Salmon v Albarran

Consideration

The respondents contend that special circumstances, warranting an order for security for costs, are established and that an order for security for costs should be made having regard to the following matters. 1. Whilst the respondents do not accept that the appellants are impecunious, they say that if the Court accepts Mr Salmon's evidence in this regard, then it follows that they are unlikely to recover past or future legal costs incurred irrespective of the outcome on appeal. Further, the respondents contend that the appellants' contention that their impecuniosity was caused by the respondents is contrary to the findings of the primary judge and unsupported by evidence: see eg Aquatic Air Pty Ltd v Siewert [2016] NSWCA 130 at [22] (Macfarlan JA). 2. The appeal grounds lack any real prospects, lack precision and by their sheer number call essentially for a retrial of the case before the primary judge. In this way, they contend, the grounds of appeal are oppressive and harassing. Further, they contend there is likely to be a process of revision of the grounds of appeal, akin to the revisions to the statement of claim in the proceedings at first instance, leading to significant cost to the respondents: see eg Ballard at [27]. Indeed, at the hearing of the applications Mr Salmon foreshadowed that there would be further revision of the grounds of appeal. 3. The position as to the appellants' financial position is unsupported by any documentary evidence other than two tax returns and one screenshot of what appears to be a Commonwealth Netbank webpage on 11 March 2024. Whilst Mr Salmon has prepared an estimate of the appellants' assets and liabilities, he has not provided any proof of the matters set out in that document. This falls short of proving that the appellants will be unable to meet an order for security for costs. 4. The appellants' evidence falls short of the requisite level of candour and does not in any event prove that an order for security for costs would stifle the appeal. They say that Mr Salmon's evidence as to stultification goes no higher than what is set out in the First Salmon Affidavit: "23 It is unlikely that the Appellant's can provide Security for Costs. I have relied upon generosity of friends to continue this legal fight and have yet to pay those people back. 24 Making the orders sought by the Respondents may well stifle a more than reasonably arguable appeal..." 1. Whilst in the past Mr Salmon had claimed that an order for the immediate payment of costs would, or at least might, result in the proceedings being stultified, those orders were made and "no problem arose": Salmon v Albarran (No 4) [2022] NSWSC 114 at [4]-[5] and Stein Affidavit at [35]-[37]. They contend that Mr Salmon has been able to come up with money when required to do so, either to pay lawyers' fees or where he is required to do so in order to enable the proceedings to progress. They submit that it is not clear where Mr Salmon gets this money from. It is now apparent that Mr Salmon intends on briefing counsel for the appeal but, the respondents submit, there has been no explanation as to how this will be funded and how this fits with Mr Salmon's evidence as to the appellants' lack of financial resources and the likelihood of stultification. 2. No matter of public importance arises in any event.
In response, in summary (and without attempting to be comprehensive) the appellants contend the appeal grounds are strong and obviously so, there are "serious errors" in the judgment of the primary judge, the "number of material errors by the lower court are not going to be controversial", and there is a strong public interest in the appeal progressing given that there should have been a finding against the respondents for serious professional misconduct.
Mr Salmon took the Court to some of the grounds of appeal during the course of his oral submissions, and also included submissions as to the strength and obvious correctness of some of his grounds of appeal in his written submissions. I have taken these submissions into account.
The appellants contend that "it should be uncontroversial both are impecunious", their financial problems were caused by the respondents, and if a "substantial amount of funds" are ordered into court that will stifle the appeal and say they "simply can't pay". Mr Salmon has not worked since Christmas 2023, has significant debt and does not own any property. There are no special circumstances. They submit, further, that the respondents' estimates of the costs of the appeal are unreasonable and excessive "in a significant way".
As to stultification, the appellants contend that it is clear that an order for security for costs in the sums sought by the respondents would stultify the proceedings. They contend, however, that a relatively small sum could be met by the appellants. They contend that where they had to, they met costs orders at first instance through loans or through a payment from the estate of Mr Salmon's father, but that such funds would not be available to meet the substantial orders for security for costs sought by the respondents.
As to candour, Mr Salmon submitted from the bar table that he could not have done more than he has, and also expressed some concerns (unsupported by affidavit evidence) at disclosing private information to the respondents. When asked by the Court why he had not disclosed documents which supported his affidavit evidence about paying counsels' fees at first instance from borrowed funds, he said that no documents were available which matched up loans and payments to counsel. He contended that his own affidavit evidence as to the appellants' impecuniosity, as to loans not being available to meet security for costs, and as to him not currently speaking to his former solicitors, James Legal, should be sufficient to satisfy the Court as to these matters. When asked about the lack of evidence he had provided to satisfy the Court that the single payment of $89,824 on 26 November 2021 was from his father's estate, he simply told the Court from the bar table that the name on his bank statement against that entry was that of the solicitor responsible for his father's estate. He relied also upon the failure of the respondents to seek to cross-examine him on his affidavit evidence.
In my judgment the requirement of special circumstances is satisfied in the present case.
First, whilst impecuniosity is not sufficient, and it is difficult to be clear as to the true position in relation to Mr Salmon's financial resources for the reasons advanced by the respondents, there is a real likelihood, having regard to Mr Salmon's evidence, that the respondents will not recover their costs below or their costs of the appeal in the event that the appeal is dismissed. Even if the appellants succeed on one or more grounds of appeal, there is a real possibility that the respondents will still be entitled to some of their costs on appeal given the multitude of grounds of appeal advanced by the appellants. As to this, the respondents have already spent in excess of $1.5 million between them in the proceedings below, and on any view the appeal is likely to be lengthy and expensive, requiring significant time by way of preparation.
I am not satisfied that the appellants' financial position was caused by the conduct of the respondents. Notwithstanding his rejection of the appellants' contentions on liability, the primary judge separately considered the appellants' contentions as to causation. His Honour rejected the contention that the respondents' conduct caused financial loss to the appellants. Whilst the appellants contend, on appeal, that these findings are erroneous, I am not satisfied, on the evidence before me, that the respondents' conduct was the cause of the appellants' current financial circumstances.
Second, even if Mr Salmon does narrow his grounds of appeal to eliminate duplication, this will be an appeal of exceptionally broad scope. The 62 grounds of appeal currently advanced in the amended notice of appeal encompass some matters of very wide ambit. By way of example, ground 1 alleges that the primary judge "erred in making certain findings of fact in which he stated, as findings of fact, certain matters that are contrary to the underlying evidence" but does not specify what those findings are. Ground 12(a) alleges that the primary judge erred by making general credit findings against Mr Salmon that were not supported by the evidence generally. Ground 16 alleges, in general terms, error in "applying generally his own rules inconsistently" as regards Mr Albarran's credit and includes one particular but only by way of example. Further, a very significant number of findings of fact and credit are directly challenged by the grounds of appeal. Each of the 92 separate sub-grounds of ground 25 challenges a separate finding of fact, and this is not the only ground of appeal challenging factual findings. I do not accept Mr Salmon's submission, that these challenges will be resolved simply by reference to one single document, as he put it, "the document says it's black, the judgment says it's white". In my judgment, most if not all of these challenges will likely require detailed consideration by reference to the evidence as a whole.
The amended notice of appeal is unfocussed and unduly broad, seeking to challenge nearly every finding of fact or law of any significance. Given the extent of the challenges, there is a very significant risk that, as was held in Ballard at [28], costs will be unnecessarily incurred by the respondents to the appeal, "in the sense that if the appeal were confined to more narrow grounds of appeal those costs would be minimised".
Third, whilst this is not an occasion for a detailed examination of the merits of the many grounds of appeal, it is fair to say that the appellants will need to overcome a series of factual and legal hurdles in order to succeed in this appeal. The appellants will face the usual threshold for overturning findings of fact on appeal, including the primary judge's findings as to credit, when the primary judge's findings were likely influenced by his impressions of the various witnesses giving oral evidence: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. In addition, the primary judge identified multiple, independent, reasons why the primary claim of breach of fiduciary duty should fail, including because there was no breach as regards Mr Albarran (although there was as regards Mr Brown), fully informed consent was given by the appellants, there was no dishonesty by either Mr Brown or Mr Albarran, and in any event there was no loss caused by the alleged breaches. As is apparent, the appellants will need to overturn numerous significant findings in order to succeed on appeal.
Acknowledging that any reliable assessment of the merit of the grounds would require consideration of material that was not before the Court, I do not accept Mr Salmon's submission that the appellants are advancing grounds of appeal which are obviously correct.
Fourth, I would reject the contention that these proceedings are of public importance. The fact that the allegations are made against professionals does not elevate the significance of the proceedings in that regard.
Finally, I am not satisfied that Mr Salmon has been candid about the appellants' financial position and the position of third parties who may stand behind this litigation or who stand to benefit from the successful prosecution of this appeal. It was well within Mr Salmon's power to adduce evidence to explain the sources of funds that he has accessed through the course of these proceedings and to explain the basis of his assertion that funds will not be available to meet any significant order for security for costs. This could have been done through the tender of documentary evidence going to such matters, including as to the money which he says came from his father's estate and by affidavit evidence from those who he says have in the past provided significant funding for the purposes of this litigation and from the solicitor for his father's estate. He did not do so. As set out above, it is insufficient for the appellants simply to make assertions as to their financial resources in affidavit evidence and leave it to the respondents, if given leave to do so, to cross-examine.
Mr Salmon was also unwilling to provide the documents sought by the Notice to Produce up until the hearing of these applications in circumstances in which he relied upon matters to which they relate in resisting the applications for security for costs. Moreover, the documents produced to the Court, and tendered by Mr Salmon, at the hearing on 6 May 2024, fall well short of displaying the candour expected in the circumstances. As to this: 1. No documents were produced to explain how Mr Salmon met counsels' fees for the proceedings at first instance, including the eight-day hearing before the primary judge and what is likely to have been significant time spent in preparation for that hearing. This is in circumstances in which the fee disclosures for counsel who appeared for the appellants below were tendered by Mr Salmon, showing that the combined daily rate for his senior and junior counsel in those proceedings was in excess of $14,000 plus GST per day in court. Counsel were not acting on a conditional fee basis. It thus appears that Mr Salmon was able to meet very significant fees of counsel below. He has not offered any explanation to the Court as to how he was able to do that (or whether the fees of his two counsel at trial were "part paid", noting that he generically described counsels' fees as "part paid" in the First Salmon Affidavit at [15]), beyond the assertion that funds were borrowed and have now "dried up", at [15] of the First Salmon Affidavit, and the following advanced by way of submission at the hearing on 6 May 2024: "You know, there aren't loan agreements. These are friends that just said, 'Okay, how much do you need?' and I've put on a sob story. That's essentially it. All of who are very unhappy with me, I've got to say." 1. In response to the Notice to Produce Mr Salmon did not produce any bank statements, correspondence or other documents which supported his affidavit evidence as to how counsels' fees were met, notwithstanding that paragraph 8 of the Notice to Produce sought such documents. His response was that he had nothing to produce in respect of that paragraph. 2. The appellants have not explained how their ability to meet counsels' fees at first instance is consistent with the position Mr Salmon put to Parker J on 20 September 2021 (as recorded in Salmon v Albarran (No 3) at [14]): "Mr Salmon stated that he is now dependent on Centrelink benefits and has funded the disbursements in the proceedings (together, presumably, with the $10,000 paid to the liquidator of TCBS) with loans from family and friends. He stated that this has caused friction and no further funds are available. He stated that he has no money to pay the costs which may be awarded in the defendants' favour and asserted that, if the Court makes orders of the type sought by the defendants, the proceedings will be, or are likely to be, stultified, because he will be unable to pursue them." 1. Whilst that was some two years before the substantive hearing before the primary judge, the appellants have not adduced any evidence to explain how it was that loan funds were available to meet counsels' fees when Mr Salmon said that no further funds were available in late 2021. In this regard it should be noted that Mr Salmon's affidavit evidence is that he has been "impecunious throughout these proceedings". 2. It is also apparent that, after Parker J ordered that leave to amend the statement of claim was conditional upon the appellants paying the respondents' costs in September 2021, the appellants were able in 2021-2022 to make payments to the respondents of some $125,000. Mr Salmon stated in the First Salmon Affidavit that these payments were made out of a disbursement of approximately $89,000 out of his father's estate, his father having died in May 2021. He has not explained whether he knew that he was entitled to this money at the time of the hearing before Parker J on 20 September 2021, referred to above. Bank statements produced in response to the Notice to Produce show a transfer to Mr Salmon's bank account on 26 November 2021 of $89,824.75, and the transfer has the description: "Direct Credit 301500 Yvonne Derbyshir", but there is no evidence other than Mr Salmon's assertion in the First Salmon Affidavit to establish that this was a distribution from his father's estate. From the bar table, Mr Salmon said that Ms Derbyshire was the solicitor for his father's estate, but again, there is no evidence to support this assertion. Further, whilst Mr Salmon said in the First Salmon Affidavit at [13] that "everything left by my father had to be used to pay those costs", there is no evidence to support this. The Notice to Produce at paragraph 5 sought documents recording the distribution of funds or other assets out of his father's estate, but no documents were produced in response to this paragraph other than bank statements showing the transfer of $89,824. 3. At the hearing on 6 May 2024 Mr Salmon said, from the bar table, that the payments to the respondents on account of costs in 2021-2022 were also funded out of loans, and pointed to a number of entries recorded on bank statements produced in response to the Notice to Produce, which included multiple transfers to Mr Salmon's bank account, including amounts of $30,000, three transfers of $20,000, $18,000, $17,000 and $10,000, some of which are described on Mr Salmon's bank statements as "loans". These are very significant sums of money. There was no evidence adduced by Mr Salmon to explain how it was that these sums were loaned to him in circumstances in which he told Parker J in September 2021 that no further funds were available. Other than the evidence of Mr Salmon in the First Salmon Affidavit at [23] that he has relied upon "the generosity of friends to continue this legal fight and have yet to pay those people back", these payments to Mr Salmon are largely unexplained. 4. There is no documentary evidence, or evidence from any of the people who Mr Salmon says have loaned him money, to support Mr Salmon's affidavit evidence in the Second Salmon Affidavit at [38]-[39] that he does not have access to "any lump sum for security for costs" and that there "are no people benefitting from my case and no person with any obligation to assist me". In circumstances in which Mr Salmon says that he has received significant loans to support this litigation, those who have lent Mr Salmon money may well have a real interest in him succeeding on appeal. 5. Mr Salmon did not produce any documentary evidence of the fee agreements he had with the solicitors acting for the appellants at first instance, notwithstanding that these documents were sought by the Notice to Produce. Mr Salmon stated in his affidavit that the solicitors were briefed on a contingency basis. Those solicitors would thus appear likely also to have a significant interest in Mr Salmon succeeding on appeal. There is no evidence before the Court as to whether those solicitors would be willing to meet an order for security for costs, or whether they have been asked to do so. Whilst Mr Salmon stated from the bar table that James Legal (the solicitors' firm instructed by the appellants at first instance) no longer appear and no longer want to be involved or speak to him, there is no evidence before the Court as to these matters. 6. The appellants have not explained how they intend to pay the fees of counsel Mr Salmon indicated would likely be instructed on appeal. In particular, Mr Salmon has not indicated how this squares with his affidavit evidence that loan funds have now "dried up" and that he does not have access to funds to meet an order for security for costs. 7. Whilst there may be good explanations for all these matters, they were not provided to the Court.
As to discretion, having regard to the matters set out above, I accept the respondents' submission that the evidence adduced by the appellants falls short of establishing that the making of an order that the appellants pay security for costs would stultify proceedings, although I accept that there is a risk that this may happen. In the exercise of discretion, I must take this into account, but I must also consider the matters that I have identified as special circumstances. It is of particular significance that the respondents have already been put to considerable expense in defending very serious allegations and there is a real risk that they will now be exposed to a long and expensive appeal in circumstances in which they are unlikely to recover their costs even if successful in whole or in part.
Some payment of security is required in the circumstances, albeit not in the sums sought by the respondents. Whilst I accept that the respondents are likely to incur significant costs in defending the appeal, I am mindful that the respondents' evidence relies upon a number of assumptions, which may or may not prove to be well founded, and that any costs which the appellants may be ordered to pay if their appeal is partly or wholly unsuccessful will in any event be less than the costs actually incurred. I am also mindful of the risk of stultification which I have already discussed. In these circumstances, I consider it appropriate at this stage that the appellants be required to pay $35,000 security for costs for the Hall Chadwick Respondents and $15,000 security for costs for Mr Brown. I will allow the appellants until 4 pm on 20 June 2024 to provide the security, during which time the appeal will be stayed. I consider that this longer than usual period should be allowed to give the appellants a reasonable opportunity to satisfy these orders.
Nothing in my judgment precludes the respondents making a further application for the payment of additional security for costs at a later stage in the appeal proceedings.
I will adjourn consideration of the applications for an order that the proceedings be dismissed pursuant to UCPR, r 51.50(2A) if the appellants do not comply with my order. Rather, I direct that the matter be listed before the Registrar for mention on the first available date after 20 June 2024. If necessary, directions can be made on that occasion for me to hear the adjourned applications for an order dismissing the appeal if the appellants do not meet any order for security for costs. If the appellants comply with Order 1 below, then the Registrar should be notified and that hearing can be vacated. The appellants are to pay the respondents' costs of the motions for security for costs. There should be no order for costs of the other two motions before the Court.

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Judgment (9 paragraphs)

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Legislation Cited (4)

Cases Cited (22)