Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Anderson v Canaccord Genuity Financial Ltd [2022] NSWCA 168 Hearing dates: 17 August 2022 Date of orders: 30 August 2022 Decision date: 30 August 2022 Before: Basten AJA Decision: (1) With respect to the notice of motion filed on 6 June 2022 seeking a stay of the costs orders made on 7 February 2022, as varied on 24 May 2022, upon the appellant Daniela Anderson and Craig Anderson giving written undertakings not to dispose of their assets other than in the ordinary course of business or for the purposes of funding the appeal: (a) stay orders (1)-(15) made in the Equity Division on 24 May 2022 until 21 days after the determination of the appeals, and (b) order that the costs of the stay motion be the appellant's costs in the appeal to be payable by first, second, third and fifth respondents. (2) With respect to the applications by the first to sixth respondents for security for costs filed on 23 June 2022 (first, second and third respondents), 6 July 2022 (fourth respondent), 9 August 2022 (fifth respondent) and 23 June 2022 as amended on 15 August 2022 (sixth respondent): (a) dismiss the notices of motion; and (b) order that the costs of the motions be the appellant's costs in the appeal. Catchwords: APPEALS – security for costs – special circumstances – length and complexity of appeal – whether grounds reasonably arguable – respondents' estimates of likely costs of appeal – appellant's impecuniosity – overseas residence of appellant – circumstances of those likely to benefit from success – availability of litigation funding – whether lawyers with unpaid costs reasonably expected to fund appeal – Uniform Civil Procedure Rules 2005 (NSW), rr 42.21, 51.50 APPEALS – stay of order for assessment of costs of trial – assessment referred to referee – expenses to be incurred in reference – possible futility – likely stay of enforcement of payment of costs if assessed – parties to focus on appeal – overriding principle of expeditious resolution of proceedings – undertaking not to dispose of assets CORPORATIONS – directors and officers – diversion of commercial opportunity – fiduciary duties – knowing assistance – other corporations' participation in breaches – vicarious liability for officer's breach of duty – damages for loss of a chance Legislation Cited: Corporations Act 2001 (Cth), s 1335 Uniform Civil Procedure Rules 2005 (NSW), rr 42.21, 51.50 Cases Cited: Anderson v Canaccord Genuity Financial Ltd (No 2) [2022] NSWSC 649 Australian Executor Trustees (SA) Ltd v Kerr [2021] NSWCA 5 Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; [2006] HCA 41 Carter v Mehmet [2021] NSWCA 32 Gunasegaram v Blue Visions Management Pty Ltd [2018] NSWCA 179; 129 ACSR 265 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 Hung v Aquamore Credit Equity Pty Ltd [2022] NSWCA 123 Porter v Gordian Runoff Ltd [2004] NSWCA 69 Porter v Gordian Runoff Ltd [2004] NSWCA 171 Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 Category: Procedural rulings Parties: Daniela Alejandra Anderson (Appellant) Canaccord Genuity Financial Ltd (First Respondent) Nicola Lesleigh Garrett (Second Respondent) Samuel Mark Renauf (Third Respondent) Falcon Prime Pty Ltd (Fourth Respondent) Acorn Capital Ltd (Fifth Respondent) Albany Capital Investors Pty Ltd (Sixth Respondent) Ashington Capital Pty Ltd (in liq) (Seventh Respondent) Ashington Management Pty Ltd (in liq) (Eighth Respondent) Representation: Counsel: Mr P Braham SC / Mr A Bhasin (Appellant) Mr T Boyle (First Respondent) Ms M Painter SC / Mr T Bagley (Second and Third Respondents) Mr R Sud (Fourth Respondent) Ms J Jaffray (Fifth Respondent) Mr S Gray (Sixth Respondent) Solicitors: McLachlan Thorpe Partners (Appellant) Clayton Utz (First Respondent) Piper Alderman (Second and Third Respondents) Corrs Chambers Westgarth (Fourth Respondent) Moray & Agnew Lawyers (Fifth Respondent) Kennedys (Sixth Respondent) File Number(s): 2022/00048359 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2022] NSWSC 58 Date of Decision: 7 February 2022 Before: Ward CJ in Eq File Number(s): 2015/00285816 [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. BASTEN AJA: On 17 August 2022, the Court heard a motion by the appellant, Daniela Alejandra Anderson, and her husband, Craig Anthony Anderson, seeking a stay of the determination of costs awarded against them in the Equity Division. Ms Anderson has brought an appeal from the judgment in the Equity Division delivered on 7 February 2022. [1] On 6 June 2022 Mr Craig Anderson filed an appeal against the third-party costs order made against him on 24 May 2022. [2] 2. The first to sixth respondents have each filed notices of motion seeking security for their costs of the appellant's appeal. 3. The proceedings (which were substantially dismissed) involved a number of claims arising out of the collapse of two companies, which may be referred to as "Ashington" for present purposes. The companies operated two wholesale unregistered property development funds. In September 2009, Ashington engaged the first respondent, then known as Patersons Securities Ltd ("Patersons"), to raise funds to replace an investor for one of the Ashington funds. The result of steps taken by Patersons and two senior employees of Ashington was not to raise funds to replace the outgoing investor, but rather the transfer of the business from Ashington to a new developer. 4. Patersons (now Canaccord Genuity Financial Ltd) is the first respondent on the appeal. The second and third respondents, Nicola Lesleigh Garrett and Samuel Mark Renauf, were formerly two senior employees or consultants with Ashington. They were engaged to obtain funding for Ashington. The claim against them at trial was that they passed confidential information about the Ashington business to a third party which in due course acquired the business and employed Ms Garrett and Mr Renauf. Whether they were employed by Ashington, and whether they owed fiduciary duties to Ashington were major issues in the proceedings. The trial judge found that they owed (and breached) duties of good faith, loyalty and honesty as employees, but did not owe fiduciary duties to Ashington. The judge further held that, had they owed fiduciary duties, they would have been in breach. 5. The judge accepted that a senior officer of Patersons, Martin Carolan, acted in concert with Ms Garrett and Mr Renauf, but "on a frolic of his own – outside the scope of his employment and in fraud of his employer" and therefore created no vicarious liability on the part of Patersons. [3] Patersons did not otherwise owe fiduciary duties to Ashington, despite being engaged to obtain a commercial opportunity by way of a new investor for an Ashington development fund. [4] 6. The remaining three active respondents, Falcon Prime Pty Ltd, Acorn Capital Ltd and Albany Capital Investors Pty Ltd were found not to have the requisite knowledge of facts and circumstances so as to have knowingly assisted the breaches of duty by the other respondents, had they been held to have owed fiduciary duties. 7. Although the trial judge upheld (on a limited basis) the claims against Ms Garrett and Mr Renauf, the appellant was unable to recover because the judge was not satisfied that the misconduct led to a financial loss. In short, the Ashington companies would have failed in any event. 8. There were two inactive respondents, being two Ashington companies which are both in liquidation (the seventh and eighth respondents). At the time the Ashington companies collapsed, their founder and commercial principal, Mr Craig Anderson, was an undischarged bankrupt. His wife, Daniela Anderson, purchased from the liquidators of the companies any rights and interests the companies might have against the first to sixth respondents. Accordingly, as assignee of the companies' rights, she was the plaintiff in the court below and, having failed at trial, is the present appellant. She was ordered to pay the first to sixth respondents' costs of the trial. Mr Anderson was the subject of a third-party costs order made following the trial. By orders in a second judgment delivered on 24 May 2022, the gross sum costs payable were referred to a referee for assessment. 9. The bulk of the submissions (both written and oral), and the evidence tendered by the parties on the motions, addressed the applications for security for costs. It will be convenient to deal first with those matters. Relevant legal principles 1. Each of the respondents relied upon r 51.50 and r 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) as the basis for an order by way of security for costs. Counsel for Acorn also relied upon the inherent power of the Court. Although a number of cases were cited in support of the existence of such a power, none was a decision of this Court. Nor was there any discussion in the submissions as to how an unfettered inherent discretion could operate in conjunction with a specific power governing security in this Court. (As there is no corporate appellant, the power to require security to be given and proceedings stayed until security is given, pursuant to s 1335 of the Corporations Act 2001 (Cth), was not engaged.) 2. Rule 51.50 of the UCPR provides: 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). 1. Subject to powers conferred under r 42.21, the prohibition in subr (2) is inconsistent with a general inherent discretion to require the giving of security. 2. Rule 42.21 reads as follows: 42.21 Security for costs (1) If, in any proceedings, it appears to the court on the application of a defendant— (a) that a plaintiff is ordinarily resident outside Australia, or (b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or (c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or (e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, or (f) that there is reason to believe that the plaintiff has divested assets with the intention of avoiding the consequences of the proceedings, 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. (1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant— (a) the prospects of success or merits of the proceedings, (b) the genuineness of the proceedings, (c) the impecuniosity of the plaintiff, (d) whether the plaintiff's impecuniosity is attributable to the defendant's conduct, (e) whether the plaintiff is effectively in the position of a defendant, (f) whether an order for security for costs would stifle the proceedings, (g) whether the proceedings involves a matter of public importance, (h) whether there has been an admission or payment in court, (i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant, (j) the costs of the proceedings, (k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute, (l) the timing of the application for security for costs, (m) whether an order for costs made against the plaintiff would be enforceable within Australia, (n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff. (1B) If the plaintiff is a natural person, an order for security for costs cannot be made merely on account of his or her impecuniosity. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given. 1. With respect to the latter rule, picked up by r 51.50(3), primary emphasis was placed by the respondents upon r 42.21(1)(a) based on the submission that Ms Anderson was ordinarily resident outside Australia, and subr (1)(e) based on the submission that she was suing not for her own benefit but for the benefit of others. 2. In considering whether the test of "special circumstances" under r 51.50(1) is satisfied, it is appropriate for the Court to have regard to the matters set out in r 42.21(1A). Satisfaction of a particular factor listed in that rule does not necessarily constitute a "special circumstance" for the purposes of r 51.50. Further, although it was generally conceded by the respondents that Ms Anderson was impecunious, it may be noted that subr (1B) precludes an order for security being made merely on account of her impecuniosity. 3. The parties addressed the principles primarily by reference to the following statement in my judgment in Preston v Harbour Pacific Underwriting Management Pty Ltd: [5] "18 The principles governing applications for security were helpfully set out by Beazley J in the Federal Court in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197-198. Although the factors are discussed in the context of an unfettered discretion, in contrast to the power conferred by Pt 51 r 16, the factors themselves remain relevant in assessing special circumstances. The considerations engaged by the concept of 'special circumstances' in relation to security for costs were considered by this Court in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143 (Beazley, Santow and Ipp JJA), and in Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Bryson JA, Sheller and Giles JJA agreeing). The following principles were identified: (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. 19 Some of these factors, particularly the last two, may better be seen as influencing the exercise of the discretion, rather than as potential 'special circumstances', engaging the power." Issues 1. The issues addressed by the parties fell broadly within the following categories: 1. merits of the proposed appeal; 2. likely costs to be incurred by the respondents, and 3. risk of stultification if security were ordered. 1. The question of the likely costs which would be incurred was itself a factor of the scope of the appeal, and the likely length of the hearing. For reasons which will be explained, there were grounds to think that the estimates of costs were significantly inflated. That had two consequences: first, it made it difficult, if not impossible, for the Court to arrive at a realistic view of the likely costs of the respondents. This is not a novel problem, but it is one which may have its own consequences, as noted by Leeming JA in Hung v Aquamore Credit Equity Pty Ltd. [6] Secondly, if the costs were to be taken at face value, the risk that orders for security in favour of the respondents would stultify the appeal would rise close to the level of certainty. 2. There is a further preliminary point to be noted. To the extent that the respondents addressed the nature of the appeal, they did so by reference to the potential complexity of the issues, by way of explanation of the estimates of preparation and hearing time. The challenge to the merits was muted. While a detailed analysis of the likely merits of the appeal is often an invidious exercise, the Court is entitled to expect some assistance if it were to be suggested that the grounds, or some part of the grounds, were not reasonably arguable. For the reasons explained below, I am satisfied that the major issues sought to be raised by the appellant are reasonably arguable. That ensures that the difficult issue of stultification and its appropriate resolution must be squarely faced. [7] 3. It is convenient to commence by addressing the nature and merits of the appeal. Nature and merits of appeal 1. Counsel for the fourth respondent referred to the reasoning of Meagher JA in Carter v Mehmet, [8] for the proposition that, assuming that an order for security in any significant amount will stultify the proceeding, the interests to be weighed in the balance are the potential loss to the appellant of not being able to pursue her appeal on the one hand and the risk that the respondents will suffer unrecoverable financial loss for the costs of the appeal on the other. That consideration led directly to the need to assess the merits of the appeal. 2. The premise (as to stultification) is a live issue in this case; accordingly, it is convenient to turn immediately to the merits of the appeal. The respondents emphasised the careful consideration given by the trial judge to every issue in dispute and the complexity of the notice of appeal required to challenge those findings. 3. The grounds in the notice of appeal run to 66 paragraphs. However, that number provides limited assistance in identifying the extent and complexity of the issues. There are seven topics dealt with in the notice of appeal, namely: 1. assignment of causes of action; 2. fiduciary duties owed by Ms Garrett and Mr Renauf; 3. fiduciary duties owed by and knowing assistance of Patersons; 4. knowing assistance of PPB (now Falcon Prime); 5. knowing assistance of Acorn; 6. knowing assistance of Albany; and 7. loss suffered by Ashington. 1. As to the first topic, and as has been noted above, the appellant sued upon causes of action assigned to her by the liquidator of the Ashington companies, for which she provided consideration. The grounds of appeal indicate some uncertainty as to whether the trial judge in fact made adverse findings with respect to the validity of the assignments. Nothing was said about these grounds in the course of the hearing, but there was clearly a basis on which the judge could have been satisfied of the legal validity of the assignments, if the issue requires determination. 2. There was undoubtedly an important issue in the case as to whether Ms Garrett and Mr Renauf owed fiduciary duties to the Ashington companies by one of which they were employed. Indeed, there was a dispute as to whether they were in fact employees or rather were consultants. The possibility that agents can be fiduciaries is beyond question: a determination of that status will depend upon the particular circumstances of the case. The issue was treated by the trial judge as one of some difficulty. 3. Counsel for the second and third respondents did not seriously contest that there were reasonably arguable issues as to their legal status. It is convenient to say something more about this particular issue. The trial judge commenced the relevant discussion by identifying the uncontroversial proposition that an employee could owe fiduciary duties to his or her employer, but that that was not necessarily so. [9] The appellant submitted that the proper focus was that identified by Gleeson JA in Gunasegaram v Blue Visions Management Pty Ltd, [10] namely to focus "on the actual functions or responsibilities" of the officer. The appellant further submitted that a paradigm example of a breach of fiduciary duty case was one involving a director or senior employee who diverted a business opportunity from the company. [11] This case, on the appellant's analysis, fell into that category. The trial judge accepted that at least the "high point" of analysis of their employment relationship was that "there was trust and confidence reposed in them to negotiate commercial deals and to 'package' proposed refinancing arrangements". [12] On the other hand, the judge concluded that Ms Garrett and Mr Renauf did not have, by way of delegation or otherwise, decision-making powers of Ashington and therefore did not have a power to "affect the interests of the Ashington Group". [13] The judge was satisfied that they were "more than 'finders'" in the sense that they negotiated with and made presentations to potential investors, but "neither was in the position to commit Ashington to any exercise of power or discretion". [14] 4. It is reasonably arguable, as the appellant submitted, that that was the fundamental finding which led the trial judge to conclude that they did not owe fiduciary duties. The appellant submitted that that finding erroneously relied on an immaterial consideration. Persons clothed by a principal with authority to identify and negotiate commercial opportunities, the submission continued, are, in the exercise of that function, subject to fiduciary duties to the principal because they are in a position to divert a commercial opportunity for their own benefit or to their own purposes. The conflict of duty and interest is, the appellant submitted, sufficient to engage the duty to prefer the interest of the principal. On that basis they should have been deemed to be fiduciaries. 5. The fundamental proposition thus presented is that, in a commercial opportunity case, the ability to divert the opportunity away from the principal precedes any occasion for decision-making by the principal. Accordingly, it does not matter whether the "finder" could exercise decision-making power for the principal, or whether he or she has no such power. On that basis, it was reasonably arguable that the judge had erred in a critical respect with respect to the second and third respondents. I accept that reasoning at the requisite level of arguability. 6. It is not necessary to undertake any similar assessment with respect to the fourth, fifth and sixth respondents. In each case, there was a contested factual issue as to the state of knowledge held by, or available to, senior officers of those companies as to the conduct of the second and third respondents. It was undoubtedly open to the trial judge to make the findings that she did; however, there was in each case evidence which, to varying degrees, constituted a basis for a different conclusion. It was not submitted by those respondents that the appellant's case was not reasonably arguable. A similar analysis applies with respect to Patersons. 7. It is, however, necessary to consider more closely the appellant's submissions with respect to the conclusion as to loss. The appellant's submission commenced with the proposition that, once the plaintiff had proved a loss, the onus shifted to the defendants to prove that some or all of the loss would have been suffered in any event, referring to Australian Executor Trustees (SA) Ltd v Kerr. [15] The appellant also relied upon the proposition derived from Houghton v Immer (No 155) Pty Ltd [16] that, where a party's actions "have made an accurate determination so problematic", doubtful questions should be resolved against that party and the court should assess damages or compensation "in a robust manner". 8. On the appellant's case, the trial judge accepted the reasoning of the respondents' expert, Jeffrey Hall, that Ashington was on the verge of insolvency on 30 September 2009. [17] On the other hand, an assessment of assets or liabilities as at that date did not conclude the question as to whether Ashington had suffered a loss, because what was to be assessed was a loss of an opportunity. [18] The judge then identified cumulative uncertainties, concluding that the chance was "no more than 5%". The judge continued, referring to the evidence of the appellant's valuer, Brendan Halligan: [19] "Even on Mr Halligan's calculations the figure (albeit including a value for the Ashington units in the respective funds) was $5.247 million (from which deduction would need to be made)." 1. There were other difficulties noted, but the trial judge continued: [20] "Both scenarios have an air of unreality about them. Adopting for present purposes Mr Halligan's (optimistic) $5.247 million figure and discounting to reflect a 5% prospect of the lost opportunity (ie, the Stonington Capital Raising occurring) would produce a loss of roughly $260,000. Even a 10% prospect of success does not assist the plaintiff greatly. A 5% prospect on the plaintiff's second scenario [of $10.6m] still produces only around $530,000. On the most realistic scenarios the loss is therefore much smaller than the plaintiff has contended, even adopting favourable assumptions to the plaintiff." 1. In the following paragraph the trial judge continued: [21] "Had I been required to assess the amount payable for equitable compensation I would therefore have concluded that it was no more than $930,000 [?$530,000] (pre-interest) and more likely $260,000 (pre-interest) and that this would be reduced to nothing by the offsetting claims, in particular the unpaid capital calls …." 1. Given the successful challenge to Mr Halligan's calculations, the plaintiff no doubt faced a difficult task in seeking to recover some figure from the ruins. The appellant submitted that there was contemporaneous evidence which supported the lost opportunity as significantly above the range of 5%-10% adopted by the trial judge and that market conditions were improving in the event that the capital-raising had been successful. In the course of oral submissions, counsel for the appellant referred to an "incorrect assumption" that it would be necessary to deduct offsetting liabilities in circumstances where they existed in both the factual and counterfactual scenarios and did not represent part of the lost opportunity. In any event, the appellant submitted, the $5.247 million figure already included a deduction for unpaid calls. [22] 2. Each of these points, and others, is expanded upon in the appellant's written submissions. In the absence of argument that those points were not reasonably arguable, the Court should be satisfied that there is merit both in the proposition that the relevant heads of liability could be established on the appeal, and that there was a resulting lost opportunity, having commercial value, for the appellant. 3. The grounds relating to Patersons were covered in 23 paragraphs. The third set of grounds related to the conduct of two officers of Patersons, namely Messrs Doherty and Carolan. On the basis of their knowledge and conduct, it was submitted that Patersons knowingly assisted Ms Garrett and Mr Renauf in breach of their fiduciary duties to the Ashington entities. The trial judge accepted that, had there been vicarious liability with respect to Mr Carolan's conduct, Patersons would have been in breach of any fiduciary duty it owed to Ashington, [23] and presumably knowingly concerned in any breaches of by Ms Garrett and Mr Renauf. 4. The appellant also asserted that Patersons owed fiduciary duties itself to Ashington because its function was that of a "trusted advisor … rather than a financial counterparty": ground 39(a). 5. With respect to each of the other respondents, namely Falcon Prime, Acorn and Albany, the complaint was, in substance, that their officers knew or ought reasonably to have known that Ms Garrett and Mr Renauf were not acting with the authority of Ashingtons in their dealings with those companies. There were 15 paragraphs in the grounds relating to respondents other than Patersons. 6. The next major topic (which accounted for 22 paragraphs in the notice of appeal) related to the trial judge's assessment as to whether the Ashington companies would have remained solvent were it not for the breaches of duty by Ms Garrett and Mr Renauf (with or without the knowing assistance of the other respondents). This was undoubtedly a critical aspect of the case because the trial judge found that the amount payable for equitable compensation was nil and that only nominal damages were payable for breach of contract. 7. The counterfactual (based on the diligent and honest conduct of Ms Garrett and Mr Renauf) required an assessment of the loss of a chance of a business opportunity (namely the successful completion of developments). For that purpose, the trial judge had two conflicting expert reports. As counsel for Patersons noted, the appellant's expert, Mr Hall, commenced with a valuation of $140 million, which was effectively abandoned, in favour of a fraction of that sum, in the course of cross-examination. The written submissions prepared by the appellant for the purposes of the appeal do not take issue with major challenges to the basis of the original calculations, but rather maintain that even on a conservative view, there remained a significant amount which should have been awarded by way of equitable compensation. The respondents did not submit that such an approach was not reasonably arguable. 8. Understandably, given the limited nature of the exercise which this Court can properly undertake in assessing the merits of an appeal at the stage of proceedings, with the assistance of the appellant's written submissions but (entirely understandably) no submissions in response, little was said about the merits of the claims with respect to the knowledge of officers of the respondents other than Patersons, or what they arguably should have known in the circumstances at the relevant time. Suffice to say that the appellant's written submissions demonstrate a reasonably arguable case as to the knowledge of each of those officers, based to a significant extent on inferences which may be drawn from contemporaneous documents. Preparation and hearing of appeal 1. The costs estimates prepared by the respondents in support of their motions for security for costs ultimately turned on three considerations, namely (i) the length of the appeal, (ii) the role to be played by that party in the appeal and (iii) the amount of preparation required of solicitors and counsel in order to fulfill that role. It is convenient to consider first the likely length of the hearing. 2. The parties, or some of them, appeared to have been under a misapprehension that the appeal had been listed for eight days in December. That was not so. Although the Court file records an estimate of seven days, it appears that the parties (or some of them) requested that eight days be set aside. In the course of the oral submissions, there was little light cast on how that estimate was obtained and whether there was in truth agreement about it. When advised that the matter had not been set down for eight days, senior counsel for the appellant said he was "pleased to hear it". He then proceeded to explain, by reference to the appellant's written submissions, the very limited role to be played by some respondents and the relative brevity with which even significant issues had been addressed in the appellant's own written submissions. Various counsel who appeared on the hearing of the motions (almost all of whom had appeared at the trial) sought to reassure the Court that a high degree of cooperation had been apparent during the trial and therefore the Court could be satisfied that the case would be dealt with expeditiously on appeal. 3. Any possible state of satisfaction as to that proposition must be qualified in a respect which is of great present importance. While it is possible that the role of the respondents at the hearing will reflect a degree of cooperation so that the same point will not be made repetitively, there must be a real doubt that that is reflected in the manner in which the various cases will be prepared and the costs which will be incurred by solicitors and counsel in the course of their preparation. That concern is revealed in two aspects of what has happened in this Court so far. First, there appears to have been no attempt to cooperate in preparing evidence for the present hearing. Bundles of material were tendered by various parties without regard to the fact that other parties had or were about to tender the same material. More significantly, the costs estimates suggested that the solicitors and counsel were intending to take on the same amount of work on behalf of each respondent as if they were solely responsible for running the whole of the appeal. Examples will be given shortly. 4. Those points having been made, the difficulty for the Court in estimating the likely hearing time for the appeal is not to be underestimated. 5. First, however expeditious counsel for the appellant may expect to be in presenting her case, it is harder to predict how expeditious the respondents will be. By way of contrast, at a trial with multiple defendants, it is relatively easier to avoid repetitive cross-examination, which frequently constitutes the bulk of the time taken by a trial. 6. Secondly, it is not possible to ignore the fact that the trial judgment is over 2,800 paragraphs in length, extending over more than 850 pages (excluding the formal parts and index). On the other hand, it is clear that the trial judge dealt with a large of number of issues which arose at the trial, some of which are no longer in dispute. Further, the trial judge adopted a clear structure to the judgment summarising findings as she went and indicating which findings were contingent. Issues were identified by headings which can be located in the hyperlinked index. 7. Thirdly, the time taken for the appeal may be increased by the filing of notices of contention and a cross-appeal. The appellant submitted that she should not be required to give security for an appeal expanded in those ways. There is, in addition, a looming challenge to separate findings in a second judgment dealing primarily with costs. 8. Fourthly, some of the findings under challenge, including the critical issue as to the fiduciary duty (or otherwise) owed by Ms Garrett and Mr Renauf, may ultimately prove to be fact-based, as will the challenges to matters about which the senior officers of the corporate respondents are said to have knowledge, or as to which they ought to have had knowledge having regard to the circumstances. 9. While it is possible that the appeals will be completed within four days, it is not possible to say with confidence that they will not ultimately consume a longer period. 10. This conclusion gives rise to a real difficulty in assessing the likely costs of the hearing. If, as appeared to be suggested in the course of consideration of the motions, the Court were minded to assume a four-day hearing, rather than an eight-day hearing, that could be accommodated by halving the amount allowed in the costs estimates. Unfortunately, that exercise is not so straightforward. It is not possible to make a simple adjustment to preparation time on that basis, and that is where the bulk of the costs ultimately lay. 11. Although I do not ultimately accept the costs estimates proposed by the respondents, this is not a case in the same category as Hung v Aquamore where the estimate bore no rational relationship to the appeal in question. Costs of preparation 1. In assessing the scope of the appeal (and hence the time required for both preparation and hearing), it is easy to infer from the length of the judgment that there is much work involved for all parties. However, there is another, equally plausible, inference. Unsurprisingly, the judgment is detailed, comprehensive and pellucid. Although for the limited purposes of considering the motions, the Court has not read the whole of the judgment, in addressing those issues to which reference has been made, it readily became apparent that the challenged reasoning was clear, a comprehensive index allowed ready cross-referencing to underlying findings of fact, and the discussion of relevant evidence, and the points of principle were readily located. In this way, the length of the judgment was not a measure of the complexity of the appeal. 2. Turning to the first respondent's evidence in relation to costs of the appeal, the affidavit of its solicitor indicated that it sought security for the sum of $500,000 in relation to its legal costs "incurred to date and for its future legal costs". [24] 3. The grounds upon which it sought security for costs which had already been incurred in the appeal was not identified. There may be some doubt as to the appropriateness of such a claim. More importantly, the estimated costs totalled more than $660,000. First, there was a claim for the law firm's own costs on the basis of 685 hours of preparation for the appeal. Secondly, there was an estimate of 23.5 days for senior counsel and 34.5 days for junior counsel, both of whom had appeared at the trial. Whilst it may be accepted that they will not presently remember the detail of a trial which, although it lasted for 28 days, was completed more than a year ago, the suggestion that they will require such periods of preparation to defend the appeal as presently presented by the appellant is simply not credible. Indeed, as there are only 61 weekdays between the end of August and the beginning of December when the parties imagined that the appeal might commence, it would, in any event, be unrealistic to expect highly regarded counsel to be available for that period of time. 4. With respect to the hours spent by those in the law firm, even with limited experience of what is involved in the preparation for an appeal to this Court, the figure is, on its face, simply unjustified and unjustifiable. Accepting that large commercial cases involve an exercise in Rolls-Royce representation, whether or not such costs would in fact be incurred does not mean that an appellant with a reasonably arguable case should be required to fund those costs in advance. 5. That conclusion raises the question identified by Leeming JA in Hung v Aquamore. If the court is unable or unwilling to accept the estimate provided to it, what should the court do? On one view, there is an absence of evidence upon which to make any estimate of likely costs. In that event, the only proper course is to decline to make an order. Another view is that, with little experience of the assessment of costs, the judge should speculate as to what costs might be incurred and on what basis, and order a proportion of that amount to be secured. However, there are other problems. Is each respondent entitled to costs in the same amount and on the same basis? The solicitor for the second and third respondents estimated their costs as an amount in excess of $360,000. [25] The solicitor for the fourth respondent (Falcon Prime) made no attempt to breakdown the components beyond professional costs, counsel's fees and disbursements, but estimated that it would incur $400,000. [26] The solicitor for the fifth respondent (Acorn) provided a more detailed breakdown, with a total (exclusive of GST) of more than $580,000. [27] The solicitor for the sixth respondent (Albany) estimated its costs of defending the appeal to be in the region of $400,000. [28] He did not identify a figure for professional costs, but it may be inferred that it was in the order of $170,000, being the difference between counsel's fees and the total amount. 6. The roughly uniform level of costs assessed by the respondents suggested that all parties were equally involved in the appeal. In the course of oral submissions, there was some prevarication about how that worked and the extent to which there was likely to be duplication of submissions in the course of the appeal. Counsel for Patersons noted that it took the running of the trial in respect of loss. Counsel continued, stating that "the first respondent will take the lead on quantum in the appeal, as well as on the other matters which affect it". [29] On the other hand, senior counsel for the second and third respondents emphasised that there were "overlapping interests between all of the respondents" and that "[t]hose overlapping interests cover most of the subject matter of the trial." [30] Troublingly, senior counsel submitted at one stage: [31] "As I addressed your Honour before, we each have responsibility for the whole of our client's case. Although we have taken a cooperative approach at trial, that cooperative approach should not and would not be interpreted to mean that any individual respondent was subordinate to any of the others, or that any of those individual respondents subordinated their case to the care of another. We found it expedient at the trial to share the workload and to take responsibility for various issues within our individual camps. Whether that endures at the appeal, and whether indeed it is relevant, I can assure your Honour that each of the camps of the respondents was fully across all of the issues, gave all of those issues independent thought, was ready to stand up and supplement if necessary." 1. No other counsel contradicted this proposition. No doubt it should be accepted in broad terms. At trial much of the time is taken up with cross-examination of witnesses: cooperation to avoid repetitive cross-examination is relatively straightforward and occurs on a daily basis. It may be that an appeal is not so readily controlled, but the proposition that the appellant should bear the costs of each respondent being ready to address on each issue (and no doubt filing written submissions on that basis) is disturbing. At least as a matter of discretion, I doubt that the court should act upon such a basis. However, assuming that some level of cooperation will be maintained and duplication avoided, there is no basis upon which the court, having regard to the present state of the evidence, can treat some costs estimates as subject to reduction or, even if that were possible, by any particular amount. Special circumstances 1. The parties were by no means precise as to what matters constituted "special circumstances" for the purposes of r 51.50, what matters merely informed the general discretion engaged by the applications, nor how the factors identified in r 42.21 should be weighed. 2. Counsel for the first respondent relied upon (i) the unacceptable risk of non-recovery of costs; (ii) the low likelihood of the appellant succeeding on the appeal; (iii) the fact that the appeal was not brought for the appellant's benefit, and (iv) the appellant's overseas residence. 3. To the extent that the first matter is not encompassed within the second (likelihood of success) it appeared to turn on the impecuniosity of the appellant. However, given that the appellant is an individual, and given the statement in r 42.21(1B) that mere impecuniosity is not a basis for ordering security for costs, I do not think that can constitute a special circumstance. 4. So far as the second matter is concerned, the likelihood of success is a relevant consideration which applies in every case. If it goes beyond the question as to whether the appeal is reasonably arguable, it goes beyond that which should realistically be assessed by a court considering an application for security. Otherwise, for reasons already indicated, I am satisfied that the appeal is reasonably arguable. It is not (at least in this case) a special circumstance. 5. As to the third matter, I accept that the fact that the appellant is seeking to run a case on behalf of her husband's former companies, where, but for his bankruptcy at the relevant time, he might well have purchased the causes of action by way of assignment from the liquidator himself, the appeal is not run primarily for her benefit. However, it is then necessary to ask what is the significance of that circumstance? A person who purchases a right of action for consideration thereafter has a stake in the litigation, at least to the extent of recovering the value provided and the costs of the suit. If others will also benefit, those who stand to benefit from the litigation may be required to step forward and provide security for the costs, or demonstrate why they are unable to do so. This factor no doubt underlies the general rule under the Corporations Act permitting orders for security against corporations, and thus ensuring that those likely to benefit from the success of the litigation step forward from behind the corporate entity, rather than seeking to protect themselves from an unsuccessful outcome by relying on its limited liability. I propose to take this factor into consideration in dealing with the question of stultification. It is, to a limited extent, a form of special circumstance because analogous to the situation of a corporation. 6. The fourth factor was the residence of Ms Anderson overseas. Other parties also addressed this issue. I am inclined to think that, in an appropriate case, this could well constitute special circumstances for the purposes of r 51.50. However, as I put to counsel in the course of the hearing, I was unsure as to the significance of the place of residence of an Australian citizen and asked if it were that he or she may not be able to be sued if not in the country and ,if sued, a judgment would be unenforceable in practical terms. Counsel accepted that proposition. [32] However, it may be doubted if that were a material factor in the present case. First, the evidence, while establishing that the appellant's place of birth was Argentina and that she had family there, fell short of establishing that it was her present country of residence. It was not insignificant that she is an Australian citizen and that her husband and child are in Australia. Secondly, there is no suggestion that the appellant personally owns any significant assets, either here or in Argentina, or that she has income-earning capacity at a level which would be significant having regard to the amount of the anticipated costs of the litigation. A costs order may well be unenforceable against her in any event. I am not, therefore, inclined to place any weight on that circumstance. 7. Counsel for the second and third respondents identified three special circumstances, namely (i) "the interrelationship between the impecuniosity of the appellant and Mr Anderson, and their joint and separate … financial reliance on a third party or a series of third parties [as litigation funders]"; (ii) "the undeniable fact [that] notwithstanding attempts to minimise it, this is an extensive appeal"; and (iii) "the question of stultification". [33] 8. The first and third of these circumstances may be treated together as going to stultification. The second is separate and relevant. Whether the present appeal (putting to one side any notice of contention or cross-appeal) is likely to extend over four, five, seven or even eight days, it is undoubtedly a major appeal in the work of this Court and will give rise to a higher level of costs than the ordinary run of appeals. That is something which may be treated as a "special circumstance" and is to be so treated in this case. 9. It was not easy to identify any additional matters relied upon as special circumstances by the other respondents. I would accept that special circumstances have been made out, particularly by reference to the last matter, and that the power to award security for costs is engaged. 10. That being so, it is convenient to turn to the question of stultification which is the critical issue upon which the applications must be determined. It, in turn, involves a balancing of the respective levels of prejudice which may be anticipated on each side. Stultification 1. The appellant's case was that if the proceedings were to be stayed pending the provision of any significant amount by way of security for the respondents' costs of the appeal, the appellant would not be able to proceed. She herself had no relevant assets or capacity to raise money, neither did Mr Craig Anderson. 2. The respondents resisted that conclusion. The arguments, primarily put forward by senior counsel for the second and third respondents, were as follows. First, as a matter of principle, the court should approach claims of stultification with a degree of scepticism. Similar claims had been made with respect to the trial, but when security was ordered, it was found. 3. Secondly, whilst the appellant may have had no relevant capacity to raise funds, that was not true of Mr Anderson, who stood to benefit from the appeal if successful. He had disclosed an income (before tax) of some $700,000 per annum and enjoyed a comfortable lifestyle, including paying an estimated $2,000 per week for rental accommodation. He and his family had been able to take overseas trips to Argentina on several occasions in recent years. 4. Thirdly, the evidence disclosed that at least seven individuals had provided funding to run the trial. It should be inferred that they stood to benefit if the appeal were successful and would, in their own interests, provide further funding to ensure that an order for security was met so that the appeal would proceed. 5. Fourthly, the appellant's solicitors also had an investment in the success of the appeal, as that event was the only realistic means by which they would obtain payment of unpaid fees incurred in the course of the trial. 6. Fifthly, and perhaps rhetorically, senior counsel for the second and third respondents suggested that, if there were any real likelihood of the appeal succeeding and the appellant obtaining a significant judgment, a litigation funder "would crawl over broken glass" to provide security. However, as it appears that the only litigation funder to have shown interest at the trial stage withdrew before providing funds, this last submission may have been intended to imply that either the appeal lacked merit or, even if successful, would not return a significant judgment in favour of the appellant. 7. Putting the first matter to one side for the moment, and considering the second first, there was no dispute that the appellant herself was impecunious. However, as noted above, it is not legally correct to say that the appellant has no financial interest in the outcome of the appeal. Evidence tendered by the respondents demonstrated that Ms Anderson had entered into seven funding agreements in amounts varying between $30,000 and $500,000 and totalling $1.23 million. Each agreement provided for interest to accrue from the date of payment of the loan until repayment. It is not necessary to identify the circumstances in which repayment was due; it is sufficient that the appellant has a significant financial interest in the outcome of the appeal. 8. To the extent that, in a practical sense, Mr Craig Anderson was the likely beneficiary of a successful appeal, he has stepped forward and put his own financial circumstances in evidence. With respect to the ability of either the appellant or Mr Anderson to raise a further sum by way of security for the appeal from those who had funded the trial, he has given evidence by affidavit to the effect that he has had discussions with each of them since the primary judgment and "they have each said words to the effect that they are not prepared to 'throw good money after bad' by providing funding to pursue an appeal". [34] 9. This being an interlocutory application, there was no application to cross-examine Mr Anderson. I do not suggest there should have been. In the absence of some basis for contradicting his statements, cross-examination would not have been likely to advance the position of the respondents. However, despite the lack of cross-examination, and addressing the first point raised above, I accept that the court should approach his evidence with a degree of scepticism. Nevertheless, that exercise must be undertaken having regard to the significant level of detail in the affidavit, which covers extensively the funding arrangements which had been made with respect to the costs of the trial and as to arrangements with the appellant's solicitors, to which further reference will be made below. In short, Mr Anderson's evidence is detailed and inherently plausible. I accept that those who have provided funding in the past are not presently prepared to provide funding for the appeal and are unlikely to do so. 10. It is convenient to deal next with the submissions with respect to the appellant's solicitors. Those submissions invited the court to draw an inference that the solicitors were so heavily invested in the success of the appeal that it should be inferred that they would provide security to allow the appeal to proceed, if security were required. 11. I acknowledge that this has been treated as a relevant consideration in earlier cases. As was noted in Carter, the legitimacy of that approach found support in the reasons of Hodgson JA in Porter v Gordian Runoff Ltd, [35] upheld on appeal. [36] Nevertheless, there are troubling aspects underlying that approach. They have to do with the role of lawyers (including both solicitors and counsel) in relation to the conduct of litigation. Starting with the proposition that legal representatives should not proceed with litigation that they deem to be hopeless, the findings with respect to the merits of the appeal mean that this is not such a case. That being so, it is open to legal representatives to proceed on the basis of a contingency fee agreement which provides for a form of success fee, or simply a fee agreement contingent on acceptance that the client will be unable to meet the fees absent success in the litigation. There is no obligation on solicitors or counsel to act on such a basis. However, if an inference were to be drawn from their apparent willingness to act on a particular basis, and in circumstances where they could not reasonably be expected to give evidence as to their assessment of the merit of the case, or their own financial circumstances, such an inference might have unintended ramifications for the future conduct of litigation. 12. In the present case, there was evidence as to the amount of the costs incurred by the appellant in running the trial, the payments made to her solicitors and the ongoing arrangements with respect to the conduct of the appeal. Mr Anderson noted that the solicitors were issuing invoices monthly in the ordinary course, that one invoice had been paid and that others remained outstanding. He said that he had also paid "some fees of counsel". [37] 13. Mr Anderson also gave evidence as to the arrangements with the appellant's solicitors at trial. The original litigation funder defaulted on 4 January 2021. Attempts to obtain an alternative funder failed. The trial was due to commence on 15 February 2021. It being practically impossible for the appellant to retain new solicitors, the solicitors agreed to continue to act throughout the trial, on the basis that the Andersons pay disbursements, including counsels' fees. 14. With respect to the current arrangements, Mr Anderson stated: [38] "There is no conditional costs agreement in place, or premium payable if Daniela is successful in the appeal. Nor is any interest accruing on the unbilled work-in-progress." 1. This is not the occasion on which to reagitate the claim which was unsuccessful in Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd, [39] to the effect that litigation funding placed a solicitor acting for the funded party in a situation involving a conflict of interest and obligation. Nor is it the occasion to consider whether it is proper for a solicitor to actively fund litigation by providing security for costs to a client to permit the client to pursue an appeal. It is sufficient to decline to draw an inference, in the absence of any evidence to support it, that if security were ordered, the solicitor would make arrangements to provide it. 2. The result in Carter apparently reflected the amount that the solicitors might reasonably be expected to provide, given their interest in recovery of unpaid fees. However, the reasonableness of the expectation, and how it may be applied, will depend upon the circumstances of the individual case. There is a difficulty, as noted above, in accepting that such an expectation arises in this case in an amount which would have a material effect on the interests of the respondents in the present case. I am not prepared to draw such an inference. 3. There remains a question as to whether the income of Mr Anderson provides a basis for satisfaction that the appeal would not be stultified if security were required. 4. On the one hand, Mr Anderson is no longer in bankruptcy and remains a successful financial manager who is well remunerated for his time. Were this an ordinary appeal where the amount to be secured was in the order of $40,000-$100,000, it would be appropriate to conclude that such a sum would not stultify the appeal. However, this is not an appeal of that kind. It is not an appeal involving a single respondent, nor is it an appeal which will be conducted over one or possibly two days. While the amounts identified as the likely costs of each respondent appear to me to be excessive, I have little doubt that the costs to be incurred by each will exceed $250,000, but by how much it is impossible to say. In the absence of acceptable estimates, and with no clear basis upon which to form a different view, the proper course is for the court to accept the amounts sought by way of security (which are less than the estimated costs) for the purpose of determining of whether security should be required. 5. In this case, the five applications (involving six respondents) total, in round terms, $2 million. I am comfortably satisfied that there would be stultification if more than 15% of that figure were to be required. The further one goes beyond such an amount (which would have limited practical benefit once divided between the respondents) towards a figure which could provide significant security to respondents exercising a degree of restraint, the greater the likelihood of stultification. Whatever the common interests of the respondents, there is no suggestion that they extend to some apportionment of an order for security for costs other than on the basis of equality. Conclusions 1. Once a finding of special circumstances is accepted, the determination as to whether to award security for costs, and in what amount, lies within the discretionary powers of the court. As with most cases where an appellant is impecunious, it will follow that the respondents are at risk of incurring unrecoverable costs in defending the appeal. On the other side of the record, where an order to stay the appeal pending provision for security appears likely to stultify the appeal, the prejudice to the appellant is the inability to exercise a right of appeal with the opportunity for a favourable outcome. The balancing exercise inevitably places weight upon an imponderable factor, namely an assessment of the merit of the appeal. In the present case, I am satisfied that, on the two most important determinants of the proceeding, namely (i) whether the second and third respondents owed a fiduciary duty (and, to an extent whether the first respondent owed a fiduciary duty or was knowingly concerned in a breach by the second and third respondents) and (ii) the likelihood of the appellant establishing a valuable lost opportunity, the appellant has reasonable prospects of success. That is not an assessment as to whether it is more likely than not that the appellant will succeed on either or both points, but rather that there is substance in the appellant's arguments. 2. So far as the likelihood of stultification is concerned, a finding to that effect involves an evaluative judgment which is inherently predictive in nature. The confidence with which the judgment may be made will depend upon the extent to which the appellant, and persons likely to benefit from a successful appeal, have been forthcoming as to their circumstances and capacity to provide security. In the present case, that has involved a consideration of the position of Mr Craig Anderson and of the appellant's solicitors. As noted above, Mr Anderson's evidence, despite the criticisms made by the respondents based on past events, is detailed and plausible. So far as the position of the solicitors is concerned, as a major potential beneficiary, not being a mere "trade creditor", I am not satisfied that they can reasonably be expected to provide funds by way of security in an amount which would be meaningful in this case. In one sense, that conclusion is informed by the expected length of the appeal, the number of respondents and the evidence as to likely costs. 3. On the basis of the foregoing considerations, I do not propose to order that the appellant provide security for the respondents' costs of the appeal. Stay of costs assessment 1. With the exception of the order that the second and third defendants pay nominal damages for breach of their employment obligations, by orders made on 7 February 2022, the trial judge dismissed the plaintiff's claims with costs. On 24 May 2022, the costs judgment varied certain aspects of the costs orders, made consequential orders for the release of moneys held by way of security and provided for the fixing of the amount of a gross sum costs order with respect to each defendant. [40] Thus, order (13) read: "(13) Order that the costs ordered in favour of each of the defendants (other than the sixth defendant) be fixed on a gross sum basis, that sum to be determined by the Court subsequent to the appointment by the Court, of its own motion, pursuant to r 20.14 of the UCPR of a referee with costs assessment expertise to report on the appropriate quantum of those costs (to be determined on a broad brush evaluative basis); the costs of such referee to be borne proportionately by the plaintiff and the said defendants as to the outcome of the referral process or as assessed by the referee." 1. Order (14) directed that the parties file submissions identifying the issues to be determined in the gross sum assessment process. Order (15) proposed a timetable for the filing of additional evidence relevant to that process order. 2. On 6 June 2022, the appellant filed a notice of motion seeking a stay of the costs orders made on 7 February 2022, as varied on 24 May 2022, until the determination of the appeal or until further order. The application does not extend to the orders made in favour of the fourth and sixth defendants (now the fourth and sixth respondents) because those parties have agreed the sum in each case and the respondents have agreed to a stay of the execution of the costs orders pending determination of the appeal. [41] 3. In substance, the operative order appears to be (and was so treated in submissions) the order of referral to a referee, and the directions as to the relevant process. In substance, the stay was sought on the following bases: (i) that, to the extent that costs cannot be agreed, the process will itself involve significant expense and liability for the costs of the referee; (ii) if there is some degree of success in the appeal the assessment exercise will involve wasted costs and time; (iii) the appellant and Mr Anderson are impecunious, and (iv) being impecunious, they cannot meet the likely costs judgment in any event. 4. The countervailing prejudice to the respondents is an increase in the time within which they may obtain a judgment for their costs of the trial and the possible disposal of assets by those to be rendered liable (the Andersons). 5. With respect to the second point, which does not appear to have great practical consequence, the appellant indicated in her affidavit that she will undertake not to dispose of any significant asset until 21 days after the appeal judgment is handed down. [42] Mr Anderson, who filed a notice of appeal on 15 June 2022 challenging the third-party costs order, proffered a similar undertaking through counsel. [43] 6. One factor diminishing the prejudice to the respondents is that part-payment of costs has already been achieved through release of amounts held by way of security. Secondly, the benefit of an early and potentially unnecessary assessment process is limited. If the process were to be completed before the determination of the appeal, enforcement is likely to be stayed in any event pending that determination. 7. The proceedings have already been on foot for some six years. The orders sought to be stayed were finally determined some three months ago. The likelihood is that the appeal will be listed for hearing early in the new year. In these circumstances, the overriding principle of expeditious disposal of the appeal favours the parties focusing their attention on the forthcoming appeal. Accordingly, the Court will grant the stay with respect to those respondents who have not consented. 8. As to the costs of the motions, the appellant and Mr Anderson have been successful with respect to the stay of the assessment of costs of the trial; this stay was unsuccessfully resisted by the first, second, third and fifth respondents. Nevertheless, the stay is a form of indulgence and recovery of the costs of the motion should depend on their success in the appeal. The first to sixth respondents have been unsuccessful in their application for security for costs, but again the appellant's recovery of her costs should be dependent on success on the appeal. Orders 1. In these circumstances, the Court makes the following orders: 1. With respect to the notice of motion filed on 6 June 2022 seeking a stay of the costs orders made on 7 February 2022, as varied on 24 May 2022, upon the appellant Daniela Anderson and Craig Anderson giving written undertakings not to dispose of their assets other than in the ordinary course of business or for the purposes of funding the appeal: 1. stay orders (1)-(15) made in the Equity Division on 24 May 2022 until 21 days after the determination of the appeals, and 2. order that the costs of the stay motion be the appellant's costs in the appeal to be payable by first, second, third and fifth respondents. 1. With respect to the applications by the first to sixth respondents for security for costs filed on 23 June 2022 (first, second and third respondents), 6 July 2022 (fourth respondent), 9 August 2022 (fifth respondent) and 23 June 2022 as amended on 15 August 2022 (sixth respondent): 1. dismiss the notices of motion, and 2. order that the costs of the motions be the appellant's costs in the appeal. ********** Endnotes 1. Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58 (Ward CJ in Eq) ("primary judgment"). 2. Anderson v Canaccord Genuity Financial Ltd (No 2) [2022] NSWSC 649 ("costs judgment"). 3. Primary judgment at [1252]. 4. Primary judgment at [1247]. 5. [2007] NSWCA 247 (Ipp JA and Hoeben J agreeing). 6. [2022] NSWCA 123 at [24]-[26]. 7. Carter v Mehmet [2021] NSWCA 32 at [22] (Meagher JA). 8. [2021] NSWCA 32 at [22]. 9. Primary judgment at [1837]-[1843]. 10. [2018] NSWCA 179; 129 ACSR 265 at [152]. 11. Appellant's written submissions, 12 August 2022, par 34. 12. Primary judgment at [1845]. 13. Ibid. 14. Primary judgment at [1847]. 15. [2021] NSWCA 5 at [99] (Gleeson JA; Leeming JA and Emmett AJA agreeing). 16. (1997) 44 NSWLR 46 at 59D (Handley JA; Mason P and Beazley JA agreeing). 17. Primary judgment at [1260]. 18. Primary judgment at [1261]. 19. Primary judgment at [1261]. 20. Primary judgment at [1262]. 21. Primary judgment at [1263]. 22. Appellant's written submissions, par 159(v). 23. Primary judgment at [1253]. 24. Affidavit of David Benson, 23 June 2022, par 53. 25. Affidavit of Angelina Kozary, 24 June 2022, Annexure A. 26. Affidavit of Mark Wilks, 6 July 2022, par 30. 27. Affidavit of Michael Polozotoff, 23 June 2022. 28. Affidavit of James Melvin, 24 June 2022, par 32. 29. Tcpt, 17/08/22, p 25(38). 30. Tcpt, p 36(46). 31. Tcpt, p 43(1)-(14). 32. Tcpt, p 28(40)-29(5). 33. Tcpt, p 32(5), (19), (41). 34. Affidavit of Craig Anthony Anderson, 18 July 2022, par 84. 35. [2004] NSWCA 69 at [41]. 36. Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Bryson JA, Sheller and Giles JJA agreeing). 37. Affidavit, par 83. 38. Affidavit, par 74-79. 39. (2006) 229 CLR 386; [2006] HCA 41 at [87] (Gummow, Hayne and Crennan JJ). 40. Costs judgment at [244]. 41. Appellant's and Craig Anderson's written submissions on stay of costs orders, 1 August 2022, par 5. 42. Affidavit of Daniela Anderson 15 July 2022, par 47. 43. Appellant's and Craig Anderson's written submissions, 1 August 2022, par 12. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 August 2022