Federal Court of Australia

LK Law Pty Ltd v Karas (No 7) [2026] FCA 669

ORDERS

UPON THE COURT NOTING THAT:

A.    The Second Applicant, in his capacity as a director of the Third Applicant, undertakes not to call in or otherwise demand repayment of the Third Applicant’s loan to the First Applicant until the determination of any final appeal in this matter; and

B.    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; and

C.    The First Respondent also undertakes in respect of the assets identified at paragraphs 12 to 19 inclusive of his 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 him and his family, and the costs of and associated with this litigation.

THE COURT ORDERS THAT:

1.    Excepting Orders 5 and 12 of the judgment of the Honourable Justice O’Sullivan in LK Law Pty Ltd v Karas (No 5) [2026] FCA 129 be stayed until the determination of any final appeal in this matter as against the First Respondent subject and conditional upon:

(a)    the First Respondent paying the sum of AUD$5,000,000 to the First Applicant as follows:

(i)    AUD$1,500,000 within 21 days of this order; and

(ii)    AUD$3,500,000 within 45 days of this order; and

(b)    the First Respondent providing the Applicant’s solicitor with an irrevocable bank guarantee issued by an Australian bank in terms agreed between the parties in the sum of AUD$5,000,000.00 in favour of the First Applicant within 30 days of this order; and

(c)    if the terms of the bank guarantee referred to in order 1(b) above are not agreed within 21 days of the date of this order, the parties have liberty to apply on 24 hours’ notice to apply to the Court for resolution of the question of the terms of the irrevocable bank guarantee; and

(d)    the Applicants being entitled to demand payment from the bank providing the irrevocable bank guarantee to enforce the judgment, post-judgment interest and costs if the Respondents’ appeal is dismissed or upon the discharge of this Court’s Order staying the enforcement of the judgment (whichever occurs first).

2.    Excepting Orders 5 and 12, the judgment of the Honourable Justice O’Sullivan in LK Law Pty Ltd v Karas (No 5) [2026] FCA 129 be stayed as against the Fourth Respondent subject to and conditional upon:

(a)    the Fourth Respondent providing the Applicants’ solicitor with an irrevocable bank guarantee issued by National Westminster Bank PLC in the sum of AUD$21,399,540.24 in favour of the First Applicant within 28 days of this order in terms to be agreed by the First Applicant and Fourth Respondent; and

(b)    the Applicants being entitled to demand payment from National Westminster Bank PLC to enforce the judgment, post-judgment interest and costs if the Fourth Respondent’s appeal is dismissed or upon the discharge of this Court’s Order in paragraph 2(a) above (whichever occurs first).

3.    In the event that the First Respondent fails to comply with the conditions set out in Order 1 above, the order for the stay of proceedings set out in that order will cease to operate.

4.    In the event that the Fourth Respondent fails to comply with the conditions set out in Order 2 above, the order for the stay of proceedings as set out in that order above will cease to operate.

5.    The Applicants have liberty to apply to vary the quantum of the bank guarantees required to be provided by the First and Fourth Respondents, respectively, at a date not before six calendar months from the date of this order, to take account of the accrual of post-judgment interest.

6.    The application by the First Respondent for orders pursuant to s 37AF of the Federal Court Act 1976 (Cth) concerning the affidavits of the First Respondent sworn 30 January 2026 and 9 March 2026, is dismissed.

7.    Liberty to apply on 24 hours’ notice.

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 5 May 2026, I provided reasons to the parties dealing with issues of:

(a)    my decision refusing an application by the first respondent, Mr Karas, that I recuse myself from hearing a stay of enforcement of judgment application brought by him; and

(b)    applications for a stay of enforcement of judgment brought by Mr Karas and the fourth respondent, MdR.

2    When I provided the reasons, I did not publish them because on that occasion Mr Dunning KC, senior counsel for Mr Karas, expressed the desire to consider any confidentiality issues arising out of the reasons. That was notwithstanding that the issue was specifically raised at the hearing of the stay of enforcement application on 18 March 2026.

3    My reasons directed the parties to provide draft orders and the required undertakings, which I identified in the reasons, within seven days of the date of publication of the reasons.

4    However, since I did not publish the reasons on 5 May 2026, those orders should be taken as running from 5 May 2026 when I provided the reasons to the parties.

5    The reasons required undertakings. I reserved to myself the right to reconsider the orders upon which a stay of enforcement would be ordered should the undertakings not be provided.

6    The parties appeared before me this morning and have provided two different sets of draft orders.

7    The orders are largely agreed, save in respect of three matters on the part of Mr Karas, and two matters in so far as MdR is concerned.

8    I deal first with MdR.

MdR

9    The parties have, with respect sensibly resolved the two matters by indicating that the draft orders provided by the first applicant, LKPL, may be made subject to some slight amendments, which reflect the parties desire to negotiate terms upon which the bank guarantee to be provided by MDR will be issued. The time period sought is 28 days with liberty to apply if no agreement can be reached. There will be orders accordingly.

Mr Karas

10    Insofar as Mr Karas is concerned, the three areas of disagreement are:

(a)    the time within which he is to make a cash payment of AUD$5 million to LKPL;

(b)    the time within which he is to provide an irrevocable bank guarantee in favour of LKPL; and

(c)    the terms of the undertaking proffered by the third applicant, Lipman Family Pty Ltd, which is directed at ensuring that if Mr Karas succeeds on appeal, any money he pays to LKPL will be protected.

Cash payment

11    As to the first issue, that is a cash payment, the applicants seek orders that Mr Karas pay the sum of AUD$5 million to LKPL in the following manner:

(a)    AUD$1.5 million within seven days of the date of the order; and

(b)    AUD$3.5 million within 30 days of the date of the order.

12    In contrast, Mr Karas proposes that payment of AUD$5 million be made to LKPL within 120 days of the order and that an irrevocable bank guarantee be issued in favour of LKPL by an Australian bank in the sum of AUD$5 million in favour of LKPL also within 120 days of the order.

13    No explanation has been proffered by Mr Karas as to why he needs 120 days to pay the sum of AUD$5 million to LKPL, nor why he needs 120 days to put in place an irrevocable bank guarantee issued by an Australian bank.

14    Mr Dunning KC submitted that my reasons only directed that the parties provide draft orders reflecting the terms of those reasons and that was the ambit of today’s hearing.

15    That may well be so, but if a party seeking the benefit of a stay of enforcement puts forward a different version of orders apparently on the basis that that is when that party can make payment, one might expect there to be some evidence dealing with that issue.

16    Instead, the position taken by Mr Karas is that reflected in the annexures to the affidavit of Matthew Selley sworn 13 May 2026 (Selley Affidavit) which was read on the application this morning. Mr Selley is a Director of Iles Selley, solicitors for the applicants.

17    The correspondence to the Selley Affidavit reveals that by letter dated 8 May 2026 – Annexure MS-1 to the Selley Affidavit, Iles Selley inquired of Mr Karas’ solicitors as to why Mr Karas could not comply with time limits proposed by Iles Selley, that is seven days and 30 days respectively. Iles Selley indicated that LKPL is willing to engage further with Mr Karas in relation to the deadline for compliance with the orders. As I have noted, those orders proposed a payment of AUD$1.5 million within seven days and AUD$3.5 million within 30 days.

18    In reply, Piper Alderman wrote to Iles Selley on 12 May 2026, in which they asserted the draft orders provided by Iles Selley did not reflect the reasons: Annexure MS-2 to the Selley Affidavit.

19    Piper Alderman continued that it was instructed that Mr Karas does not believe he will be able to comply with the order for cash payments to LKPL proposed by either party within any timeframe. Instead Piper Alderman, without explanation save for the bare assertion that Mr Karas does not believe he will be able to comply with the cash payment order, enclosed orders providing for the 120 day periods to which I have referred.

20    On 13 May 2026, Iles Selley wrote to Piper Alderman: Annexure MS-5 to the Selley Affidavit, noting that, given the assertion by Mr Karas that he did not believe he would be able to comply with Order 1 of the draft orders proposed by LKPL, he should explain why that is so.

21    Illes Selley continued by noting that there was no explanation provided and that Mr Karas’ assertion is inconsistent with the positions he deposed to in Mr Karas’ affidavit sworn 9 March 2026, to which I referred in the reasons.

22    A reply to that letter was tendered at the hearing this morning as Exhibit R-1, being a letter from Piper Alderman dated 15 May 2026. Iles Selley’s question as to why it is that Mr Karas could not comply with the draft orders was summarily dismissed by Piper Alderman with the bare statement that Piper Alderman did not intend to engage in debate or correspondence concerning the contents of the reasons or Mr Karas’ ability to comply with the draft orders. Instead, Piper Alderman stated that it would rely on the draft orders proposed by Mr Karas and will address those orders at the hearing this morning.

23    Mr Dunning KC addressed those orders by reiterating, for all intents and purposes, that the draft orders proposed by Mr Karas was Mr Karas’ position, whilst also making reference to potential times to sell assets. There was no detail provided on the latter point and there was no further detail.

24    The position therefore is that I am completely without information as to Mr Karas’ ability to meet conditions upon which I am prepared to stay enforcement of the judgment against him.

25    I dealt with Mr Karas’ assets in detail, at least to the extent I was able given my observations in the reasons that he had not provided certain information.

26    Nonetheless, it seems to me that payment of AUD$1.5 million within seven days of the order is oppressive. So too a payment of AUD$3.5 million within 30 days of the order, whilst more reasonable, nonetheless is somewhat oppressive if assets are to be realised.

27    Accordingly, there will be orders that Mr Karas pay the sum of AUD$5 million to LKPL in two instalments, the first being the sum of AU$1.5 million within 21 days of the date of today’s orders, and the remaining sum of AUD$3.5 million within 45 days of the date of today’s order.

Bank guarantee

28    As to the provision of an irrevocable bank guarantee, it seems to me that that should be able to be done with some alacrity. Accordingly, there will be an order that Mr Karas provide the applicants’ solicitors with an irrevocable bank guarantee issued by an Australian bank in the sum of AUD$5 million in favour of LKPL within 30 days of the date of this order. If the parties cannot agree on the terms of the bank guarantee, there will be liberty to apply.

Lipman Family undertaking

29    The remaining matter concerns the terms of an undertaking from Lipman Family.

30    In my reasons, I noted that Lipman Family was, by far, LKPL’s most significant creditor in that there was a loan from Lipman Family to LKPL in the sum of AUD$10,295,268. As part of the conditions upon which I was prepared to stay the enforcement of judgment, I held that I would require an undertaking from the proper officer of Lipman Family that it would not call in the debt until the determination of any final appeal.

31    That was not a matter that was raised on argument and is a matter that I considered during the course of my consideration. It is directed at protecting Mr Karas from a position where he pays money to LKPL but it is ultimately successful on appeal.

32    I am now informed by the Selley Affidavit that in or about February 2025, LKPL and Lipman Family agreed that LKPL would make monthly repayments in the sum of AUD$30,000 on that loan. That agreement was “unless otherwise agreed”: Selley Affidavit at [4].

33    Mr Selley continues by deposing at [4] of the Selley Affidavit that the proposed monthly repayments are intended to continue, but that Lipman Family will undertake not to call in the loan pending the determination of the respondents’ appeals, nor will it demand repayments in addition to the agreed AU$30,000 per month.

34    It is for that reason that LKPL proposes that the undertaking from Lipman Family by which it undertakes not to call in the AUD$10,295,268 loan to LKPL carves out the sum of AUD$30,000 per month.

35    The agreement between LKPL and Lipman Family is “unless otherwise agreed”. The amount in question, in the event an appeal takes 12 months from the date of this order to be heard and determined, a not unreasonable period, is AUD$360,000. In all the circumstances, that seems to me to be a not particularly significant sum given a payment to LKPL of AUD$5 million with AUD$1.5 million to be paid within 21 days. It also seems to me that given that LKPL is to receive the sum of AUD$5 million in cash, there is no need for the monthly payments of AUD$30,000 to continue, at least in the short term.

36    Accordingly, an order will be made so that the undertaking from Lipman Family will not exclude the sum of AUD$30,000 payable per month.

Confidentiality

37    A final word about confidentiality.

38    I note from Piper Alderman’s letter to Iles Selley dated 12 May 2026, that Mr Karas intends to seek leave to appeal from my decision refusing to recuse myself and not ordering that Mr Karas’ affidavit read on the stay of enforcement application be marked confidential.

39    I noted in my reasons at [36]-[40], that no party advanced any opposition to my preliminary view at the hearing on 18 March 2026 that none of the documents should remain confidential.

40    As I have noted, when I provided the reasons to the parties on 5 May 2026, at Mr Dunning KC’s request, I did not publish them to allow the parties to deal with the question of confidentiality. Hence the reasons were not published that day.

41    When the matter resumed today, no party advanced any submissions as to confidentiality.

42    To the extent any of the documents filed on the application for a stay of enforcement of judgment are currently marked confidential, that application for confidentiality will be dismissed.

Conclusion

43    It is for these reasons that I make the orders today.

Associate:

Dated:    28 May 2026

SCHEDULE OF PARTIES