FEDERAL COURT OF AUSTRALIA

Cai v DC Rd DC Pty Ltd [2026] FCA 763

ORDERS

THE COURT ORDERS THAT:

1.    By 12.00pm on 19 June 2026, the parties are to submit a minute of orders, or separate minutes if not agreed, to give effect to these reasons.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

NESKOVCIN J:

1    The appellants in proceedings NSD254 of 2026 (Bob and Lian Parties), NSD280 of 2026 (John) and NSD296 of 2026 (Tony Corporate Parties) have commenced appeals and filed interlocutory applications seeking a stay of the judgment orders, a stay of orders for the judicial sale of certain properties and a variation of freezing orders, each made in the underlying proceeding NSD247 of 2023, pending the determination of their appeals. The respondents opposed the applications and have filed interlocutory applications for security for costs of the respective appeals.

2    In the underlying proceeding, Justice Jackman delivered judgment in DC Rd DC Pty Ltd v Zhang (Trial Judgment) [2026] FCA 16 (or TJ) and made final orders on 23 January 2026 (Judgment Orders). On 27 February 2026, his Honour made further orders for the judicial sale of certain properties and orders for the appointment of trustees to effect the sales (Judicial Sale Orders): DC Rd DC Pty Ltd v Zhang (No 6) [2026] FCA 189.

3    In the Trial Judgment and at the hearing of these applications, the appellants were referred to by their first names and, without intending any disrespect, I will do likewise. Defined terms in the Trial Judgment have the same meaning in these reasons, unless stated otherwise.

4    In summary, Bob and Lian sought a stay of the Judgment Orders and Judicial Sale Orders pending the determination of their appeal on the basis that they will suffer irreparable prejudice if the stay is not granted and they ultimately succeed on the appeal. Although they considered that a variation was unnecessary, they also sought a variation of freezing orders made on 17 March 2023 and 22 February 2024 (Bob and Lian Freezing Orders) to enable them to obtain a loan, by using the Arthur Street Property as security, or alternatively, to sell the Arthur Street Property and/or the Saiala Property, and use the proceeds to fund the appeal and the payment of security for costs, if ordered. Lian also sought a variation of the Freezing Orders against her to reflect the maximum amount for which she was found liable to the respondents in the Trial Judgment.

5    The Bob and Lian Parties relied on:

(a)    affidavits of their solicitor, Mr Zhu, dated 26 February 2026 and 31 March 2026;

(b)    an affidavit of Mr Sukkar, a registered valuer, dated 31 March 2026; and

(c)    an affidavit of Ms Bakalian, a registered valuer, dated 31 March 2026.

6    In summary, John sought a stay of the Judgment Orders on the basis that he will suffer irreparable prejudice if the stay is not granted and he ultimately succeeds in the appeal. John also sought a variation of the freezing orders made against him on 25 August 2025 (John Freezing Orders) to increase the amount he is able to incur by way of reasonable legal expenses, to allow him to fund the appeal.

7    John relied on affidavits of his solicitor, Mr Calabretta, dated 3 March 2026, 31 March 2026, 8 April 2026 and 15 May 2026.

8    In summary, the Tony Corporate Parties sought a stay of the Judgment Orders and the Judicial Sale Orders insofar as they concerned the Belrose Property.

9    The Tony Corporate Parties relied on an affidavit of their solicitor, Mr Hidayat, dated 3 March 2026.

10    The respondents opposed the applications brought by the Bob and Lian Parties, John and the Tony Corporate Parties. They submitted that they are entitled to the benefit of the Trial Judgment, a stay will deprive them of substantial sums of money and their proprietary claims over some of the appellants’ property, as determined by the Trial Judgment, tend against the variation of the freezing orders sought. The respondents sought security for their costs of the appeals on the basis that the appeals arise from a lengthy, complex and contested proceeding, in which they were overwhelmingly successful, and expose them further on the question of costs due to the impecuniosity of most of the appellants.

11    The respondents relied on two affidavits of their solicitor, Mr Korbel, dated 27 March 2026 and 2 April 2026. The respondents also tendered various documents during the hearing, some of which were produced pursuant to notices to produce and subpoenas.

12    The applications are interrelated, in that the impecuniosity of the majority of the appellants has a bearing on the prejudice to the appellants if the stay and variations are not granted, on the one hand, and the prejudice to the respondents if the stay is granted and they are further exposed on the question of costs without an order for security for costs, on the other hand.

13    For the reasons set out below, I am satisfied that the Bob and Lian Parties and John have established that it is in the interests of justice to stay the Judgment Orders and Judicial Sale Orders, as against them, pending the determination of their appeals. I am not satisfied, however, that the Tony Corporate Parties have discharged their burden of persuading the Court that a stay of the Judicial Sale Orders with respect to the Belrose Property should be granted.

14    I am further satisfied that it is in the interests of justice to vary the Bob and Lian Freezing Orders to facilitate the payment of legal costs to fund the appeal, to allow Bob and Lian to sell the Arthur Street Property to fund Bob’s and CAC’s costs in the appeal (up to their legal costs caps) and as security for costs. Similarly, I am satisfied that it is in the interests of justice to vary the John Freezing Orders to increase the legal costs cap to allow John to fund the appeal and to pay security for the respondents’ costs. I am not, however, persuaded that it is in the interests of justice to vary the freezing orders against Lian to reflect her maximum liability under the Judgment Orders.

15    Finally, I am satisfied that it is in the interests of justice to make orders, substantially in the form sought by the respondents, for security for costs of the appeals. To alleviate the asserted prejudice to the appellants, however, I will order that the security for costs be provided in tranches.

BACKGROUND

16    Before turning to the interlocutory applications, it is convenient to summarise some of the findings in the Trial Judgment and the Judgment Orders.

17    The dispute in the underlying proceeding concerned the purchase of the Denham Court Property by DC Rd, one of the respondents, from 30 Denham, a company associated with Tony and Bob.

18    In July 2019, the Denham Court Property was sold to DC Rd by 30 Denham for $45 million plus GST, by a contract which settled simultaneously with 30 Denham’s purchase of the same property for $14 million plus GST: TJ [6].

19    The parties agreed that, as at 25 July 2019, the Denham Court Property was worth $10,800,000: TJ [7]. Broadly, at trial, the respondents sought to recover the difference of approximately $32 million (the DC Rd Proceeds) which they said was misappropriated by the appellants.

20    Justice Jackman relevantly found that Tony was liable to pay damages to DC Rd for misleading and deceptive conduct, pursuant to s 236 of the ACL. As to 30 Denham, his Honour found that it held the DC Rd Proceeds on a constructive trust, at TJ [280], and that 30 Denham breached its fiduciary duty as constructive trustee by disbursing the DC Rd Proceeds, at TJ [343]. Furthermore, his Honour found that Bob knowingly assisted in 30 Denham’s dishonest and fraudulent design and breach of fiduciary duty as constructive trustee of the DC Rd Proceeds: TJ [278]–[279].

21    As against Lian, Jackman J found that Lian received part of the DC Rd Proceeds as a volunteer, with notice, which moneys were traceable to assets held by Lian and her related entities, including the Turramurra Property, acquired in part by using $1,571,000 of traceable funds, and the Bob and Lian ANZ Account 1814, into which $2,400,000 of the DC Rd Proceeds was paid: TJ [342], [343] and [346].

22    As against John, Jackman J found that John engaged in misleading and deceptive conduct by representations and omissions, and was liable to pay damages to DC Rd in the amount of approximately $5.5 million: TJ [445]–[454]. John was also liable to account in the amount of $150,000: TJ [412] and [475].

23    On 23 January 2026, Jackman J made the Judgment Orders, which relevantly included the following orders against Tony and the Tony Corporate Parties:

(a)    an order that Tony pay damages to DC Rd pursuant to s 236 of the ACL in the amount of $36,866,947.94 plus interest;

(b)    an order that Link account to DC Rd in the amount of $19,739,471.93 plus compound interest;

(c)    an order that DC Rd is entitled to an equitable charge over the proceeds of sale of lots in the Smithfield Property, to secure the amount of $3,718,601 plus simple interest;

(d)    an order that Belrose COB account to DC Rd in the amount of $18,299,990 plus compound interest; and

(e)    a declaration that Belrose COB holds the whole of the Belrose Property on constructive trust for DC Rd.

24    As against Bob and the corporate entities associated with Bob, Jackman J relevantly ordered that:

(a)    Bob pay equitable compensation to DC Rd in the amount of $36,866,947.94 plus compound interest;

(b)    Bob and CATA pay damages to DC Rd pursuant to s 236 of the ACL in the amount of $36,866,947.94, plus interest;

(c)    CTD account to DC Rd in the amount of $12,073,962, plus compound interest;

(d)    CAC account to DC Rd in the amount of $5,000,000, plus compound interest; and

(e)    CAGA to account to DC Rd in the amount of $5,357,657.21, plus compound interest.

25    In relation to the claims that Lian received part of the DC Rd Proceeds as a volunteer, which moneys were traceable to assets held by Lian and her related entities, the Judgment Orders against Lian relevantly included:

(a)    orders requiring Lian to account to DC Rd in the amount of $1,571,000, plus interest;

(b)    a declaration that Lian holds the Turramurra Property on constructive trust for DC Rd to the extent of securing the amount of $1,571,000 plus interest;

(c)    a declaration that Lian holds $1,000,000 plus simple interest in the Lian CBA Account 7759, as a constructive trustee for DC Rd and an order requiring Lian to pay that amount to DC Rd;

(d)    a declaration that DC Rd has an equitable charge over the Herbert Street Property to secure the amount of $590,000, plus simple interest;

(e)    a declaration that Saiala holds the Saiala Property on constructive trust for DC Rd to the extent of securing the amount of $1,900,000 plus simple interest, and is liable to account to DC Rd for that amount including interest;

(f)    a declaration that Clarence 104 holds the Clarence 104 Property on constructive trust for DC Rd to the extent of securing the amount of $266,657.21 plus simple interest, and is liable to account to DC Rd for that amount plus interest; and

(g)    a declaration that DC Rd is entitled to an equitable charge over the DSZ Clarence Street Properties to secure the amount of $930,000, plus simple interest.

26    As regards John, Jackman J ordered John to pay damages to DC Rd pursuant to s 236 of the ACL, in the amount of $5,530,042.19, plus interest, and ordered John to account in the amount of $150,000, plus interest.

27    On 27 February 2026, Jackman J made the following additional orders:

(a)    the Judicial Sale Orders, including orders for the appointment of Trustees for the sale of:

(i)    relevantly to the Bob and Lian Parties, the Turramurra Property, Herbert Street Property, Saiala Property, Clarence 104 Property and DSZ Clarence Street Properties; and

(ii)    relevantly to the Tony Corporate Parties, the Belrose Property; and

(b)    an interim stay of orders in respect of certain of the Judicial Sale Orders pending the determination of these stay applications.

STAY APPLICATIONS

28    Broadly speaking, the appellants sought a stay of the Judgment Orders and Judicial Sale Orders pending the determination of the appeals on the basis that they will suffer irreparable prejudice if the stay is not granted and they ultimately succeed on the appeals.

29    The particular grounds on which the appellants brought their respective applications, and the respondents’ position in response to each application, are discussed further below.

30    The respondents did not oppose a stay of the Judicial Sale Orders in relation to the Turramurra Property. For the purpose of the stay applications, the respondents conceded that the appeal is arguable and agreed to undertake not to take steps to bankrupt Bob and John, or to wind up the corporate parties, if the stay was not granted.

31    During the course of the hearing, the respondents made one further concession. The appellants submitted that they would face irreparable prejudice due to the significant risk that any moneys recovered and paid to DC Rd pursuant to the Judgment Orders and Judicial Sale Orders would not be recovered, because DC Rd has paid up share capital of $1 and negative net assets. In response, the respondents agreed that any proceeds recovered from the sale of the properties under the Judicial Sale Orders or from the Judgment Orders should be “quarantined”, pending the outcome of the appeal.

32    Before turning to the detail of the individual cases, it is convenient to set out the relevant principles.

Legal principles

33    The applications for a stay were brought pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and rr 36.08, 41.03 and/or 41.11 of the Federal Court Rules 2011 (Cth).

34    Section 23 relevantly provides:

The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.

35    Rules 36.08, 41.03 and 41.11 provide:

36.08  Stay of execution or proceedings under judgment appealed from

(1)    An appeal does not:

(a)    operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or

(b)    invalidate any proceedings already taken.

(2)    However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.

...

41.03  Application for stay of judgment or order

A party bound by a judgment or order may apply to the Court for an order that the judgment or order be stayed.

Note: The party may rely on events occurring after the judgment or order takes effect.

...

41.11  Stay of execution

A party may apply to the Court for a stay of execution of a judgment or order.

36    The principles relevant to an application to stay the execution of orders were not in dispute and were summarised by Jagot J in Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 2) (2010) 88 IPR 633; [2010] FCA 1212 at [15], which I gratefully adopt, as follows:

(1)    “A successful party is presumed to be entitled to the benefits of the judgment obtained” (Advanced Building Systems v Ramset Fasteners (Aust) Pty Ltd (1997) 145 ALR 121 at 122).

(2)    An “applicant for a stay has the burden of persuading the court that it should be granted” (Advanced Building Systems at 122) but it is not necessary to show special or exceptional circumstances (Henderson v Amadio Pty Ltd (1996) 136 ALR 593 at 595 applying Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685).

(3)    “The court, in the exercise of its discretion, will not hesitate to stay proceedings when it is necessary to preserve the subject matter or integrity of the litigation. Nor will the court hesitate to grant a stay where the refusal of a stay could create practical difficulties in terms of the relief which [the] court could grant” (Advanced Building Systems at 122).

(4)    It is relevant to consider whether “there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed” (Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at 223).

(5)    Another relevant consideration is whether the proposed appeal is genuine and based on reasonable grounds (Henderson v Amadio Pty Ltd at 595).

(6)    Relevant also is the willingness or not of a party to give an undertaking as to damages. Hence, in Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited [2001] FCA 1750 at [10] Red Bull’s refusal to give such an undertaking, thereby exposing Sydneywide to irrecoverable loss if Sydneywide succeeded in its appeal, was described as “a factor which is clearly relevant to the exercise of the discretion to grant a stay”, however it proved insufficient to displace the presumption that Red Bull was entitled to the benefit of its judgment (at [20]).

37    Where the Court is satisfied that any subsequent appeal or review would be rendered nugatory should a stay be refused, this will be a substantial factor in favour of granting a stay: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695 (Kirby P, Hope and McHugh JJA). Generally, that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance: Commissioner of Taxation v Myer Emporium Ltd [1986] HCA 13; (1986) 160 CLR 220 at 223 (Dawson J).

38    The only limitation on the Court’s broad discretion to grant a stay is that it must be exercised judicially: National Australia Bank Limited v Norman [2009] FCAFC 13 at [44] (Finn, Lander and Besanko JJ). In Quach v MLC Limited [2022] FCAFC 202 at [81] (Collier, Perry and Thomas JJ), in summarising the principles that apply to the exercise of the discretion to grant a stay by reference to an earlier decision, the Full Court endorsed earlier observations that the balance of convenience plays an important role in determining whether a stay should be granted and the Court will consider whether a stay is warranted in the interests of justice.

The parties’ submissions

Bob and Lian Parties

39    The Bob and Lian Parties submitted that, absent a stay, they will suffer serious, largely irreversible prejudice such that any successful appeal would be rendered nugatory.

40    In particular, the Bob and Lian Parties submitted that:

(a)    the Turramurra Property is the family home of Bob, Lian and their son, and the sale of the Turramurra Property would cause irremediable personal disruption, particularly because the property is close to their son’s school. This asserted prejudice was, however, addressed by the respondents agreeing to a stay of the Judicial Sale Orders with respect to the Turramurra Property;

(b)    if the stay is not granted and the properties associated with Bob and Lian are sold, they will incur costs associated with the sale (i.e. agent fees and the Trustees’ costs), which they will not be entitled to recover if the appeal is successful. They further noted that the respondents had not proffered an undertaking to indemnify the parties for such non-recoverable costs;

(c)    similarly, if the properties are sold, they will incur the costs of purchasing alternative properties in the future, such as stamp duty, for which they would not be compensated if the appeal is successful;

(d)    if the stay is not granted and the properties are sold, in addition to incurring non-recoverable costs associated with the sale, the properties could not be restored to the appellants if the appeal succeeds;

(e)    insofar as the Herbert Street Property is a residential investment property, the Bob parties would be unable to acquire a property on equivalent terms if the stay is not granted in light of changes to the rules around negative gearing announced in the recent Federal Budget;

(f)    if the properties are sold and the proceeds are paid to DC Rd, Bob and Lian may suffer irreparable financial prejudice due to the risk that they may not be able to recover the moneys from DC Rd if the appeal is successful. This concern was, however, addressed by the respondents offering to quarantine the sale proceeds;

(g)    although the respondents had agreed to give undertakings to the effect that they would not take steps to bankrupt Bob or commence winding up proceedings against the corporate entities, the respondents could still take other enforcement actions, such as seeking garnishee orders, including against Lian.

41    The Bob and Lian Parties submitted that they had strong prospects of success in the appeal, which should weigh in favour of granting the stay. However, the authorities are clear that it is generally inappropriate to speculate as to the prospects of success of an appeal in a stay application except to consider whether the appeal is arguable: In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2) [2020] FCA 772 at [25] (Katzmann J) and Master Wealth Control Pty Ltd v Australian Competition and Consumer Commission [2024] FCA 1024 at [74] (Halley J).

John

42    John sought a stay of the Judgment Orders against him, for damages in the amount of approximately $5.5 million and to account to DC Rd in the amount of $150,000.00, plus interest. There are no Judicial Sale Orders against John.

43    John’s most significant asset is the Warrawee Property, which is subject to a mortgage and has available net equity of approximately $3.75 million. That sum obviously is insufficient to cover the judgment debt against John.

44    John submitted that, absent a stay of the Judgment Orders and notwithstanding the respondents’ limited undertaking (not to bankrupt him), he will suffer irreparable harm if the respondents take steps to enforce the Judgment Orders. As was submitted on behalf of John, the undertaking given by the respondents would not prevent them from taking other steps to enforce the Judgment Orders, including seeking garnishee orders. John further submitted that enforcement of the Judgment Orders against him could constitute a breach of covenant under the mortgage over the Warrawee Property, which would allow the bank to declare an event of default and foreclose on the mortgage.

45    The evidence showed that John has expressed an interest in selling the Warrawee Property. John has agreed to give the respondents’ solicitors at least two working days’ notice of his intention to engage any agent, lawyer or conveyancer in connection with the sale or proposed sale of the Warrawee Property. John submitted that this regime and the John Freezing Orders adequately protects the respondents’ interests, because it would allow the parties to return to Court to seek a variation order of the John Freezing Orders in the event that the property is to be sold, at which time the Court can decide how the proceeds should be disbursed.

46    It was not in dispute that DC Rd is an investment vehicle of the Sit Family, and that the respondents collectively have significant funds. John led evidence that the Sit Family has acquired real property in New South Wales from 2019 to 2023 valued at almost $350 million, excluding the purchase of the Denham Court Property. John submitted that given the wealth of the respondents, there is negligible financial prejudice to the respondents in staying the Judgment Orders with respect to John, compared to the potential for irreparable prejudice to John’s financial circumstances if steps are taken to enforce the judgment against him.

Tony Corporate Parties

47    The Tony Corporate Parties’ application for a stay was limited to seeking a stay of the Judicial Sale Orders with respect to the Belrose Property, once the respondents confirmed that they would not take steps to bankrupt individuals or wind up the corporate parties.

48    In relation to the sale of the Belrose Property, it was submitted that the property is not fully tenanted and requires improvement works to put the property in the best possible position prior to sale. Apparently, this has been the subject of some discussion between the parties and, in June 2025, the Tony Corporate Parties sought a variation of the freezing orders against Tony to permit him to deal with assets for the purpose of spending $550,000 to undertake improvement works. It was common ground that no such works have yet been undertaken.

49    The Tony Corporate Parties submitted that, if the Judicial Sale Orders are not stayed and the Belrose Property is to be sold, the Trustees may decide that such works should be undertaken, which could have the following adverse impacts on the Tony Corporate Parties if the appeal succeeds and the Judicial Sale Orders are set aside:

(a)    there could be a dispute as to who should be liable for the Trustees’ fees in acting pursuant to the Judicial Sale Orders; and

(b)    if the works are not completed and the Belrose Property is not sold (but the appeal succeeds and the Judicial Sale Orders are set aside) it is unclear whether the Trustees would have a right of restitution in respect of costs and fees incurred, and an interest in the property until such costs and fees are repaid.

The respondents

50    The respondents submitted that, consistently with the legal principles set out above, the starting position is that a successful litigant is entitled to the benefit of the judgment and the onus is on the appellants to demonstrate a proper basis for a stay. The respondents further submitted that, after years of litigation and having been defrauded of a substantial sum of money, they obtained a significant outcome in their favour and they should not be deprived of the benefits of the judgment any longer.

51    While the respondents concede that the appeal is arguable, they submitted that the appellants face significant obstacles in the appeal having regard to the findings in the Trial Judgment of “brazen fraud and dishonesty” and adverse credit findings against Bob, Lian and John.

52    As to the prejudice to the respondents if the stay is granted, the respondents pointed to the detriment of being deprived of the benefit of the judgment and substantial sums of money, for which they have had no recovery for over six years. To a large degree, the respondents’ submissions were framed in terms that Jackman J declared that the respondents had equitable interests in certain properties owned by the appellants and constructive trusts over significant sums of money, which the respondents described as “their properties” (to the extent of their interest) and “their money”. As a result, it was submitted, a stay would deprive the respondents of “their property” and “their money”.

53    Conversely, the respondents submitted that the prejudice to the appellants if the stay is refused has been addressed by the respondents’ undertaking not to take steps to bankrupt individuals, except for Lian who is solvent, or wind up the corporate parties, and by agreeing to a stay of the Judicial Sale Orders in relation to the Turramurra Property. The respondents also submitted that the potential prejudice to the appellants if DC Rd is unable to repay money recovered from the appellants would be addressed by the respondents’ willingness to quarantine any moneys recovered.

54    The respondents did not specifically address the prejudice to the appellants from the non-recoverable costs associated with the sale of the properties. However, the respondents raised the following further matters as reasons why the stay should not be granted:

(a)    The accounting firm that had previously been conducted by Bob and CATA has been sold. It was not clear what bearing this was meant to have on whether or not a stay should be granted. It is also noted that the respondents contemplated seeking a freezing order to protect their interests in the proceeds of sale. Following the hearing, CATA agreed to undertake not to dissipate any funds received from the sale, except to pay legal expenses and liabilities incurred in the ordinary course of its business. As a result, I infer, the respondents have not sought a further freezing order.

(b)    The stay is sought in relation to parties who played no part in the proceeding, namely CTD and CAGA. That may be so, however, their interests were affected by key findings regarding the constructive trusts and tracing remedies, regardless of whether they participated or not.

(c)    Several of the corporate parties have no assets, such as CAC, and were proposing to run up legal costs in prosecuting the appeal. It is not clear what bearing this had on whether or not to grant a stay, except that it would potentially reduce the pool of assets available to the respondents to enforce the Judgment Orders.

(d)    Bob and Lian have indicated a willingness to sell the Arthur Street Property and Saiala Property, which suggests there is no prejudice to the appellants from the sale of the properties. As will be seen below, the proposed sale of the Arthur Street and Saiala Properties is to fund the appeals (see paragraph 74 below).

(e)    Lian has significant assets in her name and no real prejudice will be suffered by Lian if the stay is not granted, particularly in circumstances where the respondents have agreed to undertake not to take steps to wind up the corporate entities, to quarantine any proceeds and to stay the Judicial Sale Orders in relation to the Turramurra Property.

(f)    Lian has not given an undertaking to pay any damages that the respondents might suffer if the stay is granted and the appeal does not succeed.

(g)    No prejudice arises to the appellants from the sale of the properties, which are investment properties, other than the Turramurra Property which the respondents have agreed should be the subject of a stay.

(h)    In relation to the only other residential investment property (the Herbert Street Property), there was no evidence that the Herbert Street Property is tenanted in order to demonstrate that Bob is currently entitled to negative gearing tax benefits that would be lost if the property was sold.

Determination

55    As already mentioned, the respondents conceded that the appeal is arguable for the purpose of the stay application. However, as matters stand, the respondents are presumed to be entitled to the benefit of the Trial Judgment: Advanced Building Systems v Ramset Fasteners (Aust) Pty Ltd [1997] HCA 24; (1997) 145 ALR 121 at 122 (McHugh J); Sigma at [15] (Jagot J).

56    Ultimately, I am required to consider the balance of convenience and whether the interests of justice favour a stay of the Judgment Orders and Judicial Sale Orders.

57    The evidence suggests that the appellants, except for Lian, are impecunious and do not have sufficient assets to pay the amounts owing under the Judgment Orders. As a result, the respondents will not be able to recover the full amounts owing under the Judgment Orders. That position is likely to worsen as the appeal continues in light of ongoing interest on the judgment debts and the legal costs associated with the appeal.

58    In relation to the Bob and Lian Parties, I am satisfied that they will suffer irreparable prejudice if the stay is not granted for the following reasons. First, the Bob and Lian Parties will not be able to be restored to their current position because they are likely to incur non-recoverable costs for which the respondents have not agreed to provide an indemnity. Secondly, if the Herbert Street Property is sold, and even if they acquire another residential investment property, it will not be subject to the negative gearing rules that currently apply. Although there was no evidence before the Court as to whether the Herbert Street Property is currently tenanted, the Herbert Street Property is encumbered and, as a result, I infer that Bob would be unable to buy an equivalent property subject to any tax benefits currently available. Thirdly, the undertakings not to take steps to bankrupt Bob or wind up the corporate parties would not prevent the respondents from taking steps to enforce the Judgment Orders more broadly.

59    It was not in dispute that the respondents have undertaken significant property investments since 2019 and have access to substantial funds. There was no suggestion that a stay would compromise the continuity of their business or investments. The prejudice to the respondents if the stay is granted is delay in recovering what they can and the risk that the appellants’ financial position will worsen over time.

60    The respondents’ position is somewhat protected by the Bob and Lian Freezing Orders (referred to in paragraphs 66 – 67 below), and by the caveats and equitable charges lodged to protect their interests. I have taken into account the potential prejudice to the respondents, if the stay is granted, in determining Lian’s application to vary the freezing orders against her. Lian sought a reduction in the value of her assets caught by the freezing order, from $4,216,010 to $2,571,000, to reflect her maximum liability under the Judgment Orders. However, this lesser amount does not take into account any liability for costs or further interest that may accrue if the appeal is not successful. To ensure the respondents are not further exposed, I would not vary the freezing orders in the manner sought by Lian as effectively the “price” of the indulgence granted to her by the stay.

61    I also note that the Bob and Lian Parties have consented to orders, as a condition of the stay, that they be required to provide regular reports to the respondents regarding the status of the properties and assets the subject of the stay. This includes providing monthly disclosure of income and expenditure on each property, and information as to the recipients of the income.

62    As to John, I am satisfied that he will suffer irreparable prejudice if the stay is not granted. As John submitted, taking steps to enforce the Judgment Orders could cause irreparable prejudice if such enforcement steps constitute a breach of covenant under his existing mortgage and the financial institution declares an event of default.

63    The John Freezing Orders provide the respondents with some protection. I note that, if John wishes to pursue the sale of the Warrawee Property to allow him to access equity to fund the appeal, and the respondents agree, the respondents can approach the Court to ensure their interests are protected by seeking an amendment of the freezing orders in respect of the proceeds of sale.

64    For those reasons, I am satisfied that the balance of convenience favours a stay of the Judgment Orders and Judicial Sale Orders in relation to the Bob and Lian Parties and John. In my assessment, the potential prejudice to the Bob and Lian Parties, and John, if the stay is not granted and the appeal succeeds outweighs the potential prejudice to the respondents if the stay is granted. I also consider that granting the stay, with respect to the Bob and Lian Parties and John, is consistent with the overarching purpose under s 37M of the FCA Act as it will reduce the potential for wasted costs and injustice if the Judgment Orders and Judicial Sale Orders are enforced and the appeals subsequently succeed.

65    As to the Tony Corporate Parties, once the respondents confirmed that they would not take steps to bankrupt individuals or wind up corporate parties, their application was limited to a stay of the Judicial Sale Orders with respect to the Belrose Property. I am not satisfied that the Tony Corporate Parties have discharged their burden of persuading the Court that a stay of the Judicial Sale Orders with respect to the Belrose Property should be granted. The Tony Corporate Parties have indicated that they are prepared to sell the Belrose Property. Indeed, they sought a variation of the freezing orders to allow them to access funds to undertake works to ensure the property is in the best possible position prior to sale. They did not seek to explain why the works had not progressed prior to now or suggest that the works should not occur. They merely raised questions or concerns about who might be liable for the works if the Trustees take steps to sell the property, but the property is not sold and the appeal ultimately succeeds. Furthermore, at the hearing, senior counsel for the Tony Corporate Parties said that his clients were open to a “consensual arrangement” about the work to be done and who should bear the costs. It would seem that the concerns raised on behalf of the Tony Corporate Parties are matters which they can try to resolve with the Trustees and the respondents. In those circumstances, I am not persuaded that it is in the interests of justice to grant a stay of the Judicial Sale Orders with respect to the Belrose Property.

VARIATION TO FREEZING ORDERS

Bob and Lian Parties

66    On 17 March 2023, the Court made freezing orders in the following amounts against Bob and his corporate entities:

(a)    $36,000,000 plus interest for Bob;

(b)    $12,073,962 plus interest for CTD;

(c)    $5,000,000 plus interest for CAC; and

(d)    $5,357,657.21 plus interest for CAGA.

67    On 22 February 2024, the Court made further freezing orders for the following amounts against Lian and her corporate entities after they were joined to the proceeding:

(a)    $4,216,010 for Lian;

(b)    $1,999,000 for Saiala; and

(c)    $1,331,894.28 for Clarence 104.

68    The Bob and Lian Freezing Orders included carveouts which, as at the last variation to the orders on 24 June 2025, increased the legal costs caps to a total of $1,600,000, distributed across the following parties:

(a)    $350,000 for Bob;

(b)    $350,000 for CAC;

(c)    $300,000 for Lian;

(d)    $300,000 for Saiala; and

(e)    $300,000 for Clarence 104.

69    The solicitor for the Bob and Lian Parties, Mr Zhu, gave evidence that, to date, the Bob and Lian Parties have been invoiced a total of approximately $2.3 million for legal costs in these proceedings. Furthermore, the invoices have largely been paid, and, where they have, that has been through funds provided by CATA, Clarence 104 and DSZ Accountants. That is to say that, outside of Clarence 104 which has utilised all but $9,162.72 of its cap, the legal costs caps for Bob, CAC, Lian and Saiala have not been utilised, because the costs incurred to date by those parties have been paid from alternative sources. Over $1,300,000 in the legal costs cap remains to be utilised.

70    Mr Zhu’s evidence was that Bob, in the event a stay is not granted, has insufficient assets (other than the Herbert Street Property and the Arthur Street Property) to pay the further anticipated legal costs. Bob is the sole registered proprietor of the Herbert Street Property. His estimated equity in it is less than $200,000. The Herbert Street Property is subject to an equitable charge, in the amount of approximately $600,000: Judgment Orders, at [15]. The Arthur Street Property is owned by Bob and Lian as joint tenants and is not subject to the Judgment Orders or the Judicial Sale Orders. Bob’s estimated equity in the Arthur Street Property is between $650,000 – $900,000.

71    Lian’s financial position is set out in paragraph 105 below, in the context of the application for security for costs. The respondents say that Lian’s net equity is worth over $5.5 million and she has access to ample funds, despite the freezing orders.

72    Mr Zhu addressed the financial position of the entities that have been paying the Bob and Lian Parties’ legal costs. Mr Zhu’s evidence was to the effect that CATA and Clarence 104 have insufficient assets to fund the appeal, within the cost caps imposed on them. The asset position with respect to DSZ Accountants, being an appellant and an entity controlled by Lian, was not specifically addressed by Mr Zhu. However, the respondents suggested that DSZ Accountants has at least $1.1 million in assets and is subject to an equitable charge of $900,000 pursuant to the Judgment Orders (see paragraph 105 below), which was not contested.

73    The Bob and Lian Parties estimate that they will incur approximately $1,300,000 (including GST) in future costs in prosecuting the appeal and finalising the first instance proceeding. The 24 June 2025 variation to the exception in the Bob and Lian Freezing Orders (referred to above at paragraph 68) expressly contemplated a sharing mechanism, whereby, relevantly, Bob, Lian, CAC, Saiala and Clarence 104 are able to use their costs cap to fund the others’ legal fees.

74    Lian proposes to fund her appeal from her own funds, up to the cost cap imposed on her. Bob, CAC, Saiala, and Clarence 104 intend to utilise the balance of the legal costs cap to fund the appeal. To do so, and to liquidate their assets into funds, the Bob and Lian Parties sought to vary the Bob and Lian Freezing Orders to:

(a)    allow the Bob parties to use the Arthur Street Property, to the extent of Bob’s equity in it, as security for a loan to fund the costs of the appeal and any further costs in these proceedings, loan fees and any further steps in the proceeding and the appeal (including the payment of security for costs, if ordered); and

(b)    permit the Bob and Lian Parties to sell the Arthur Street Property (of which Bob and Lian are the registered proprietors) to repay the loan referred to above; or

(c)    permit the Bob and Lian Parties to sell the Arthur Street Property and apply the proceeds to the payment of legal fees, and any further steps in the proceeding and appeal (including the payment of security for costs, if ordered), with the balance to be paid into Court; and

(d)    permit Saiala to use the Saiala Property as security for a loan and/or to sell the Saiala Property to assist in funding the appeal.

75    Although they considered that a variation was unnecessary, the Bob and Lian Parties sought to vary the Bob and Lian Freezing Orders to expressly allow the above steps to be taken, if the Court was so minded. I consider that to be the prudent course to avoid any disputation later.

76    Lian also sought to vary the Bob and Lian Freezing Orders against her to reflect her maximum liability under the Judgment Orders. For the reasons mentioned above in paragraph 60, I am not prepared to amend the Bob and Lian Freezing Orders in this manner as it unnecessarily risks prejudice to the respondents’ position and I am not satisfied that it is in the interests of justice to do so in this case.

John

77    On 25 August 2025, Jackman J made the John Freezing Orders against John in the amount of $36,000,000. That order included an exception by which John was not prohibited from paying up to $50,000 on legal expenses incurred in that proceeding. By consent orders made on 11 September 2025 and 27 November 2025, the exception for legal expenses was varied and increased to $900,000.

78    John’s primary asset is the Warrawee Property, which is valued at approximately $18 million and is subject to a mortgage in the amount of approximately $14.2 million. Accounting for the offset account linked to that mortgage, John’s equity in the Warrawee Property is approximately $3.86 million.

79    The evidence suggested that John’s net assets, before the judgment debt is considered, are approximately $3.9 million. Including the judgment debt, John’s net assets are negative $4 million.

80    John has incurred approximately $750,000 of his legal costs cap. His solicitor estimates he will incur approximately $30,000 more in respect of the first instance proceeding and $325,000 in legal costs in respect of the appeal.

81    John sought a variation of the John Freezing Orders to lift the legal costs cap from $900,000 to $1,200,000. The respondents opposed the variation on the basis that it would cause a further reduction of John’s assets, which are not sufficient to pay the judgment debt against him.

Legal principles

82    It is trite that a freezing order is not intended to operate as a form of de facto security: Goumas v McIntosh [2002] NSWSC 713 at [27] (Barrett J). Rather, it exists to enable a court to protect its process from abuse in relation to the enforcement of its orders and minimise the possibility of an unscrupulous defendant rendering itself judgment proof by taking steps which are liable to produce the result that no assets are within the jurisdiction on the day of judgment: Deputy Commissioner of Taxation v Shi (2021) 273 CLR 235; [2021] HCA 22 at [21]–[22] (Gordon J, with whom Kiefel CJ, Gageler and Gleeson JJ agreed). However, upon entry of a judgment, a freezing order ceases to be an order contemplated to operate until the final disposition of the proceeding and its purpose is to protect the efficacy of the future execution of the judgment debt: Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 618 at [21] and [25] (Jagot J).

83    Generally, a variation of a freezing order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application. However, where, as here, a judgment debt exists and remains unpaid, the Court must determine whether it is in the interests of justice for the freezing order to be varied: Huang (No 4) at [19], [25].

84    Different principles also apply to the variation of a freezing order where a party has a present proprietary entitlement under a judgment already entered in relation to the property the subject of the freezing orders: National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900 at [111] (Henry J); Westpac Banking Corporation v Forum Finance Pty Ltd (Freezing Order variation No 2) [2022] FCA 1206 at [11]–[13] (Thawley J); CIP Group Pty Ltd v So (No 5) [2024] FCA 1373 at [24]–[25] (Derrington J). In the case of a proprietary claim, in contrast to a claim for damages, the courts will be more protective of the property in question and a “careful and anxious judgment” is required: Waterproofing Technologies Pty Limited v Perri (No 3) [2025] FCA 934 at [53] (Moore J).

85    The exception that is generally made in a freezing order for living expenses and legal costs recognises that the freezing order cannot extend to prevent a defendant from having access to its own assets to the extent necessary to meet legitimate expenses such as ordinary living and business and legal expenses: Deputy Commissioner of Taxation v Bollands (2012) 90 ATR 679; [2012] FCA 1050 at [22] (McKerracher J).

86    Once a judgment debt is entered, the continuation or inclusion of any exception from the freezing order for the payment of living expenses, the ordinary costs of business, and/or legal costs for any matter involves a discretionary decision to be exercised in all of the circumstances of the case, having regard to the overall interests of justice. It should not be presumed that the exception of reasonable legal expenses will continue (if a freezing order is continuing) or will be included (if a freezing order is to be made) once a judgment debt has been entered: Huang (No 4) at [25].

The respondents’ submissions

87    The respondents opposed the variations sought.

88    First, the respondents submitted that the Bob and Lian Parties’ estimated costs of $1.3 million, inclusive of GST, was excessive. That submission took force from the juxtaposition with the respondents’ estimated costs of less than $800,000, in circumstances where they are responding to three separate appeals.

89    Secondly, the respondents submitted that the Bob and Lian Parties had not discharged what was said to be their onus, because there was insufficient evidence to show that there was no alternative source of funds available to fund the appeal, in circumstances where, to date, their legal fees have been paid by other entities, as to which, see paragraph 69 above.

90    Underlying that submission was the contention that different principles apply to the variation of the Bob and Lian Freezing Orders because the respondents have a present proprietary entitlement, under the Judgment Orders, in relation to property that is the subject of the freezing orders: Human Group at [111] (Henry J); Forum Finance at [11]–[13] (Thawley J); CIP Group at [24]–[25] (Derrington J). Essentially, the respondents’ submission appeared to be that the starting point is that the Bob and Lian Parties are not entitled to a variation unless they can demonstrate that the interests of justice weigh in their favour: Human Group at [109] – [111]; Forum Finance at [12] – [13]. As there was insufficient evidence that undisclosed sources of funds have been exhausted, so the submission went, the Bob and Lian Parties had not discharged their onus of showing that the interests of justice weigh in their favour because they will not be able to fund the appeal.

91    Thirdly, and as regards the consequences of the variations sought, the respondents submitted that they have a proprietary interest over the Saiala Property, which the Bob and Lian Parties seek to diminish through the proposed variation. With respect to the Arthur Street Property, the respondents submitted that the proposed loan would reduce the net equity in the property to around $350,000, which would be insufficient to meet any judgment in the respondents’ cross-appeal.

92    Finally, the respondents submitted that it was relevant that the freezing orders were made because a risk of dissipation of assets was established. That was said to take extra force where the Trial Judgment involved findings of fraud and dishonesty by the parties the subject of the freezing orders.

Determination

93    As already mentioned, different principles apply to exceptions to freezing orders, where, as here, a judgment has been entered and a proprietary remedy is made out. Post judgment, the inclusion of an exception to a freezing order for payment of legal costs involves a discretionary decision to be exercised in all of the circumstances of the case having regard to the overall interests of justice.

94    The weighing of the interests of justice may involve a consideration of whether a defendant, or here the appellants, has shown that it is necessary for them to have access to funds over which a proprietary claim is made in order to defend the proceedings: Human Group at [112]. That factor is at the crux of the issue here.

95    As already mentioned, the cost caps of Bob, CAC, Lian and Saiala have not been utilised. The funding of the proceedings to date has come from what the respondents described as “undisclosed” alternative sources. However, as set out above at paragraph 69, and contrary to the respondents’ submissions, the Bob and Lian Parties did disclose the sources that have been used to fund the costs of the proceeding to date. That evidence did not, however, adequately address the financial position of all of the appellants, notably DSZ Accountants. As also mentioned above, at paragraph 72, the respondents submitted that DSZ Accountants has equity of approximately $200,000, with which the Lian parties did not cavil.

96    Without the sought variation to the Bob and Lian Freezing Orders, the Bob parties will have insufficient liquid assets to prosecute their appeal. The Arthur Street Property is not the subject of any Judgment Order and the respondents have no proprietary interest in it.

97    I am satisfied that it is in the interests of justice to vary the Bob and Lian Freezing Orders, to facilitate the payment of legal costs to fund the appeal, to allow Bob and Lian to sell the Arthur Street Property, which is owned by them jointly for the purpose of accessing Bob’s equity in the property (ie, approximately $650,000 – $900,000) to fund Bob’s and CAC’s costs in the appeal up to the existing costs cap (ie, $350,000 each), and towards security for costs. The balance of the proceeds of sale should be paid into Court pending the determination of the appeal. I am not satisfied, however, that it is appropriate to vary the Bob and Lian Freezing Orders to allow Bob to enter into a loan agreement on the terms proposed. The terms are onerous, in particular, they include an interest rate of 18%, a default rate of 27% and a 2.4% loan management fee.

98    Furthermore, I am not satisfied that it is appropriate to vary the Bob and Lian Freezing Orders to allow Lian to enter into a loan agreement or to sell the Saiala Property to fund Saiala’s costs in the appeal. Saiala is a company controlled by Lian: TJ [42]. The Saiala Property is subject to a constructive trust in favour of the respondents. Lian and her entities have sufficient funds to pay for the appeals within the applicable costs caps. Lian has not demonstrated that the loan or sale of the Saiala Property are necessary to fund Saiala’s costs of the appeal. In reaching this determination, I have had regard to the need to be protective of the respondents’ proprietary claim in the Saiala Property: Perri (No 3) at [53]; Huang (No 4) at [25].

99    I am satisfied that it is in the interests of justice to vary the John Freezing Orders to allow John to incur a further $300,000 in legal costs. If the freezing order variation is not made, John will be unable to prosecute his appeal given his current costs cap.

SECURITY FOR COSTS

100    The respondents sought security for costs of the appeal from the appellants, in the amount of $616,000. The respondents estimate they will incur costs in the appeal of between at least $650,000 to $750,000. To calculate the amount sought by way of security, the respondents rounded that estimate to $700,000 and estimated that they would recover about 75% to 80% of their costs on taxation, if they are successful on appeal. The respondents apportioned their costs across John’s and the Tony Corporate Parties’ appeals, as to 30% each, with the balance against the Bob and Lian Parties’ appeal.

101    The upshot was that the respondents sought:

(a)    $246,000 by way of security for costs of the appeal from the Bob and Lian Parties;

(b)    $185,000 from John; and

(c)    $185,000 from the Tony Corporate Parties.

102    The appeal is not yet listed for hearing and, as such, is unlikely to be heard before November 2026. On that basis, the majority of the costs associated with the appeal will likely be incurred from September 2026 onwards.

103    Broadly, the respondents submitted that the three appeals are brought from lengthy, complex and contested first instance proceedings in which they were overwhelmingly successful. They submitted that their application for security for costs ought to be considered in the context of both the stay and variation applications, and the interrelatedness of all three. As a result, so the submission went, the prejudice suffered by the respondents as a result of the stays should, at least partially, be ameliorated by an order for security for costs and any variation to the two sets of Freezing Orders should include security for the respondents’ costs.

104    As regards the Bob and Lian Parties specifically, the respondents submitted that their notice of appeal is extensive, such that there is a real risk that costs will be incurred unnecessarily by the respondents. The respondents submitted that the Bob parties are impecunious and there was, at the minimum, a real risk that they would not be able to satisfy an adverse costs order. Furthermore, Bob’s evidence disclosed that, if he is unsuccessful on appeal, he would have insufficient assets to satisfy the primary judgment, so his inability to meet an adverse costs order made against him on appeal is a fortiori.

105    As regards Lian and her related entities, the respondents submitted:

(a)    Lian’s evidence revealed she has sufficient funds to meet an adverse costs order;

(b)    Saiala, an entity controlled by Lian, has approximately $3,500,000 in assets, being its equity in the Saiala Property, which is the subject of an approximately $1,900,000 constructive trust pursuant to the Judicial Orders;

(c)    Clarence 104, an entity controlled by Lian, has approximately $800,000 in assets, which are the subject of an approximately $250,000 constructive trust; and

(d)    DSZ Accountants, an entity controlled by Lian, appeared to have $1,100,000 in assets, which are the subject of an approximately $900,000 equitable charge.

106    Factoring in the amounts payable under the Judgment Orders by the Lian parties, and recognising that interest will continue to accrue until the appeal is determined, and the costs that the Lian parties will incur in respect of the appeal, the respondents submitted that there is a significant risk that Lian and her related entities, Saiala, Clarence 104 and DSZ Accountants, will be unable to meet an adverse costs order, if the appeal is unsuccessful. As no undertaking had been provided by anyone standing behind those entities, the respondents submitted that an order for security for costs should be made.

107    As regards John specifically, the respondents submitted that John’s evidence disclosed that he would be unable to pay the judgment debt ordered against him, and his inability to pay an adverse costs order on appeal is a fortiori.

108    In relation to the Tony Corporate Parties specifically, the respondents submitted that Link has no assets and is not trading, and Smithfield 40 has sold its assets since the Trial Judgment and has limited funds. Furthermore, Belrose COB, which holds its main asset, the Belrose Property, on constructive trust pursuant to the Judicial Orders, will be unable to meet an adverse costs order if the appeal is unsuccessful. As no undertaking had been provided by anyone standing behind those entities, an order for security for costs should be made.

Legal principles

109    The principles in relation to the Court’s power under s 56 of the FCA Act and r 36.09 of the Rules to order security for costs were conveniently summarised by Abraham J in Lehrmann v Network Ten Pty Limited [2024] FCA 1226 at [16]–[26] and Colvin J in Hillier v Martin (No 24) [2026] FCA 273 at [7]–[9], the first of which concerned security for costs applications in an appeal.

110    The relevant principles are as follows:

(a)    The power to order security is discretionary and has been described as “broad”.

(b)    The only limitation on the discretion is that it is to be exercised judicially.

(c)    The Court’s discretion is to be exercised having regard to the interests of justice in the particular circumstances of the case.

(d)    The type of factors which have been considered as relevant on such applications include whether the application has been brought promptly, the prospects of success, whether the appellant is impecunious such that they would not be able to satisfy a costs order against it and whether the appellant is a natural person or a corporation.

(e)    The considerations identified in other cases are not a checklist of matters to be brought to account as part of the balancing exercise in every case. Whether a consideration has significance and, if so, the weight that it should be afforded, will depend upon the particular circumstances.

(f)    Although courts are disinclined to order security against natural persons, even if impecunious, it has been recognised that being a natural person is no bar to an order for security for costs.

111    In cases where an order for security for costs has been made against a natural person, some factor in addition to impecuniosity has been present: see Knight v Beyond Properties Pty Ltd [2005] FCA 764 at [32]–[33] (Lindgren J) and the cases cited at [33]. See also Lehrmann at [23] and Hillier v Martin at [9].

112    Furthermore, where security for costs is sought against an appellant who has lost at trial, different considerations may apply, see 33 South Pty Ltd v Fitzgerald [2008] FCA 1960 at [6]–[7], where Jagot J quoted the following passage in Tait v Bindal People [2002] FCA 322 at [2]–[4] (Spender J):

2    The position in relation to security for costs in the present matter is governed by s 56 of the Federal Court of Australia Act 1976 (Cth). Section 56 provides that security is to be of such amount and given at such time and in such manner and form as the Court or Judge directs. As to whether security for costs should be ordered, Cowell v Taylor (1885) 31 Ch D 34 at 38, a case of more than 100 years ago, sets out the fundamental principle:

“The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another”.

3    What that passage demonstrates is that there is a difference in principle in relation to the ordering of security for costs in a first instance matter and the ordering, or the consideration of the ordering, of security for costs where one is at the appellate level. The difference is that, at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought and, if it be shown that there is a substantial risk that even if successful the respondent to the application for leave to appeal, or to an appeal, will be deprived of his costs, such an outcome would clearly be unjust.

4    In a sense, it would be giving to a person who has been on the receiving end so to speak of a determination by the courts a free hit at great cost to the other party in the appeal proceedings. That consideration, it seems to me, is also reinforced by the judgment of Gummow J in Wiest v Director of Public Prosecutions and Anor (1988) 23 FCR 472. That case involved appeals against extradition with penal consequences. Such consequences were clearly very relevant considerations, but discretionary reasons moved the Court to order security for costs. Such discretionary considerations, which were particularly noted by Gummow J, included the delay between the filing of the papers and the bringing of the applications for security. His Honour referred to a particular circumstance which is relevant here, and that is that the applicant for security has a judgment in its favour. There was a reference by Gummow J to Bethune v Porteous (1892) 18 VLR 493, again an old case. In that case, Hood J said (at 494):

“the reason underlying the numerous and varying cases in which appellants have been ordered to give security will be found in the injustice to a successful litigant that may be caused if he be compelled to contest the matter for a second time without a probability of obtaining his costs if ultimately successful.”

That really is the fundamental question of justice behind my decision to order security for costs.

Determination

113    In relation to the Bob and Lian Parties, it may be accepted that the Bob parties are impecunious, in the sense that they do not have sufficient assets to satisfy the judgment debts against them. Although Lian is not impecunious, the respondents did not seek to separate her liability from that of Bob or their corporate entities, and counsel for the Bob and Lian Parties did not object to the respondents treating the Bob and Lian Parties together, for the purpose of security for costs, subject to the quantum as between them. Furthermore, as already noted, the fact that Bob and Lian are natural persons is no bar to an order for security for costs.

114    The respondents accept that the appeal is arguable. In determining this application, it is unnecessary to comment further on the appellants’ prospects of success or the likelihood that an adverse costs order might be made, because, in my assessment, there are other factors, in addition to the appellants’ impecuniosity, that are more influential in determining whether the interests of justice in this case are best served by making an order for security for costs.

115    First and foremost, the respondents were successful at the trial but, in light of the stay, they will be precluded from recovering on the judgment until after the appeal. The stay suspends the enforcement of the Judgment Orders, and the variation to the Bob and Lian Freezing Orders allows the appellants to prosecute the appeals. However, it also generates a further potential unfairness for the respondents because the financial position of the appellants is likely to deteriorate further on account of interest accumulating on the judgment debt and the legal costs of the appeals. That unfairness can, in part, be alleviated by requiring the appellants to provide security for costs of the appeal, a proposition which senior counsel for the Bob and Lian Parties accepted. Absent an order for security for costs, it would be unfair to the respondents to be put to further costs in the appeal, which they are unlikely to recover due to the impecuniosity of the appellants. In view of the orders I propose to make regarding the stay and freezing order variation applications, I am satisfied that an order for security for costs will not stultify the Bob and Lian Parties’ appeal.

116    In relation to John, he submitted that an order for security for costs will cause considerable prejudice to him because the respondents seek an order for security within 14 days. There was no submission that the appeal will be stultified by a security for costs order, if the stay is ordered. John’s primary asset is the Warrawee Property in which he has net equity of approximately $3.9 million. It appears that John is meeting fortnightly mortgage repayments of approximately $42,000. John has expressed interest in selling the Warrawee Property and has agreed to a regime with the respondents that may allow him to sell the property, which would allow him to access the equity in the property.

117    An order that security for costs be provided in three tranches of $50,000 and one tranche of $35,000, with the smallest tranche being paid first, from the beginning of August 2026, will alleviate the asserted prejudice to John of an order for security for costs.

118    In relation to the Tony Corporate Parties, they did not suggest an order for security for costs would stultify their appeal. Their objection was that an order was not justified having regard to their prospects of success. Furthermore, they said that the vast majority of the time and expense associated with the respondents’ preparation for and participation in the appeal arises because of the respondents’ notice of contention. Finally, it was also submitted that the quantum sought as against them specifically was excessive.

119    The Tony Corporate Parties’ submission in relation to the quantum of security sought was not persuasive. First, there was no evidence from a costs consultant disputing the reasonableness of the quantum. Secondly, the respondents’ costs do not appear excessive having regard to the appellants’ own estimated costs of the appeal.

120    To the extent the Tony Corporate Parties’ appeal points would be run anyway, as part of other appeals, and therefore would not cause additional costs to be incurred, that reasoning cuts both ways. There is no reason why those costs should be solely attributed to the other parties’ appeals. Further, the respondents’ notice of contention would not have been filed if it were not for the Tony Corporate Parties’ appeal. Finally, as the respondents pointed out, the Tony Corporate Parties have since served an Amended Notice of Appeal, which has not yet been accepted for filing.

121    I will order the appellants pay security for the respondents’ costs in instalments, as follows:

(a)    the Bob and Lian Parties, in the amount of $246,000, to be payable in four equal, monthly tranches, commencing 3 August 2026;

(b)    John, in the amount of $185,000, to be payable in three tranches of $50,000 and one tranche of $35,000, with the smallest tranche being paid first, commencing on 3 August 2026; and

(c)    the Tony Corporate Parties, in the amount of $185,000, to be payable in three tranches of $50,000 and one tranche of $35,000, with the smallest tranche being paid first, commencing on 3 August 2026.

122    Unless an alternative arrangement is agreed by the parties, the security for costs must be paid into Court. To address a concern raised by the respondents, the order will be accompanied by a direction that the amount paid into Court be placed into an interest-bearing account.

CONCLUSION

123    I will hear the parties on the form of orders to give effect to these reasons.

Associate:

Dated:    17 June 2026

SCHEDULE OF PARTIES