Federal Court of Australia

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 9) [2025] FCA 275

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent’s interlocutory application filed on 5 March 2025 is dismissed.

2.    The first respondent is to pay the applicant’s costs of the interlocutory application.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 6 September 2022 I made orders (6 September Orders) in this proceeding following a lengthy hearing and the publication of reasons on 16 June 2022: see Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar [2022] FCA 691 (Stolyar (No 1)). Andrew Scott in his capacity as the trustee of the bankrupt estates of Ian Stolyar and Beth Ngoc Nguyen (Trustee) is the applicant in the proceeding, Faina Stolyar is the first respondent and Fanchel Pty Ltd, a company in Mrs Stolyar’s control, is the second respondent. The bankrupts, Ian Stolyar and Beth Ngoc Nguyen, are respectively Mrs Stolyar’s son and daughter in law.

2    Since that time there have been a number of interlocutory applications filed variously by the Trustee and Mrs Stolyar which have come before me for resolution. One of the more recent such applications which is now before me for resolution is the interlocutory application filed by Mrs Stolyar on 5 March 2025. In that application Mrs Stolyar seeks the following relief (as written):

1    The orders made on 17 September 2024 be stayed as per r 41.03 of the Federal Court Rules 2011 (Cth), pending the outcome of an application to set the Judgement and Orders aside as per r 39.05(d), of the Federal Court Rules 2011 (Cth).

2    An order pursuant to Rule 41.11 of the Federal Court Rules 2011

3    An order that a charge over property known as 5/41 Francis Street, Bondi Beach, being the land in folio identifier 5/SP17061, be removed from being charged in equity as security to the Applicant.

4    The Applicant Andrew John Scott, to be removed as a Receiver over property known as 5/41 Francis Street, Bondi Beach.

5    The Applicant is to refund Respondent all the rental income that he collected since becoming a Receiver of the property.

6    The Applicant is to pay the Respondent $855,235.33 in liu of funds lost as a result of non-compliance of Court orders.

3    Having regard to her interlocutory application, Mrs Stolyar effectively seeks two categories of relief:

(1)    the first concerns a property known as 5/41 Francis Street, Bondi, New South Wales (Francis Street Property). Mrs Stolyar seeks that the Trustee be removed as receiver of that property, that his charge over the Francis Street Property be removed and that the Court’s orders appointing the Trustee as receiver be stayed in the meantime (paras 1 to 5). The orders by which the Trustee was appointed as receiver of the Francis Street Property were made on 17 September 2024: see in Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 7) [2024] FCA 1068; and

(2)    for the Trustee to pay Mrs Stolyar $855,253.33 because of his non-compliance with the Orders made by the Court in relation to the sale of a property known as 701/152-162, Campbell Parade, Bondi, New South Wales (Campbell Parade Property) (para 6).

4    However, as developed in submissions made by Mrs Stolyar and on her behalf by Mr Stolyar who, with the Court’s approval and the Trustee’s consent, appeared to assist Mrs Stolyar who is not legally represented, the two are connected and are founded upon the proposed sale of the Campbell Parade Property to Andrew John Kroger, which did not complete.

background

5    The hearing which resulted in the 6 September Orders concluded on 22 June 2021. Among others, the claims in that proceeding concerned the Campbell Parade Property which at the time was owned by Mrs Stolyar.

6    On 30 July 2021 Mrs Stolyar entered into a contract for the sale of the Campbell Parade Property with Mr Kroger for $9 million. Prior to that time the Trustee had lodged a caveat on the title of the Campbell Parade Property being caveat number AP417330 (Campbell Parade Caveat).

7    On 26 November 2021 the Court made Orders (26 November Orders) including the following Orders to facilitate the sale of the Campbell Parade Property:

9.    Pursuant to s 74MA of the Real Property Act 1900 (NSW) the applicant is ordered to withdraw caveat number AP417330 to enable completion of the sale by the first respondent of the land known as 701/152 Campbell Parade, Bondi Beach (Campbell Parade) to take place on 1 December 2021.

10.    The first respondent shall apply the proceeds of sale of Campbell Parade (including, for the avoidance of doubt, any deposit upon it being released) as follows:

(a)    to sales agent’s commission and expenses of the sale;

(b)    to the conveyancer’s costs and disbursements of the sale;

(c)    to the discharge of the mortgage on the title of Campbell Parade to the National Australia Bank;

(d)    to the discharge of the mortgage registered on the title to the properties registered in the name of the first respondent known at 11/2 Ocean Street, North Bondi and 5/41 Francis Street, Bondi; and

(e)    the balance (Balance) is to be paid to the applicant’s solicitors to be dealt with in accordance with Order 11 below.

11.    The applicant is to cause his solicitors to invest the Balance in an interest-bearing account or accounts with an Australian authorised deposit-taking institution as defined by the Banking Act 1959 (Cth), and to not otherwise deal with the Balance or any interest accrued upon it except:

(a)    in accordance with the written direction of both the applicant and the first respondent; or

(b)    pursuant to further order of the Court.

12.    The applicant shall be entitled to lodge a caveat on the title to the property known as 5/41 Francis Street to notify his interest under Order 5(a) made on 23 April 2020.

8    On 29 November 2021 Matthews Folbigg, solicitors for the Trustee, provided a copy of the 26 November Orders to Paffas Lawyers, the solicitors for Mr Kroger. Among other things they informed Paffas Lawyers that:

On Friday, 26 November 2021, orders were made by the Federal Court in the above proceedings, in relation to the sale of the Property (“the Orders”). The Trustee has been ordered to withdraw the Caveat and in exchange, Ms Stolyar is required to apply the proceeds of sale in accordance with Order 10 of the Orders.

9    On 30 November 2021 Matthews Folbigg wrote to Sydney Law Practice, at the time the solicitors for Mrs Stolyar. Their letter, which set out the Trustee’s views of the matters which were to be attended to by Mrs Stolyar in accordance with the 26 November Orders, included:

Sale of Campbell Parade

9.    Pursuant to Order 10 of the Orders, Ms Stolyar is required to apply the proceeds of sale of the property known as 701/152 Campbell Parade, Bondi Beach (“Campbell Parade”) as follows:

(a)    to sale agent’s commission and expenses of the sale;

(b)    to the conveyancer’s costs and disbursements of the sale;

(c)    to the discharge of the mortgage on the title of Campbell Parade to the National Australia Bank (“the NAB Mortgage”);

(d)    to the discharge of the mortgage registered on the title of the properties registered in the name of Ms Stolyar known as 11/2 Ocean Street, North Bondi and 5/41 Francis Street, which is owed to Bendigo and Adelaide Bank (“the Bendigo Mortgage”); and

(e)    the balance is to be paid to our office to be dealt with in accordance with Order 11.

10.    In order to allow the settlement to take place and for the funds to be distributed in accordance with Order 10, would you please arrange for our office to be added to any PEXA settlement for the sale of Campbell Parade as soon as possible.

11.    Once we are added to the PEXA workspace for the settlement of Campbell Parade, we confirm the Trustee will arrange for his caveat over Campbell Parade to be withdrawn as part of the settlement transaction.

12.    We confirm that the balance of the proceeds of sale will need to be paid into the following account as part of the PEXA settlement:

Name:    Matthews Folbigg Pty Ltd Trust Account

BSB:    062 223

Account:    10498397

Reference:    191056

13.    Once the balance of the proceeds of sale are received in our above trust account, we will then arrange for those funds to be placed into a controlled monies account in accordance with Order 11.

The Mortgages

14.    Would you please confirm that your client will be arranging for the NAB Mortgage and the Bendigo Mortgage to be discharged as part of the PEXA settlement and accordance with order 10(d) of the Orders.

15.    Once you have reviewed the enclosed orders and the above letter, please urgently let us know if you disagree with any aspect of the obligations of Ms Stolyar and Fanchel as outlined in this letter, and if so, the details and basis for any such disagreement.

10    On 30 November 2021 Bonnie McMahon, a solicitor in the employ of Matthews Folbigg, joined the PEXA workspace for the settlement of the sale of the Campbell Parade Property on behalf of the Trustee in his capacity as a caveator on title.

11    On 1 December 2021, after a conversation with Dominic Carbone, a solicitor with Sydney Law Practice, Ms McMahon sent an email to Mr Carbone in which she wrote:

I refer to our earlier telephone discussion regarding the above matter.

As discussed, we look forward to receiving the proposed settlement figures for the distribution of the proceeds of sale of the above property. We understand that your client is still confirming their instructions regarding these figures, but you will send them through as soon as possible.

Provided any proposed distribution is in accordance with Order 10 of the orders made by her Honour Justice Markovic on 26 November 2021, we confirm that we are ready to sign off on our client’s withdrawal of caveat and on the financial settlement, so that the sale can settle today.

Please note we have allocated the balance of the proceeds to be paid to our trust account on the PEXA workspace, as a figure was required to be entered in order to record our trust account details on the workspace. Once we are able to confirm with you the final figures to be paid at settlement, including the amount which will be paid to our firm’s trust account, we will amend the figure to the final agreed amount.

12    On 9 December 2021 Sydney Law Practice sent a letter to Matthews Folbigg which canvassed several matters, including in relation to the Campbell Parade Property:

22.    On 30 July 2021 the contract for sale of Campbell Pde for $9,000,000.00 exchanged.

23.    Faina’s intention is to apply the proceeds of sale of discharge the $3,300,000 National Australia Bank loan secured against Campbell Pde and the $1,300,000 Adelaide Bank loan secured against 11/2 Ocean Street and 5/41 Francis Street, leaving about $4,400,000 as net proceeds.

24.    Faina also wishes to improve the Point Piper property by renovating it. She expects to have to spend between $700,000 to $1,000,000 on those renovations. She expects the renovations will increase the value of the Point Piper property.

25.    Faina also requires funds on which to live.

26.    The Orders made on 26 November 2021 require variation. We enclose draft orders of variation. Could you please urgently obtain instructions in regards to them.

27.    In particular these draft variation orders seek to:

(a)    release Francis Street;

(b)    expand the security interest for the Trustee in Point Piper to include it as a substitute for Campbell Parade - so as to in return permit Faina to access $1,200,000 of the net proceeds of sale of Campbell Parade;

(c)    remove the need for Faina to disclose any bank account that is not a loan to her.

28.    There is some urgency about this: the completion of the sale of Campbell Parade is now overdue. Faina wants to resolve the above issues before completion.

29.    Could you please telephone the writer at your earliest convenience.

13    The draft “orders of variation” enclosed with Sydney Law Practice’s letter referred to in the preceding paragraph included:

7.    Order 10 made on 26 November 2021 be varied by replacing the words in 10(e) with the following “... $1,200,000.00 to be paid to the First Respondent; and...” and including 10(f) which is to read: “...the balance (Balance) is to be paid to the applicant’s solicitors to be dealt with in accordance with Order 11 below.”

8.    Order 12 made on 26 November 2021 be deleted.

9.    Order that the interest in 5/41 Francis Street, Bondi the applicant was granted by Order 5 made on 23 April 2020 is now at an end.

14    On 13 December 2021 Matthews Folbigg responded to Sydney Law Practice’s letter dated 9 December 2021. They wrote (omitting formal parts):

We refer to your letter dated 9 December 2021 and your telephone discussion with Bonnie McMahon of our office on 10 December 2021.

The majority of the matters raised in your letter, were already argued before the Court on 26 November 2021.

We note that pursuant to Order 11(a) of the orders made on 26 November 2021 (“the Orders”), after the proceeds of sale of Campbell Parade are paid into an interest-bearing account which will be organised by our office, funds can be released from that account in accordance with a written direction of both the applicant and the first respondent.

As indicated to the Court by the [Trustee’s] counsel during the hearing on 26 November 2021, the [Trustee] will be prepared to consider providing a written direction for the release of some of the funds, provided the request is reasonable and adequate evidence regarding the purpose of the release is provided.

In circumstances where the Orders already enable the release of funds in the manner proposed by your client, subject to an agreement being reached, the [Trustee] does not agree that there is any need for the Orders to be varied in the form proposed by your client, nor does the [Trustee] believe that there is any urgency in relation to the Orders being varied before the settlement of Campbell Parade.

Therefore, we confirm that the [Trustee] is not prepared to consent to the Orders being varied in the form proposed by your client or to the orders made on 23 April 2020 and 14 December 2020 being varied.

We confirm the [Trustee] is ready, willing and able to proceed with settlement of the sale of Campbell Parade, as soon as your client confirms that the proceeds of sale will be distributed in accordance with Order 10 of the Orders.

We look forward to your client confirming that she is ready to proceed with settlement of the sale, in accordance with the Orders.

15    On 21 January 2022 Mr Carbone sent an email to Archie Paffas of Paffas Lawyers in which he wrote:

Further to our email to you today, we attach signed irrevocable direction and authority by the vendor to our firm with respect to the completion of the contract.

In relation to the completion and the delay, we make the following observations: -

1    Our vendor client will complete the contract for sale.

2    The vendor is in dispute with the trustee of the estate of Ian Stolyar who is the son of the vendor. She is attempting to negotiate a satisfactory distribution of the sale funds, and if necessary, file an interlocutory application before Justice Markovich of the Federal Court of Australia to seek a variation of the current orders.

3    Justice Markovich conducted a 2 week hearing of this dispute in May and June 2021 and judgement has been reserved and not yet been delivered, but it is anticipated that it will be delivered soon.

4    Draft Interlocutory application has been prepared and will be filed before the end of the month. We are confident that a resolution of the matter will be achieved by the end of February so as to enable us to complete the purchase.

5    The attached signed Irrevocable Authority and Direction comments the vendor to completion no later than 25 March 2022 as a worst-case scenario, but we are quietly confident that a completion may take place sometime during February 2022.

We note that the notice to complete has been extended to Friday 28 January 2022 and we shall be in further communication with you next week.

16    On 3 February 2021 Mr Paffas responded to Mr Carbone’s email in the following terms:

We are instructed my client accepts your client’s signed irrevocable direction and authority.

We hereby extend our client’s notice to complete so that it now expires at 4pm on Friday 25 March 2022.

We will amend the settlement date on the PEXA workspace accordingly.

Please note our client is happy to complete the contract any day earlier than 25 March 2022 if your client wishes to settle earlier than such date.

Our client looks forward to settlement occurring on or before 25 March 2022.

17    On 11 February 2022 Matthews Folbigg again wrote to Sydney Law Practice. Their letter included:

The PEXA workspace indicates that settlement for the sale of 701/152 Campbell Parade, Bondi Beach NSW 2026 (“the Property”) is now scheduled to occur on 25 March 2022.

Would you please confirm that 25 March 2022 is the new date for settlement, so that the Trustee can ensure settlement is ready to proceed on that date.

We confirm that the orders made on 26 November 2021 are still in place (“the Orders”) and Ms Stolyar must apply the proceeds of sale of the Property in accordance with Order 10.

18    On 9 March 2022 Matthews Folbigg sent a further letter to Sydney Law Practice which relevantly included:

We refer to the above matter and note we have not received any update from your office regarding settlement of the sale of the Campbell Parade property or our previous correspondence regarding Ms Stolyar’s failure to comply with the orders made on 26 November 2021 (“the Orders”).

Sale of the Campbell Parade Property

1.    Pursuant to the Notice to Complete served on your client by the purchaser, Ms Stolyar was required to complete the Contact for Sale of the Campbell Parade property by Friday, 17 December 2021.

2.    Notwithstanding the above, the PEXA workspace for settlement of the Campbell Parade property indicates that:

(a)    Settlement has not been completed;

(b)    Settlement has been rescheduled to occur on 25 March 2022; and

(c)    Your office has not accepted the invitation to the PEXA workspace.

3.    Would you please confirm that settlement will now occur on 25 March 2022.

4.    We take this opportunity to remind your client of order 10 of the Orders, which requires Ms Stolyar to transfer the balance of any proceeds of sale of Campbell Parade, including the deposit, to our trust account.

…

Response Requested

15.    In light of the matters set out in this letter, could you please as soon as possible:

(a)    Confirm that settlement of Campbell Parade’s sale is to occur on 25 March 2022, or otherwise what is occurring in respect of that sale;

…

19    On 16 March 2022 Ms McMahon sent an email to Mr Carbone in which she wrote:

I refer to the above matter, our earlier telephone discussion and our previous letters to your office dated 13 December 2021 and 9 March 2022, to which we have not received any response.

As discussed, it has been brought to our attention that a lapsing notice has been issued by your client in relation to our client’s caveat, which is registered on the title of Campbell Parade.

Would you please confirm, as a matter of urgency and by no later than 5pm on 17 March 2022:

•    That your client has in fact applied for a lapsing notice in respect of our client’s caveat which is registered on Campbell Parade; and if so,

•    On what possible basis your client has applied to lapse our client’s caveat, in circumstances where:

•    these issues are the subject of orders which were made by the Federal Court after a contested hearing; and

•    our client has previously confirmed in correspondence that he intends to withdraw his caveat at the settlement of the sale of Campbell Parade, which we understand is schedule to take place on Friday, 25 March 2022.

Our client is extremely concerned about the circumstances which have given rise to the lapsing of our client’s caveat, including whether your client is attempting to evade the orders made by the Court on 26 November 2021.

We look forward to your urgent response by the above deadline. In the absence of a response by the above deadline, our client reserves his position to approach the Federal Court to seek further relief to protect his position in relation to Campbell Parade, without any further notice to your client.

20    On 25 March 2022 at 1.10 pm Mr Stolyar sent an email to Mr Carbone in which he wrote:

Sorry Dominic,

[Mrs Stolyar] is ready to settle on the property as long as the caveat is removed as per the order 9 of the Federal Court.

The solicitors for the Trustee can not be given any funds as they are not owed to them.

Especially there is an order that minimum $1,480,000 is to go to us.

Also we need to have a mechanism in place to insure that the remaining funds don’t just disappear. This can only be done after settlement when the funds are received and the available funds are deposited into account where the Trustee or his solicitors will have no access to the funds, but be able to view only account similar as they wanted with our NAB accounts, that are described in the orders.

Please write to them as a matter of urgency, to let the settlement happen today or Monday.

Also the settlement adjustments have not been agreed to, as has been instructed by us previously.

If the Trustee does not agree then we can not settle, until the caveat is removed or we make a fresh application with the court.

If the purchaser does not agree to wait, as there is no financial damage to him, then we are happy to rescind the contract.

Please provide me with the copies of the emails, letters sent to the purchaser and trustee.

Also please provide me your response to the LPI regarding the caveat, that was dine yesterday.

    (Errors in original.)

21    On 25 March 2022 at 2.40 pm Ms McMahon sent an email to Mr Carbone in which she wrote:

We refer to our recent telephone conversations with you regarding the above proceedings (the Proceedings), and to the sale of the property known as 701/152-162 Campbell Parade, Bondi Beach (the Property), in relation to which you act for Faina Stolyar.

To confirm our client’s position in writing:

1.    Our client has become aware that your client has applied for the issue of a lapsing notice in respect of our client’s caveat upon the Property. This was sought without notice or warning to our client, and only discovered by our client monitoring the Property’s title.

2.    In light of the orders made in the Proceedings on 26 November 2021, it is plainly improper for your client to seek to lapse our client’s caveat. Our client has at all times been ready, willing, and able to withdraw his caveat on settlement of the Property’s sale in accordance with the orders. It is your client that is obstinately refusing to complete the settlement for no known reason other than an unwillingness to comply with the orders.

3.    While our client should be served with the lapsing notice if it is issued, having made enquiries with Land Registry Services we are told that is something that would be left entirely to your client, and further that the Registrar-General would rely upon any statutory declaration that might be filed by your client alleging service to have occurred even if it did not.

4.    We of course do not accuse your client (or her son, Ian Stolyar) of intending to swear and file a false statutory declaration, but it is a risk to which our client should not be exposed, particularly given how clearly inappropriate it is for a lapsing notice to be issued at all.

5.    We understand that both the purchaser of the Property and the outgoing mortgagee are ready, willing, and able to complete settlement of the Property’s sale (in a manner consistent with the Court’s orders) this afternoon, with all necessary arrangements having been made on PEXA. Our client is similarly ready, willing, and able. The only impediment to that settlement proceeding is your client.

6.    Accordingly, our client demands that either:

a.    The settlement of the sale of the Property proceed today in a manner consistent with the Court’s orders, in which case the issue of the lapsing notice will fall away; or

b.    By no later than 5pm on Monday, 28 March 2022, your client withdraw her application for a lapsing notice and you give to us written evidence of that actually having occurred.

7.    In the event that your client refuses to comply with either of the above demands then our client intends to approach the Court without further notice for orders restraining your client from proceeding with the lapsing notice. In circumstances where that application would be the result of your client’s (yet further) refusal to comply with the Court’s orders, our client will seek an order that your client pay the costs of the application on the indemnity basis.

We look forward to your prompt reply.

22    On 28 March 2022 Mr Stolyar sent an email to Ms McMahon, copied to Messrs Carbone and Paffas, in which he wrote:

My name is Ian Stolyar, and i am authorised by Faina Stolyar to write this email on her behalf.

We are concerned that the Trustee is plainly disregarding orders handed down by the Federal Court of Australia on 26 November 2021, in particular order 9 that orders your client to remove the caveat over the property known as unit 701/152 Campbell Parade Bondi Beach NSW 2026, to enable the settlement of the above property to take place on 1 December 2021.

We have been informed by the conveyancer that the trustee failed to adhere to the above order as at 25 March 2022, almost 5 months after the order was issued.

In order to resolve any disputes and have the property go to settlement, Ms Stolyar proposes that after the repayment of all mortgages and until the final orders are made by the Courts, the remaining funds be deposited by Ms Stolyar into an account where a “view” only function will be given to the trustee where he can monitor the account and the funds to make him more secure.

Ms Stolyar will give relevant undertaking that she will not access the funds, unless to pay for living expenses and legal fees.

We believe that the above will make both parties comfortable.

Please let us know the trustees approval of the above ASAP, as we will need to make an urgent application to the court, if we don’t here from you in the next couple of days, so that the property can settle without further delay.

23    On 28 March 2022 by email addressed to Mr Carbone, Ms McMahon responded to Mr Stolyar’s email. In her email Ms McMahon wrote:

I refer to the attached email which our office received from Ian Stolyar early this morning. I note you were also copied into this email.

As you are still the solicitor on record for Ms Faina Stolyar in the above proceedings, and assuming Mr Stolyar does have the authority he asserts (which we do not accept) you are the solicitor on the record for Ms Stolyar, and we are not able to respond to Ms Stolyar, or her agent. Mr Stolyar is a third party in relation to this matter. Therefore, we will not be responding directly to Mr Stolyar.

To the extent it is necessary, the Trustee rejects the allegations contained within Mr Stolyar’s email, including any suggestion from your client, Ms Stolyar, that the Trustee has not complied with the orders made by the Court in the above proceedings.

The Trustee’s withdrawal of caveat has been prepared and ready to be lodged on PEXA since 1 December 2021 and we have confirmed in all correspondence sent to your office and Paffas Lawyers since 1 December 2021 that our client is ready, willing and able to proceed with settlement of the sale, provided the net proceeds of sale will be paid into our trust account in accordance with the orders made by the Court on 26 November 2021.

As at today’s date, the Trustee remains willing to participate in a settlement of the sale of Campbell Parade, in accordance with the orders made on 26 November 2021.

We also confirm that the Trustee’s position remains the same as the position set out in our email to your office dated 25 March 2022. In this regard, we confirm that if we do not receive a response to the demand contained in our email by 5pm today, the Trustee intends to approach the Court without any further notice to your client, Ms Stolyar.

24    On 6 April 2022 on the ex parte application of the Trustee the Court made the following orders in relation to the Campbell Parade Caveat:

1.    Order 9 of the Orders made on 26 November 2021 be vacated and in its place an order be made that:

“At settlement of the sale by the first respondent of the land known as 701/152 Campbell Parade, Bondi Beach (Campbell Parade) pursuant to the contract for sale of land between the first respondent and Andrew John Kroger dated 30 July 2021, and conditional upon the sale proceeds being distributed in accordance with Order 10 of the Court’s orders made on 26 November 2021, the applicant is ordered to withdraw caveat AP417330.”

2.    Until midday on 21 April 2022:

(a)    the operation of the caveat bearing caveat number AP417330 be extended;

(b)    the first respondent is not to take any further steps to:

(i)    procure the issue of a lapsing notice in respect of caveat number AP417330;

(ii)    serve any lapsing notice in respect of caveat number AP417330; or

(iii)    otherwise procure the lapsing of caveat number AP417330.

3.    Pursuant to s 74O of the Real Property Act 1900 (NSW), the applicant have leave to lodge a further caveat in respect of the property known as 701/152-162 Campbell Parade, Bondi Beach NSW 2026, bearing folio identifier 27/SP81899, claiming the same interest as under caveat number AP417330 in the event that caveat number AP417330 is lapsed, upon the applicant by his counsel giving the usual undertaking as to damages.

4.    The interlocutory application filed by the applicant on 31 March 2022 be adjourned to 20 April 2022 at 9.30 am for case management hearing.

5.    Liberty to restore on one day’s notice.

25    On 29 April 2022 the Court made the following orders in relation to the Campbell Parade Caveat by consent:

1.    The operation of the caveat bearing caveat number AP417330 be extended until further order of the Court.

2.    Until further order, the first respondent is not to take any further steps to:

(a)    procure the issue of a lapsing notice in respect of caveat number AP417330;

(b)    serve any lapsing notice in respect of caveat number AP417330; or

(c)    otherwise procure the lapsing of caveat number AP417330.

3.    The hearing of the applicant’s interlocutory application dated 31 March 2021 on 29 April 2022 be vacated.

4.    The costs of the applicant’s interlocutory application dated 31 March 2021 be costs in the cause.

26    The sale of the Campbell Parade Property to Mr Kroger did not proceed to settlement.

mrs stolyar’s submissions

27    Mrs Stolyar submits that by her interlocutory application she seeks to set aside the declarations and orders made on 17 September 2024 (in accordance with Stolyar (No 7)) pursuant to r 36.15 of the Uniform Civil Procedure Rules (NSW) (UCPR) because those declarations and orders “were made against good faith”. She submits that a trustee must act justly but that here the Trustee failed to discharge his duties in good faith.

28    Mrs Stolyar submits that the Trustee breached his duty because he failed to comply with the 26 November Orders. That is because he did not remove the Campbell Parade Caveat in accordance with Order 10 of those Orders. As a result of the failure to comply with that Order, the settlement of the sale of the Campbell Parade Property to Mr Kroger could not proceed and, as a result, Mrs Stolyar has suffered harm.

29    By reference to the submissions relied on by the Trustee in support of his interlocutory application which led to the making of the 26 November Orders, Mrs Stolyar notes that at the time that application was made the Trustee claimed an entitlement to 100% of the Campbell Parade Property and that he submitted (at [31]) that:

[Mrs Stolyar] has given notice that Campbell Parade has been sold for $9,000,000 with the sale due to settle on 1 December 2021. Based upon the figures provided in [Mrs Stolyar’s] correspondence, after allowing for selling costs and the discharge of Campbell Parade’s mortgage the sale will generate net proceeds of approximately $5.65 million.

    (Footnotes omitted.)

30    Mrs Stolyar also notes that in Stolyar (No 1) as reflected in the 6 September Orders I found that she held 58.17% of the legal title of the Campbell Parade Property on resulting trust for the Trustee. On that basis, and using the figure of $5.65 million, she submits that she is entitled to $2,363,395 of the sale proceeds from the Campbell Parade Property. She also submits that the Trustee did not need security over the Francis Street Property because he was only in fact entitled to 58.17% of the Campbell Parade Property.

31    Mrs Stolyar submits that if the Trustee is allowed to sell the Francis Street Property and keep the proceeds, he would cause the bankrupt estates to be wrongfully enriched. She contends that in Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 6) [2024] FCA 37 the Court ordered that all the funds from the sale of the Campbell Parade Property be distributed to the Trustee. Thus, the Trustee is holding funds that were contemplated by Order 10 of the 26 November Orders to be used to discharge the mortgage held by Bendigo and Adelaide Bank (BABL).

32    Mrs Stolyar submits that if the Trustee is allowed to sell the Francis Street Property and keep the proceeds then any honest person would consider it unfair for the Trustee to retain the money in question as the bankrupt estate would be unjustly enriched.

consideration

33    Mrs Stolyar relies on r 36.15 of the UCPR. As I explained at the hearing of Mrs Stolyar’s interlocutory application, the UCPR do not apply to proceedings in this Court. As the Trustee points out, the closest analogous power in this Court is r 39.05(b) of the Federal Court Rules 2011 (Cth) which provides that the Court may vary or set aside a judgement or order after it has been entered if it was obtained by fraud. In her interlocutory application Mrs Stolyar also relies on r 39.05(d) of the Federal Court Rules which enables the Court to set aside an order if it is, relevantly, an order for the appointment of a receiver.

34    Mrs Stolyar’s application seems to rely on one aspect of the Trustee’s conduct which she alleges is wrongful. That is that the Trustee did not remove the Campbell Parade Caveat in accordance with Order 9 of the26 November Orders. It is that conduct which, according to Mrs Stolyar, caused Mr Kroger not to complete the sale of the Campbell Parade Property. However, the evidence before me clearly demonstrates that the reason why that sale did not complete was because Mrs Stolyar was unwilling to comply with the 26 November Orders and unwilling to settle on the sale of the Campbell Street Property until those orders were varied. The failure to complete the sale does not lie at the feet of the Trustee and had nothing to do with any improper conduct on his part, as alleged.

35    The flaw in Mrs Stolyar’s argument can be seen from the recitation of the facts set out above. In summary and having regard to the relevant facts:

(1)    the 26 November Orders were made to facilitate the sale of the Campbell Parade Property to Mr Kroger;

(2)    those orders do not operate and cannot be viewed in isolation. That is, it is clear that Orders 9, 10 and 11 are to be considered together. The withdrawal of the Campbell Parade Caveat was to occur as a step in the completion of the sale of the Campbell Parade Property to Mr Kroger and on the basis that the payments referred to in Order 10 were made from the proceeds of sale, after which, in accordance with Order 11, the Trustee was to cause the balance of the settlement sum to be paid into an interest bearing account to be dealt with in accordance with the terms of Order 11;

(3)    that that is so is reinforced by the Trustee’s submissions relied on in support of the application for the 26 November Orders where, after addressing the various purposes for which at that time Mrs Stolyar sought release of the proceeds of sale of the Campbell Parade Property to her, the Trustee submitted at [46]-[47]:

46    Accordingly, and as will be set out in the [Trustee’s] proposed short minutes of order accompanying these submissions, the [Trustee] proposes that:

a.    [Mrs Stolyar] may use Campbell Parade’s sale proceeds to discharge (and not merely pay down) her Adelaide Bank mortgage debt, conditional upon the [Trustee] obtaining substitute security over the properties the subject of that mortgage; and

b.    The balance of the sale proceeds should be held in an interest-bearing controlled monies account managed by the [Trustee’s] solicitors.

47    This arrangement protects the [Trustee’s] security position, repays [Mrs Stolyar’s] genuine debt that she wishes to pay, and otherwise invests the sale proceeds as a cash investment substantially consistent with [Mrs Stolyar’s] own proposal.

(4)    the Trustee was at all relevant times ready and willing to participate in the settlement of the sale of the Campbell Parade Property to Mr Kroger in accordance with the 26 November Orders. Indeed, the Trustee’s solicitors had been added to the relevant PEXA workspace for that purpose and had prepared a notice of withdrawal of caveat;

(5)    on the other hand, Mrs Stolyar was not prepared to comply with the 26 November Orders. That is evident from the correspondence that passed between her solicitors, Sydney Law Practice, and Mr Kroger’s solicitors, Paffas Lawyers, and Mr Carbone and Mr Stolyar. As to the former, Mrs Stolyar’s solicitors refer to a “dispute with the trustee of the estate of Ian Stolyar” and that Mrs Stolyar is “attempting to negotiate a satisfactory distribution of the sale funds, and if necessary, file an interlocutory application before Justice Markovich (sic) of the Federal Court of Australia to seek a variation of the current orders” (see [15] above). In other words, Mrs Stolyar was not happy with the 26 November Orders and wished to vary them. As to the latter, Mr Stolyar, in communicating with Mrs Stolyar’s solicitor, made his dissatisfaction with the 26 November Orders plain (see [20] above);

(6)    as is evident from the variation to the 26 November Orders she proposed to the Trustee and her application for lapsing notice of the Campbell Parade Caveat, without notice to the Trustee, Mrs Stolyar was not content with the terms of the 26 November Orders. Despite that she did not approach the Court to seek any variation of them; and

(7)    the Trustee sought and obtained a variation of Order 9 of the 26 November Orders after Mrs Stolyar had applied for a lapsing notice of the Campbell Parade Caveat. Contrary to the submission made by Mrs Stolyar, Order 1 made on 6 April 2022 was not an acknowledgement by the Trustee that the effect of Order 9 of the 26 November Orders was that the Trustee was obliged on and from the making of that order to remove the Campbell Parade Caveat as an isolated step, divorced from the settlement of the sale of the Campbell Parade Property to Mr Kroger. Rather it was, in light of the correspondence that had passed, clarificatory.

36    For those reasons Mrs Stolyar’s application must fail.

37    However, for completeness, I address Mrs Stolyar’s contention that Order 10 of the 26 November Orders which, among other things, directed that upon settlement of the proposed sale of the Campbell Parade Property to Mr Kroger part of the sale proceeds were to be applied in discharge of the mortgage debt owed to BABL secured over the Francis Street Property and a further property situated at 11/2 Ocean Street, Bondi, New South Wales, in effect amounted to a final order requiring that the proceeds of sale from the Campbell Parade Property, under any sale, whenever and however achieved, be used to discharge BABL’s loan. Mrs Stolyar submits that the Court erred in Stolyar (No 6) as allowance was not made for discharge of that loan when the Court ordered that the Trustee should receive the sale proceeds from the eventual sale of the Campbell Parade Property.

38    That argument must fail for the reasons identified by the Trustee.

39    First, Mrs Stolyar’s submissions amount to an impermissible attempt to relitigate Stolyar (No 6) on grounds which she could have raised at first instance but did not. That Mrs Stolyar is dissatisfied with the outcome of Stolyar (No 6) does not amount to bad faith or fraud entitling her to now raise a new argument and in effect to relitigate that matter.

40    Secondly, Mrs Stolyar’s argument proceeds on the premise that Order 10 of the 26 November Orders remains in place. That is not the case. That order was vacated by consent by Order 22 of the 6 September Orders.

41    Thirdly, in any event as is evident from the facts set out above, even if it had not been vacated, Order 10 was directed to Mrs Stolyar in relation to the proposed sale to Mr Kroger, to facilitate that sale and prevent improper dissipation of the sale proceeds at a time when judgment was reserved with respect to the Trustee’s claim against Mrs Stolyar. Order 10 had no broader application.

42    Fourthly, even if the loan from BABL had been repaid out of the sale proceeds from the Campbell Parade Property, that would not have entitled Mrs Stolyar to receive the Francis Street Property unencumbered. Rather, to the extent that the Trustee’s share of the proceeds of sale from the Campbell Parade Property were applied to repayment of that loan, the Trustee would have received the benefit of a charge upon the Francis Street Property securing reimbursement of the relevant sum (as provided for in the security regime implemented by Order 5 of the Court’s Orders made on 23 April 2020 and also referred to in Order 12 of the 26 November Orders). That charge would have entitled the Trustee to the same substantive relief as he obtained in Stolyar (No 7).

43    Mrs Stolyar has not demonstrated any improper conduct, let alone fraud, on the part of the Trustee. There is no basis to set aside the orders made on 17 September 2024 nor to support Mrs Stolyar’s claim to damages in the sum of $855,253.33.

conclusion

44    It follows from the above that Mrs Stolyar’s interlocutory application filed on 5 March 2025 should be dismissed. As she has been unsuccessful, Mrs Stolyar should pay the Trustee’s costs of that application.

45    I will make orders accordingly.

Associate:

Dated:    28 March 2025