Federal Court of Australia

LK Law Pty Ltd v Karas (No 6) [2026] FCA 551

ORDERS

THE COURT NOTES THAT:

A. The first applicant has undertaken to the Court not to enforce the judgment in this matter until such time as the respective applications by the first respondent and the fourth respondent for a stay of enforcement are determined; and

B. The decision in this matter proceeds on the basis that certain conditions are to be satisfied.  In the event any of the conditions are not satisfied, the Court reserves the right to reconsider the matter.

THE COURT ORDERS THAT:

1. The first respondents’ Recusal Application as it relates to their Stay Application is refused.

2. Upon the third applicant and the first and fourth respondents satisfying the conditions set out in these reasons, pursuant to r 36.08 of the Federal Court Rules 2011 (Cth), enforcement of the judgment entered against the first and fourth respondents on 20 February 2026 will be stayed until the determination of any final appeal in this matter.

3. The parties are to provide draft orders and the required undertakings in accordance with these reasons within seven (7) days of the date these reasons are published.

4. Liberty to apply.

5. Costs reserved.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1 On 26 November 2025, the Court delivered its reasons in this matter: LK Law Pty Ltd v Karas (No 4) [2025] FCA 1461.

2 Following the delivery of reasons, the matter was listed for mention only on 10 December 2025 for final orders.  The parties were unable to agree final orders at which time the Court ordered, amongst other things, that the question of final orders, interest and costs, together with any application for a stay of enforcement of the judgment would be heard on 6 February 2026.

3 On 6 February 2026, the question of a stay of enforcement of the judgment was not argued as argument had occurred on the final orders and the respondents requested the opportunity to consider those orders prior to arguing any stay application.

4 On 20 February 2026, the Court delivered reasons and final orders in which judgment was entered in favour of the first applicant (LKPL) against the first respondent (Mr Karas) and the fourth respondent (MdR).  At that stage, the Court listed the hearing of the stay application for 18 March 2026.

5 In the meantime, LKPL undertook not to take any steps to enforce judgment until 5.00pm (ACDT) on 18 March 2026 (LKPL undertaking).

6 On or about 12 March 2026, LKPL’s solicitors, Illes Selley, advised Mr Karas’ solicitors, Piper Alderman, by email that Mr Karas was required for cross-examination at the hearing of the stay application.

7 That same day Piper Alderman replied by letter acknowledging the requirement that Mr Karas attend for cross-examination and expressed its conclusion that LKPL was intending to challenge Mr Karas’ credit.  Piper Alderman contended in that letter that as a consequence of the adverse findings I had made against Mr Karas in the reasons, I should recuse myself (recusal application): Annexure GTG-2 to the affidavit of Gordon Thomas Grieve sworn 16 March 2026 (Grieve Affidavit).

8 The contents of Piper Alderman’s letter dated 12 March 2026: GTG-2 to the Grieve Affidavit, are important.  At paragraph 4 of that letter, Mr Grieve wrote:

4.    We note that it is plain that if the primary judge were to hear the stay application, he would need to (a) make a determination as to whether the respondents have raised an arguable case on appeal (which will necessarily involve engaging with his own conclusions and reasoning in respect to them), (b) hear cross-examination and (c) consider and determine submissions as to the credit and reliability of Mr Karas (where Mr Karas' evidence is critical to his position on the stay application, and his credit has been the subject of extensive, adverse findings by his Honour). In those circumstances, in our view, the appropriate and preferable course is for the stay application to be heard by another judge of the Federal Court.

9 In response, by letter dated 13 March 2026, Illes Selley opposed Mr Karas’ foreshadowed recusal application: Annexure GTG-4 to the Grieve Affidavit.  Further, Iles Selley advised Piper Alderman that for the purposes of the stay application it was prepared to accept that Mr Karas has raised an arguable case on appeal.

10 On 15 March 2026, Mr Karas served an outline of written submissions in support of his recusal application.  The applicants served their submissions in response on 16 March 2026.

11 Apart from the acceptance that Mr Karas has an arguable case on appeal, albeit for the limited purposes of the stay application, the applicants’ submissions on recusal also advised that LKPL no longer required Mr Karas to attend for cross-examination at the hearing on 18 March 2026.

12 The recusal application was called on for argument on 16 March 2026.  In answer to a question from the bench, Mr Roberts KC, who appeared for LKPL, confirmed that there would be no submission made at the hearing of the stay application attacking Mr Karas’ credit.

13 I reserved my decision on the recusal application.  On 17 March 2026, I advised the parties that the recusal application was refused and that I would provide reasons at the same time as delivering my reasons on the stay application.

14 The reasons which follow address:

(1) Why the application that I recuse myself was refused; and

(2) The reasons why there will be an order staying enforcement of the judgment as against the first respondent (Mr Karas) and the fourth respondent (MdR) subject to the certain conditions being satisfied.

Principles — Recusal

15 Mr Karas seeks an order that I recuse myself on the basis of apprehended bias.

16 MdR supports Mr Karas’ application but ultimately will abide the event.

17 The principles are not in dispute and were set out in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 at [6] where the relevant test was described as being whether “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”.

18 Application of that test was described in QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 15; (2023) 279 CLR 148 at [38] (Kiefel CJ and Gageler J) in the following terms:

Application of the criterion was identified in Ebner, and has been reiterated, logically to entail: (1) identification of the factor which it is said might lead a judge to resolve the question other than on its legal and factual merits; (2) articulation of the logical connection between that factor and the apprehended deviation from deciding that question on its merits; and (3) assessment of the reasonableness of that apprehension from the perspective of a fair-minded lay observer.

(citations omitted)

19 Kiefel CJ and Gageler J continued by describing the characteristics of the fair-minded lay observer: at [47]-[48]:

47.    Being “fair-minded”, the observer “is neither complacent nor unduly sensitive or suspicious”. Yet the observer is cognisant of “human frailty” and is all too aware of the reality that the judge is human. The observer understands that “information [as well as attitudes] consciously and conscientiously discarded might still sometimes have a subconscious effect on even the most professional of decision-making”.

48.    Being “lay”, the observer “is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge”. Though the observer may be taken to understand that the judge, by reason of professional training and experience and fidelity to the judicial oath or affirmation, will have a greater capacity than most to discard “the irrelevant, the immaterial and the prejudicial” and to discharge the judicial function uninfluenced by past professional relationships, “the public perception of the judiciary is not advanced by attributing to the … observer a knowledge of the law and an awareness of the judicial process that ordinary experience suggests not to be the case”. This indicates that the observer will see the person who is currently a judge as the person who was formerly an advocate and may be less inclined to dissociate the advocate from the cause advocated than would someone steeped in the adversary process with a cultivated sense of the ethics of the legal profession and the profundity of the judicial oath.

(citations omitted)

The parties’ submissions and consideration

20 Mr Karas advanced the recusal application on three bases.

21 The first basis reflects the first of the criteria identified in Ebner which is the factor that might lead me to resolve the issue of whether there should be a stay of enforcement of the judgment against Mr Karas other than on its legal and factual merits.

22 Mr Karas submits that in view of my adverse credit findings against him in the reasons, a fair-minded lay observer might reasonably apprehend that I might not be able to decide the question of whether a stay of enforcement of the judgment against Mr Karas should be granted on its merits and without regard to the adverse credit findings.

23 In support of that submission, Mr Karas refers to a number of cases which make it clear that where a judge has made adverse credit findings against a witness and has to address that witness’ credibility on a subsequent occasion, the judge should recuse themselves: Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411, 419A-421A, 438C-442D, 448G-449; Global Capital Property Fund Ltd (in liq) v Point Bay Developments Pty Ltd [2025] FCA 1597 at [27] citing Livesy v NSW Bar Association [1983] HCA 17; (1983) 151 CLR 288 at 300; BHP Billiton Ltd v District Court of South Australia [2012] 112 SASR 494 at [44]-[46] (Gray J); Australian Securities and Investments Commission v SunshineLoans Pty Ltd [2025] FCAFC 32; (2025) 308 FCR 514.

24 In SunshineLoans, the primary judge was considering a matter in which there were split hearings, the first dealing with liability and the second with penalty.  The primary judge made adverse credibility findings against a witness in the liability judgment.  The same witness was to give evidence in the penalty hearing.  The primary judge recused himself and the Full Court, by majority, held that his Honour had erred in so doing.

25 Special leave was granted against that decision and on 18 March 2026, the High Court dismissed an appeal against that decision: SunshineLoans Pty Ltd v Australian Securities and Investments Commission [2026] HCA 8.

26 After considering a number of the authorities dealing with recusal, Gageler CJ and Gleeson J observed: at [42]:

Articulating the logical connection between the identified source of bias and the feared deviation from the course of deciding the case on its merits requires that the party fearing bias identify an objectively credible reason why the judge might lack the requisite impartiality to decide the case. In Ebner v Official Trustee in Bankruptcy, examples given of assertions generally insufficient to articulate such a connection were that the judge has a mortgage with a bank that is a party to litigation or that the judge knows a party's lawyer. A logical connection was accepted to exist, by contrast, in the realistic possibility that the outcome of the litigation would affect the value of the judge's assets.

(citations omitted)

27 As is apparent from SunshineLoans and QYFM, there must be a logical connection between the identified source of apprehended bias and the feared deviation from deciding the case on its merits.

28 The second basis raised by Mr Karas in Piper Alderman’s letter dated 12 March 2026: exhibit GTG-2 to the Grieve Affidavit, is that I would need to hear cross-examination of Mr Karas and consider submissions as to his credit and reliability.

29 That is linked to the first basis which concerns an assessment as to the credit and reliability of Mr Karas on the stay application.  In view of LKPL’s intimation that it no longer needed Mr Karas for cross-examination and that it would not be challenging Mr Karas’ credit, this basis falls away.

30 The third basis relied upon by Mr Karas, and as enunciated in Piper Alderman’s letter dated 12 March 2026, was that I would need to make a determination as to whether the respondents had raised an arguable case on appeal.

31 In view of LKPL’s quite proper concession that for the purposes of the stay application there are arguable grounds of appeal, this basis also falls away.

32 Having identified the factors said to comprise the first criteria, Mr Karas submits that there is a logical connection between the adverse credit findings that I made in the reasons and an apprehended deviation from deciding the question of whether there should be a stay of enforcement of the judgment on its merits.  Mr Karas submits that provides an objectively credible reason why I might lack the required impartiality to decide the stay application.

33 I do not accept that submission for a number of reasons:

(a) There is no logical connection between the adverse credit findings made in the reasons and the exercise of the discretion as to whether or not there should be a stay of enforcement of the judgment against Mr Karas;

(b) LKPL specifically disavowed any attack on Mr Karas’ credit in relation to the stay application.  Further LKPL accepted that the matter would have to be determined taking Mr Karas’ evidence at its highest; and

(c) LKPL also accepted that for the purposes of the stay application, arguable grounds of appeal against the primary judgment existed.

34 In view of Mr Karas’ failure to establish the logical connection required between the first and second criteria, the third criteria falls away.  Nonetheless, in any event and in view of the matters I have set out above, I do not consider that objectively assessed, a fair-minded lay observer with the characteristics identified in QYFM: at [48], would consider an apprehension that I would decide the question of whether a stay of enforcement should be ordered other than on its legal and factual merits, to be reasonable.

35 It is for these reasons that I refused the application that I recuse myself from hearing the stay application.

The stay application

Confidentiality

36 A preliminary matter that arose on the stay application is that the parties in this matter seek confidentiality orders over various documents filed in relation to the stay application.

37 In each case, the parties seek a confidentiality order pursuant to ss 37AF(1)(b) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth).

38 On filing the documents in question, the parties had sought interim confidentiality orders.  The documents remained confidential until such time as the Court had an opportunity to consider submissions from the parties in order to determine whether continuing confidentiality orders should be made.

39 At the commencement of the stay application hearing, I intimated my preliminary view to the parties that I did not consider that any of the documents filed on the stay application should remain confidential.  No party advanced any opposition to that intimation.

40 I am not satisfied that any of the documents filed in relation to the stay application by any party should remain confidential and to the extent any documents filed in relation to the stay application have been marked as confidential on the Court file, that confidentiality is revoked.

Principles — Stay Application

41 The principles are not in dispute.

42 Rule 36.08(1) and (2) of the Federal Court Rules 2011 (Cth) provide that an appeal does not operate as a stay of proceedings and that an appellant may apply to the Court for a stay of execution of the proceedings until an appeal is heard.

43 In Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65, 66 (Burchett, Heerey, Whitlam JJ) the Full Court followed Alexander v Cambridge Credit Corporation Limited (Receivers Appointed) (1985) 2 NSWLR 685 in holding that it is not necessary for an applicant for a stay of enforcement to show “special reasons” and that it was “sufficient that the applicant for a stay demonstrate a reason or an appropriate case to warrant the exercise of the discretion in his favour”.

44 In Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Ltd [2022] FCA 1039, [35]-[37] Derrington J referred to the summary of principles in Stefanovski v Digital Central Australia (Assets) Pty Ltd [2017] FCA 1121 at [4].  Those principles included that identified in Powerflex as well as a number of other principles:

(a) A court should not be easily disposed to delaying the enforcement of a judgment obtained after a trial.  Prima facie, the successful party at trial is entitled to the fruits of their judgment.  In particular, judgments of the trial division should not be treated merely as provisional and following a trial the successful party should generally have an unfettered entitlement to enforce their judgment;

(b) The Court may grant a stay pending the determination of an appeal so as to prevent possible injustice arising from the enforcement of a judgment which might subsequently be overturned;

(c) Sound reasons must be shown by the applicant to justify a suspension of the successful party’s right to recover judgment (McBride v Sandland No.2 (1918) 25 CLR 369, 374; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65, 66);

(d) The applicant will need to establish that their appeal has some merit to it.  That will be a significant factor in favour of granting a stay;

(e) As to the likelihood of future events occurring, the evidence produced must provide a sound foundation to allow a court to assess the risk of those future events occurring.  Mere “speculation” or “argument” is insufficient;

(f) Whether there is a real risk or probability that a successful appellant would be deprived of the fruits of their appeal if a stay is not granted is a significant factor: Scarborough v Lew’s Junction Stores Pty Ltd (1963) VR 129, 130).  That consideration extends to the circumstances where there is a real risk that it will not be possible for the successful appellant to be substantially restored to its former position if judgment is executed against it (see Cellante v G Kallis Industries (1991) 2 VR 653); and

(g) There is a strong reason for refusing a stay where it is established that there is a real risk that the granting of a stay may prevent the successful party at trial from obtaining the full benefits of their judgment if the appeal is unsuccessful.

45 In Redbubble, Derrington J also referred to Viagogo AG v Australian Competition and Consumer Commission [2021] FCA 175 at [10]–[12] (Abraham J):

10.    Rule 36.08 confers a broad discretion. … :Powerflex Services Pty Ltd v Data Access Corp [1996] FCA 460; (1996) 67 FCR 65 at 66.

11.     Two questions must be considered: first, is there an arguable point on the proposed appeal: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) at [24] or some “rational prospect of success” in relation to any of the grounds of appeal: Burns v AMP Finance Ltd [2005] FCA 761 at [5]; and second, does the balance of convenience favour the grant of a stay: Nolten at [24], [46].

12.     The party seeking the order bears the onus of demonstrating a proper basis for a stay, which must be fair to all parties: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (Alexander) at 695. That party must demonstrate that there is a real risk that it will suffer prejudice or damage if a stay is not granted, which will not be redressed by a successful appeal: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd, McLean Tecnic Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 (Kalifair) at [18]; Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658 (Flight Centre) at [9(f)]. This requirement will be satisfied if a successful appeal will be rendered nugatory unless a stay is granted: Ali v Australian Competition and Consumer Commission [2020] FCA 860 at [11]; Australian Competition and Consumer Commission v BMW (Australia) Ltd (No 2) [2003] FCA 864 (BMW) at [5]; Alexander at 695; Kalifair at [18].

MdR’s stay application

46 MdR’s liability was assessed at AUD$21,399,540.24 (inclusive of interest): LK Law Pty Ltd v Karas (No 5) [2026] FCA 129.

47 By an interlocutory application filed 2 February 2026, pursuant to FCR 36.08, MdR seek a stay of enforcement of the judgment against it pending the determination of an appeal, to be instituted by on or before 20 March 2026.

48 In support of that application, MdR has proffered a bank guarantee in the sum of AUD$21,399,540.24.

49 In general terms, that bank guarantee is acceptable to LKPL provided it is in Australian dollars and is provided by a recognised bank.

50 MdR has confirmed the former and the bank in question is National Westminster Bank PLC, a bank which is authorised by the Prudential Regulation Authority of England and regulated by the Financial Conduct Authority and the Prudential Regulation Authority of England.  Clearly, National Westminster Bank PLC is a recognised bank.

51 In the circumstances, I am satisfied that the provision of a bank guarantee in that amount and on those terms is such that LKPL’s existing judgment against MdR is secured.  I will hear the parties as to the time required to put such a bank guarantee in place.

52 As to the question of post-judgment interest.  Initially I was disposed to order that the bank guarantee also include a sum for post-judgment interest for a period of 12 months.  However, upon further consideration of Ms Well’s submissions, who appeared as counsel for MdR, I accept her submission that there is no basis at this stage to require an amount to be secured for post-judgment interest from MdR.  To order post-judgment interest be paid or secured at this time, and thereby ahead of time, is punitive and I do not consider it appropriate.

53 However, there is a question as to when the judgment in any appeal will be delivered.  On the assumption that it will be in the order of 12 months from the date of these orders, I will grant liberty to apply to the parties in relation to varying the quantum of the bank guarantee at a date not before six calendar months from the date of the stay order, to take into account the accrual of post-judgment interest.

54 One further matter arises which is the application to stay the execution of any costs order.  On its terms, MdR’s interlocutory application also seeks a stay of enforcement of any costs order, the quantum of which is yet to be assessed.

55 Until such time as the costs are assessed, there is nothing to enforce.  Whether the enforcement of such an order should be stayed is a matter I will consider after assessment of those costs and upon application by MdR pursuant to liberty to apply generally.

Mr Karas’ stay application

56 The position with respect to Mr Karas is more complicated.

57 In an affidavit sworn 9 March 2026 (Karas Affidavit) and read on the stay application, Mr Karas deposed: at [12] that in summary, his assets comprised:

Assets

Real Property            AUD$10.4m

Art (estimated)            AUD$1.5m

Liquid Assets            AUD$3.5m

Receivable from KSLLP    AUD$4m

Shareholding in LKUK        AUD$2m

Liabilities

Loans on Real Property        AUD$6.4m

58 On its face, that leaves net assets available to Mr Karas to satisfy the judgment against him of AUD$15 million.

59 In the following paragraphs of the Karas Affidavit, Mr Karas provides further information with respect to each of his assets.

Real property

60 Mr Karas deposes that he has interest in real property as sole owner, part owner with others, or as sole beneficiary of a discretionary trust: Karas Affidavit at [14].

61 Mr Karas annexes, at annexure JDK-1 to the Karas Affidavit, a list of 11 properties.  He deposes that he is the sole or joint owner of the properties at line items 1, 2, 4, 5 and 6.

Property 3

62 Mr Karas has not included the property at line item 3 of annexure JDK-1 in his list of real estate assets on the basis that he holds the property as trustee for, amongst others, himself, his wife (Ms Baillie-Karas) and their two children.  The property is located on Fullarton Road, Rose Park in South Australia.

63 The Valuer-General’s valuation for the property is AUD$770,000.

64 Mr Karas’ reason for not including the property in his list of assets is that he contends it is not possible to determine the trust or obtain a distribution from it, as the children are still minors.

65 Mr Karas annexes the relevant trust deed as exhibit JDK-3 to the Karas Affidavit.  Two things may be observed about Mr Karas’ contention as to a distribution.  First, pursuant to cl 2(g) of the trust deed, where Mr Karas (as the sole trustee) holds funds on trust for the identified beneficiaries (which includes himself), he may, in his absolute discretion, pay those funds into a bank account in his own name as beneficiary, at which time the funds vest in him absolutely.

66 Second, Mr Karas, in his capacity as trustee, is not able to mortgage the property without the prior consent of his late father, nor can he lease it.

67 Mr Karas does not depose to the status of his father’s estate but in any event, given Mr Karas’ father is now deceased, in my view, it is open to Mr Karas to utilise the property as security against borrowings for the purposes of contributing to LKPL’s judgment, in the alternative to realise it and apply the cash for his own benefit or, in the further alternative, use it to support a bank guarantee.

68 Even if I am wrong in my conclusions as to Mr Karas’ powers under the trust as trustee, as will become apparent, it makes no difference to the conditions upon which I am prepared to order a stay.

Properties 7, 8 and 9

69 Properties 7 (Bristow-Smith Avenue, Goolwa South in South Australia), 8 (Fairway Court, Goolwa South in South Australia) and 9 (Prescott Terrace, Rose Park in South Australia) in annexure JDK-1 to the Karas Affidavit are owned by Karas Properties Pty Ltd, a company of which Mr Karas is the sole director and shareholder.

70 As to properties 7 and 8, the properties are held by Karas Properties Pty Ltd as trustee for the Karas Investment Trust, the trust deed for which is annexure JDK-4 to the Karas Affidavit.  Mr Karas, Ms Baillie-Karas and Mr Karas’ late father are named as beneficiaries.

71 Mr Karas does not include properties 7 and 8 in the estimated real property value of AUD$10.4 million.  The Valuer-General’s valuation is AUD$930,000 for property 7 and AUD$650,000 for property 8.

72 Amongst other things, cl 4.1(12) of the trust deed permits the trustee to distribute capital, incur liabilities, guarantee, indemnify and undertake in any way any existing or future debts, liabilities or obligations incurred or which may be incurred at any time from, or from time to time, be incurred by any beneficiary.

73 Further, there are various provisions within that trust deed empowering the trustee to distribute the capital of the trust to such of the beneficiaries as the trustee may in its absolute discretion deem fit; permitting the trustee to sell the properties; empowering the trustees to advance and lend money to any person as the trustee thinks fit; and empowering the trustee to execute a mortgage for the purposes of securing payment of money to the trustee: see cls 3.4, 4, 4.1(10), 4.1(11).

74 In my view, both those properties are available as potential sources of security for borrowing, in the alternative for sale, or in the further alternative as security for the provision of a bank guarantee in order to contribute to and/or secure LKPL’s judgment.

75 Property 9 is included in the sum of AUD$10.4 million and is owned by Karath Properties Pty Ltd, a company of which Mr Karas is sole director and shareholder.  It holds property 9 in trust for the Karas Property Trust with the trust deed annexed as annexure JDK-5 to the Karas Affidavit.  Mr Karas is the sole beneficiary.

76 In broad terms, the same provisions exist in that trust deed as in the Karas Investment trust deed to which I have referred above.

77 The Valuer-General’s valuation is AUD$3.575 million with a mortgage of AUD$1.2 million, giving a net equity of AUD$2.375 million.

Properties 10 and 11

78 The remaining two properties are the properties listed at lines 10 and 11 in annexure JDK-1 to the Karas Affidavit.  Mr Karas deposes that he does not have an interest in these properties, however within the context of the financial support he provides to Ms Baillie-Karas and his family, he is responsible for meeting the mortgage payments in relation to both those properties.

79 Property 10 is the family home in Adelaide. It is valued by the Valuer-General at AUD$6.275 million.

80 Property 11 is a flat in London, WC1 N2BF, which had a purchase price of AUD$2.4 million and was purchased in the name of Ms Baillie-Karas on 24 January 2026.

81 Mortgages exist over both properties.

82 Whereas Mr Karas deposes that he does not have an interest in the properties, the fact that he provides both financial support and is responsible for meeting the mortgage payments in relation to both properties, satisfies me that, at least in principle, he is able to use the properties as security for any borrowings, alternatively for sale, or in the further alternative as security for the provision of a bank guarantee in order to contribute to and/or secure LKPL’s judgment.

83 However, as property 10 is the family home, I am not prepared to include that property as being available for sale or a potential source of security for borrowings or the provision of a bank guarantee.

84 Property 11 is an asset that I consider to be available as a potential source of security for any borrowings, alternatively for sale, or in the further alternative as security for the provision of a bank guarantee.  It has a mortgage over it in the sum of approximately AUD$1.9 million giving an equity of approximately AUD$500,000.

Artwork

85 Mr Karas has deposed that he and Ms Baillie-Karas have acquired and collected Art for more than 20 years and although he does not have a valuation, he has estimated the total value at around AUD$3 million, with the figure of AUD$1.5 million being his 50% share.

86 By its nature, artwork is particular to the owner but also, once disposed of, is unlikely to be readily reacquired.

87 I am not prepared to include Mr Karas’ Artwork as available for sale or a potential source of security for borrowings, or the provision of a bank guarantee.

Liquid assets — AUD$3.5 million

88 Mr Karas deposes that he holds liquid assets in the form of cash and listed company shares of about AUD$3.5 million.  Mr Karas deposes further: at [21]-[22] of the Karas Affidavit, that these assets are critical to allow him to meet legal and other costs associated with the appeal.  There is no estimate given other than the bare statement that he anticipates those costs will be in the millions of dollars.

89 Mr Karas currently receives USD$125,000 per month by way of income.  He has not provided any information as to what his monthly commitments are.

90 A party seeking the exercise of the Court’s discretion to stay the enforcement of a judgment should provide sufficient detail as to their financial position, including their regular outgoings, so as to allow the Court to make an accurate assessment of what is available, realistically, for the purposes of meeting and/or securing a judgment sum in whole or in part.

91 Nonetheless, I accept that Mr Karas will require some of the assets in the form of cash and listed company shares for the purposes of prosecuting his appeal.  I am prepared to allow AUD$2 million for those purposes, leaving a balance of AUD$1.5 million available as security for borrowings or a bank guarantee or as cash in order to contribute and/or secure LKPL’s judgment sum.

Receivables from Karas So LLP

92 Mr Karas deposes: at [23]-[24] of the Karas Affidavit that he is owed approximately AUD$4 million by Karas So LLP comprising unpaid profits to 31 March 2025.  He deposes that he does not presently know the likely timing of repayment of that amount nor does he believe that his interest in Karas So LLP currently has any realisable value in the context of the judgment and pending determination of the appeal.  Mr Karas does not explain why that is so.

93 In the absence of any explanation or any details, doing the best I can on the scant information provided, I consider that approximately AUD$1 million is able to be leveraged by Mr Karas from Karas So LLP whether as an asset available as security for borrowings or a bank guarantee or able to be realised as cash.

Shareholding in LKUK — AUD$2 million

94 Mr Karas deposes: at [25] of the Karas Affidavit, that he owns 50% of the shares in LKUK, which is the company established by he and Mr Lipman for the purposes of holding their share of Lipman Karas LLP, the firm established in London.

95 The companies are subject to a winding up petition in the UK.  I do not consider the shareholding either a readily realisable asset in LKUK or an asset available as security for borrowings or a bank guarantee in order to contribute and/or secure LKPL’s judgment sum.

Other assets

96 Mr Karas deposes: at [26]-29] of the Karas Affidavit that he has other assets comprising:

(a) 25,000 shares in CyberKnife Australia Pty Ltd which, at his best guess, has a value not in excess of AUD$1 million; and

(b) Mr Karas also deposes that he owns four motor vehicles with a resale value unlikely to exceed AUD$150,000.  No details are provided as to the type of motor vehicles nor their age or condition.

97 Mr Karas attributes no realisable value to household effects.  As to his late father’s assets, beyond the real property to which he has referred, Mr Karas deposes that they are unlikely to exceed AUD$200,000.

98 I do not consider that the household effects or the personal effects of Mr Karas’ late father have any realisable value or provide assets that might be proffered as security for any borrowings or a bank guarantee or realised in order to contribute and/or secure LKPL’s judgment sum.

99 I have no information to allow me to form a view about the motor vehicles.  I repeat my observations about the obligation of a party to provide adequate information to the Court in support of an application such as this.

100 As to the shares in CyberKnife, those shares either have a realisable value or comprise an asset that might be proffered as security for any borrowings or a bank guarantee, however I have no further information.  I proceed on the basis that the value of that asset is AUD$1 million which is available as either security for borrowings or for a bank guarantee or is able to be realised.

Summary

101 The result of the above consideration is that Mr Karas has assets which are realisable, or alternatively available as security for borrowings or a bank guarantee, in the sum of AUD$16,470,000, such sum made up as follows:

LKPL asset position

102 To be balanced against Mr Karas’ asset position, is the asset position of LKPL.  In the affidavit of Matthew Selley of Iles Selley, sworn 2 March 2026 (Selley Affidavit), Mr Selley annexes the annual financial statements for LKPL for the years ended 30 June 2025, as well as financial statements for the five months ended 30 November 2025.

103 Consideration of those documents reveals the following:

(a) As at 30 June 2025, LKPL had an excess of current assets over current liabilities of AUD$6,196,615;

(b) It has non-current liabilities comprising loans to various entities which seem to reflect the companies associated with various directors.  One of those is Lipman Family Pty Ltd, the third applicant, in the sum of AUD$10,530,384;

(c) The profit and loss statement shows a loss before tax of AUD$3,884,644, however I was informed by Mr Roberts KC and I accept, that within that figure are expenses associated with this litigation in the sum of AUD$1,277,440;

(d) Insofar as the five month period ended 30 November 2025, the LKPL balance sheet reveals an excess of total assets of AUD$4,531,209; and

(e) The profit and loss statement shows a total income of AUD$5,819,083 with total expenses of AUD$6,583,840 resulting in a net loss before tax of AUD$764,757.00 over five months in question.

104 The five months to 30 November 2025 demonstrates an improving profit position, however it should be observed that the profitability of law firms can vary wildly depending on the vagaries of legal practice.  Against that is the fact that LKPL is a well-established firm which is recognised internationally.

105 Utilising the balance sheet as at 30 June 2025, I am prepared to accept that in the event Mr Karas succeeds in his appeal, the assets to which he could have recourse when seeking the repayment of any money paid in partial satisfaction of the judgment is, on one view, limited to the excess of current assets over current liabilities in the sum of AUD$6,196,615.

Consideration

106 Mr Karas deposes: at [31] of the Karas Affidavit that he does not believe he has any prospect of borrowing or obtaining a bank guarantee for a sum required to satisfy the judgment sum of AUD$36,458,048.44, inclusive of interest.

107 However, given that MdR is going to provide a bank guarantee for the sum of AUD$21,399,540.24, the balance of the judgment due to LKPL is AUD$15,058,508.20 and it is that figure against which I consider the extent, if any, to which enforcement of the balance of the LKPL judgment should be stayed.

108 Mr Karas deposes: at [32] that if the entire judgment is enforced against him, he will become bankrupt, will be unable to pursue the appeal, would lose his ability to practise as a solicitor in Hong Kong, and will likely lose the ability to remain a registered foreign lawyer in England.

109 Enforcement of the entire judgment sum against Mr Karas will have very serious consequences which the Court is not prepared to allow at this stage.

110 The position therefore is that Mr Karas has assets available to him of AUD$16.47 million which he is able to either realise or against which he is able to use as security for borrowing, or in the alternative, to support a bank guarantee in satisfaction or partial satisfaction of the sum of AUD$15,058,508.20.  On the other hand, LKPL has assets in the sum of AUD$6,196.615 available to repay any monies paid by Mr Karas towards the judgment sum.

111 Mr Karas deposes: at [36] of the Karas Affidavit that in the event he sells any real property, he will incur a capital gains tax liability of about AUD$1.8 million.  That will, of course, only apply if Mr Karas elects to sell any of the properties, however in any event it is not a reason to stay enforcement per se.  It does, however, inform the value of the assets available to Mr Karas to put towards the balance of the judgment sum.  I take that potential liability into account.

112 I am not satisfied that Mr Karas should utilise the AUD$16.47 million available to him, whether as cash or as security for borrowings, or for a bank guarantee.  That is because such a figure assumes each of the assets realise the various sums attributed to them or, alternatively that a lender will either advance funds against 100% of the value of the available assets or provide a bank guarantee for the same.  That is so, notwithstanding that the real property assets are valued using Valuer-General’s valuations, which typically are conservative.  It also does not take into account Mr Karas’ ongoing ability to service any loan.

113 That said, as I have noted, Mr Karas provided no evidence as to his weekly/monthly commitments against his monthly income of USD$125,000.  Conservatively, I proceed on the basis that Mr Karas is able to raise approximately 60% of his asset value of AUD$16.47 million, whether by way of cash, including by borrowing, or alternatively, by providing a bank guarantee of AUD$9.88 million which I round up to AUD$10 million.

114 However, I have noted that LKPL’s excess of current assets over current liabilities is AUD$6.196m as at 30 June 2025.

115 In arriving at a decision as to whether Mr Karas should either pay or secure part or all of the balance of the judgment sum after allowing for MdR’s bank guarantee, I am conscious that Mr Karas will need to fund any appeal as well as his genuine general living expenses both in Hong Kong where he resides, and Australia, where his family resides.

116 Under those circumstances, a combination of a bank guarantee in the sum of AUD$5 million on terms acceptable to LKPL and a cash payment of AUD$5 million to LKPL allows for both security for part of the judgment sum, as well as some recovery by LKPL of the fruits of its judgment.

117 As to the balance of LKPL’s judgment sum against Mr Karas after allowing for MdR’s bank guarantee, Mr Karas proffers an undertaking not to dispose of or charge, mortgage or otherwise encumber any of the assets identified in his affidavit other than for the purpose of meeting the ordinary living and business expenses of himself and his family and the costs of and associated with this litigation: at [39] of the Karas Affidavit.  The specific terms of that undertaking are as follows:

1. The First Respondent undertakes to pursue the appeal expeditiously and with all reasonable diligence and to seek to have the appeal listed for an expedited hearing on the earliest dates convenient to the Full Court.

2. The First Respondent also undertakes in respect of the assets identified in the table at paragraph 12 of their affidavit of 9 March 2026, not to dispose of, charge, mortgage or otherwise encumber any of those assets, other than for the purpose of meeting the ordinary living and business expenses of the First Respondent and their family, and the costs of and associated with this litigation.

118 As I understand it, the terms of that undertaking are acceptable to LKPL.  However, in view of my findings as to Mr Karas’ available assets, the reference in the second paragraph of the undertaking to [12] of the Karas Affidavit is too limited, such that the undertaking needs to extend also to [13]-[19] inclusive of the Karas Affidavit.

119 That leaves five matters.

120 The first is that with a loan owing from LKPL to the third applicant, Lipman Family Pty Ltd, in the sum of AUD$10,295,268, Lipman Family, is by far, the largest creditor.  In order to preserve the assets of LKPL pending the outcome of the appeals process, I will require an undertaking from the proper officer of Lipman Family that the debt will not be called until the determination of any final appeal.  In the event that undertaking is not provided, then I reserve my right to reconsider the question of a cash payment to LKPL.

121 The second concerns post-judgment interest.  I am satisfied that Mr Karas should make allowance for post-judgment interest in the same way as MdR, and the parties will have liberty to apply after not less than six months from the date of the orders to have the amount secured by the bank guarantees increased by the post-judgment interest to that point in time.  Any amount will need to make allowance for the post-judgment interest secured by the other party.

122 The third is the question of the enforcement of any order for costs against Mr Karas.

123 It is for the same reasons as I have set out in relation to MdR on the question of costs that there will also be liberty to apply on that issue.

124 The fourth is LKPL’s undertaking.  At the conclusion of the hearing on the stay application, LKPL advised the Court that its undertaking not to enforce the judgment would continue until I delivered my decision on the stay application.  Since there are some administrative details to attend to that undertaking should continue.

125 As to those administrative details, I do not have any information as to:

(a) How long it will take for Mr Karas;

(i) to raise AUD$5 million in cash and pay it to LKPL; and

(ii) arrange a bank guarantee in a form acceptable to LKPL for AUD$5 million; nor

(b) How long it will take for MdR to arrange a bank guarantee.

126 Accordingly, I will hear the parties on those questions.  If LKPL’s undertaking is not extended further, I reserve my right to reconsider the question of a cash payment to LKPL.

127 If the parties cannot agree as to the form of the bank guarantees, I will determine that question on any party exercising liberty to apply.

Conclusion

128 It is for these reasons, that subject to MdR, Mr Karas and LKPL satisfying the conditions set out in these reasons which will be reflected in the final orders, there will be a stay on the enforcement of the judgment sums against both Mr Karas and MdR pursuant to FCR 36.08.

129 The parties are to provide draft orders reflecting these reasons within 7 days of the date these reasons are published.

130 As to the question of costs of the stay application, the parties requested that I reserve that question to a further date.  If necessary, I will fix a date in consultation with the parties for that matter to be argued.

Associate:

Dated:    18 May 2026

SCHEDULE OF PARTIES