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Representation: First Plaintiff (L Miller, director)
Second Plaintiff/Cross-Defendant (self-represented)
Defendant/Cross-Claimant (self-represented)

File Number(s): 2023/00238721

JUDGMENT

1. In my first judgment, delivered on 26 June 2026, I stood the proceedings over for directions at 9am on 10 July 2026 to hear the parties on the question of costs and to allow the parties to show cause why this matter should not be referred to the authorities for investigation: ELEM Investments Pty Ltd atf the Lisa Miller Family Trust v Starling [2026] NSWSC 721.

2. The show cause aspect was, in substance, directed towards the Plaintiffs.

3. When the matter reconvened for directions on 10 July 2026, both parties were self-represented. Counsel who had been retained to appear for the Plaintiffs at the hearing did not appear. Both Ms Miller and Mr Starling appeared via audiovisual link.

4. I propose to deal first with costs, and then to address the show cause issue.

Costs

5. The Plaintiffs failed in their proceedings. Costs should follow the event. The Defendant sought an order for indemnity costs, although he did not articulate any specific basis upon which such an order should be made. That does not, however, preclude the Court from making such an order if it forms the view that it is nonetheless appropriate.

6. The principles which inform the exercise of the Court’s discretion to award indemnity costs have recently been addressed by Peden J in Council of the City of Broken Hill v Redenbach Group Pty Ltd (No 2) [2026] NSWSC 367 at [32] as follows:

“1. The particular facts and circumstances must warrant the making of an order for payment of costs other than on the ordinary basis: see eg Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233 (Sheppard J) (Colgate).

2. Indemnity costs are reserved for ‘clearly exceptional cases’: New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469 at 494 (Kirby P). They are not to punish an unsuccessful party for pursuing a case that fails, but rather, seek to compensate a successful party fully for costs incurred, when the Court finds it was unreasonable for the other party to have subjected the successful party to the costs expenditure: Hamod v New South Wales (2002) 188 ALR 659 at [20] (Gray J, Carr and Goldberg JJ agreeing); Oshlack v Richmond River Council (1998) 193 CLR 72 at 89 (Gaudron and Gummow JJ).

3. An unsuccessful party must exhibit some ‘special or unusual feature’: Collier v Country Women’s Association of New South Wales [2018] NSWCA 36 at [117] (Gleeson JA).

4. It is insufficient to order indemnity costs solely on the basis that a witness is not to be believed or that their evidence is fabricated: see eg Roberts-Smith v Fairfax Media Publications Pty Limited (No 45) [2023] FCA 1474 at [10]-[11] where Besanko J cited Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1866 at [31]-[32] (Kenny J).

5. This usually concerns how the litigation was conducted, including the persistence of what should have been seen to be a ‘hopeless case’, where the unsuccessful party’s conduct was ‘unreasonable or delinquent’, or where a party incurs unnecessary expenses in meeting unmeritorious claims based on deliberate falsehoods and falsified records: see eg Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109 at [47] (Mitchelmore JA) (and citations therein); Foundas v Arambatzis (No 4) [2023] NSWSC 1648 at [18] (Rees J) (and citations therein).”

7. In applying these principles, I consider that a basis to order indemnity costs arises owing to three unusual features of the case:

8. the Plaintiffs sought, in effect, summary judgment, at least as to liability, in relation to the claims they made in paragraphs 30–44 of the Second Further Amended Statement of Claim under the heading “Breach of Fiduciary Duties / Breach of Trust / Fraud”. The Plaintiffs pursued that claim by submitting to the Court that the Defendant had failed to file a Defence to that version of the pleadings. Analysis of the court file, once judgment was reserved, revealed that contention to be wrong. That Plaintiffs who, at least at the hearing, were legally represented pursued a case founded upon such a fundamental error is highly unusual and contributed to a waste of the Court’s resources;

9. despite that error, the Plaintiffs marshalled no evidence in support of that claim in circumstances where no order had ever been sought (and hence made) to bifurcate the hearing between liability and damages. There was little point in pursuing the claim for breach/fraud (ie, paragraphs 30–44) in the absence of any evidence to establish any loss. To do so was futile and a waste of time, resources and costs; and

10. as to the claim concerning the alleged loan agreement and guarantees purportedly signed by the Defendant, for the reasons identified in the principal judgment, the Plaintiffs included in the Court Book multiple differently drafted and executed versions of the “First Loan Agreement”, “Second Loan Agreement” and “Third Loan Agreement”. It was not possible for the Court to determine which (if any) was genuine where not only were several versions of the same documents contained in the Court Book but, moreover, Ms Miller gave no explanation during the hearing about this welter of documentation.

11. One of the bases identified by Peden J arises where the unsuccessful party’s conduct is unreasonable or delinquent, or where a party incurs unnecessary expense in meeting unmeritorious claims based on deliberate falsehoods and falsified records. Because of the lack of explanation in relation to the multiple different copies of the aforesaid agreements, I consider the Plaintiffs’ conduct in pursuing such a claim to have been unreasonable or delinquent. I am unable to determine whether some or all of those documents were also falsified records. That is a matter that concerns the show cause issue, which I address next.

12. The Plaintiffs oppose the imposition of indemnity costs. In their eight-page written submissions prepared by Ms Miller in advance of the hearing on 10 July 2026, Ms Miller advanced a number of reasons why such costs should not be imposed against the Plaintiffs, namely:

13. the omission of the Defendant’s Further Amended Defence caused the Plaintiffs’ case to take “an ill-fated turn, with detriment”;

14. Ms Miller is already the subject of several costs orders made in favour of Mr Starling in other proceedings, and so the costs order could cause her to genuinely contemplate bankruptcy;

15. the preparation of the Court Book “should be regarded as falling outside of the Plaintiffs’ control”; and

16. the presentation of the Plaintiffs’ case was “not within the Plaintiffs’ control”.

17. I do not consider that any of these matters is a satisfactory explanation for the three features which I consider justify an order for indemnity costs.

18. I will award costs on an indemnity basis on the Plaintiffs’ claim. Costs will be awarded on the ordinary basis on the Cross-Claim, which was dismissed after it fell away because the Plaintiffs failed.

Show cause

12. At [194] of the principal judgment, I set out the authorities which establish that the Court is under a duty to refer proceedings to the appropriate authorities for investigation where a judicial officer believes that an offence or a possible offence has been committed in connection with the proceedings before the Court.

13. In that judgment, I considered in detail the different iterations of the “First Loan Agreement”, “Second Loan Agreement” and “Third Loan Agreement”, taken together with the competing evidence of the forensic handwriting experts, as well as what I consider to be explicitly different versions of Mr Starling’s purported signature. The sheer volume of differences between these documents, and the number of them—when only one signed version of each would ordinarily be expected, or two if the documents were exchanged—far exceed what one would expect.

14. Ms Miller included these various versions in the Court Book, and the Plaintiffs needed to rely upon at least one genuine version of each of these three documents to establish a prima facie claim. She was given the opportunity to address the Court orally as to how these versions could exist. She also took the opportunity to do so in her written submissions. At the stood-over hearing, Ms Miller seemed to suggest that she did not truly understand the nature of a show cause hearing. But I am comfortably satisfied, both from the explanation she received from the Court during the hearing and from the contents of her written submissions, that she did understand the issues, even if she may not have understood the potential consequences of any such referral.

15. No submission has been made to the Court which explains away the numerous different versions of the loan documents. On that basis, I am satisfied that it is appropriate to refer the matter to the Attorney General for his consideration as to whether there is evidence of an offence or possible offence committed in connection with these proceedings. This referral does not constitute a finding of misconduct by any person.

Orders and directions

16. For the above reasons, I make the following orders and directions:

17. The Plaintiffs are to pay the Defendant’s costs of the Plaintiffs’ claim on an indemnity basis.

18. The Cross-Defendant is to pay the Cross-Claimant’s costs of the Cross-Claim on the ordinary basis.

19. The Court directs the Prothonotary to refer the papers in these proceedings to the Attorney General for New South Wales for his consideration as to whether an offence has been committed in connection therewith.

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