Salmon v Albarran

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

JUDGMENT

1. STERN JA: A number of applications are before the Court in proceedings in which the appellants, Owen Salmon and TCBS Group Holdings Pty Ltd ("TCBS Group"), a company of which Mr Salmon is the sole director and the shares in which are wholly owned by him either personally or through entities controlled by him, seek an extension of time to appeal against a judgment and orders of Nixon J on 19 October 2023: Salmon v Albarran [2023] NSWSC 1238.
2. In chronological order the four motions before the Court are: 1. a notice of motion filed by the first, second and fourth to eighth respondents (the "Hall Chadwick Respondents") on 20 February 2024 seeking security for costs under Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 51.50 as against both appellants, or as regards the second appellant, under s 1335 of the Corporations Act 2001 (Cth); 2. a notice of motion filed by the appellants on 12 March 2024 under UCPR, r 51.44(1) and s 67 of the Civil Procedure Act 2005 (NSW), seeking a stay of the costs orders made by the primary judge on 3 November 2023 (the "Costs Orders Below"); 3. a notice of motion filed by the third respondent, Mr Brown, on 14 March 2024 seeking security for costs under UCPR, r 51.50 as against both appellants, or as regards the second appellant, s 1335 of the Corporations Act; and 4. a notice of motion filed by the appellants on 26 March 2024 seeking to set aside a notice to produce filed by the first, second and fourth to eighth respondents on 18 March 2024 (the "Notice to Produce").
3. At the hearing of the applications: 1. Senior Counsel for the Hall Chadwick Respondents indicated that he no longer pressed the Notice to Produce but would instead rely upon Mr Salmon's response to the Notice to Produce in support of the application for security for costs. As it turned out, at the hearing on 6 May 2024 Mr Salmon produced documents in response to the Notice to Produce and tendered those documents in support of his submissions in response to the respondents' applications for security for costs. It is thus unnecessary to deal further with Mr Salmon's application to set aside the Notice to Produce which I shall treat as having been withdrawn in the circumstances. 2. Senior Counsel for the Hall Chadwick Respondents and Mr Salmon both indicated that they were content with orders being made on the appellants' application to stay the Costs Orders Below pending final determination of the appeal proceedings on terms which permitted steps to be taken to agree or assess those costs. Accordingly, I propose to make those orders.
4. It is thus only necessary in this judgment to deal substantively with the two applications for security for costs.
5. By way of background, the appellants commenced proceedings against the respondents by statement of claim filed on 13 December 2016. The appellants' interest in in the proceedings was as assignee, following a deed entered into by the liquidator of Terra Cresta Business Solutions Pty Ltd ("TCBS"), effective 15 December 2015, by which TCBS (the party to earlier litigation to which the proceedings commenced on 13 December 2016 related and a subsidiary of TCBS Group) assigned all of its choses in action to Mr Salmon and TCBS Group: J[19].
6. The defendants to those claims, the respondents in this Court, were: 1. Richard Albarran and Geoffrey McDonald (the first and second respondents, the "Receivers") who were appointed by TCBS as the receivers and managers of two companies related to TCBS (referred to by the primary judge as "BACM" and "BACF") pursuant to charges granted to TCBS. At the relevant time both Mr Albarran and Mr McDonald were partners in the firm Hall Chadwick; 2. Stephen Brown (the third respondent), the principal of Etienne Lawyers, who was retained to act for TCBS and the Receivers in litigation in 2006 (the "2006 Proceedings") in which the liquidator of BACM and BACF prior to the appointment of the Receivers, Mr Wiley, sought declarations that both the BACM and BACF charges were invalid. This litigation was at the heart of the appellants' claims in these proceedings at first instance; and 3. five other partners in the firm Hall Chadwick (the fourth to eighth respondents).
7. The appellants' claims in the proceedings at first instance all related broadly to steps taken in the 2006 Proceedings, and in particular steps taken in relation to a proposed settlement of those proceedings on 18-19 September 2006. The 2006 Proceedings did not settle and judgment was given, with the judge finding that the BACM charge was invalid and upholding the BACF charge. Mr Wiley was awarded 80% of his costs of the 2-day hearing. TCBS was unable to pay this amount. TCBS was subsequently placed into liquidation. Mr Salmon became bankrupt in 2009 and was discharged from bankruptcy in September 2014. TCBS was deregistered on 28 April 2012: J[15]-[19]. In the proceedings at first instance the appellants made claims of breach of fiduciary duty, knowing assistance, breach of a deed, and claims based upon partnership against the respondents, all of which in general terms arose out of these events in 2006.
8. Following a protracted process of amendment and re-amendment of the statement of claim: Salmon v Albarran (No 2) [2021] NSWSC 186; Salmon v Albarran (No 3) [2021] NSWSC 1200; J[20] the matter came on for trial in 2023. After an eight-day hearing between 28 August 2023 and 15 September 2023, the primary judge dealt comprehensively with the appellants' claims in a lengthy judgment which comprises 493 paragraphs. His Honour dismissed the appellants' claims.
9. On the respondents' evidence, the costs which the respondents incurred in defending the proceedings at first instance were, $891,787.70 for the Hall Chadwick Respondents and $637,762.97 for Mr Brown. On 3 November 2023 Nixon J made orders for costs in favour of the respondents. Further whilst the appellants place some reliance upon an order of Slattery J made on 13 March 2019 that the appellants' costs of one interlocutory motion should be the appellants' costs in the proceedings: Salmon v Albarran & Ors [2019] NSWSC 243, this does not diminish the extent to which the respondents are out of pocket on account of their costs of defending the proceedings at first instance. Whilst these costs have not yet been assessed, I accept the respondents' evidence that they have spent very significant amounts by way of costs.
10. The appellants filed a notice of intention to appeal on 9 November 2023 but did not file their notice of appeal until 25 January 2024, approximately one week after the required time under UCPR, r 51.9 (Griffiths AJA having initially extended time for filing the notice of appeal on 17 January 2024, but that order being revoked by Meagher JA on 25 January 2024: Salmon v Albarran [2024] NSWCA 3). Whilst the notice of appeal filed on 25 January 2024 was 20 pages in length comprising 74 separate grounds of appeal, on 14 March 2024 the appellants filed an amended notice of appeal which is 61 pages in length and comprises 62 grounds of appeal, including multiple sub-grounds, of appeal. Indeed, as regards ground 25 of the grounds of appeal, there are 92 separate sub-grounds of appeal. Whilst during the hearing on 6 May 2024 Mr Salmon indicated an intention to pare down the grounds of appeal, it appeared from his submission that this was primarily to eradicate duplication more than anything else. Mr Salmon also indicated from the bar table that it was likely that counsel would be instructed on appeal, but Mr Salmon was somewhat vague as to when this would happen.

The two applications for security for costs

1. The Hall Chadwick Respondents seek an order that the appellants provide security for their costs in the sum of $150,000 - $200,000. That is the sum calculated in an affidavit sworn 20 February 2024 of their solicitor, Mitchell Stein (the "Stein Affidavit") at [46] as the Hall Chadwick Respondents' likely cost of the appeal. Mr Brown seeks an order that the appellants provide security for his costs in the sum of $70,000 - $100,000, being the sum calculated in an affidavit sworn 14 March 2024 of his solicitor, Alexander Haslem (the "Haslem Affidavit") at [45]. In both applications, the respective respondents also seek an order that the proceedings be dismissed pursuant to UCPR, r 51.50(2A) in the event the appellants fail to comply with such order.
2. The applications are brought against both appellants under r 51.50, UCPR: 51.50 Security for costs (1) In special circumstances, the Court may order that such security as the Court thinks fit be given for costs of an appeal. (2) Subject to subrules (1) and (3), no security for costs of an appeal is to be required. (2A) If an appellant or cross-appellant fails to comply with an order under this rule, the Court may order that the appellant's appeal or cross-appellant's cross-appeal be dismissed. (3) Subrules (1), (2) and (2A) do not affect the powers of the Court under rule 42.21 (which relates to security for costs).
3. As TCBS Group is a corporation, s 1335 of the Corporations Act also applies as regards the application for security against it: (1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given. … (2) The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs.
4. Whilst the respondents rely upon s 1335 of the Corporations Act as against TCBS Group, there is complete identity in this case between the individual and corporate appellants. Thus, as the respondents' accept, they must establish "special circumstances" as regards both appellants, consistent with the authority of this Court in Macedonian Orthodox Community Church St Petka Incorporated v Petar [2012] NSWCA 304 recently applied in Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 151 ("Flynn v PPK").
5. The relevant principles as regards the requirement for special circumstances are well known: see Flynn v PPK at [38]-[48]. The principles were summarised by Basten JA (Ipp JA and Hoeben J agreeing) in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18]: "(1) no order for security should be made in the absence of 'special circumstances'; (2) consideration of what may constitute special circumstances should not be fettered by some general rule of practice; (3) impecuniosity, without more, will usually be insufficient; (4) an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; (5) where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made, and (6) the subject matter of the appeal, including an issue as to the liberty of the individual, or a public interest may provide a reason for not imposing a security order which would stifle the continuation of the appeal."
6. Impecuniosity such that one party, if successful, will not be able to recover their costs of the appeal may go to special circumstances: Khattar v Khattar [2022] NSWCA 189 at [24] (Gleeson JA).
7. On an application for security for costs, it is "unnecessary and inappropriate to undertake any detailed examination of the appeal grounds and their likely prospects": Hannaford v Commonwealth Bank of Australia [2013] NSWCA 472 at [48] (Gleeson JA).
8. The expansive nature of the issues sought to be litigated on appeal, and the risk that an appeal will involve unnecessary costs, may be taken into account as to special circumstances: Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434 at [17], [50] (Ward JA, as her Honour then was) ("Ballard").
9. The evidentiary onus of establishing that any order for security would stifle the appeal is on the appellants. As set out in Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Limited [2007] NSWCA 344 ("Pioneer"), stultification is not made out "merely by reference to the company's impecuniosity, but requires proof": at [51] (Basten JA, Tobias and McColl JJA agreeing on this issue). In so finding, Basten JA cited with approval the statement from Sheppard, Morling and Neaves JJ in Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 at 4 that: "…a court is not justified in declining to order security on the ground that to do so will frustrate the litigation unless a company in the position of the appellant here establishes that those who stand behind it and who will benefit from the litigation if it is successful (whether they be shareholders or creditors or, as in this case, beneficiaries under a trust) are also without means."
10. In this regard, the position of lawyers who are creditors, or contingent creditors, who thus stand to benefit from the successful prosecution of the appeal, should also be considered: Murray John Carter v Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust [2021] NSWCA 32 at [21] (Meagher JA).
11. As to the requirement of candour, the Court (Bathurst CJ, Leeming JA and Barrett AJA) in Live Board Holdings Ltd v Cody Live Pty Ltd [2017] NSWCA 302 held at [90]: "Candour in a case such as this involves the impecunious claimant which seeks to avoid an order for security for costs presenting evidence of those persons who stand to benefit from the litigation and their own capacity to fund it including by meeting any adverse costs orders. The obligation is not satisfied by providing a limited account in an affidavit, and leaving it to the cross-examiner to elicit details (if indeed cross-examination is sought and is permitted). One work states that if it is said that an order will stultify a claim, 'the precise financial circumstances of the litigant and of those behind it will need to be set out': J Delany, Security for Costs (Law Book Company Ltd 1989, p 118). Although the primary judge erred in statements as to the absence of evidence, there was no error in the conclusion insofar as it was based upon a finding that LBH had failed candidly to identify those standing behind it and their assets."
12. There is a difference in principle as between the resolution of applications for security for costs at first instance and on appeal. As regards the latter, there has already been a determination adverse to the party against whom security is sought: Ballard at [18]. As set out by Emmett J in Dye v Commonwealth Securities Limited [2012] FCA 992 at [28]: "While impecuniosity ought not to be a bar to a person prosecuting a reasonable claim at first instance, the position on appeal is fundamentally different. At the appellate level, there has already been a determination adverse to the person against whom security for costs is sought. If there is a substantial risk that, if successful, the respondent will be deprived of costs, that outcome would clearly be unjust. In a sense, it is giving to a person who has been on the receiving end of an adverse determination by the courts, a free hit at great cost to the other party in the appeal proceeding."

Evidence on the applications

1. The Hall Chadwick Respondents read the Stein Affidavit and tendered the exhibits to that affidavit, which included the judgment of Parker J in Salmon v Albarran (No 3). They also tendered the Notice to Produce. Mr Brown read the Haslem Affidavit, and tendered the exhibits to that affidavit, which in large measure replicated the exhibits to the Stein Affidavit. The appellants read an affidavit of Mr Salmon affirmed 12 March 2024 (the "First Salmon Affidavit"), and an affidavit of Mr Salmon affirmed 28 March 2024 (the "Second Salmon Affidavit"), on both applications. He also tendered a bundle of documents comprising his response to the Notice to Produce.

Consideration

1. 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.
2. 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.
3. 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.
4. 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".
5. 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.
6. 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.
7. In my judgment the requirement of special circumstances is satisfied in the present case.
8. 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.
9. 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.
10. 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.
11. 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".
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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.

Conclusion

1. Accordingly, I make the following orders: 1. Pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), r 51.50(1) by 4 pm on 20 June 2024 the appellants are to provide security: 1. in the sum of $35,000 for the first, second and fourth to eighth respondents' costs of the appeal; and 2. in the sum of $15,000 for the third respondent's costs of the appeal 3. either by payment of those amounts into Court or in such other form as the respective respondents may agree in writing before that time expires. 1. These proceedings are stayed until the appellants have provided security in accordance with Order 1. 2. The applications by the respondents for orders that the appeals should be dismissed pursuant to UCPR, r 51.50(2A) if security has not been provided in accordance with Order 1 are adjourned. 3. The proceedings are listed for mention before the Registrar on the first available date after 20 June 2024 at which time, if security has not been provided in accordance with Order 1, directions should be made for a hearing before Stern JA to hear the adjourned applications for orders dismissing the appeals. 4. The appellants are to pay the first, second and fourth to eighth respondents' costs of the motion for security for costs dated 20 February 2024. 5. The appellants are to pay the third respondent's costs of the motion for security for costs dated 14 March 2024. 6. Orders 1 and 2 made by Nixon J on 3 November 2023 are stayed save that this order does not preclude steps being made for the costs the subject of those orders to be assessed or agreed. 7. There shall be no order for costs on the appellants' motions filed 12 March 2024 and 26 March 2024.

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