Federal Court of Australia

Karas v LK Law Pty LTD (Costs of Stay Application) [2026] FCA 859

ORDERS

THE COURT NOTES THAT:

A.    The first appellant has undertaken to pursue the appeal expeditiously and with all reasonable diligence and seeks to have the appeal listed for an expedited hearing on the earliest dates convenient to the Full Court.

B.    The first appellant also undertakes in respect of the assets identified at paragraph 12 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.    Orders 1, 9, 10, 11 and 12 of the Federal Court of Australia, made by O’Sullivan J on 20 February 2026 in Adelaide, South Australia in proceeding SAD 222 of 2021 be stayed as against the first appellant until the conclusion of appeal proceedings SAD 58 of 2026 and SAD 59 of 2026.

2.    Order 1 of the orders of the Federal Court of Australia made by O’Sullivan J on 18 May 2026 in Adelaide, South Australia in proceeding SAD 222 of 2021 be stayed until the conclusion of appeal proceedings SAD 58 of 2026 and SAD 59 of 2026.

3.    The first appellant’s interlocutory application filed on 29 May 2026 in SAD 120 of 2026 be treated for all purposes as having always been filed in SAD 58 of 2026.

4.    The respondents’ costs of the interlocutory application dated 29 May 2026 be the respondents’ costs in the appeal.

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

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to appeal filed on 19 May 2026 in SAD 120 of 2026 be dismissed.

2.    The costs of and incidental to the application for leave to appeal in SAD 120 of 2026 be costs in SAD 58 of 2026.

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

REASONS FOR JUDGMENT

PERRAM J:

1    On 26 June 2026 I published my reasons for granting an application by Mr Karas to stay the enforcement of the primary judgment. Mr Karas’ stay application was treated as if it had always been filed in the substantive appeal proceeding (SAD 58 of 2026) rather than the application for leave proceeding (SAD 120 of 2026). Mr Karas now seeks an order that the respondents (‘LK Law’) pay his costs of the stay application. LK Law seeks an order that the costs of the stay application should be costs in the appeal or that they should be Mr Karas’ costs in the appeal.

2    A stay is an indulgence. Ordinarily, the party seeking an indulgence should pay the costs of the other party. It would not be appropriate to order LK Law to pay Mr Karas’s costs of the interlocutory application.

3    On the other hand, if Mr Karas succeeds in his appeal, it would be unfair for him to have to pay the respondents’ costs. There is authority for the proposition that in such a circumstance an appropriate order can be that the costs of the stay application should be the respondents’ costs in the appeal: see Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 85 at [24] per Brereton JA.

4    Costs orders in that form can be confusing and are rarely explained.

5    The formal effect of that order is that the appellant’s costs of the interlocutory application will not form part of the costs of the appeal if the respondents are ordered to pay all or some part of those costs. But the respondents’ costs of the interlocutory application will form part of the costs of the appeal if the appellant is ordered to pay some or all of those costs.

6    In the stay judgment, I indicated that the application for leave to appeal had become moot and I now make orders dismissing it as such. There was a minor disagreement about the appropriate costs order. The appropriate order is that the costs in SAD 120 of 2026 should be costs in SAD 58 of 2026. I otherwise make the orders the parties have agreed to give effect to the earlier reasons.

Associate:

Dated:    7 July 2026