Clifffall Pty Ltd v Wollongong City Council

1. [1]

   By notice of motion filed on 28 April 2026 the first respondent, Wollongong City Council (the Council), seeks security for its costs of the appeal pursuant to rr 51.50(1) and 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), and s 1335 of the Corporations Act 2001 (Cth) (Corporations Act).

Background

1. [2]

   The appellant appeals against orders made by Pike J on 18 February 2026, dismissing the appellant's claim against the Council and Transport for New South Wales (TfNSW) for what the appellant alleges is an obstruction of access to the appellant's undeveloped land at 339 Lawrence Hargrave Drive, Clifton, NSW (the Land) due to the construction of a cycleway and walkway in the road reserve of Lawrence Hargrave Drive: see Clifffall Pty Ltd v Wollongong City Council [2026] NSWSC 84. The cycleway and walkway prevent any vehicular access to the Land. The appellant sought to enforce a right of access purportedly conferred by s 6 of the Roads Act 1993 (NSW) (Roads Act) and sought relief including an order in the nature of mandamus requiring the Council and TfNSW to grant the appellant access to the boundary between the Land and Lawrence Hargrave Drive. The appellant also brought a claim in nuisance in the alternative.

2. [3]

   The appellant's notice of appeal, which was filed on 5 March 2026, contains a single ground concerned with the primary judge's construction of s 6(2) of the Roads Act.

3. [4]

   Section 6 of the Roads Act provides:

4. [5]

   Relevantly, the question before the primary judge was whether the reference to “those rights” in subs (2) was a reference to rights conferred by the common law only or whether it was also a reference to the rights conferred by subs (1). Following the earlier decisions in Thomas v Symons [2013] NSWSC 490 and Tanner v The Minister for Education and Training (2002) 119 LGERA 321; [2002] NSWLEC 40, the primary judge held that the latter construction was the correct one, with the result that any rights the appellant had under subs (1) were subject to the right of the Council to “erect a structure or carry out a work in, on or over a public road” in accordance with s 138 of the Roads Act.

5. [6]

   A question arose at the time the notice of appeal was filed whether the appeal was competent having regard to the fact that both the appellant and the respondent assert that the value of the Land is less than $100,000: see Supreme Court Act 1970 (NSW), s 101(2)(r). However, according to evidence filed by the appellant, the value of the land in around September 2023, when the appellant still enjoyed vehicular access, was $500,000 whereas its value now, as a consequence of the construction of the cycleway and walkway, is $50,000, with the result that there is evidence before the Court that the amount in dispute exceeds the $100,000 threshold. Following the filing of that evidence, on 20 April 2026, the Registrar gave directions for the filing and service of appeal books.

6. [7]

   The appellant was incorporated on 2 December 2020. It has a paid up share capital of $20.00. It owns the Land as trustee of the Clifffall Trust. One of its directors is Mr Peter Khouri. On 27 March 2026, the solicitor for the appellant wrote to the solicitor for the Council enclosing a signed undertaking to the Court from Mr Khouri stating:

7. [8]

   There is a question concerning Mr Khouri’s net worth. Originally, he provided a certificate from his accountant saying that his net assets were approximately $7 million, although it transpired that that certificate related to Mr Khouri and entities associated with him. In a subsequent certificate, the accountant stated that Mr Khouri’s net assets were $3,188,270 consisting of a property in Mays Hill estimated to be worth $2,550,000 and a loan to a related company of $1,286,365 less a bank loan of $648,095.

8. [9]

   The evidence is that the Council has incurred $203,341.64 (including GST) in costs in respect of the hearing at first instance. Mr Balasubramanian, a partner of Marsdens and the Council’s solicitor, estimates that the Council will recover approximately $180,000 on assessment. Mr Balasubramanian also estimates that Marsdens’ professional costs of the appeal will be $30,000 (plus GST and disbursements) and that its costs of the current application will be $8,000 (plus GST and disbursements). He gives evidence that Marsdens have briefed Mr David O’Connor and Mr Michael Connor in the appeal, who have estimated their fees at $25,000 (plus GST) and $20,000 (plus GST) respectively, making the Council’s total costs of the appeal to be $83,000 (plus GST). In giving those estimates, Mr Balasubramanian gives an indication of the work that he expects to be done and sets out Marsdens’ charge out rates, which appear to be reasonable. However, he does not attempt to give a breakdown of what work he expects to be done by each solicitor and the expected charge for that work.

9. [10]

   The appeal is well advanced. The blue books have been prepared. The appeal has been set down for hearing on 9 July 2026.

Relevant principles

1. [11]

   UCPR r 51.50 gives the Court power to order security for costs of an appeal “in special circumstances”. The principles relating to an order for security under UCPR r 51.50(1) were summarised in these terms by Basten JA (with whom Ipp JA and Hoeben J agreed) in Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18]:

2. [12]

   The existence of special circumstances is a necessary, but not necessarily sufficient, condition. Matters relied upon as special circumstances are likely also to weigh in favour of the residual discretion: Brown v King [2022] NSWCA 75 at [8]-[10] (Kirk JA).

3. [13]

   The Council alternatively relies on s 1335(1) of the Corporations Act, which relevantly provides:

4. [14]

   Section 1335 provides a separate and independent basis for ordering security against a corporate appellant from that provided by UCPR r 51.50 and its predecessors: see Winnote Pty Ltd (in liq) v Page (2005) 64 NSWLR 244; [2005] NSWCA 362 (Mason P) and the cases cited there.

5. [15]

   Whether security should be ordered in accordance with s 1335 is to be determined by reference to the principles applicable to that section, not the principles applicable to UCPR r 51.50. UCPR 51.50 does not in any way constrain the operation of s 1335: see Pioneer Park Pty Ltd (in liq) v ANZ Banking Corporation [2007] NSWCA 344.

Consideration

1. [16]

   I have concluded that this is not an appropriate case in which to order security.

2. [17]

   I accept that the threshold requirement of s 1335 (that it appears by credible testimony etc) has been satisfied in this case. I also accept that it is not necessary for the Council to establish special circumstances to obtain security under s 1335. However, there are several matters which, when taken together, make it appropriate to refuse security in this case.

3. [18]

   First, in my opinion, the appeal has reasonable prospects of success. Moreover, I accept the appellant’s submission that the appeal raises a question of some public importance because it raises a question concerning the scope of the right conferred by s 6 of the Roads Act, which has consequences beyond the current dispute. The fact that the appeal raises a question of public importance is a reason for refusing security: see Merribee Pastoral Industries Pty Ltd v Australia and New Zealand Banking Group Limited (1998) 193 CLR 502; [1998] HCA 41.

4. [19]

   Second, the appeal is substantially well advanced, and the appellant has already incurred significant costs in relation to it. The appellant should not be put in a position where it must either provide security or throw those costs away.

5. [20]

   Third, the costs of the application for security appear to be disproportionate to the costs of the appeal itself. Mr Balasubramanian’s estimate of the costs of the appeal itself appears to be excessive. The only issue on appeal is the correct construction of s 6 of the Roads Act. The appeal is likely to take no more than half a day. In that context, the estimate of $75,000 (plus GST) seems excessive. It is, for example, not clear why two counsel are required. And insufficient information has been given to understand why the solicitor costs of preparing for the appeal itself are $30,000 (plus disbursements and GST), given that the responsibility for preparing the appeal books falls on the appellant. Consequently, the recoverable costs of the appeal itself if the respondent is successful are likely to be substantially less than $75,000 (plus GST). On the other hand, it is apparent from the material contained in the court book for the motion that a significant amount of work has been done in preparing for the motion seeking security for costs. Mr Balasubramanian estimates the cost of that work to be $8,000, which does not appear to be unreasonable having regard to the work that has been done. That estimate does not include counsel fees. Applications for security for costs on appeal where the appeal has reasonable prospects of success and the costs of the application are not justified by the amount of security that is likely to be awarded should be discouraged.

6. [21]

   Fourth, the undertaking given by Mr Khouri to the Court provides the Council with adequate security in the circumstances. It is unfortunate that Mr Khouri initially provided the Council with a certificate from his accountant that was misleading. However, the evidence does establish that Mr Khouri owns real property, albeit as a joint tenant. The second certificate also indicates that Mr Khouri is owed a substantial sum of money by a related entity, which itself owns real property. The first certificate provided by Mr Khouri’s accountant suggests that there may be other sources available to him to meet any costs order made in favour of the appellant. Mr Khouri faces the prospect of being made bankrupt if any costs order is not met. It is reasonable to infer that he will have a strong incentive to take steps (such as calling on the loan to the related entity) to enable him to meet any costs order in favour of the Council. It is true, as the Council submitted, that Mr Khouri has not provided primary records which would give a clear picture of his financial position and that of entities related to him. But again, that fact must be considered in the context of the amount in issue. Moreover, as the appellant points out, there is no evidence that the Council pressed it for additional information concerning Mr Khouri’s financial affairs after his accountant provided the second certificate.

Orders

1. [22]

   The first respondent’s notice of motion dated 28 April 2026 is dismissed with costs.