Act 1976 (Cth) and R 19.01 of the Federal Court Rules 2011 (Cth). The discretions conferred on the court under both s 56 and R 19.01 are broad and should be exercised having regard to all the relevant facts. In Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972 at 50,635; [1989] FCA 361, Hill J referred to the following factors as relevant to the question whether security should be ordered: (a) the chances of success of the applicant; (b) whether the applicant's claim is bona fide or a sham; (c) the quantum of risk that the applicant cannot satisfy a court order; (d) whether the power is being used oppressively; (e) whether the impecuniosity arises out of the conduct in respect to which relief is sought; (f) whether there are aspects of public interest which weigh in the balance against the making of an order; and (g) whether there are any particular discretionary matters peculiar to the circumstances of the case. These principles have been applied in the context of the current Rules. See, for example, Southern Equity Pty Ltd v Timevale Pty Ltd [2015] FCA 1364 at [23], citing Mecrus Pty Ltd (ACN 088 126 756) v Industrial Energy Pty Ltd (ACN 080 687 681) and Another (2015) 327 ALR 523 at [19]; [2015] FCA 103. In that case, Murphy J, at [42], also had regard to whether an order for security would stultify the proceeding. 60 In relation to the security for costs application, the issues identified by counsel for the parties for consideration, in accordance with these principles, were the relative weakness of the case that Mrs and Mr Frigger wish to advance, their financial position and their ability to meet any subsequent costs order. 61 By their application filed 26 February 2016, the respondents sought an order that security be provided in the sum of $359,268 by payment into the Court within seven days, pursuant to R 19.01 of the Rules. 62 On the hearing of the interlocutory application, counsel for the respondents explained that an order in those terms would reflect costs likely to be incurred through to the conduct of a trial in the proceeding. He said that the respondents would, however, be satisfied, if a staged order were made, so that security be given, in the first instance, in the sum of $75,000, to the end of the completion of the current interlocutory applications, with liberty to apply for further payments. 63 The application was supported by an affidavit of Mr Cameron Victor Eastwood made 24 February 2016. Mr Eastwood is a solicitor for the respondents in the employ of the solicitor on the record and with a knowledge of the history of the above proceedings in the Supreme Court and elsewhere. He provided evidence of a number of steps taken, and statements and materials provided in the relevant Supreme Court proceedings. He also noted costs orders made and not paid in those proceedings. He further noted the existence of mortgages over real estate property registered in the name of Mrs and Mr Frigger. He also noted that on 13 January 2016, Mrs Frigger described herself and her husband to this Court, at a case management hearing, as "high wealth individuals", with millions of dollars of assets. He also noted that the Friggers had previously informed the Supreme Court of their intention to leave the country in a letter to Justice Allanson, dated 26 September 2014, a copy of which was produced. 64 The respondents fundamentally dispute the case that the Friggers wish to pursue, submitting that it constitutes a collateral attack on a final decision over central issues ultimately encapsulated in the decision of the Court of Appeal in CACV 76/2008 of 10 December 2015, which found they had no standing to dispute the earlier decision of the Court of Appeal of 7 December 2009. 65 This is the not the occasion fully to rehearse the arguments that might subsequently be agitated in any summary judgment application or a subsequent trial. It is sufficient to note that counsel for the Friggers, at the hearing on 5 April 2016, said that the kernel of the case that would be put (on the proposed amended materials) is that submissions made to the Court of Appeal in 2009 were inconsistent with obligations owed under cl 6.13 of the DoCA referred to above, and that Mrs and Mr Frigger had a sufficient interest for the purpose of s 447A of the Corporations Act to seek the relief that they claim in this Court. Counsel said that the case put would be that the terms of the DoCA were not mentioned to the Court and cl 6.13 in particular was not brought to the Court's attention. 66 The respondents make a number of salient points about the kernel of the claim that Mrs and Mr Frigger intimated they wished to pursue: (1) Mrs and Mr Frigger are not now, and never have been, "creditors" of the DoCA and have no standing to commence the proceedings, referring to the Court of Appeal decision of 10 December 2015. (2) Mrs Frigger has previously produced a true copy of an alleged notice by her to Computer Accounting & Tax dated 1 September 2003 and a true copy of an alleged minute of directors' meeting of that company dated 1 September 2003, and has made a number of affidavits in proceedings in the Supreme Court and in the District Court representing these documents as the "contract for litigation" which is referred to in para 1(d) of the presently filed statement of claim. (3) The validity of the deed of charge made by Computer Accounting & Tax in favour of Mrs and Mr Frigger is disputed by the liquidator of that company (and also by the respondents) and it was not until 7 April 2014, that the Friggers made any attempt to seize the property the subject of that charge by making a demand of the liquidator pursuant to the deed. In that regard, the respondents produce the notice served on the liquidator on that date, under s 123 of the Personal Property Securities Act 2009 (Cth) (s 123 notice). (4) The decision of Simmonds J in Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444, was a decision whereby his Honour ordered the DoCA be terminated. The order was made on 6 November 2012. Simmonds J did not find that the DoCA needed to be terminated as a result of any breach but that it had served its intended purpose. (5) Special orders for costs originally made by Simmonds J on 6 May 2009, were set aside by the Court of Appeal in its orders of 7 December 2009. No orders in favour of Computer Accounting & Tax were reinstated in CIV 2265/2006 until the orders made by Simmonds J on 18 September 2015. It follows there was no "property" in existence which could have been the subject to any seizure at any earlier material time. At the time of the purported s 123 notice, not only had the DoCA long since been terminated, but the costs order in favour of that company did not then exist. (6) The respondents, like the liquidator, say they dispute the validity of the s 123 notice as at no time prior to the termination of the DoCA in 2012 had Mrs and Mr Frigger ever been possessed of any rights of Computer Accounting & Tax as a "creditor" pursuant to the DoCA. In short, while the company might theoretically have standing as a "creditor" affected by the DoCA or its termination to take some action in respect of an alleged breach of its terms, neither Mrs nor Mr Frigger have any such right. 67 The respondents also say that, contrary to the allegations made in [18] and [19] of the currently filed statement of claim, a claim made by Mrs and Mr Frigger, effectively on behalf of Computer Accounting & Tax, in respect of the non-payment of costs to the company being in breach of the DoCA is without legal merit. The costs order of 6 May 2009 in question, the respondents point out, was set aside and had never been taxed. The respondents say that the Friggers, in effect, claim that even though the company was required, by a judgment of the Court of Appeal, to pay the second and third respondents approximately $730,000 (the respondents say the amount was actually over $800,000), Computer Accounting & Tax was entitled to retain the judgment sum paid to it pursuant to the DoCA by the loan money made available from Banning Holdings Pty Ltd for the purposes of effecting the agreement encapsulated in the DoCA. The respondents say the judgment of the Court of Appeal was never stayed and therefore this plea is nonsensical and has no legal merit. Further, even if either of those matters had any merit, they would be for the liquidator to act upon and not Mrs and Mr Frigger. They say that the lawyer for the liquidator has advised that the Friggers have not approached him to take any action on behalf of the company in relation to the DoCA, nor to set aside the judgment of the Court of Appeal, such as the Friggers appear to propose in this proceeding. Nor have they placed the liquidator in funds to take any such action. 68 So far as unpaid costs are concerned, it is apparent, while Mrs Frigger asserts they are "fictitious", that the following costs orders were made and remain unsatisfied: (1) Judgment for costs in action CIV 1727/2009 for $64,461.88 in favour of Ms Sandra May Banning, Mr Campbell-Smith and Banning Holdings Pty Ltd against the Friggers. (2) On 26 November 2014, Registrar Davies issued a certificate allowing costs in action CIV 1727/2009 for $4,284 in favour of Ms Banning, Mr Campbell-Smith and Banning Holdings Pty Ltd against the Friggers. (3) Mrs and Mr Frigger are liable to Mr Campbell-Smith and PSA for costs of the lengthy freezing order proceedings against them and Computer Accounting & Tax, and the subsequent appeals in CACV 23/2012 and CACV 24/2013 (in which costs were also ordered to be paid by them), which costs have not been assessed or taxed, but are estimated by the solicitors for the respondents to be in the vicinity of $160,000-$200,000, as most of the costs payable are pursuant to indemnity costs orders. Those appeals arose out of the applications determined by Simmonds J in CIV 2265/2006. CACV 23/2012 arose from his Honour's decision as to who should bear the costs of the freezing order proceedings against Computer Accounting & Tax and Mrs and Mr Frigger, which were commenced in December 2009, and CACV 24/2013 arose from the refusal of Mrs and Mr Friggers' applications for compensation against Mr Holbrook and Mr Campbell-Smith, pursuant to undertakings given in support of the freezing order proceedings. (4) On 16 September 2014, Simmonds J made an order for costs to be payable to Mr Campbell-Smith and PSA by the Friggers personally in CIV 2265/2006, which have not yet been taxed, but are estimated by the solicitors for the respondents in the sum of about $10,000. (5) On 16 September 2014, Simmonds J made an order for costs to be payable to Mr Campbell-Smith and PSA by the Friggers personally in CIV 2265/2006, fixed in the sum of $1,500. (6) On 16 October 2012, Simmonds J made an order for costs payable to Mr Campbell-Smith and PSA by the Friggers personally in CIV 2265/2006, which was subsequently taxed in the sum of $31,599.72. (7) On 9 October 2015, Simmonds J made an order for costs payable to Mr Campbell-Smith and PSA by the Friggers personally in CIV 2265/2006, fixed in the sum of $43,328.65. (8) On 10 December 2015, the Court of Appeal made an order for costs to be payable to Mr Campbell-Smith and PSA by the Friggers personally in CACV 76/2008. Those costs have not yet been taxed but are estimated by the solicitors for the respondents to be in the amount of $25,000-$30,000, as the costs payable are pursuant to "indemnity" costs orders. (9) On 9 January 2015, the Court of Appeal made an order for costs to be payable to Mr Campbell-Smith by the Friggers personally in CACV 118/2014, which have not yet been taxed, but are estimated by the solicitors for the respondents to be in the amount of $3,000-$3,500. 69 The respondents note the Friggers do personally own substantial real estate in Western Australia, but have placed a mortgage over all of their properties in favour of a "two dollar company", H & A Frigger Pty Ltd, of which they are directors and used to be shareholders, the shareholders now being persons in Germany, who the respondents believe to be either their friends or extended family. The mortgages appear to be in a sum about equal to the value of the land. 70 The respondents, by Mr Eastwood, also produce a letter of Mrs and Mr Frigger to Justice Allanson in the Supreme Court, suggesting that they might leave the country permanently. 71 On behalf of the Friggers, counsel submits that it cannot be said that the case they wish to run in this proceeding is weak, given that the terms of cl 6.13 of the DoCA are clear and that it is apparent that neither the DoCA nor that clause was mentioned in the Court of Appeal when relevant orders were made. 72 So far as standing is concerned, counsel says s 447A of the Corporations Act may be said to give them a right to seek relief. 73 Counsel notes that the security for costs is sought against individuals, not a company. 74 Counsel also refers to the affidavit made by Mrs Frigger on 30 March 2016, in which she notes, at [26], reasons why costs have not been paid to the receiver, Mr Lean. At [27], Mrs Frigger says she believes that the amounts claimed, which are referred to in [4(c)]-[4(i)] of Mr Eastwood's affidavit, and [68] above, are fictitious and, furthermore, those costs were obtained by the respondents pursuant to the claim of Mrs and Mr Frigger in these proceedings, and they seek an injunction against any claim until the resolution of the proceedings. Mrs Frigger also makes other general statements that allegations made in the proceedings, referred to in [5] of Mr Eastwood's affidavit, have not even been canvassed or decided in other proceedings, that there are no unpaid costs owing to other parties such as Clavey Legal Pty Ltd, and that she denies that she and her husband have placed mortgages over "all" their properties (the inference being it was only over "some"). 75 Additionally, she says that she and her husband are drawing allocated pensions from the Frigger Super Fund, which holds all their assets other than their residence in Applecross. She says in the event that they are unsuccessful in this proceeding, they will have to sell assets from their superannuation fund to pay legal costs and that any order to pay security for costs now will result in real and unnecessary hardship. 76 She also says in [39] of her affidavit, that she and her husband do not intend to leave Australia permanently and that Justice Allanson, to whom she and her husband sent the letter in September 2014 in relation to leaving for a holiday, made a finding that there was a misunderstanding of the letter and that the Friggers did not intend to leave Australia permanently. 77 Counsel on behalf of the Friggers submits that the other costs orders are not relevant to the determination of the security for costs application, and that the only issues are whether they will leave the jurisdiction and what their actual financial position is. 78 In the Court's view, there should be a security for costs order, for the following reasons: Given the background to the current proceeding in the Supreme Court of Western Australia and the rulings made by the Court of Appeal referred to above, notwithstanding that counsel submits that Mrs and Mr Frigger have standing to maintain this proceeding under the Corporations Act and that there appears, literally, some inconsistency between the terms of cl 6.13 of the DoCA and the manner in which the Court of Appeal proceeding was finalised, it is apparent to the Court that there are significant hurdles faced by Mrs and Mr Frigger in the maintenance of this proceeding. To state that is not, in any way, to prejudge or to intend to prejudge any subsequent application for summary judgment in the proceeding. The fact of the matter remains that the history of the related proceedings in the Supreme Court and the orders made in the Court of Appeal and subsequently, including the termination of the DoCA in 2012 by Simmonds J, are issues of significance confronting Mrs and Mr Frigger. For example, if they are not capable of being classified as a "creditor" their claim is seriously undermined. Given that there are considerable costs orders in these related proceedings against Mrs and Mr Frigger in favour of one or other of the respondents, the fact that those costs orders have not been paid and, instead, the Friggers have sought to reverse the Court of Appeal decisions, recover all expenses they say they or Computer Accounting & Tax have incurred, and reverse all costs orders, indicates an unwillingness, at least presently, to meet costs orders if and when made. The fact that there would appear to be questions concerning the circumstances in which real property owned by Mrs and/or Mr Frigger has been mortgaged to a company apparently associated with them or their friends or relatives, additionally raises concern about the willingness or ability of the Friggers to meet any costs order made against them. Mrs Frigger, in her recent affidavit of 30 March 2016, does not say that she and her husband cannot pay security for costs, only that any order to pay security for costs now will result in "real and unnecessary hardship". That might be said of any order for costs made against any party in any proceedings. She does not say she and her husband are impecunious. I infer that Mrs and Mr Frigger are not impecunious. The Court is informed that security for costs orders have been made in proceedings in the Supreme Court and met. It is the case that Mrs Frigger conveyed to this Court in January 2016 that she and her husband were people of means. There is no basis for considering that the Friggers will be unable to maintain this proceeding should the security for costs order be made. 79 Altogether, in these circumstances, there should be an order made for security for costs in relation to the current stage of the proceedings in this Court, including the current interlocutory applications mentioned above. On behalf of the Friggers it was not suggested that the costs associated with this first stage of the proceeding in the sum of $75,000 was not appropriate. I consider, in the circumstances, that security for costs in relation to the first stage of this proceeding should be made in that sum. conclusion and orders 80 In these circumstances, the Court orders that: (1) The applicants do pay into Court within seven (7) days of the date of this order the sum of $75,000 by way of security for costs in relation to the first stage of this proceeding up to and including a hearing and determination of any interlocutory application by the respondents for summary judgment and the hearing and determination of any interlocutory application of the applicants to restrain the named lawyers from acting in the proceeding, with liberty to the respondents thereafter to apply for further security. (2) The applicants do pay the respondents' costs of this interlocutory application for security for costs to be taxed, if not agreed. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate: Dated: 13 April 2016 SCHEDULE OF PARTIES WAD 607 of 2015 Respondents Fourth Respondent: BANNING HOLDINGS PTY LTD ACN 009 006 437