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JUDGMENT

1. This is an application by the respondents to an appeal for an order that the appellants provide security for the respondents' costs, and for other orders. The appeal is against the decision of Robb J in Reliance Financial Services Pty Ltd v Antalija Developments No 4 Pty Ltd [2022] NSWSC 519 dated 2 May 2022. Two days have been reserved for its hearing, being 27 and 28 February 2023.
2. The appellants filed a notice of appeal on 13 July 2022 but the respondents, in my opinion for good reason, objected to its competency in light of the existence of a number of matters that were left outstanding by the primary judge. The appellants' application for leave to appeal was filed on 31 August 2022. The hearing in February 2023 is to be a concurrent hearing. The respondents' notice of motion seeking security was not filed until 5 October 2022 but they had foreshadowed an application by a letter of 29 July 2022.
3. In these circumstances, I do not consider that the respondents' application is sufficiently late to warrant refusal but its timing and the imminence of the appeal hearing are reasons to confine any order for security for costs to costs not yet incurred, as usually occurs (see The Cleaning Doctor NSW Pty Ltd v Fonseca [2022] NSWCA 157 at [52]-[53] per Leeming JA; In the matter of Australian Style Holdings Pty Ltd as trustee of The Australian Style Investments Unit Trust [2018] NSWSC 1368 at [41] per Black J).
4. The dispute which gave rise to the proceedings at first instance concerned the financing of a property development in the Australian Capital Territory. The development was undertaken by the second respondent, Antalija Developments No 4 Pty Ltd, ("Antalija Developments") as trustee of the Antalija Unit Trust in which the first respondent and his mother held units, each for another trust. The second appellant, Ms Nancy Morvillo, who is the sister of the first appellant, Mr Sam Cassaniti, was also a unit holder, in her case as trustee for the Cassaniti Discretionary Trust. The primary judge found that Ms Morvillo held her units as "de facto nominee of Mr Cassaniti".
5. The principal issue in the proceedings was who, and on what basis, made a contribution of $2.25 million to Antalija Developments towards the costs of the development. The Cassaniti interests put forward two bases. The first basis relied upon the "Development Funding Agreements" which were found by the primary judge to be fabricated by Mr Cassaniti, or to contain signatures procured by his subterfuge. The second basis relied upon a Unit Holders Agreement which the Katavic interests successfully contended was made by reason of misleading and deceptive representations by Mr Cassaniti. The primary judge declared the relevant provisions of the Unit Holder's Agreement void ab initio and dismissed Ms Morvillo's claim.
6. There were also allegations before the primary judge that Antalija Developments had breached its duties as trustee of the Antalija Unit Trust in three respects. His Honour rejected the first allegation and deferred consideration of the others.
7. The appeal grounds set out in the Notice of Appeal focus on the primary judge's finding that Mr Cassaniti's representations concerning the Unit Holder's Agreement were misleading or deceptive inter alia because they described the agreement as "standard" or "simple", when it was not. The appellants challenge this finding and those concerning what Mr Katavic is likely to have done but for the representations and what loss, if any, the respondents suffered. I accept, as the appellants submitted to me, that it is at least strongly arguable that they can advance these arguments without challenging the primary judge's adverse credit findings concerning Mr Cassaniti, which they do not seek to do.
8. It appears to me that the appellants are probably also able to challenge on appeal, without challenging the adverse credit findings, the remaining findings which are the subject of the Notice of Appeal, being those relating to the character and consequences of the payment of $2.075 million to Antalija Developments.
9. Whilst the respondents contended that the appeal was "weak", I am not in these circumstances able to treat it as other than reasonably arguable. I would have taken a different view if, as the respondents contended, it would be clearly necessary for the appellants to challenge the primary judge's credit findings in order to succeed on the appeal (see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22).
10. Other matters upon which the respondents relied to establish "special circumstances" for the purposes of r 51.50 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") were: 1. "[T]he appellants bring the concurrent appeal in a representative capacity for the beneficiaries of a discretionary trust known as the Cassaniti Discretionary Trust." 2. "[I]t is unlikely that the appellants and/or any assets of the Cassaniti Discretionary Trust will be able to satisfy an adverse costs order in the concurrent appeal." 3. "[T]here is no evidence that an order for security for costs would stifle the concurrent appeal."
11. The appellants accepted by letter to the respondents that Ms Morvillo sues only in her capacity as trustee of the Cassiniti Discretionary Trust. Mr Cassaniti was not a party to the proceedings below otherwise than as a cross-defendant on a cross-claim alleging that he engaged in the misleading and deceptive conduct referred to above. Whether he has the ability to meet a costs order is not known but the respondents identified the following matters as relevant to their lack of confidence that he would be both willing and able to pay costs: "a. Mr Cassaniti was declared bankrupt in April 2007 for a period of 10 years. The NPII search in respect of his bankruptcy… identifies multiple objections to his discharge, including on the basis of failure to disclosure particulars or income or expected income; b. Mr Cassaniti was convicted of 23 criminal charges of defrauding the Commonwealth in relation to false claims for tax deductions by his accounting clients… Further, he has also been convicted of numerous charges concerning improper governance of corporations (failure to submit reports as to company affairs, failure to submit books and records, disqualified person managing corporation):… and c. In the court below, the primary Judge concluded that Mr Cassaniti either fabricated the purported 'Development Funding Agreements' or procured Mr Katavic's signatures on them by subterfuge… Those documents were the basis of the plaintiffs' primary claim in the proceedings below and the freezing orders, under which the first plaintiff claimed debts of over $4 million (though the claim was abandoned at trial during Mr Cassaniti's cross examination)".
12. As far as Ms Morvillo is concerned, her financial position is unknown other than that it can be inferred that she has a right as trustee to be indemnified in respect of her costs liabilities by the Cassaniti Discretionary Trust, which in turn has a 25% interest in the Antalija Trust. If, as is appropriate, the situation is considered on the assumptions that the respondents are successful on appeal, obtain a costs order relating to the appeal and retain the costs order concerning the proceedings at first instance, it would seem on the evidence that there would be little if any money in the Antalija Trust to satisfy Ms Morvillo's assumed right of indemnity.
13. As to the third matter referred to in [10], the absence of a contention by the appellants that the appeal will be stultified if they are ordered to provide security for costs is not of itself a "special circumstance" so as to justify a security for costs order. Rather, if such a contention had been made, it might have provided a reason for refraining from making a security order if the basis for it were otherwise established.
14. Considering these various matters together, my conclusion is that the fact that the principal appellant, Ms Morvillo, is bringing the proceedings in a representative capacity and that there is reason to doubt her ability to satisfy an adverse costs order, taken together with the circumstances referred to in [11] above suggesting a basis for real doubt as to the respondents' ability to enforce a costs order against Mr Cassaniti are sufficient to constitute special circumstances for the purposes of UCPR r 51.50 and lead me to make an order for security for costs. As I indicated above, I would however only be prepared to order security for future costs.
15. The appellants have provided a commentary on the respondents' estimate of costs which I have taken into account. Using a broad brush approach and confining the costs to future costs, I adopt an amount of $75,000 which is close to the amount identified by the appellants as a "not… unreasonable figure".
16. Further orders sought by the respondents' notice of motion arise out of asset preservation orders made at first instance. These were made by Kunc J on 26 November 2019 and were varied by his Honour and by Pembroke J on 29 November 2019 and 13 December 2019 respectively.
17. In his principal judgment of 2 May 2022, Robb J concluded that the plaintiffs in the proceedings before him, who included Ms Morvillo, "appear[ed] to have misled Kunc J on the grounds that they put forward [matters] ex parte that persuaded his Honour to make the asset preservation orders". In consequence, and as a result of the respondents' success on the matters that were determined by his Honour on 2 May 2022, his Honour discharged the orders on 15 June 2022.
18. It should follow that funds paid into Court pursuant to the asset preservation orders (presently totalling $1,022,846.70) would be paid out to the Antalija Unit Trust but Antalija Developments does not seek a general order to that effect at this stage. Instead, it seeks a more limited order permitting it to use those funds, and any other assets of the Antalija Unit Trust, for the purpose of payment of its reasonable legal fees of the proceedings. It seeks such an order because in the course of the hearing at first instance, when the asset preservation orders were on foot, it gave an undertaking that it would not use any of the funds of the Unit Trust for that purpose unless and until authorised by the Court. There is no reason now to hold the Trust to that undertaking. Accordingly, I propose to make appropriate orders as sought by the respondents but I point out that they are made in recognition of the absence of any reason having been established before me for imposing or retaining a relevant restriction. It does not involve an expression of this Court's view, one way or the other, as to whether any particular expenditure, or the use of the Trust funds for payment of the trustee's legal costs of the proceedings, is authorised or justified.