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Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.21

Category: Procedural rulings

Parties: Michael Nathan Kerry (Plaintiff)
Morgan Evan Williams (First Defendant)
Giuseppe Palumbo (Second Defendant)
Zax Pty Ltd (Third Defendant)
Zax Pty Ltd as trustee for the Mojo Superannuation Fund (Fourth Defendant)

Representation: Michael Nathan Kerry (self-represented)
Counsel:
J Rogers / L Rivkin (Defendants)
Solicitors:
SBA Lawyers (Defendants)

File Number(s): 2026/00158399

Publication restriction: Nil

ex tempore JUDGMENT – revised

1. By Statement of Claim issued on 17 April 2026, the Plaintiff sues the Defendants for just in excess of $1 million being, as the Plaintiff describes it, “disgorgement of the full amount extracted from the Plaintiff above the principal advanced”. He makes an alternative claim, with which it is not presently necessary to deal, for a lesser amount.

2. The Defendants move by Notice of Motion filed 20 May 2026 pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.21 that the Plaintiff provide security for their costs of $150,000 by way of payment into Court. That rule says that if certain conditions are satisfied, the Court may order the plaintiff to give such security, and in such manner, as the Court determines.

3. UCPR r 42.21(1)(a) provides that:

[i]f, in any proceedings, it appears to the court on the application of a defendant…that a plaintiff is ordinarily resident outside Australia…the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant’s costs of the proceedings and that the proceedings be stayed until the security is given.

4. The application came before me on 1 July 2026 and I made directions to bring it to hearing. I referred the Plaintiff to the Registrar for referral to a barrister on the Pro Bono Panel for legal assistance (even though the Plaintiff has a law degree). I directed that the Plaintiff file and serve any evidence resisting the application for security by 21 August 2026. By consent, I varied that order in Chambers to extend the time to 2:00pm on 4 September 2026. I also made a guillotine order that evidence not filed in accordance with that order could not be relied on without leave. His evidence (an affidavit affirmed on 4 September 2026) was late by an immaterial margin. I gave him leave to rely on it. I directed the parties to email submissions to my Associate by 10:00am on 28 September 2026. The Plaintiff was a day late. I overlook this. Today, he sought to read an affidavit by his mother, filed on 29 September 2026. It was served out of time but the Defendants did not object to it being read and it was read.

5. The Statement of Claim runs to over 43 pages and is not without complexity. Some aspects of it may be described as novel. His case appears to be that some of the Defendants lent him money on terms which, by reason of their unequal bargaining relationship, the Plaintiff says he was “unable as a practical matter to refuse” and which enabled the Defendants to “extract” from him excessive interest and commission, which he wants back. By reason of the relationship between the Defendants amongst themselves, the Plaintiff says they are each jointly and severally liable to him. The causes of action include assertions of misleading and deceptive conduct and unconscionability. Part of the history is that the Plaintiff, as security for the loan, mortgaged his property at Maroubra, a beachside eastern suburb of Sydney, which property was sold and part of the proceeds used to repay the loan. By all accounts, the Plaintiff received something of the order of $1 million from the sale. What he did with that money (and whether he still has any of it), he has not revealed.

6. One factor in the exercise of the discretion whether to grant security for costs is the prospects of success or merits of the proceedings. The Defendants argue that security should be ordered because the Plaintiff’s case is weak. However, it is not possible at this stage to say how strong it is, save to state that it is complex and aspects of it might be novel. The Defendants drew attention to documents indicating that the Plaintiff had legal advice at the time of the conduct complained of. This may be something of a hurdle for him but it cannot be considered at this point to be an insuperable one. I observe that after I had referred the Plaintiff for assistance under the Bar Council’s pro bono assistance scheme, a barrister was assigned but the Plaintiff has apparently not taken advantage of this benefit.

7. I proceed on the footing that it cannot be said that the Plaintiff’s claim is unarguable or bound to fail.

8. The Plaintiff sought leave to appear at the directions hearing on 1 July 2026 remotely from the United States (which leave I granted) and he sought leave once again to appear remotely on this application. I granted it because by the time he made the application it was too late for him to get to Australia. Obviously, he has not been to Australia between the two dates.

9. The Plaintiff claims to be impecunious. He told me on a previous occasion that he could not afford a lawyer, which of course, with legal costs being what they are today, cannot be equated with impecuniosity. He says that he is living off his mother’s superannuation. She is supporting him and has paid legal costs incurred by him in the United States proceedings referred to below. But more importantly, he has not disclosed what happened to the money he got from the Maroubra sale and he chose not to comply with a Notice to Produce served on him by the Defendants for his tax returns here and in the United States, documents evidencing the posting by him of a bond for US$30,000 with the Los Angeles Superior Court and other documents concerning payments by him to American lawyers in not insubstantial amounts.

10. Finally, the Plaintiff does not work, although he could. He did not say that he cannot work in the United States. In fact, he has a visa which allows him to work, to which I will return shortly. He says he is devoting himself (apparently full time) to the legal proceedings in the United States. In all these circumstances, I am not satisfied that if he has to put up security for the Defendants’ costs, these proceedings will be stultified.

11. The Defendants also argue that the Plaintiff delayed in bringing proceedings. But no reason why this should play any part in the exercise of my discretion was articulated.

12. The central question to be determined is whether the Plaintiff is ordinarily resident in Australia.

13. I am satisfied that the Plaintiff is not ordinarily resident in Australia because:

14. he went to the United States in 2019, supposedly to work. He apparently met his ex-wife in Australia where she was working as a diplomat. Their child was born in the United States. He says that they had plans to come back. But their marriage has not survived and he is now embroiled in a fight with his ex-wife, who presently lives, with their child, in Puerto Rico;

15. he has been back to Australia only twice since 2019 and does not maintain a home here. When he visits he lives with his mother; and

16. he is embroiled in family litigation in the courts of California, which litigation is of uncertain duration, in connection with ongoing custody of his young son. There is a restraining order against the Plaintiff in that jurisdiction which will be in place, at least, until 2029. He says that he remains in the United States for the matters concerning his son, to represent him because he has no one representing him. He says that he will stay there until the complications with the mother of his child are unwound. This potentially means indefinitely. They may never be unwound. There is no suggestion, whatever else may be the case, that his son will be permitted to travel to Australia. He told me that he wishes to be with his son. This supports the conclusion that he is presently ordinarily resident there, not here.

17. It is worthy of observation that the Plaintiff hired immigration lawyers who set up a corporation in 2019 to sponsor him being in the United States on a visa, offering him a job to work there. No doubt to counter the suggestion that he is resident in that country, his explanation is, in effect, that his application was based on what might be described as a fiction. The paperwork was signed by a friend. There was no business and he was not paid for any work he did. This perhaps calls into question everything else he says but it is not necessary to go into that any further.

18. There is no reciprocal enforcement of judgment treaty with the superior courts of California. Enforcement of a judgment for costs there may be complicated, expensive and drawn out.

19. The Defendants’ estimation of their costs for these proceedings is of the order of $180,000. I think that is extraordinarily cheap. However, what I propose to do is to order the Plaintiff put up security of $30,000 to cover up to the filing of the Defendants’ Defence and any Cross-Claim and service of the Plaintiff’s evidence in chief, with liberty for the Defendants to apply for an uplift thereafter (which application will no doubt reveal the costs they will to that point have expended).

20. I propose to give the Plaintiff, however, liberty to apply for a variation of these orders if he establishes that the costs of enforcing an order against him for costs in the United States would be significantly less than the costs to the Defendants of litigating this matter in this jurisdiction.

21. I make the following orders:

22. Within 28 days, the Plaintiff is to provide security for the Defendants' costs of the proceedings in the amount of $30,000 by payment into Court, which is intended to cover the Defendants' costs up to the filing of their Defence and any Cross-Claim, and service of the Plaintiff's evidence in chief. If the Plaintiff fails to provide security in accordance with this order, the proceedings will be stayed.

23. The Defendants have liberty on not less than seven days’ written notice to apply for an uplift in the security after service of the Plaintiff's evidence in chief, without filing any further motion.

24. The Plaintiff has liberty on not less than seven days’ written notice to apply for a variation of these orders, upon him establishing that the costs of a reciprocal enforcement in the United States of an order for costs in favour of the Defendants in these proceedings would be significantly less than the costs to the Defendants of litigating the matter in this jurisdiction.

25. The Defendants are to file and serve their Defence and any Cross-Claim against the Plaintiff within 21 days after the provision by the Plaintiff of the security provided in these orders.

26. The Defendants' application for security for costs is otherwise dismissed.

27. The costs of this application will be costs in the cause of the proceedings provided that the Plaintiff provides security in accordance with these orders. If the Plaintiff does not comply, the costs of this application are reserved.

28. I stand the matter over to the Registrar in Equity's list on 25 November 2026 with liberty to apply on three days' notice.

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