Clifffall Pty Ltd v Wollongong City Council

What happened

Clifffall Pty Ltd appealed from Pike J's dismissal of its claims against Wollongong City Council and Transport for NSW. The dispute concerned undeveloped land at 339 Lawrence Hargrave Drive, Clifton. Clifffall alleged that construction of a cycleway and walkway in the road reserve obstructed access to the land, including vehicular access [2]. Its principal claim relied on a right of access said to arise under s 6 of the Roads Act 1993 (NSW), and it also advanced a nuisance claim in the alternative [2].

The appeal was narrow in the sense identified by Ball JA: its notice contained one ground concerning the primary judge's construction of s 6(2) of the Roads Act [3]. Section 6(1) provides an adjoining landowner with a right of access across the boundary between the land and a public road. Section 6(2) says that the statutory right does not derogate from common-law access rights, but that “those rights” are subject to restrictions imposed by or under legislation or law [4]. The primary judge had followed Thomas v Symons and Tanner v The Minister for Education and Training, construing “those rights” to include the right in s 6(1), with the consequence that it was subject to the Council's power under s 138 to carry out work in, on or over a public road [5]. The Court of Appeal was not deciding that appeal in this judgment. It was deciding the Council's interlocutory application for security.

The Council sought security for its appeal costs under UCPR rr 51.50(1) and 42.21 and s 1335 of the Corporations Act 2001 (Cth) [1]. The appeal's competence had initially been questioned because both sides asserted that the land was worth less than $100,000, the threshold mentioned in s 101(2)(r) of the Supreme Court Act 1970 (NSW). Clifffall produced evidence that the land had been worth $500,000 when it had vehicular access and was then worth $50,000 after construction. The judgment records that this provided evidence that the amount in dispute exceeded the threshold, after which appeal-book directions were made [6].

Clifffall had nominal paid-up share capital of $20 and held the land as trustee of the Clifffall Trust [7]. Its director, Peter Khouri, gave an undertaking to guarantee any costs award against Clifffall, consent to personal liability jointly and severally, and become a party for matters arising from the undertakings [7]. The financial evidence was imperfect. An initial accountant's certificate stated net assets of about $7 million, but that figure related to Mr Khouri and associated entities. A later certificate put his net assets at $3,188,270, including a property and a loan to a related company, less a bank loan [8]. The Court noted that the Council had no primary records giving a clear picture of Mr Khouri's and related entities' finances [21].

The appeal was substantially advanced: appeal books had been prepared and the hearing was listed for 9 July 2026 [10]. The Council estimated its appeal costs at $83,000 plus GST, made up of solicitor and counsel estimates, and provided an estimate of $8,000 plus GST and disbursements for the security application [9]. Ball JA dismissed the motion with costs [22].

Why the court decided this way

The Court treated s 1335 and UCPR r 51.50 as separate routes to security. Under r 51.50, security is available “in special circumstances”. Ball JA set out the principles summarised in Preston v Harbour Pacific Underwriting Management Pty Ltd, including that impecuniosity alone will usually not suffice, that a hopeless or harassing appeal may justify an order, and that an order should usually not stifle a bona fide, reasonably arguable appeal [11]. Public interest in the subject matter may also weigh against an order that would stifle the appeal [11].

Section 1335 provided a separate and independent statutory basis for security against a corporate appellant [14]. The Court said that the principles applicable to s 1335, rather than those governing r 51.50, determine an application under the statutory provision. Rule 51.50 does not constrain s 1335 [15]. Ball JA accepted that the s 1335 threshold had been satisfied and that special circumstances were not required to obtain security under that provision [17]. The refusal therefore did not rest on a finding that the statutory threshold failed.

Instead, the Court considered several matters cumulatively. First, it assessed the appeal as having reasonable prospects of success and accepted that it raised a question of some public importance because the scope of s 6 of the Roads Act had consequences beyond the parties' dispute [18]. The judgment cites Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Limited as support for treating public importance as a reason to refuse security [18]. This assessment concerned the security application; it was not a final determination of the appeal ground.

Second, the appeal was well advanced, and Clifffall had already incurred significant costs [19]. The judge considered it inappropriate to put Clifffall in the position of either providing security or discarding those sunk costs [19]. This was a practical assessment of the potential effect of the security order in the case before the Court.

Third, the Council's costs estimates were scrutinised against the work described and the appeal's scope. Ball JA considered that the appeal would likely take no more than half a day and involved only the construction of s 6 of the Roads Act. In that context, the estimate of $75,000 plus GST appeared excessive. The judge also queried why two counsel were required and why solicitor costs were estimated at $30,000 when the appellant was responsible for preparing the appeal books [20]. The information did not explain the anticipated work and costs solicitor by solicitor. The judge therefore considered likely recoverable appeal costs to be substantially lower than $75,000 plus GST [20].

The costs of the security motion were also relevant to proportionality. The judge accepted the estimate of $8,000 for the solicitor work on the motion as not unreasonable, but observed that the estimate did not include counsel fees [20]. The judgment states that applications for security on appeal should be discouraged where the appeal has reasonable prospects and the application's costs are not justified by the amount of security likely to be awarded [20].

Finally, the undertaking and financial evidence were weighed together. The initial certificate had been misleading because it included Mr Khouri and entities associated with him, rather than his assets alone. The Court nevertheless noted his property interest, the substantial loan owed to him by a related entity, possible other resources, and the incentive created by the prospect of bankruptcy to meet a costs order [21]. It acknowledged the absence of primary financial records, but treated that gap in the context of the amount in issue and noted there was no evidence the Council had sought further information after receiving the second certificate [21]. The Court concluded that the undertaking provided adequate security in the circumstances [21].

Before and after state of the law

The judgment does not purport to change the legal test for security for costs. It summarises the existing r 51.50 principles through Preston, including the need for special circumstances and the usual reluctance to make an order that would stifle a bona fide, reasonably arguable appeal [11]. It also notes that matters said to constitute special circumstances may bear on the residual discretion [12].

For applications under s 1335, the judgment emphasises the distinct statutory route. Citing Winnote Pty Ltd (in liq) v Page and Pioneer Park Pty Ltd (in liq) v ANZ Banking Corporation, it states that s 1335 is independent of r 51.50 and that the latter rule does not constrain the operation of the statutory provision [14]-[15]. Ball JA accepted the s 1335 threshold but did not treat that as automatically requiring security. The decision illustrates that, even after the threshold is crossed, the Court considers whether security should be ordered in the circumstances [17]-[21].

The judgment's treatment of the appeal's public importance and prospects is also case-specific. It regarded those features, the appeal's advanced state, the estimate of costs, and the undertaking as reasons that collectively supported refusal [18]-[21]. It does not establish that any one feature necessarily determines an application or that a director's undertaking will always be adequate. Nor does it decide the substantive construction of s 6 of the Roads Act. It records the primary judge's construction and the appeal ground, but the present ruling is confined to the motion for security [3]-[5].

Accordingly, the “after” position shown by this decision is an application of the existing principles to the particular record, rather than a stated alteration of doctrine. Any broader account of the state of the law would require sources beyond this judgment.

Key passages with plain-English translation

At [17], Ball JA accepted that the s 1335 threshold was met, while also stating that special circumstances were not necessary under that section. In plain English, the Council had satisfied the initial statutory basis for asking for security, but that did not end the Court's consideration of whether to make an order.

At [18], the Court said the appeal had “reasonable prospects of success” and raised a question of “some public importance”. The reasoning was not that Clifffall had already won its appeal. Rather, these were factors that weighed against requiring security, given the consequences of the interpretation of s 6 beyond the immediate dispute.

At [19], the judge noted that the appeal was substantially advanced and that the appellant had already incurred significant costs. The practical point was that an order could force Clifffall to abandon an appeal after spending considerably on it.

At [20], the judge considered the appeal-cost estimate excessive and insufficiently explained. The appeal concerned one statutory construction issue and was likely to take half a day. The Court questioned the need for two counsel and the solicitor estimate, especially given that Clifffall was preparing the appeal books. In plain English, the amount sought needed to be assessed against the work apparently required, not accepted merely because it was estimated.

At [21], the judge said Mr Khouri's undertaking provided adequate security “in the circumstances”. That qualification matters. The Court relied on the evidence available about property, the related-company loan, other possible resources and the incentive to meet a costs order, while acknowledging the evidentiary gaps. The passage should not be read as a general rule about director undertakings.

The final order at [22] was that the Council's motion be dismissed with costs. This determined only the security application. The supplied judgment does not determine the appeal itself.

What fact patterns trigger this precedent

This ruling is most directly relevant to an application for security for costs of an appeal where the appellant is a corporation and the respondent relies on both the appellate rule and s 1335 of the Corporations Act. It specifically addresses the distinction between the two routes: special circumstances under r 51.50, and a separate statutory threshold under s 1335 [11], [14]-[17].

The features that mattered in this case included a single, reasonably arguable appeal ground; a question the judge accepted as having public importance; an appeal that was substantially prepared and listed for hearing; and costs already incurred by the appellant [18]-[19]. The Court also scrutinised whether the respondent's forecast costs were proportionate to the appeal's scope and sufficiently explained [20].

The decision may also be relevant where a director provides an undertaking to meet a corporate appellant's costs liability, supported by some evidence of assets but not a complete set of primary records. The judgment considered the undertaking alongside its context, including the nature of the asset evidence, the potential for access to a related-company loan, and the amount in issue [21]. It did not announce a standard evidentiary checklist or say that such an undertaking invariably removes the need for security.

The ruling is less directly informative about cases involving a hopeless or abusive appeal, a lengthy appeal with extensive evidence, materially different costs estimates, or no undertaking. Those circumstances are not decided here. The reasons also do not determine the substantive access rights of adjoining landowners under the Roads Act.

How later courts have treated it

The supplied judgment contains no later decisions discussing or applying Clifffall Pty Ltd v Wollongong City Council [2026] NSWCA 82. It therefore does not establish how later courts have treated this ruling, whether they have followed or distinguished it, or whether subsequent authority has qualified its reasoning.

The authorities that the judgment itself cites are earlier authorities. Preston supplies the summary of principles relating to r 51.50 [11]. Brown is cited for the relationship between special circumstances and the residual discretion [12]. Winnote and Pioneer Park support the separate operation of s 1335 [14]-[15]. Merribee is cited in relation to public importance as a reason for refusing security [18]. Thomas and Tanner appear in the background as decisions followed by the primary judge when construing s 6(2) [5]. The present judgment does not state that it decides, approves or rejects the underlying construction in those cases.

A reliable account of subsequent treatment would require later judgments or a current legal research source. No such later sources are included in the material analysed here.

Still-open questions

The judgment leaves the substantive appeal unresolved. In particular, it does not decide whether “those rights” in s 6(2) of the Roads Act refers only to common-law rights or also includes the right conferred by s 6(1) [4]-[5]. That construction question was the single ground identified in the notice of appeal [3].

The judgment also does not set a general method for quantifying appropriate security where a respondent's costs estimate appears excessive. Its reasoning turns on the particular estimates, the appeal's single issue, the likely half-day hearing and responsibility for preparing the appeal books [9], [20]. It does not prescribe a tariff, formula or evidentiary standard for future estimates.

Nor does it determine what level of financial disclosure is sufficient when a director provides an undertaking. The Court expressly noted the absence of primary records but assessed that shortcoming in context [21]. The decision does not say what result would follow if the undertaking were absent, the assets were materially less accessible, or the likely costs were substantially higher.

Finally, although the Court accepted that the s 1335 threshold was satisfied and refused security after considering the circumstances, the extract does not attempt an exhaustive account of the discretion under that section. It records the principles and authorities relevant to this application, not every possible factor in other corporate appeals [14]-[17].

This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have a qualified Australian lawyer check it.