Anderson v Beldev MI Pty Ltd

Parties: Shane Anderson (First Plaintiff)
Beldev SA Pty Ltd (Second Plaintiff)
Beldev MI Pty Ltd (First Defendant)
Mena Ibrahim (Second Defendant)
Beldev PM Pty Ltd (Third Defendant)
Peter Micalos (Fourth Defendant)
Beldev Nominees Pty Ltd (Fifth Defendant)
Canberra Property Development Holdings Pty Ltd (Sixth Defendant)
Intellectual Property Group Pty Ltd (Seventh Defendant)

Representation: Counsel:
M A Friedgut (First and Second Plaintiffs)
M Condon SC/J Adamopoulos (First to Fourth Defendants and Seventh Defendant)
Solicitors:
Levitt Robinson Solicitors (First and Second Plaintiffs)
Madison Marcus (First to Fourth Defendants and Seventh Defendant)

File Number(s): 2024/155999

Publication restriction: Nil

JUDGMENT

1. These proceedings arise out of a joint venture to develop property in Belconnen, ACT. The fifth defendant, Beldev Nominees Pty Ltd (Nominees), is the corporate vehicle through which the various joint venture parties associated themselves to conduct the development.

2. The first plaintiff, Mr Anderson, was previously a director and 46.25% shareholder of Nominees. The other directors and shareholders of Nominees are Mr Mena Ibrahim and Mr Peter Micalos. Each of Nominees, the three individuals just mentioned, and the companies associated with them, was a party to the Belconnen Joint Venture Agreement dated 31 January 2022 (JVA).

3. In Mr Anderson’s case, the associated company was Beldev SA, which is the second plaintiff. The companies associated with Mr Ibrahim and Mr Micalos were, respectively, Beldev MI Pty Ltd and Beldev PM Pty Ltd.

4. Under the JVA, Beldev SA had obligations to provide funding for the venture. In 2023 a dispute arose among the joint venture parties in relation to Beldev SA’s ability to contribute funding to progress the development. In circumstances that are the subject of serious dispute and lengthy pleading, the other joint venturers purported to exercise an option to acquire Mr Anderson’s shares in Nominees.

5. In April 2024, the plaintiffs commenced these proceedings by which they seek a range of relief to restore and protect their interests in Nominees and the joint venture more broadly. The plaintiffs allege breaches of the JVA and breaches of fiduciary duties. They also seek remedies under the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law in relation to the affairs of the joint venture and its financing.

6. In addition to Nominees, the defendants are Mr Ibrahim, Mr Micalos, Beldev MI Pty Ltd, Beldev PM Pty Ltd, Canberra Property Development Holdings Pty Ltd (CPDH) and Intellectual Property Group Pty Ltd. I will refer to Mr Ibrahim, Mr Micalos, Beldev MI Pty Ltd, Beldev PM Pty Ltd and Intellectual Property Group Pty Ltd as the active defendants.

7. The active defendants now seek security for costs of the proceedings. These reasons deal with that application.

Procedural Background

8. The proceedings were commenced on 27 April 2024. At that time, the plaintiffs were represented by Ms Lucy Nguyen of Law Australia.

9. The active defendants were served on 8 May 2024. A defence was filed on 10 December 2024. At some point, the active defendants may seek leave to file a cross-claim.

10. There have already been several interlocutory applications. On 11 June 2024, the plaintiffs filed a notice of motion seeking, inter alia, interlocutory injunctions, leave to issue subpoenas and notices to produce. The defendants explained that the June application was supported by a lengthy and controversial affidavit of Mr Anderson, the contents of and attachments to which spurned an application by the first to fourth defendants in July 2024 for injunctions to prevent Mr Anderson from accessing Mr Ibrahim’s email account. In August 2024, the plaintiffs filed an application seeking orders in connection with the July motion. This August application has been resolved.

11. On 21 February 2025, the active defendants filed the application for security for costs with which I am now dealing. That application was set down for hearing together with the plaintiffs’ June motion and certain prayers for relief in the July motion on 23 and 24 April 2025.

12. On 24 March, Ms Nguyen served a notice of ceasing to act. The plaintiffs seem to have scrambled to obtain representation for the April hearing as best they could, but they have been significantly hampered in their ability to do so by the fact that Ms Nguyen asserts a lien over her file because she has unpaid costs of around $280,000.

13. On 28 March, the plaintiffs engaged Levitt Robinson Solicitors (Levitt Robinson), who have briefed Mr Friedgut of counsel. Their understandable inability to prosecute the June motion led me to vacate the hearing of everything other than the security for costs application on condition that the plaintiffs pay costs thrown away but without prejudice to the plaintiffs’ right to reagitate the motion in the future, should they be so advised. In the result, I heard the application for security for costs on 24 April.

14. At the time it was filed, the application for security for costs rested on two contentions. The active defendants first contended that the second plaintiff was impecunious and that it would be unable to meet a costs order. They next contended that Mr Anderson should be ordered to provide security pursuant to rule 42.21(b) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) because he had mis-stated his address in the originating process and there was reason to believe that the mis-statement was made with intention to deceive.

15. However, on 7 April 2025 Mr Daniel Rappoport, a partner at Levitt Robinson, swore an affidavit in support of the application to vacate the April hearing dates in which he provided a thorough chronology of the circumstances in which Levitt Robinson came to be instructed and the vigorous attempts made by Levitt Robinson to gain access to documents and come up to speed on the issues in dispute. In the course of doing so, he explained that the plaintiffs’ costs of the proceedings had hitherto been the subject of a litigation funding agreement with ACN 643 171 199 Pty Ltd (the Funder). This was the first time that the defendants knew that such an arrangement was in place. Understandably, its existence is now at the forefront of their application.

The Funding Deed

16. The funding agreement was contained in a Funding Deed dated 17 May 2024. The parties to the Funding Deed were the Funder and both plaintiffs, although the plaintiffs were collectively referred to as ‘the Plaintiff’. The Funder was a company associated with Ms Nguyen’s husband, Mr Tan. The Funding Deed included a clause in which the Funder represented and warranted to the plaintiffs that it was a relative of Ms Nguyen.

17. By clauses 2.1 and 2.2, the Funder undertook to pay the plaintiffs’ reasonable costs and disbursements of the proceedings. The expression ‘costs and disbursements’ meant legal fees, court costs and other miscellaneous expenses approved by ‘the Solicitor’, being Ms Nguyen. The plaintiffs accept that the Funder did not have any liability under the Funding Deed to pay the defendants’ costs of the proceedings where the plaintiffs had been ordered to pay those costs.

18. By clause 2.4, if the Funder notified the plaintiffs that it proposed to cease paying costs and disbursements, the plaintiffs were required to use ‘reasonable best efforts’ to find an alternative funder.

19. By clause 3.1, the plaintiffs became liable to pay the ‘Funder Recovery Amount’ if they were to recover the ‘Claims Proceeds’. The ‘Funder Recovery Amount’ was defined to be 50% of the plaintiffs’ profit entitlement under the JVA. The expression ‘Claims Proceeds’ included all net proceeds, receivables, property, cash and other consideration due to the plaintiffs arising from or in connection with the claim brought by the plaintiffs (excluding injunctive relief or specific performance).

20. By clause 3.2, the plaintiffs understood to pay the Funder the sum of $13 million if the plaintiffs terminated the funding agreement with no fault on the part of the Funder, or if the plaintiffs settled at any time for an amount less than $27,971,240 exclusive of costs.

21. By clause 8.4, the payment obligations which I have just described were, among other clauses, expressed to survive termination of the Funding Deed.

22. In his 7 April 2025 affidavit, Mr Rappoport explained that Ms Nguyen had been acting on the basis that the proceedings were to be funded by the Funder under the Funding Deed. However, in late 2024, Ms Nguyen and Mr Tan separated and a very substantial judgment in an unrelated matter was entered against Mr Tan. On 17 March 2025, Ms Nguyen informed Mr Anderson that she had not received payment from the Funder in respect of outstanding invoices, or funds in trust. It was for this reason that she served a notice of ceasing to act.

23. Mr Anderson spoke to Mr Tan on 27 March 2025. According to Mr Rappoport, Mr Tan said that ‘given that Lucy Nguyen has decided to cease acting’, his obligation to fund the proceedings was at an end.

24. Mr Rappoport says that neither Mr Anderson nor Beldev SA is able to pay the amount of costs due and payable to Ms Nguyen. I note however that the evidence of Mr Anderson’s financial circumstances was far from clear.

25. Mr Levitt has met with at least two potential funders who may be willing to fund the proceedings and to pay the plaintiff’s outstanding costs. However, they understandably wish to see an advice on prospects settled by senior counsel before doing so. That has not been possible at this stage given Levitt Robinson’s inability to access the Law Australia file. As matters stand, the evidence does not allow me to reach any conclusion as to the likelihood of a new funder being found. Mr Friedgut informed me that Mr Anderson would prosecute the proceedings without a funder if he could not find one.

The quantum of security sought

26. The active defendants seek security in the sum of $842,340.20 for their costs up to and including the conclusion of a 10-day hearing with senior and junior counsel. This sum includes an amount for costs incurred to date. As at the time of bringing the application, the active defendants had incurred costs of $477,537.40. However, they have proceeded on the basis that security for only half this amount, being $238,768.70, should be provided.

27. Somewhat unusually, the plaintiffs have not sought to challenge the plaintiffs’ estimate of costs. Their explanation, which is reasonable, is that they remain in a position of real difficulty in knowing exactly what the issues in dispute will be.

Should security for costs be ordered?

28. I would not have been willing to make an order for security for costs solely on the basis of the impecuniosity of the second plaintiff or on the basis of UCPR r 42.21(b) in respect of the first plaintiff.

Impecuniosity

29. The proceedings are to a significant extent brought to vindicate Mr Anderson’s personal rights as a former shareholder and director of Nominees and his rights as a party to the JVA. He is the sole director and shareholder of Beldev SA which, as the active defendants point out, is a company with no meaningful financial resources. But Beldev SA has not been put up as a front for Mr Anderson so as to shield him from the risk of running the proceedings. Beldev SA was itself a party to the JVA. It seems to be a necessary party to the proceedings and, if successful, may be entitled to significant compensation. Its claims seem to be very closely bound up with Mr Anderson’s claims. It is at this stage not possible to conclude that it stands in any materially different position than Mr Anderson so far as security for costs is concerned. I would not in these circumstances be prepared to make an order for security for costs on the basis of the impecuniosity of the second plaintiff.

30. Although not overtly identified as a basis upon which security for costs should be ordered, there was some suggestion by counsel for the active defendants that Mr Anderson was impecunious as well. To the extent that this was a discrete issue, I deal with it at [47] below.

UCPR r 42.21(b)

31. As to UCPR r 42.21(b), the active defendants have led evidence to show that Mr Anderson was not ordinarily resident at the address for service given in the originating process. It has also shown that at the time these proceedings were commenced, Mr Anderson was using as many as five separate addresses for ASIC records, not one of which was his usual place of residence. At that time, he seems to have been a director or shareholder of 18 companies.

32. The plaintiffs say that these concerns amount to nothing because the address provided in the originating application was the address of a residential property owned by Mr Anderson, albeit one that he was not living in. They submitted that all of the various addresses used by Mr Anderson were properties with which he had some connection at the time of providing the address.

33. Those submissions do not grapple with the issue. The requirement to nominate an address for service is important because it ensures that the defendant (and the sheriff, if need be) can actually find the plaintiff for the purpose of effecting service or enforcing orders. It is no comfort to a defendant to find that they have been given an address of a property owned by the plaintiff if the plaintiff cannot be found there.

34. However, there are other reasons why the failure to nominate an address is not of particular concern on this application. The rule requires that there be reason to believe that the plaintiff has mis-stated their address with an intention to deceive. Here, however, Mr Rappoport has given an explanation as to why the statement of claim came to include an address other than Mr Anderson’s principal place of residence. The explanation is rather thin, but it was not disputed. Mr Rappoport is instructed that Mr Anderson ‘will of course provide his current residential address to the Court, and if necessary, to the Defendants’ counsel, but will respectfully seek an order that the address be kept confidential and not disclosed to the Defendants themselves, and be kept [confidential] on the Court file’.

35. In these circumstances, I would not have been prepared to order security on the basis of UCPR r 41.21(b).

The Funding Deed

36. By far the weightiest consideration concerns the existence of the Funding Deed.

37. The plaintiffs accepted, appropriately, that the active defendants would have had excellent prospects of obtaining an order for security for costs against both plaintiffs if they had brought their application early on during the period in which the Funding Deed was still on foot. The fact that the defendants did not know about the Funding Deed at that stage is, according to the plaintiffs, the defendants’ own fault for not asking. They say that the position now is altogether different because the plaintiffs have purported to terminate the Funding Deed. In fact, they assert that they were never actually bound by it because of the outlandish terms in which it was drafted and because of the serious conflict of interest that existed as between Ms Nguyen and Mr Tan. Although they are currently seeking to secure a new funder, no such funder has yet been secured and so the Court should, they submit, proceed to determine the security for costs application on the basis that neither plaintiff has the backing of a funder. The plaintiffs lastly submitted that the application was not brought promptly and that any order for security would stultify the proceedings.

38. As I pointed out to the parties, there is an air of unreality about the bases on which I am asked to determine the application. As just mentioned, the plaintiffs urge me to proceed on the footing that they were never really bound by the Funding Deed, that there is no current funder, and there may or may not be a funder in the future. The active defendants, on the other hand, urge me to proceed on the footing that the litigation has been conducted on the basis of the Funding Deed and that the Funder remains entitled to the whole of the benefit of the Funding Deed despite having ceased to provide funding. They say that the litigation was and continues to be conducted for the benefit of the Funder.

39. I cannot accept that either position is entirely correct. The evidence does not permit me to conclude that the Funding Deed would be set aside on any of the bases suggested by the plaintiffs. Nor does the fact that the plaintiffs have purported to terminate the Funding Deed mean that it is appropriate to disregard its existence. The plaintiffs and their solicitor conducted the litigation for almost a year on the strength of it. The plaintiffs were unable to say whether the Funder had actually provided funds under the Funding Deed in the past. Whether and on what basis the Funder may continue to have claims against the plaintiffs is altogether unclear. I am not prepared to accept for the purposes of this application that the Funder remains fully entitled to all the benefits under the Funding Deed.

Resolution

40. The plaintiffs should be ordered to provide security but only in relation to half the costs incurred by the active defendants up to the time at which the application was brought. That is, they should be ordered to provide security in the sum of $238,768.70. I am not willing to make an order for security for future costs as matters stand. My reasons for reaching these somewhat unorthodox conclusions are as follows.

41. In Green v CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148, Hodgson JA said at [51]:

“…in my opinion a court should be readier to order security for costs where the non-party who stands to benefit from the proceedings is not a person interested in having rights vindicated, as would be a shareholder or creditor of a plaintiff corporation, but rather is a person whose interest is solely to make a commercial profit from funding the litigation. Although litigation funding is not against public policy ... the court system is primarily there to enable rights to be vindicated rather than commercial profits to be made; and in my opinion, courts should be particularly concerned that persons whose involvement in litigation is purely for commercial profit should not avoid responsibility for costs if the litigation fails.”

42. The Funding Deed in the present case is one that gave the Funder a very significant interest in the outcome of the litigation. Not only did it provide that the Funder would derive at least an equal share of any recovered amount, it also contained what amounts to a poison pill (see clauses 3.2 and 8.4) which would have provided a seriously pressing incentive to continue to prosecute the proceedings for the benefit of the Funder.

43. The fact that the Funder and the plaintiffs now seem to have parted ways does not alter the conclusion that the litigation was conducted almost from the outset on the strength of the Funding Deed. But for the Funding Deed, or some other funding arrangement, it is unlikely that the proceedings would have been prosecuted in the way they have been. Ms Nguyen, after all, was only willing to act on the basis of it.

44. It is ordinarily inappropriate to make an order for security for costs already incurred. The many and various reasons for that position are summarised in Ritchie’s Uniform Civil Procedure NSW at [42.21.16]. However, this case is somewhat unusual. The proceedings were commenced and costs were incurred in circumstances where the defendants, had they known of the Funding Deed, would have been entitled to obtain security for their costs. It is not their fault that they were unaware of it.

45. It is true that applications for security for costs should ordinarily be brought promptly. But the plaintiffs’ submission about delay is somewhat hollow given the circumstances that now exist. There is no doubt that the application would have been brought immediately if the defendants had known about the Funding Deed when it was first entered into. Because of the developments that have occurred since late March 2025, the defendants now find themselves defending proceedings on which they have spent considerable sums of money only to discover that the plaintiffs’ financial backer has pulled out.

46. The fact that the proceedings are brought by an individual plaintiff is one that I take into account. The Court is ordinarily very reluctant to make an order for security for costs against an individual. I note that UCPR r 42.21(1B) provides that mere impecuniosity of a natural person plaintiff is insufficient to ground an order for security for costs. However, the impecuniosity of a plaintiff is not an absolute bar to the making of an order. In Green v CGU Insurance Ltd, Hodgson JA set out at [7], without apparent demur, what the primary judge had said at [6] of his reasons, which was as follows:

“There is now no rule that the impecuniosity of a natural person plaintiff prevents the court ordering the provision of security for costs. The impecuniosity of the plaintiff is a factor to be weighed in the exercise of the discretion and is neither a sufficient condition for the ordering of security nor a sufficient condition for the Court to decline the order for security: Lucas v Yorke (1983) 50 ALR 228 at 228–9 (Brennan J); Morris v Hanley [2000] NSWSC 957 at [15]–[18] (reversed on appeal but not on this point [2001] NSWCA 374). This stands in contrast to the more rigid approach taken in Cowell v Taylor (1885) 31 Ch D 34 at 38 per Bowen LJ: ‘The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity’ and Greener v E Kahn & Co Ltd [1906] 2 KB 374 at 378.”

47. The fact that Mr Anderson has prosecuted these proceedings with the backing of the Funder is a matter that is significant in this regard. Individual plaintiffs have been ordered to provide security where the proceedings partly benefit a funder: Mitchell v Roads and Maritime Services (now known as Transport for NSW) [2022] NSWSC 500 (Ball J, as his Honour then was).

48. So far as future costs are concerned, however, the situation is different. I am not prepared to proceed on the basis that the proceedings are still being conducted for the benefit of the Funder. The plaintiffs have purported to terminate the agreement and they have no intention of incurring any costs in reliance on it. It is equally clear that, from this point onwards, the Funder has no intention to provide funding.

49. But nor would it be appropriate to proceed on the basis that the proceedings will from this point be conducted without financial backing.

50. In my view, it is appropriate to allow the plaintiffs the opportunity to determine whether a funder can be located. If they do locate a funder and if the terms of that funding are such as to engage the principles discussed in Green v CGU Insurance Ltd so far as future costs are concerned, then it may well be appropriate to make an order for security for future costs in the light of whatever interest that hypothetical future funder takes in the proceeds of the litigation. That, however, is something I am unable to determine based on the evidence as it stands.

51. In the circumstances, it is appropriate to allow the plaintiffs 56 days to provide security. This will give Levitt Robinson additional time in which to pursue discussions with funders.

52. It is regrettable that it may become necessary to deal with the question of security for costs in stages. However, there are two things to be said about this. First, it is often the case that security is ordered for particular stages of litigation. Secondly, the fact that the application was heard and determined at a point in time when the funding position of the plaintiffs is so uncertain is, in part, because the active defendants were not willing to allow their application to be deferred until such time as the plaintiffs and their new legal representatives were better able to meet the application. They were of course entitled to insist on their application being heard and determined promptly, but they must accept that the present (but hopefully temporary) uncertainty about the plaintiffs’ funding position has had a bearing on the exercise of my discretion to make the orders sought in relation to future costs.

53. The plaintiffs submitted that in lieu of an order for security, the Court should instead accept the undertaking of Mr Anderson to cause Benjamin SA Developments Pty Ltd (BSA) to provide an undertaking to the Court not to dispose, assign, transfer, mortgage, charge or deal with the shares which it owns in CPDH, which is the landowner of the Belconnen land the subject of the joint venture.

54. I am not prepared to resolve the issue on that basis. The evidence does not establish that the shares which BSA owns in CPDH would be sufficient to meet a costs order of any magnitude, including the past costs for which I propose to order security. In any event, such an undertaking would not amount to a promise by BSA to meet a costs order. Any such costs order would be made against Mr Anderson, who is the sole shareholder and director of BSA. Whether or not he would be entitled to call on the CPDH shares in order to meet such a liability was not the subject of evidence. His ability to do so would also depend on the financial position of BSA at the time.

55. Lastly, I do not accept that the order I propose to make would stultify the proceedings. A plaintiff who wishes to demonstrate that a security for costs order would stultify proceedings must do so by way of admissible evidence. The evidence here does not allow me to conclude that this will be the case. In any event, this submission also rings somewhat hollow in the circumstances. If by that submission they mean that the plaintiffs could never have afforded to bring the litigation to this point without a funder (who has now abandoned them), then that is a matter that only adds force to the defendants’ entitlement to security for the costs incurred thus far.

56. Finally, I note that my power to make the orders sought in relation to Mr Anderson is to be found in the inherent jurisdiction of the Court: see Rajski v Computer Manufacture & D**esign Pty Ltd [1982] 2 NSWLR 443 at 447-448. The power to make orders in relation to Beldev SA is to be found in s 1335 of the Corporations Act 2001 (Cth).

Orders

57. The orders of the Court will be as follows:

58. Order the first and second plaintiffs to provide security for the costs of the first to fourth and seventh defendants in the sum of $238,768.70.

59. Order that the security in Order 1 is to be paid by way of payment into Court or in such other form as is acceptable to the Court.

60. Order that if the plaintiffs do not provide security in accordance with Orders 1 and 2 above within 56 days from the date of these orders, the proceedings be stayed.

61. Order that the first and second plaintiffs pay the first to fourth and seventh defendants’ costs of and incidental to the application for security for costs.

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