Kostakis v Executive Law Group

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2025 05319

ELIANNE KOSTAKIS	Plaintiff
v
EXECUTIVE LAW GROUP	Defendant

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JUDGE:	Delany J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 September 2025
DATE OF JUDGMENT:	23 September 2025
CASE MAY BE CITED AS:	Kostakis v Executive Law Group
MEDIUM NEUTRAL CITATION:	[2025] VSC 605

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PROPERTY LAW — Proposed transfer and release to the purchaser of deposit money under contract for the sale of land — Condition in deed of variation enuring for the benefit of the purchaser — Proceeding by vendor client against former solicitor seeking transfer of deposit moneys — Transfer not permitted — Sale of Land Act 1962 (Vic) ss 24, 27 — Whether notice under s 27 of the Sale of Land Act 1962 (Vic) is effective — 68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd [2023] VSCA 325, Aurumstone Pty Ltd v Yarra Bank Developments Pty Ltd [2017] VSC 502, followed.

CONTRACT — Construction —Variation deed — Where clause introduced by variation inconsistent with standard clause in contract of sale — Where to give effect to the words in the standard clause mean the clause in the deed of variation could perform no work.

FREEZING ORDER — Application to vary to permit payment of entities incorporated overseas conducting business in Dubai — Application refused — Dispute about whether certain expenses are captured by exceptions in freezing order permitting the payment of reasonable living expenses and ordinary business expenses.

PRACTICE AND PROCEDURE — Freezing order in place — Need for prompt trial given existing expenditure by defendants on legal costs and the prospect of erosion of limited resources due to expenditure permitted by carve‑outs from freezing order — Defence not yet filed — Interlocutory skirmishes taking up too many court days and resources — Page and time limits imposed — Timetable for completion of steps prior to trial including expert evidence revised to bring forward date of readiness for trial — Civil Procedure Act 2010 (Vic) ss 7(1), 8, Part 4.2.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Carlile	Moray & Agnew Lawyers
For the Defendant	Ms M Rozner	Executive Law Group
For Refuse to Lose Pty Ltd and Synochi Pty Ltd	Dr O Bigos KC Mr M Garrett	Tisher Liner FC Law

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TABLE OF CONTENTS

A. Background................................................................................................................................... 1

B.. The orders contended for........................................................................................................... 8

C. The facts....................................................................................................................................... 10

D. The Sale of Land Act................................................................................................................. 11

D.1... The legislation.................................................................................................................... 11
D.2. . Previous decisions concerning ss 24–28 of the Sale of Land Act................................ 14

E... Applying the Sale of Land Act to the facts........................................................................... 19

E.1. . Submissions........................................................................................................................ 19
Kostakis parties’ submissions................................................................................. 19
RTL’s submissions.................................................................................................... 21
ELG’s submissions.................................................................................................... 24

E.2... Consideration and disposition........................................................................................ 26
Justiciability and standing....................................................................................... 26
Section 27(2)(a) is not satisfied................................................................................ 27
Paragraph 3 of the s 27 statement is not an answer............................................. 31
The s 27 statement..................................................................................................... 31

F. . Transfer pursuant to s 24 of the Sale of Land Act................................................................ 32

F.1 .. Submissions........................................................................................................................ 32
Kostakis parties’ submissions................................................................................. 32
RTL’s submissions.................................................................................................... 33
ELG’s submissions.................................................................................................... 34

F.2... Consideration and disposition........................................................................................ 34

G.. $27,000 representing the licence fee....................................................................................... 35

H.. The contested carve-outs concerning items in the Expenses Schedule and the variation application................................................................................................................................... 35

H.1.. The contested expenses..................................................................................................... 36
H.2.. Variation application......................................................................................................... 38
Legal principles......................................................................................................... 38
Kostakis parties’ submissions and evidence......................................................... 39
RTL’s submissions.................................................................................................... 41

H.3.. Consideration and disposition........................................................................................ 41

I.... Disposition and orders.............................................................................................................. 42

HIS HONOUR:

A. Background

This ruling involves a determination of two applications in related proceedings.

The first proceeding is S ECI 2025 02010 Refuse to Lose Pty Ltd v Kostakis (‘RTL Proceeding’). In that proceeding, Refuse to Lose Pty Ltd and Synochi Pty Ltd (collectively, ‘RTL’) bring various claims against Mr Jim Kostakis, Mrs Elianne Kostakis, JKEK Investments Pty Ltd and Premier Laser Hair Removal Pty Ltd (‘the Kostakis parties’) for, among other things, misleading or deceptive conduct and breach of fiduciary duties. Although the RTL Proceeding was initiated on 15 April 2025 and RTL filed its amended statement of claim on 2 July 2025, the defendants are yet to file their defence. Pursuant to orders made on 3 September 2025 the defence must be filed and served by 4:00pm on 25 September 2025.

The second proceeding is S ECI 2025 05319, Kostakis v Executive Law Group (‘ELG Proceeding’), brought by Mrs Kostakis against Executive Law Group (‘ELG’). Until around 30 July 2025, ELG acted for the Kostakis parties in the RTL Proceeding. The ELG Proceeding was initiated by originating motion on 9 September 2025.

The ELG Proceeding was the subject of an application for an urgent hearing dated 9 September 2025. As recorded in the application form, the ELG Proceeding primarily concerns $1.7m held by Mrs Kostakis’ former solicitors, most of which being deposit moneys paid under s 24 of the Sale of Land Act 1962 (Vic) (‘Deposit Moneys’). By summons dated 11 September 2025 Mrs Kostakis seeks an order requiring ELG to transfer the Deposit Moneys to Jafer Lawyers, a law practice which acts for Mrs Kostakis in relation to the sale of 67 Were Street, Brighton VIC (‘the Brighton Property’) of which she is the registered proprietor.

The initiation of the ELG Proceeding by Mrs Kostakis follows orders made on 29 August 2025 in the RTL Proceeding permitting (though not ordering) ELG to transfer moneys or other proceeds or part-proceeds of sale of the Brighton Property held in ELG’s trust account to another solicitor acting for Mrs Kostakis as vendor in relation to the sale of the Property, pursuant to s 24(2)(a) of the Sale of Land Act1962 (Vic) (‘the Act’ or ‘Sale of Land Act’).

The permissive orders were made in the context of earlier freezing orders made on 10 July 2025 against the Kostakis parties in respect of assets to an amount of $3.5m. One of the assets expressly mentioned in the freezing orders is the net proceeds of sale of the Brighton Property.

The 10 July 2025 freezing orders and related asset disclosure orders against Mr and Mrs Kostakis required the disclosure of assets worldwide in the form of affidavits to be served on RTL in August 2025. The orders do not require the disclosure affidavits to be filed.

The Brighton Property was sold in September 2024 for $10.25m and the net proceeds available to Mrs Kostakis from the contract, originally due to be completed on 10 July 2025, are anticipated to be approximately $2.448m.[1]
[1]Refuse to Lose Pty Ltd v Kostakis [2025] VSC 438, [10] (Connock J).

The 10 July 2025 freezing and disclosure orders followed a contested hearing on 8 and 9 July 2025. This was not the first hearing of freezing order and related applications in the RTL Proceeding.

On 4 June 2025 RTL applied for a freezing order on notice to the Kostakis parties. Directions were given in relation to the hearing of that application on 10 June 2025, 24 June 2025 and 1 July 2025.

On 1 July 2025, the Kostakis parties gave the following undertaking:

Each of the defendants, by their Counsel, undertake to the Court to irrevocably direct that any deposit monies or other proceeds or part-proceeds of sale of the [Brighton Property] payable to them or on their behalf, be paid forthwith into and held in their solicitors Executive Law Group’s trust account, such funds not to be released from the trust account without further order, or written consent of the plaintiffs.

At the time the undertaking was given the contract of sale (‘Contract of Sale’) of the Brighton Property was due to settle on 10 July 2025.

On the day following the freezing and disclosure orders, 11 July 2025, a deed of variation to the Contract of Sale was entered into between Mrs Kostakis as vendor and Mr Spasevski as the purchaser dated 11 July 2025 (‘Variation Deed’).

Amongst other things the Variation Deed provided that:

1)The settlement date under the Contract of Sale was varied to July 2026.[2]
2)The deposit amount was increased by $1.7m from $850,000 to $2.5m.[3]
3)The purchaser is to be entitled to possession of the Brighton Property pursuant to a licence agreement dated 11 July 2025 (‘Licence Agreement’) subject to paying a licence fee of $27,000 a month.

[2]Variation Deed, cl 3(a)(iv).

[3]Variation Deed, cl 3(a)(ii).

Clause 3(a)(i) of the Variation Deed states:[4]

The Vendor hereby irrevocably directs that any deposit monies or other proceeds or part-proceedings of sale of the property at 67 Were Street, Brighton VIC 3186 payable to her or on her behalf, be paid into her solicitors Executive Law Group’s trust account: [details]
This direction prevails over any other provision of the Contract of Sale to the extent of any inconsistency.

[4]Variation Deed, cl 3(a)(i).

It is common ground the further deposit of $1.7m was paid to ELG. One payment of $27,000 representing the licence fee for one month was also paid and is held by ELG in trust, along with the Deposit Moneys (together, ‘the Trust Moneys’).

Clause 3(b)(ii) of the Variation Deed is central to the issues for determination. That clause provides:[5]

The following condition is included as general condition 35.4(aa), as if it followed general condition 35.4(a), and stating as follows:
further, the amount of the deposit (of $2,550,000) above 10% of the price is forfeited to the vendor’s absolute property, whether the deposit has been paid or not unless the Purchaser has prior to the 10 April 2026 notified the Vendor in writing that the Purchaser shall be unable to effect settlement on or before 10 July 2026 and provided that the Purchaser has vacated the Property on or before the 10 July 2026, the Vendor agrees to refund to the Purchaser the deposit of $2,550,000 less an amount equal to the estate agent’s commission paid by the Vendor to Kay Burton Real Estate in the sum of $103,000 on or before 10 October 2026.

[5]Variation Deed, cl 3(b)(ii).

On 24 July 2025 the Kostakis parties applied for orders in the RTL Proceeding releasing them from the 1 July 2025 undertaking, or in the alternative, releasing them from that undertaking in exchange for a fresh undertaking to use the Deposit Moneys only for particular expenses. Directions were given in relation to that application on 14 August 2025 including for the filing and service of an amended summons. On 27 August 2025 the Kostakis parties filed an amended summons.

By the 27 August 2025 amended summons, the Kostakis parties sought orders that:

1. The funds held in Executive Law Group’s trust account in the amount of $1,727,000 be released to Moray & Agnew Lawyers into the following trust account:
[details]
(Released Funds)
2.The Second Defendant is at liberty to use the Released Funds to pay for her own, the First Defendant, her family, and any expenses of businesses operated by her or the First Defendant subject to the limitations contained in the Penal Notices dated 10 July 2025.

On 29 August 2025 directions were given in relation to the amended summons. On 3 September 2025 a directions hearing was held at which ELG was given leave to be heard on the amended summons. ELG claims a lien for unpaid legal fees of the Kostakis parties in the sum of $508,486.42.

The further hearing of paragraph 2 of the amended summons was adjourned until 30 September 2025.

Events overtook that scheduled hearing when on 9 September 2025 Mrs Kostakis initiated the ELG Proceeding and sought an urgent hearing of the summons issued by her in that proceeding.

On 12 September 2025 I listed the ELG Proceeding before me for the purpose of making arrangements for an urgent hearing on 17 September 2025 at which time it was anticipated all interested parties would be in a position to participate. Notice of the hearing was given to RTL, to the Kostakis parties, to ELG and to the purchaser of the Brighton Property. On 12 September 2025 RTL, Mrs Kostakis and ELG were each represented by counsel.

As I made clear during that hearing, interlocutory skirmishes in the RTL Proceeding have occupied far too many Court days and have taken up far too many resources of the Court. I informed the parties that any party who sought any interlocutory relief concerning or arising out of the freezing orders or the Trust Moneys held by ELG needed to bring any application in either proceeding before the Court so that all applications could be heard at a single hearing on 17 September 2025. I made orders that the amended summons filed on 27 August 2025 in the RTL Proceeding and the application by summons filed on 11 September 2025 in the ELG Proceeding be heard together, that RTL had leave to be heard in the ELG Proceeding, and that ELG had leave to be heard in the RTL Proceeding. I made orders that a reference to evidence in one proceeding was to be evidence in the other.

To ensure all interlocutory disputes were identified and all issues delineated and that all relevant persons were on notice of the hearing I made orders that:

(a) the purchaser be given notice of the hearing on 17 September 2025, and when available be provided with the transcript of the hearing on 12 September 2025, a copy of the originating process and a copy of the summons filed in the ELG Proceeding;

(b) by 5:00pm on 12 September 2025, Mrs Kostakis was to provide to the Court and any other interested parties a schedule of expenses for which the Kostakis parties contend should be paid as exceptions to the freezing orders made on 10 July 2025 (‘Expenses Schedule’);

(c) by 12:00pm on 16 September 2025, ELG and RTL were to file and serve any response to the Expenses Schedule;

(d) by 5:00pm on 16 September 2025, the parties were to file and serve submissions limited to 10 pages per party with pinpoint references to evidence and authorities relied on together with a draft form of order for which that party contends; and

(e) by 11:00am on 17 September 2025, the parties were to provide a single book of authorities relied upon.

Noting the already excessive burden imposed on the Court and its resources by the interlocutory disputes to which I have referred, and conscious of the obligations imposed on the Court pursuant to s 8 of the Civil Procedure Act 2010 (Vic) (‘the CPA’), the overarching purpose in s 7(1) and the case management powers in Part 4.2 of the CPA, on 15 September 2025 my chambers informed the parties that a maximum of three hours would be allocated to the hearing and that counsel should agree on an appropriate allocation of time.

At the conclusion of the hearing I informed counsel that I would list the matter for directions in the first week of December. By that time pleadings, the filing of lay evidence, and a mediation required to be held pursuant to orders made on 21 July 2025 as varied on 3 September 2025 will have been completed. I will vacate the 30 September 2025 hearing date.

Given there are freezing orders in place and carve-outs from those orders for expenses it is important this case is fixed for trial and heard and determined without delay. The existing trial orders anticipate the matter not being ready for trial until after 8 July 2026. It is desirable the trial not be delayed and that it take place as soon as practicable. That is particularly the case noting:

(a) the claim is for an amount in the order of $5m;[6]
[6]Refuse to Lose Pty Ltd v Kostakis [2025] VSC 438, [75] (Connock J).

(b) the equity in the Brighton property is approximately $2.5m;

(c) the lien claimed by ELG is for legal costs of over $500,000 — those costs having apparently been incurred without a defence yet having been filed; and

(d) ongoing legal, living and business expenses of the Kostakis parties are continuing as permissible exceptions to the freezing orders.

A large part of the delay in the matter being ready for trial under existing orders is due to both the sequencing of and the time allowed for the completion of expert evidence. The trial orders in the RTL Proceeding made on 21 July 2025 as varied provide for expert evidence to follow the completion of lay evidence. Expert evidence currently begins with the provision of the plaintiffs’ expert evidence by 22 December 2025 and ends with joint reports by 6 April 2026. If that time can be truncated, a much earlier trial date becomes possible.

Notwithstanding s 65G of the CPA and the large number of earlier hearings in the RTL Proceeding, neither party has yet informed the Court of the subject matter or of the identity of witnesses from whom expert evidence is proposed to be adduced. As I said during the hearing, if either party wishes to rely on expert evidence they should instruct their experts without further delay. They should provide copies of any letter of instructions to their expert(s) and copies of the materials briefed to that expert to the opposite party by no later than 4:00pm on 8 October 2025. Expert evidence by either party should be filed and served by 4:00pm on 1 December 2025. Orders can be made as needed for joint reports at the December directions hearing.

I will order that by no later than 4:00pm on 2 December 2025 counsel are to have conferred and the parties are to file and serve a draft trial plan and list of issues. While I have not formally vacated the previous trial orders that anticipate the matter not being ready for trial until after 8 July 2026 that can be attended to at the December directions hearing which will be listed before me on 5 December 2025. I anticipate a trial date will be allocated to the RTL Proceeding at the directions hearing with the trial to be listed at the earliest available date in 2026. Currently I expect that the trial will be listed to commence in February 2026.

B. The orders contended for

By her originating motion and summons in the ELG Proceeding Mrs Kostakis seeks the transfer to Jafer Lawyers’ trust account of $1.7m, the whole of the Trust Moneys held by ELG in its trust account. When proposed orders were submitted as directed, Mrs Kostakis modified the relief sought, reducing the amount sought to be transferred in recognition of the lien (which Mrs Kostakis disputes) asserted by ELG in its favour for unpaid costs.

In the RTL Proceeding the Kostakis parties seek an order that the freezing orders be varied such that Mrs Kostakis is at liberty to use the Deposit Moneys to pay for expenses on behalf of or in respect to Australian Laser Clinics L.L.C. and Australian Cosmetic Trading L.L.C. whilst those entities continue to be owned, operated or controlled by Mr Kostakis.

ELG opposes Mrs Kostakis’ application against it on the basis that it claims a lien over unpaid legal costs of $508,486.42 payable to it by the Kostakis parties in relation to the RTL Proceeding, and that it does not wish to be complicit in any breach of s 27 of the Act by reason of transferring the Deposit Moneys.

ELG seeks an order in the ELG Proceeding that the deposit of $1.7m currently held in its trust account is held on trust for the purchaser of the Brighton Property until settlement of the sale or further order, and that upon settlement or further order ELG must within seven days release to Mrs Kostakis the Trust Moneys minus $508,486.42 (being the amount over which ELG claims a lien for unpaid fees). Alternatively, ELG seeks an order that the deposit of $1.7m held in its trust account be released to Mrs Kostakis beneficially minus the amount over which ELG claims a lien for unpaid fees.

Separately, ELG seeks orders clarifying that $27,000 held by it on trust, being one month’s licence fee, does not form part of the Deposit Moneys and an order that it be permitted to transfer those funds to itself on account of unpaid legal fees.

RTL opposes the applications by the Kostakis parties concerning the transfer and use of any of the Deposit Moneys for the payment of expenses on the basis that such use of the Deposit Moneys would be in breach of s 27 of the Act, and that certain purposes for which Mr and Mrs Kostakis intend to use any released funds do not fall within the permitted exceptions to freezing orders made against the Kostakis parties in the RTL Proceeding. RTL opposes the freezing order variation application.

There is a dispute between the Kostakis parties and RTL concerning the business and personal expenses that the Kostakis parties may pay out of the Deposit Moneys or otherwise as a ‘carve-out’ to the existing freezing orders. The ambit of that dispute was conveniently identified by RTL’s response to the Expenses Schedule.

C. The facts

There is no dispute between the parties involved in the two proceedings that the Deposit Moneys held by ELG in its trust account is deposit money to which s 24 of the Act applies.

The key issues concerning the Deposit Moneys involve the application of ss 24–‍28 of the Act by reference to cl 3(b)(ii) of the Variation Deed in circumstances where the purchaser has signed a statement in purported compliance with s 27 of the Act. The text of cl 3(b)(ii) is reproduced at paragraph 17 of these reasons.

Clause 3(b)(ii) of the Variation Deed varied the Contract of Sale to include general condition 35.4(aa) as if it followed general condition 35.4(a) of the Contract of Sale. The heading to cl 35 of the Contract of Sale is ‘Default Not Remedied’. Clause 35.4(a) of the contract, which is a standard form clause, reads:

35.4 If the contract ends by a default notice given by the vendor:
(a) the deposit up to 10% of the price is forfeited to the vendor as the vendor’s absolute property, whether the deposit has been paid or not; and

In addition to Clause 3(b)(ii), the Variation Deed includes a ‘second additional clause’ varying the Contract of Sale. Clause 3(c) of the Variation Deed states:

Notwithstanding anything to the contrary, in the event that the Purchaser is not entitled to a refund of the deposit pursuant to general condition 35.4 (aa) the Vendor and Purchaser agree that the Purchaser’s absolute forfeiture of the deposit of $2,550,000 would remedy any default under the contract by the Purchaser satisfactorily and no further claims shall be brought against the Purchaser whatsoever following the contract been rescinded under a default notice.

On 27 August 2025 the purchaser and Mrs Kostakis signed a statement in purported compliance with s 27 of the Act. The s 27 statement includes the following (‘paragraph 3’):

[3]The Purchaser FURTHER ACKNOWLEDGES that it waives its entitlement, if any, to object to the Vendor’s giving of this Notice by reason of the operation of section 27(2) of the Sale of Land Act 1962 (Vic) by waiving for the purpose of this Notice, but not otherwise, any conditions that may enure for its benefit.

The s 27 statement attaches two letters from the National Australia Bank (‘NAB’) regarding a mortgage over the Brighton Property.

Relying on the signed statement Mrs Kostakis submitted that because the purchaser consents to the release of the Deposit Moneys pursuant to s 27 of the Act, there is no justiciable issue that arises concerning the operation of the Act.

ELG and RTL submitted that clause 3(b)(ii) of the Variation Deed is a condition that enures for the benefit of the purchaser and that by reason of s 27(2)(a) of the Act any dealing in the Deposit Moneys is prohibited, notwithstanding the signing by the purchaser of the s 27 statement. They further submitted that s 27 has not been complied with in this case.

RTL submitted the s 27 statement is deficient because it did not list all mortgage arrears and did not provide the required details of all caveats. It submitted paragraph 3 of the s 27 statement does not remove cl 3(b)(ii) of the Variation Deed from the Contract of Sale, and that the clause continues to enure for the benefit of the purchaser in accordance with the Act.

The purchaser was provided in advance of the hearing with relevant material the subject of previous orders. An affidavit by the solicitor acting for Mrs Kostakis dated 17 September 2025 exhibits an email from the purchaser’s solicitor advising that their client did not wish to attend or to be represented at the hearing.

D. The Sale of Land Act
D.1. The legislation

The relevant provisions of the Sale of Land Act are as follows:

24Deposit moneys held by legal practitioner, conveyancer or estate agent to be held as stakeholder
(1) Any deposit moneys received by a legal practitioner, conveyancer or estate agent in the course of a transaction for the sale of land shall be held by that legal practitioner, conveyancer or estate agent as a stakeholder until—
(a) in the case of a cash transaction, the purchaser becomes entitled to a transfer or conveyance of the land; or
(b) in the case of a terms contract, the purchaser becomes entitled to possession or to the receipt of rents and profits— at which time the deposit moneys may be paid to the vendor in his own right or as the vendor directs.

(2) This section does not prevent the transfer of deposit moneys from—
(a) a legal practitioner, estate agent or conveyancer to another legal practitioner, estate agent or conveyancer if that other legal practitioner, estate agent or conveyancer is acting for the vendor in relation to the sale; or
(b)a vendor to a legal practitioner, estate agent or conveyancer acting for that vendor.

(3) Any deposit moneys transferred under subsection (2) must continue to be held by the person to whom they were transferred as a stakeholder under this Division.

27 Release of deposit moneys in certain circumstances
(1) Where a legal practitioner, conveyancer or estate agent is holding deposit moneys as a stakeholder under section 24, the purchaser may by authorization in writing empower the legal practitioner, conveyancer or estate agent (as the case may be) to release those deposit moneys to the vendor in his own right or as the vendor directs.
(2) Subsection (1) shall only operate—
(a) where the contract is not subject to any condition enuring for the benefit of the purchaser; and
(b) where the purchaser has accepted title or may be deemed to have accepted title.

(3) An authorization in writing shall not be effective unless and until the vendor has given the purchaser a notice in writing setting out—
(a) if there is a mortgage over the land which is the subject of the transaction, the particulars specified in Schedule 1; and
(c) particulars of any caveat lodged under the Transfer of Land Act 1958 in respect of the land which is the subject of the transaction— and the purchaser has given notice under subsection (4) that he is satisfied with those particulars.

(4) Where the purchaser is satisfied—
(a) that the particulars provided under paragraphs (a) and (c) of subsection (3) are accurate; and
(b) that the particulars provided under paragraph (a) of subsection (3) indicate that the purchase price is sufficient to discharge all mortgages over the property—

he shall give the vendor notice in writing to that effect within 28 days of receiving the particulars.
(5) A notice in writing under subsection (4) stating that the purchaser is satisfied with the particulars shall be deemed to be the authorization required by subsections (1) (2) and (3).
(6)Where the purchaser is not satisfied with the particulars he shall within 28 days of receiving them give notice in writing stating that he is not satisfied with the particulars and giving the reasons why he is not satisfied.
(7)Where the purchaser fails to give a notice under either subsection (4) or (6) within the time limited by the subsection he shall—
(a)be deemed to be satisfied with the particulars provided; and
(b)be deemed to have given the authorization required by subsection (1).

(8)Where a vendor knowingly or recklessly supplies false information to the purchaser regarding any particulars required to be given under subsection (3)—
(a)he shall be guilty of an offence against this Act and liable to a penalty of not more than 50 penalty units; and
(b)the purchaser shall be entitled to rescind the contract for the sale of the land and recover the deposit moneys.

…
28 Powers of purchaser where contract in contravention of this Division
(1) Where any contract for the sale of land contains provisions in contravention of this Division—
(a)those provisions shall be void and of no effect; and
(b) the contract shall be voidable by the purchaser at any time before completion and any person who has paid money under the contract shall be entitled to recover it.

(2) Notwithstanding paragraph (b) of subsection (1) the contract shall not be voidable by the purchaser if the Court is satisfied that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and that the purchaser is substantially in as good a position as if all the relevant provisions of this Division had been complied with.

Schedule 1 of the Act to which s 27(3)(a) of the Act refers is in the following terms:

Schedule 1—Particulars of mortgage
Particulars to be Supplied When Land Sold Subject to a Mortgage.
(a)The amount secured by the mortgage is
(b)The mortgage 1 does not provide for further advances by the mortgagee. 1 provides for further advances as follows:
(c)The rate of interest presently payable under the mortgage is
(d)Subject to compliance with the terms and conditions of the mortgage the amount secured by the mortgage is to be repaid by the ____ day of ____20
(e)Instalments under the mortgage must be made as follows: Amount ____ at ____ intervals
(f)The vendor is 1 not in default under the mortgage. 1 in default under the mortgage in the following respects:
(g)At the date of giving these particulars, the amount required to discharge the mortgage is
(h)The mortgagee's name and address are as follows:
(i)(to be completed if the contract is a terms contract and the consideration is to be satisfied in part by the purchaser assuming the obligations of the mortgagor)—
the mortgagee—
1 has consented to the purchaser assuming the mortgagor's obligations under the mortgage—
1 has not consented to the purchaser assuming the mortgagor's obligations under the mortgage.

D.2. Previous decisions concerning ss 24–28 of the Sale of Land Act

There are four decisions concerning the proper construction of ss 24–‍28 of the Sale of Land Act to which the parties referred in their submissions and to which it is convenient to refer, before turning to the submissions themselves.

In Abraham v Johns (No 2),[7] Mukhtar AsJ cited Rockeagle v Alsop Wilkinson (‘Rockeagle’)[8] and Skinner v Reed,[9] upon which the Kostakis parties placed reliance in their submissions when considering whether the court has the power to direct deposit moneys held by an agent to be paid directly to a mortgagee to ensure a mortgage is discharged. His Honour held that the court had such a power and that nothing in s 24 of the Act displaced it.[10] His Honour observed:[11]
[7]Abraham v Johns (No 2) [2010] VSC 212.
[8]Rockeagle v Alsop Wilkinson [1992] Ch 47.
[9]Skinner v Reed [1967] CH 1194.
[10]Abraham v Johns (No 2) [2010] VSC 212, [34] (Mukhtar AsJ).
[11]Abraham v Johns (No 2) [2010] VSC 212, [29] (Mukhtar AsJ).

[29]So the question is whether the court has the power to direct the deposit to be paid in the way proposed. With the assistance of a clear an able submission from Mr Best the following legal principles or propositions can be stated in brief—
(a)A deposit is an earnest to bind the bargain, and a part payment of the purchase price.
(b)At common law, if the deposit is paid to the seller’s agent as stakeholder. It is conjectural whether a stakeholder holds the money as trustee or in contract or quasi contract: see Skinner v Reed;[12] Burt v Claude Cousins;[13] Re Kimberley;[14] Re Burman[15] and Rockeagle v Alsop Wilkinson.[16]
(c)How the stakeholder deals with a deposit depends on the future event. Unless the vendor lawfully rescinds, the deposit remains the purchaser’s money until there is a settlement with a transfer and a discharge of mortgage. In that event, the deposit will be accounted for and paid to the vendor. Only if the money becomes the property of the vendor can the vendor’s agent take his commission. The agent has a lien once the deposit becomes the property of the vendor. See Skinner v Reed.[17]
(d)At common law, before settlement, if both parties agree as to the way in which the deposit should be paid or otherwise transferred, the stakeholder is obliged to follow that requirement: Rockeagle v Alsop Wilkinson.[18]
(e)Under s 24 of the Sale of Land Act, an estate agent holds deposit moneys as a stakeholder until the purchaser becomes entitled to a transfer of the land, at which time the deposit moneys may be paid to the vendor in his own right or as the vendor directs. The Act does not define stakeholder but it can be taken to have the usual meaning as being a person for the purpose of holding it until it can be ascertained who is entitled to it: see Re Tenuta.[19]
(f)A situation can arise where the deposit is dealt with before completion. Under s 26(1)(a) if the purchaser defaults and the vendor rescinds, then the vendor is entitled to the deposit money of the Act. That is consistent with the view that a deposit is by nature an earnest of performance. Under s 26(1)(b), if the vendor defaults, and the purchaser rescinds, the purchaser is entitled to the return of the money. That is consistent with the common law view that the deposit is always the purchaser’s money until forfeited by default. Otherwise under s 27(1), before completion the purchaser can in certain circumstances “empower” (which connotes it is the purchaser’s money) the estate agent to release the money to the vendor. In that situation, under s 27(9) the estate agent can retain his commission and expenses out of the deposit.

[12][1967] 1 CH D 1194 at 1200 D.

[13][1971] 2 QB 426 at 435.

[14][1989] FCA 350 at [95].

[15](1993) 1 Qd R 49 at 52 and 54.

[16][1992] Ch 47 at 52F–53.

[17][1967] 1 Ch 1194 at 1200.

[18][1992] Ch 47 at 52F–53.

[19](1991) 33 FCR 56 at 62.

In Aurumstone Pty Ltd v Yarra Bank Developments Pty Ltd (‘Aurumstone’),[20] the contract of sale included a clause providing that the purchaser may secure tenants for any vacant part of the property and the vendor would provide the purchaser with a deed of surrender or termination that required the current tenant to vacate the property.[21] The clause was agreed by the parties to be an essential term of the contract. Riordan J held that a ‘condition’ within the meaning of s 27(2)(a) includes an essential term:[22]
[20]Aurumstone Pty Ltd v Yarra Bank Developments Pty Ltd [2017] VSC 502 (‘Aurumstone’).
[21]Aurumstone, [9] (Riordan J).
[22]Aurumstone, [30]–[55] (Riordan J).

[30]Division 3 of pt 1 of the Act (‘Division 3’) provides that deposits paid with respect to the sale of land must be held by a stakeholder in a special account;[23] and on rescission paid to the Vendor or the Purchaser depending on which party was relevantly in default.[24]
[23]The Act s 25.
[24]The Act s 26.

…
[32]A provision in a contract of sale of land in contravention of Division 3 is ‘void and of no effect’.[25]
[25]The Act s 28.

…
[40]In determining whether ASC 3 is a condition enuring for the benefit of the Purchaser within the meaning of s 27(2)(a) of the Act, it is necessary to determine the meaning of ‘condition’ as it is used in the subsection. The word ‘condition’ has various different meanings in Australian contract law.[26] …
[26]Donald Grieg and James Davis, The Law of Contract (Lawbook, 1987) 586–7.
…
[51]It was the position of both parties that ASC 3 was an essential term; and I therefore propose to determine this question on the basis of whether a ‘condition’, within the meaning of s 27(2)(a), includes an essential term, as contended by the Vendor, or is limited to a contingent condition, as contended by the Purchaser.
[52]For the following reasons, I consider that the expression ‘condition’ within the meaning of the subsection includes an essential term:
(a)For the reasons referred to in [41](a)-[41](b)(i) above, the word ‘condition’ is capable of referring to a contingent condition and an essential term which is sometimes described as a condition.[27]
[27]Query whether it may also include an intermediate term. See [54]–[55] below.
(b)Consideration of s 27 of the Act in the context of Division 3, in my opinion, demonstrates a legislative intention to provide protection to enable purchasers to recover their deposits after termination of a contract of sale of land. As the text of Division 3 demonstrates, Division 3 was intended to be remedial legislation for the protection of purchasers. I consider that it should be interpreted liberally.[28] In my opinion, the positions of:

[28]Webb Distributors (Aust) Pty Ltd v Victoria (1993) 179 CLR 15, 41 (McHugh J); Registrar-General v Harris (1998) NSWLR 404, 416 (Mason P, Stein JA agreeing).
(i) a purchaser who has the benefit of a contract subject to a contingent condition; and
(ii) a purchaser, who has the benefit of an essential term of the contract;

are, in this context, indistinguishable, in the sense that the non-fulfilment of the first and the breach of second would both ordinarily give the purchaser a right to the return of the deposit.
(c)Reference to the Second Reading Speech of the Minister confirms the legislative intention to be discerned from the text in the context of Division 3. The Honourable Haddon Storey concluded the Second Reading Speech stating:
The provisions of the Bill will ensure that for the future innocent purchasers who have in good faith paid a deposit for the purchase of a home, will not lose that deposit in the event that the sale of the property is not completed through no fault of the purchasers.[29]
[29]Victoria, Parliamentary Debates, Legislative Council, 15 April 1980, 7886 (Haddon Storey).

(d)To the extent that there is a plain meaning of the word ‘condition’ it is a reference to an essential term of a contract.[30]

[53]It appears likely that the purpose of the Sale of Land (Deposits Amendment) Act 1980 was to extend s 27(2)(a) to apply to promissory conditions. The Act originally required the contract to be ‘unconditional’, which usually means that it was not, or was no longer, subject to a contingent condition (as to finance or otherwise).[31] The expression ‘a condition enuring for the benefit of the Purchaser’, in my opinion, indicates a legislative intention to extend the application of the subsection.

[30]Koompahtoo (2007) 233 CLR 115, 136 [47] (Gleeson CJ, Gummow, Heydon and Crennan JJ); Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 (Jordan CJ).

[31]See, eg, Landbank Tinana Pty Ltd v McKay [2006] QSC 55 [9] (de Jersey CJ).

In GLP Batesford Holdings Pty Ltd v 68 Bridge Road Land Pty Ltd (‘GLP Batesford’), in the context of considering whether a clause seeking to truncate the time provided by ss 27(4) and (6) for the purchaser to respond to a s 27 notice, Riordan J observed:[32]

[27] A provision would be in contravention of the Division if it was ‘to come or be in conflict with; go or act counter to; oppose’ the Division. It is ‘not confined to literal conflicts … between the contractual provisions and the statutory provisions’ but extends to ‘whenever there is a conflict between a contractual provision or the operation of such a provision and the purpose or policy of the statute’.
[28] In my opinion, a provision in a contract that confers on the vendor additional rights for the release of deposit moneys, which dilute the protection provided to the purchaser by the Division and s 27 of the Act in particular, is in contravention of the Division and therefore void under s 28 of the Act.

[32]GLP Batesford Holdings Pty Ltd v 68 Bridge Road Land Pty Ltd (2022) 68 VR 171, [27]–[28] (Riordan J).

On appeal in 68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd (’68 Bridge Road’), upholding the decision of Riordan J the Court of Appeal said:[33]

Deposit moneys are held as security for performance by the purchaser of the contract. Section 24 makes it clear that the default position is that deposit moneys are to be held until the purchaser becomes entitled to a transfer (in the case of a cash transaction) or possession (in the case of a terms contract). That default position can only be departed from if the requirements of s 27 for early release of the deposit moneys are satisfied. In this way, s 27 balances the interests of vendors and purchasers.

[33]68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd [2023] VSCA 325, [53] (Ferguson CJ, Niall and Kennedy JJA).

The Court of Appeal agreed with Riordan J below. It held that the clause truncating the time for the purchaser to give notice contravened s 27 and was ‘void and of no effect’ by virtue of s 28.[34]

E. Applying the Sale of Land Act to the facts
E.1. Submissions
Kostakis parties’ submissions

[34]68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd [2023] VSCA 325, [55] (Ferguson CJ, Niall and Kennedy JJA).

The Kostakis parties submitted first, that the Court does not have before it any claim by a party to the Contract of Sale that the s 27 statement is invalid; there is no justiciable issue.[35]
[35]T4.17–27.

Second, that neither RTL nor ELG have standing. Only the purchaser should be entitled to raise an issue relating to s 27. Any dispute that could arise under s 27 would properly be between the vendor and purchaser[36] both of whom are content with the contract.[37] Any interference with the terms of the contract has the effect of interfering with contractual relations between two parties who do not seek any determination and adversely affects them.[38]
[36]T3.5–22.
[37]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 32.
[38]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 33.

Third, the Kostakis parties submitted in the alternative that s 27(2)(a) is not engaged in this case because the purpose of cl 3(b)(ii) is to determine damages in the event that the purchaser defaults, and such a clause does not fall within the ambit of s 27(2)(a).[39] In support of this construction, the Kostakis parties referred to the following:
[39]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 48; T21.22–25; T22.18–22; T26.15–17; T26.5–29.25.

(a) The Variation Deed developed as a result of an expected default on the part of the purchaser. The Variation Deed gave the purchaser more time and allows him to reside in the property prior to settlement.[40]
[40]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 42.

(b) Clause 3(b)(ii) is a sub-clause to cl 35.4 of the Contract of Sale, which gives the vendor the right to issue a notice of default in certain circumstances. The sub‑clause is only engaged in the event Mrs Kostakis gives a notice of default. Clause 35.4 is for the benefit of the vendor, not the purchaser.[41]
[41]T19.30–31; T20.16–22.

(c) The words ‘unless the Purchaser has prior to 10 April 2026 notified the Vendor in writing that the Purchaser shall be unable to effect settlement on or before 10 July 2026’ show that the clause only operates if the purchaser is unable to effect settlement (ie, is in default). [42] This construction was said to be supported by:
[42]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 44.

(i) Clause 3(c)(i) of the Variation Deed which provides that in the event that the purchaser is not entitled to a refund of the deposit pursuant to cl 3(b)(ii), the purchaser's absolute forfeiture of the deposit of $2.55m would remedy any default — a clause ‘limiting damages’.[43]

(ii) Clause 4 of the Variation Deed, by which the purchaser ‘agrees not to complain that the deposit amount is higher than 10% if the contract ends by way of default notice being given by the purchaser’.[44]

[43]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 45.

[44]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 47.

The Kostakis parties contended the protective legislative intention behind s 27(2)(a), expressed by Riordan J in Aurumstone,[45] was in contemplation of the scenario where a purchaser has a right to terminate the contract. Here, cl 3(b)(ii) of the Variation Deed is only engaged when the purchaser is in default, meaning it falls outside the intended protective ambit of Division 3.[46]
[45]Aurumstone, [52(b)] (Riordan J).
[46]T60.9–61.27.

Fourth, the Kostakis parties submitted the purchaser is entitled to waive his entitlement to object to the serving of the s 27 statement but otherwise retain his entitlement to rely upon the clauses in circumstances where there is a dispute (although not of his making) in respect to the construction of the contract without otherwise seeking to enforce those clauses.[47] In support of that submission the Kostakis parties relied on Price v Spoor,[48] a decision of the High Court confirming that parties can contract out of statutory limitation periods.[49]
[47]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 54.
[48]Price v Spoor (2021) 270 CLR 450; [2021] HCA 20.
[49]In particular, the Kostakis parties cited Price v Spoor (2021) 270 CLR 450; [2021] HCA 20, [15]–[16] (Kiefel CJ and Edelman J); [96]–[97] (Steward J).

Fifth, the Kostakis parties submitted that, even if the s 27 statement was incomplete, the purchaser had full and complete knowledge of all relevant matters by reason of the Kostakis parties’ compliance with the 29 August and 12 September 2025 orders.

They submitted that s 27(3) does not invalidate a defective notice; otherwise ss 27(4)–‍(7) would have no work to do.[50] Section 27(7) states that a purchaser who fails to give notice that he or she is not satisfied with the particulars provided is deemed to have been satisfied with such particulars and given the authorisation required by s 27(1).

RTL’s submissions

[50]T65.7–67.16.

RTL submitted the Deposit Moneys are required to continue to be held by a legal practitioner as stakeholder pursuant to s 24 of the Act and cannot be released to Mrs Kostakis.

At the outset, the operation of s 27(2)(a) was said not to depend on the purchaser invoking it. Rather, if a contract contains a ‘condition enuring for the purchaser’s benefit’ no release can be made pursuant to s 27(1).[51]
[51]T38.7–19.

It was submitted cl 3(b)(ii) is such a condition.[52] That the clause is only engaged in a situation where the vendor gives a notice of default is immaterial — it still confers a benefit on the purchaser to recover the deposit in certain circumstances.
[52]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraph 9.

Referring to Aurumstone, RTL contended that Riordan J interpreted the term ‘condition enuring’ expansively. His Honour explained that the provision captures both contingent and (at least) essential promissory terms but did not confine the concept.[53]
[53]Aurumstone, [52(b)].

RTL submitted that the focus of any consideration is whether the purchaser has a right to the return of their deposit.[54] It is not necessary to decide what particular category of condition the clause may be. Alternatively, RTL submitted that the clause may be characterised as a contingent condition subject to three contingencies: first, the vendor issues a default notice; second, the purchaser gives notice that it cannot complete settlement by 10 July 2026; and third, the purchaser vacates the property.[55]
[54]T41.21–27.
[55]T42.1–8.

To capture a clause which permits the purchaser to recover its deposit in certain circumstances was also said to be consistent with the purpose of Division 3 of the Act, being to protect the purchaser.[56] If the funds were released to Mrs Kostakis and the purchaser ultimately exercised his rights under the clause, there is a ‘real risk’ Mrs Kostakis would be unable to return the deposit to the purchaser.[57]
[56]T42.9–20.
[57]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraph 10.

Separately, RTL submitted that paragraph 3 of the s 27 statement directed to waiver cannot overcome the restrictions imposed by s 27(2)(a). That is so because paragraph 3:[58]
[58]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraph 11.

(a) does not remove cl 3(b)(ii) from the Contract of Sale;

(b) conflicts with s 27(2)(a); and, further or alternatively

(c) it would be inconsistent with the policy and purpose of Division 3 if a purchaser could waive its provisions.

RTL submitted that paragraph 3 of the s 27 statement provides that the purchaser waives any conditions that enure for his benefit for the purpose of the s 27 statement ‘but not otherwise’. This means the Contract of Sale nonetheless contains a condition enuring for the purchaser’s benefit.

RTL relied on Riordan J’s decision in Aurumstone that a variation letter which purported to provide for the early release of the deposit ‘notwithstanding section 27(2)’ did not implicitly delete the condition enuring itself from the contract. The result was s 27(2)(a) applied according to its terms.[59]
[59]Aurumstone, [62] (Riordan J).

RTL submitted that to the extent, if at all, paragraph 3 of the s 27 statement had been incorporated into the Contract of Sale, paragraph 3 would be void pursuant to s 28(1)(a) of the Act. That is so because it purports to vary or modify the protection given to the purchaser by s 27(2)(a), and thereby contravenes Division 3.[60] The Kostakis parties’ reliance on Price v Spoor[61] was said to be misplaced because that case did not profess to override express prohibitions on contracting out of legislation.
[60]Referring to GLP Batesford Holdings Pty Ltd v 68 Bridge Road Land Pty Ltd [2022] VSC 614, [27]–[28]; and 68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd [2023] VSCA 325, [51]–[55] (Ferguson CJ, Niall and Kennedy JJA).
[61]Price v Spoor (2021) 270 CLR 450; [2021] HCA 20.

Alternatively, RTL submitted the s 27 statement was ineffective as it does not contain the information required by s 27(3)(a) and Schedule 1 of the Sale of Land Act in respect of a mortgage over the Brighton Property by NAB. Under the Sale of Land Act, the notice given to a purchaser must state either that ‘the vendor is not in default under the mortgage’ or that the vendor is ‘in default under the mortgage in the following respects’ (as the case requires).[62] The s 27 statement appears to rely on two letters from NAB to provide the information required by Schedule 1. That information is insufficient.
[62]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraphs 22 to 23.

The first NAB letter, addressed to JKEK Investments Pty Ltd (‘JKEK’) in respect of a loan to the same, states that ‘[t]he lending secured by this mortgage is not currently in default’.[63] By reason of, among other things, certain guarantors of the loan being placed into liquidation, an event of default has occurred. In response to the first NAB letter, Mr Kostakis emailed NAB stating, ‘Just curious why they didn’t mention the default either company in liquidation?’ A NAB representative responded that ‘the full amount sold is more then enough to cover the liabilities’.[64] RTL submitted that the Sale of Land Act requires that a purchaser be informed of all mortgage defaults, irrespective of whether the sale price is sufficient to cover any particular liabilities. As the s 27 statement incorrectly states that the NAB mortgage is not in default in respect of the loan, and as it fails to provide particulars of the defaults, it does not comply with s 27 and cannot provide the basis for any release of the Deposit Moneys.[65]
[63]Affidavit of M Kincaid dated 28 August 2025, exhibit page 87.
[64]Affidavit of M Kincaid dated 28 August 2025, exhibit pages 84 to 85.
[65]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraph 25.

The second NAB letter, addressed to Mr and Mrs Kostakis, concerns three separate home loans. The letter states that each of the three home loans is in default but does not provide particulars.[66] RTL submitted that, as the second NAB letter correctly states that the NAB mortgage is in default in respect of the three home loans but fails to provide details, it is clear that the second NAB letter does not comply with s 27. For that additional reason, the s 27 notice is invalid and ineffective.[67]
[66]Affidavit of M Kincaid dated 28 August 2025, exhibit pages 89 to 91.
[67]Submissions of RTL on Release of Deposit dated 16 September 2025, paragraph 28.

RTL further submitted that the fact the purchaser had in practice received the relevant information as a result of court processes was not material. Section 27(3)(a) states that unless a notice contains the particulars specified in Schedule 1 an authorisation in writing under s 27(1) shall not be effective.[68]

ELG’s submissions

[68]T47.24–48.7.

ELG explained its resistance to transferring the Deposit Moneys held in its trust account on the grounds:[69]
[69]Submissions of ELG dated 16 September 2025, paragraph 2.

(a) the orders made on 29 August 2025 and s 24(2)(b) of the Act are permissive and not compulsory;

(b) ELG is not satisfied that Mrs Kostakis beneficially owns the Deposit Moneys because:

(iii) ELG considers cl 3(b)(ii) is a ‘condition enuring for the benefit of the purchaser’, meaning the release mechanism under s 27 does not apply; and

(iv) the lack of particulars and disclosure with respect to mortgage defaults in the purported s 27 statement are such that even if s 27 of the Act did apply, it has not been fully complied with;[70]
[70]Submissions of ELG dated 16 September 2025, paragraph 9.

(c) Mrs Kostakis intends to use the Deposit Moneys immediately and in a foreign jurisdiction, as demonstrated by:[71]
[71]Submissions of ELG dated 16 September 2025, paragraph 11 to 12.

(i) Mrs Kostakis’ affidavit evidence regarding the Kostakis parties’ urgent need for funds;

(ii) the fact that Mr and Mrs Kostakis live in Dubai; and

(iii) the Expenses Schedule and other evidence put forward by the Kostakis parties regarding urgently payable liabilities and business expenses; and

(d) any transfer of the Deposit Moneys risks the purchaser’s rights and ELG’s liability.

If the Court determines that, pursuant to s 27, funds may be released to Mrs Kostakis as vendor, then ELG claims a lien over $508,486.42 for unpaid legal costs payable to it by the Kostakis parties in the RTL Proceeding.[72]
[72]Submissions of ELG dated 16 September 2025, paragraph 3.

In their submissions the Kostakis parties accepted that ELG has a lien over property of the Kostakis parties for unpaid fees, though the amount is in dispute.[73]
[73]Submissions of ELG dated 16 September 2025, paragraph 26, 58–59.

If the Court determines that the Deposit Moneys should not be released, ELG submitted that it should retain the Deposit Moneys in its trust account until those funds are payable to the purchaser. It contended that Mrs Kostakis would not be prejudiced by the purchaser’s funds remaining in ELG’s trust account rather than Jafer Lawyers’ trust account. There is no reason to order the transfer other than to enable the payment of expenses of the Kostakis parties and entities associated with them in Dubai.[74]
[74]Submissions of ELG dated 16 September 2025, paragraph 5.2.

It was submitted that ELG would be prejudiced by any transfer of the Deposit Moneys if it does not hold the amount claimed as unpaid fees because the Kostakis parties have indicated that they do not intend to pay the unpaid legal costs until those costs are assessed; the Kostakis parties have not applied for a costs assessment; and the Kostakis parties intend to use the Deposit Moneys immediately and in a foreign jurisdiction.[75]

E.2 Consideration and disposition
Justiciability and standing

[75]Submissions of ELG dated 16 September 2025, paragraph 6.

I do not accept the submission by the Kostakis parties that there is no justiciable issue concerning the Deposit Moneys. Mrs Kostakis issued the ELG Proceeding to obtain an order that the Deposit Moneys be transferred by ELG to Jafer Lawyers. By issuing the ELG Proceeding in which ELG is the defendant, Mrs Kostakis has created a justiciable controversy concerning the Deposit Moneys.

I do not accept the submission that neither ELG nor RTL have standing to raise an issue relating to s 27 of the Act.

The Deposit Moneys are held pursuant to the Act. ELG has a legitimate interest, and the Kostakis parties did not suggest otherwise, in ensuring that the money which it holds in trust is dealt with in accordance with the Act. ELG submitted that to transfer the Deposit Moneys risks both the purchaser’s rights and the firm’s liability. RTL is also entitled to be heard in relation to what occurs to the Deposit Moneys having regard to the terms of the freezing orders in place in the RTL Proceeding and having regard to the objective of the Kostakis parties, should the Deposit Moneys be transferred to Jafer Lawyers, to apply that money to meet living and business expenses in Dubai.

In the more usual case the dispute concerning deposit moneys will involve the parties to the contract. This is not such a case. Mrs Kostakis initiated the litigation against her former solicitors. The litigation concerning deposit money arises in the context of a freezing order relating to that money. As it happens, the purchaser does not wish to take an active part in the proceeding. That does not have the consequence that ELG, who is the defendant, and RTL, who is an interested party, do not have standing to raise issues concerning remedial legislation which governs how deposit money may be dealt with.[76]
[76]Aurumstone, [52(b)] (Riordan J).

Contrary to the Kostakis parties’ submissions, there is no interference with contractual relations between the parties to the Contract of Sale by the Court determining a dispute between one of the parties to that contract, the vendor, and its former solicitors, a dispute relating to deposit money paid under the Contract of Sale held by those solicitors.

Section 27(2)(a) is not satisfied

As was held by the Court of Appeal in 68 Bridge Road:[77]

Section 24 makes it clear that the default position is that deposit moneys are to be held until the purchaser becomes entitled to a transfer … That default position can only be departed from if the requirements of s 27 for early release of the deposit moneys are satisfied.

[77]68 Bridge Road Land Pty Ltd v GLP Batesford Holdings Pty Ltd [2023] VSCA 325, [53] (Ferguson CJ, Niall and Kennedy JJA).

I am not persuaded that the requirements of s 27(2)(a) of the Act are satisfied in this case.

I do not agree with the Kostakis parties that cl 3(b)(ii) of the Variation Deed is a clause which falls outside s 27(2)(a) and outside the protective ambit of Division 3 of the Act and that there is no statutory impediment to releasing the Deposit Moneys in response to an application to meet personal and business expenses.

Section 27(1) is only satisfied where, relevantly, the contract is not subject to any condition enuring for the benefit of the purchaser as referred to in s 27(2)(a).

As explained by Riordan J in Aurumstone,[78] s 27 of the Act in the context of Division 3 demonstrates a legislative intention to provide protection to enable purchasers to recover their deposits after termination of a contract of sale of land. Division 3 was intended to be remedial legislation for the protection of purchasers. As such, it should be interpreted liberally.[79] His Honour considered the likely purpose of the amending legislation was to apply the legislation to promissory conditions.[80]
[78]Aurumstone, [52(b)] (Riordan J).
[79]Aurumstone, [52(b)] (Riordan J) citing Webb Distributors (Aust) Pty Ltd v Victoria (1993) 179 CLR 15, 41 (McHugh J); Registrar-General v Harris (1998) NSWLR 404, 416 (Mason P, Stein JA agreeing).
[80]Aurumstone, [53] (Riordan J).

His Honour held that a ‘condition enuring for the benefit of the purchaser’ within the meaning of s 27(2)(a) includes an essential term and is not limited to a contingent condition as contended by the purchaser. I respectfully agree with his Honour that:[81]
[81]Aurumstone, [52(b)] (Riordan J).

the positions of:

(i) a purchaser who has the benefit of a contract subject to a contingent condition; and
(ii) a purchaser, who has the benefit of an essential term of the contract;

are, in this context, indistinguishable, in the sense that the non-fulfilment of the first and the breach of second would both ordinarily give the purchaser a right to the return of the deposit.

In this case cl 3(b)(ii) imposes an obligation upon Mrs Kostakis, as vendor, to refund to the purchaser the deposit amount[82] in certain circumstances. It is a promissory term. The clause enures for the benefit of the purchaser who is entitled to have the deposit refunded in his favour, subject only to the payment of an amount representing the agent’s commission.
[82]Less an amount equal to the estate agent’s commission.

It is important to understand how the clause might work to enable the purchaser to obtain the return of the deposit. If the purchaser knows that he will be unable to effect settlement on 10 July 2026, by 10 April 2026 he may give notice of that circumstance to the vendor. Provided the purchaser gives the notice and provided also that he vacates the property by 10 July 2026, the day the balance of the purchase price is due to be paid, the vendor must refund the deposit of $2.55m, less $103,000.

The clause under consideration confers the substantive right on the purchaser to bring the contract to an end, even though the purchaser is unable to complete, but without the consequence of forfeiting the deposit for failure to complete.

Standing back and taking a commercial view of the clause and its operation, the clause is clearly one which enures for the benefit of the purchaser. If the clause which permits the purchaser to give prior notice of his anticipated inability to settle were not part of the Contract of Sale, upon that inability becoming a reality, the vendor would be entitled to give notice of default and, pursuant to cl 35.4(a) of the Contract of Sale, up to 10% of the price would be forfeited to the vendor.

The clause is one which is for the benefit of the purchaser, but subject to two contingent conditions, the first, the giving of notice by 10 April 2026, the second, the purchaser vacating the property by 10 July 2026. Although the parties did not address submissions as to the status of the clause, it is an essential condition of the contract as varied by the Variation Deed. It is a clause which both entitles the purchaser to bring the contract to an end, and to the return of the lion’s share of the deposit.

Understood in the context of the vendor / purchaser relationship, it is difficult to conceive objectively of a circumstance in which a term allowing a purchaser the benefit of a near full refund of their deposit, in circumstances of their own anticipated default, would not be an essential term and therefore a condition of the contract within the meaning of s 27(2)(a).

I do not agree with a construction of the Contract of Sale as varied by the Variation Deed that requires that there first be a default pursuant to cl 35.4, before cl 3(b)(ii) of the Variation Deed can operate. If such an approach to construction, based on the words in the chapeau to cl 35.4, ‘if the contract ends by default notice given by the vendor’ is adopted, cl 3(b)(ii) would have no work to do.

There is a conflict between the opening words of cl 35.4 and the new sub‑clause introduced by the Variation Deed. It is more than a conflict at face value. At a practical level, cl 3(b)(ii) must operate temporally prior to the giving of a default notice by the vendor which ends the contract. If the position were otherwise, the new clause would have no scope of operation. Clearly the objective intention to be imputed to the parties is that they intended the earlier Contract of Sale to continue in effect, but as varied in the way set out in the Variation Deed. The whole purpose of the new clause introduced by the Variation Deed is to give the purchaser the ability to end the contract before the first date on which the vendor would be entitled to give a default notice pursuant to cl 34 of the Contract of Sale.

Clause 34.2(b) of the Contract of Sale specifies a 14 day period which must be provided for in the default notice within which the default must be remedied. The first date the vendor can give a default notice for failure to complete is 11 July 2026. It will only be 14 days after that date that the contract would end as contemplated by cl 35.4(a). Unless the new clause (cl 3(b)(ii) of the Variation Deed) is read in isolation from the opening words of cl 35.4 it would have no work to do. That cannot be the result objectively intended by the parties who entered into the Variation Deed. The reference to 10 April 2026 as the date upon which the purchaser must give notice makes it clear that the purchaser’s right under the new clause is not objectively intended to be conditioned on the vendor having first given a default notice.

Contrary to the Kostakis parties’ submissions, cl 3(b)(ii) of the Variation Deed is not a clause introduced for the purpose of determining damages if the vendor defaults. It is premised on the purchaser giving notice in advance of an anticipated default.

The new clause introduced by cl 3(c) of the Variation Deed is a clause which puts a limit on the amount of damages that may be recovered from the purchaser in the event of actual default by the purchaser. That clause operates independently of cl 3(b)(ii) of the Variation Deed but, perhaps unsurprisingly, is complementary to it. If, for example, the purchaser fails to vacate the property by 10 July 2026 having given notice on or before 10 April 2026 that he would not be able to complete, one of the two conditions required for the operation of cl 3(b)(ii) in favour of the purchaser will not have been satisfied. However, should that be the case, the exposure of the purchaser to damages is limited to the whole of the deposit moneys. Contrary to the Kostakis parties’ submissions, it is this additional clause which limits damages and not cl 3(b)(ii) of the Variation Deed.

Paragraph 3 of the s 27 statement is not an answer

The Kostakis parties submitted that paragraph 3 of the s 27 notice constituted an effective waiver by the purchaser.

I do not agree. The purchaser has not waived any rights under the Contract of Sale. In particular, as stated by the concluding words of paragraph 3, the purchaser waives his entitlement to object to the vendor’s giving of the notice, but ‘not otherwise any conditions that may enure for its benefit’. Clause 3(b)(ii) is a clause that enures for the benefit of the purchaser. The statement in paragraph 3 expressly does not displace cl 3(b)(ii).

In any case, if paragraph 3 did affect the purchaser’s rights under the contract, any clause purporting to waive s 27 is void pursuant to s 28(1). In this respect, I refer to the decisions in GLP Batesford and 68 Bridge Road referred to above.

The s 27 statement

To be effective authorisation pursuant to s 27(3) the vendor must have given a notice in writing setting out the particulars of the mortgage specified in Schedule 1 to the Act. That did not happen in this case.

There is no contest on the facts that the purported s 27 notice failed to provide the respects in which the mortgages were in default as required by Schedule 1. The ‘missing details’ are identified in the RTL submissions summarised above.

I do not accept the submission by the Kostakis parties that defects in the s 27 statement have now been waived because the purchaser, served with the material, now knows about the defect and has not wished to be heard. The Act requires the authorisation by the purchaser be in writing.

While that is so, in this case there is no evidence that the purchaser, having signed the written document, requested further particulars pursuant to s 27(6). Section 27(7) states that where a purchaser fails to give notice under either subsection (4) or (6) within the time limit provided the purchaser shall be deemed to have given the authorisation required by s 27(1). In those circumstances the s 27 statement is deemed to have been validly authorised.

While that is the case, nonetheless, because the Contract of Sale as varied contains a condition enuring for the purchaser’s benefit pursuant to s 27(2)(a), the purchaser cannot authorise release of the Deposit Moneys.

F. Transfer pursuant to s 24 of the Sale of Land Act

There is a separate question about whether the Court should order the Deposit Moneys, or so much of them as are not the subject of ELG’s claimed lien, be sent from ELG to Jafer Lawyers as a stakeholder-to-stakeholder transfer pursuant to s 24.

F.1 Submissions
Kostakis parties’ submissions

In circumstances where the Deposit Moneys are not released to Mrs Kostakis, the Kostakis parties relied on Rockeagle to contend that, if ELG wished to ensure that it had some contingent security in respect of fees owing, it should have stipulated for that when the deposit was placed into its possession.[83] They submitted that without such a stipulation, there is no lien in favour of ELG over the funds.
[83]Rockeagle Ltd v Alsop Wilkinson [1992] Ch 47, 51–52 (Staughton LJ, with whom Farquharson MR and Lymington LJ agreed).

The Kostakis parties accepted that, if the Deposit Moneys are released to Mrs Kostakis, ‘there is little doubt that the solicitor has a lien’.[84] The amount of that lien was said to be in dispute, though details of the content of that dispute were not given. Regardless, the Kostakis parties accepted that ‘there is no reason why’ the amount claimed by ELG should not be held in trust by ELG pending determination of its costs.[85]
[84]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 58.
[85]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 59.

The Kostakis parties submitted that should the Court decline to order a full release of the Deposit Moneys under s 27, ELG is obliged to transfer the funds to Jafer Lawyers upon written direction of a client pursuant to s 142 of Schedule 1 of the Legal Profession Uniform Law Application Act 2014 (Vic). They also submitted that a stakeholder‑to‑stakeholder transfer to Jafer Lawyers is permitted under s 24 of the Sale of Land Act.

RTL’s submissions

RTL submitted the Deposit Moneys are required to continue to be held by a legal practitioner as stakeholder pursuant to s 24 of the Act and cannot be released to Mrs Kostakis other than under s 27(1). Because that money cannot be released other than in accordance with the Act, the Court should not grant equitable relief by way of mandatory injunction requiring ELG to pay money out of their trust account, which is discretionary, where that relief would be illegal or inutile.[86]
[86]T35.8–21.

RTL accepted that Rockeagle, upon which the Kostakis parties relied, stands for the proposition that at common law, if both parties agree before settlement as to the way in which the deposit should be paid or otherwise transferred, the stakeholder is obliged to follow that requirement. However, it submitted that the common law position is affected by statute, and the Victorian legislation was intended to ‘ensure that innocent purchasers who have in good faith paid a deposit for the purchase of a home will not lose that deposit in the event that the sale of the property is not completed through no fault of the purchasers’.[87]
[87]Citing the Second Reading Speech for the Bill which introduced Division 3, referred to in Aurumstone, [52(c)] (Riordan J).

RTL further submitted that, although s 24(2) permits the transfer of deposit moneys from one legal practitioner to another legal practitioner as stakeholder, that is not what Mrs Kostakis and her lawyers intend to do.[88] Instead, Mrs Kostakis intends to use the Deposit Moneys for various expenses.

ELG’s submissions

[88]T37.15–21.

ELG’s submissions are summarised at paragraphs 81 to 82 above.

F.2 Consideration and disposition

I do not propose to order the transfer of the Deposit Moneys less the amount claimed by ELG to be the subject of a lien in its favour to Jafer Lawyers.

I agree with RTL that the decision in Rockeagle reflects the common law, but as discussed by Mukhtar AsJ in Abraham v Johns (No 2),[89] the common law position is to be considered in the context of the legislative scheme provided for in the Act.
[89]Abraham v Johns (No 2) [2010] VSC 212, [29(e)] (Mukhtar AsJ).

I am very reluctant to order a transfer of the Deposit Moneys to Jafer Lawyers in the context of the freezing orders and where, in essence, the relief that is sought by Mrs Kostakis is in the nature of a mandatory injunction. Mrs Kostakis has not identified any reason why ELG does not remain a suitable stakeholder and why equity should intervene to order the transfer.

It is a matter for discretion whether I make an order mandating the transfer from ELG to Jafer Lawyers of the Deposit Moneys to be held pursuant to s 24 of the Act. I see no utility in ordering the transfer of the Deposit Moneys from one stakeholder to another and I do not propose to make the order that is sought.

G. $27,000 representing the licence fee

The Licence Agreement permits the purchaser to possess the Brighton Property until settlement in July 2026 subject to the purchaser paying a monthly licence fee. This licence fee is not offset against the cost of purchasing the Brighton Property. It is akin to a rent agreement.

$27,000 of the money held in ELG’s trust account is represented by the licence fee paid in respect of one month by the purchaser.

I do not consider the licence fee to be deposit moneys or other proceeds or part‑proceeds of sale being the subject matter of the 1 July 2025 undertaking. Nor do I consider this point to be of contention between the parties.

The licence fee is not captured by the undertaking given on 1 July 2025 and is property that Mrs Kostakis may use subject to the terms of the freezing orders and any other lawful limitations.

However, given the amount claimed to be outstanding to ELG in respect of legal costs for which ELG claims the lien, I consider the appropriate course is to order the transfer of the $27,000 in ELG’s trust account to ELG on account of its costs.

There is a carve-out from the freezing orders to permit the payment of legal costs. There was no submission that the amount owing to ELG, even though not yet determined, is not well in excess of $27,000.

H.The contested carve-outs concerning items in the Expenses Schedule and the variation application

There are two topics that need to be dealt with arising out of existing freezing orders in the RTL Proceeding. The first concerns contested items, conveniently identified by reference to RTL’s response to the Expenses Schedule. The second topic concerns the application for variation to the freezing orders by the Kostakis parties.

The contested items in the Expenses Schedule fall into three broad categories. The first, the payment of expenses of adult family members. The second, the proposed repayment of loans from family members and other persons. The third, the payment of business expenses of persons other than Mrs Kostakis.

The Kostakis parties seek a variation to the freezing orders to allow Mrs Kostakis to use any released deposit funds to pay for expenses on behalf of or in respect to the entities known as Australian Laser Clinics L.L.C. and Australian Cosmetic Trading L.L.C. (‘Dubai businesses’) whilst those entities continue to be owned, operated or controlled by her husband, Mr Kostakis.

It is important to appreciate that the variation application proposes the payment from Australian assets the subject of the freezing orders of the expenses of corporate entities incorporated outside Australia who conduct business in Dubai.

H.1 The contested expenses

The starting point for a consideration of this issue are the freezing orders themselves. There are three separate freezing orders, one in respect of Mrs Kostakis, one in respect of Mr Kostakis, and the third in respect of JKEK.

The carve-outs in each order are expressed in nearly identical terms, namely:

This order does not prohibited you from –
(a) paying your ordinary living expenses;[90]

…
(d)dealing with or disposing of any of your assets in the ordinary and proper course of your business including paying business expenses bone fide and properly incurred …

[90]The freezing order against the third defendant does not contain this carve-out as it is a corporation.

So far as living expenses are concerned, each person is entitled to pay her or his personal and, taking a pragmatic view of the scope of the order and the carve-out, dependant persons’ living expenses. I am not satisfied that the expenses proposed to be paid by Mrs Kostakis described as rent for Elou Harraka, whom I understand to be an adult family member, but not a family member who, given the nature of the expense, lives with Mr and Mrs Kostakis (who have their own claim for rent of more than $40,000 per month) and who has not been shown by evidence to be a dependant person falls within the description of ‘ordinary living expenses’ of any of the persons the subject of the freezing orders.

I am also not satisfied that the repayment of loans of $100,000 and of $50,000, being loans advanced by Mr Kostakis’ brother and Mr Kostakis’ friend, constitute either ordinary living expenses or business expenses. I do not agree to those amounts being treated as carved out from the operation of the freezing orders. Based on the limited evidence provided by Mr and Mrs Kostakis I am not satisfied those loans are due to be paid before ‘settlement’ of the sale of the Brighton Property, now anticipated to occur in July 2026. The same is the position in relation to the proposed payments to Mr Kostakis relating to loans from Reservoir Laser Skincare and Ringwood Laser Skincare. None of those amounts are expenses which may be paid on the basis they fall within the carve-outs to the existing freezing orders.

During the hearing senior counsel for RTL appropriately conceded that payments to NAB in relation to home loans ending in the numbers 9990, 0669 and 2440 are expenses that fall within the carve‑outs. RTL took issue with the proposed payments extending across a four month period and I agree. I do not accept that any basis for release of amounts for that four month period as expenses that are due or otherwise payable has been established. When instalments fall due under the loans, those expenses are properly payable under the carve‑outs.

I consider the separate ATO payment plan payments required to be made by both Mrs Kostakis and by Mr Kostakis constitute expenses that fall within the carve‑outs of the freezing orders. However, only on the basis that such amounts are paid in the months in which they are required to be paid.

I note the agreement by RTL and therefore there is no issue about $10,000 per week (in total) being drawn by Mr and Mrs Kostakis on a weekly basis in respect of what is described as ‘utilities, food, transport, health, children and other’, being ordinary living expenses falling within the existing carve‑out. The same is the position concerning rent of $41,429.66 due on 2 August 2025 and the amount in respect of school fees, adjusted for the deductions recorded in the invoices as noted in the RTL schedule in response. For the avoidance of doubt, if the rent obligation continues on a monthly basis, the payment of the monthly rent is an expense that falls within the living expenses carve-out to the existing freezing orders.

I agree with RTL that the Kostakis parties have not discharged the onus of showing overdue rent on 2 May 2025, noting the absence of any reference to such a rent liability in the affidavit referred to in RTL’s responsive schedule. Neither of the affidavits filed by Mr and Mrs Kostakis mention rent overdue at 2 May 2025. In comparison, both mention the rent overdue as of 2 August 2025.[91]
[91]Affidavit of J Kostakis dated 26 August 2025, paragraph 11; affidavit of E Kostakis dated 11 September 2025, paragraph 26.

I consider it is appropriate for minimum monthly payments due on each of the American Express, NAB and Commonwealth Bank credit cards to be paid as expenses falling within the existing carve-outs, but only to be paid on a monthly basis.

I am not satisfied that the loan repayments to NAB concerning the contract with JKEK, or amounts owing to HD+Co, are expenses that fall within the existing carve-outs in orders relating to Mr and Mrs Kostakis. Amounts owing to NAB by JKEK are expenses that JKEK is permitted to pay out of its assets when loan repayments are due, however the evidence does not show any amount currently due to NAB in relation to that loan.

The expenses claims relating to HD+Co, concern expenses of companies now in liquidation. They are not business expenses of Mr or Mrs Kostakis.

H.2 Variation application
Legal principles

The Court may grant a variation to a freezing order where it ‘accords with the interests of justice and does not conflict with the purpose for which the order was made in the first place’.[92] The relevant principles were stated by Derham AsJ in Vasilaras & Co Pty Ltd v Laprese.[93]
[92]Peter Biscoe, Freezing and Search Orders: Mareva and Anton Piller Orders (3rd ed, 2023, LexisNexis Butterworths), 94–95 [2.92]. Citing Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 618, [22]; Break Fast Investments Pty Ltd v Gravity Ventures Pty Ltd [2013] VSC 89, [43].
[93]Vasilaras & Co Pty Ltd v Laprese (2019) 58 VR 155; [2019] VSR 56, [69]–[73] (Derham AsJ). Referred to recently in my decision of Zhang v Zhao (No 2) [2025] VSC 340, [36].

As I observed in Zhang v Zhao (No 2),[94] where a freezing order does not relate to the whole of a party’s assets, the party (at an inter‑partes hearing) has an evidentiary onus, if not a full persuasive onus, of showing that legal or other expenses cannot be met from unfrozen assets.
[94]Zhang v Zhao (No 2) [2025] VSC 340.

In Clout (Trustee) v Anscor Pty Ltd,[95] Drummond J stated:

[19]… It is plain that even in a case in which a Mareva restraint is justified it can never extend to prevent a respondent from having access to its own assets to the extent necessary to meet legitimate expenses such as ordinary living and business and legal expenses.
[20]But at least where, as here, a Mareva restraint is imposed only on part of the assets of a respondent in an action, the respondent who seeks a relaxation of the restraint has an evidentiary onus, if not a full persuasive onus to show that it has no other assets beyond those covered by the injunction to which it can resort to meet the expenses in question. In A v C (No 2) [1981] 2 All ER 126, Robert Goff J held that on an application to vary a Mareva injunction that had been granted over part only of a respondent's assets to permit the payment of legal costs of the action out of the assets the subject of the restraint, that it was not enough for the respondent to merely state that it owed money to someone but had instead, to show that it did not have any other assets available out of which the expenses could be paid. Rogers J took the same approach in Australian Iron & Steel Pty Ltd v Buck [1982] 2 NSWLR 889 at 890. See also Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552 at 568 to 569.

Kostakis parties’ submissions and evidence

[95]Clout (Trustee) v Anscor Pty Ltd [2001] FCA 174, [19]–[20] (Drummond J). Cited with approval in Allomak Ltd v Allan [2010] VSC 187, [24] (Davies J); Westpac Banking Corporation v Forum Finance Pty Limited [2022] FCA 910, [16] (Lee J).

The Kostakis parties conceded that a variation to the freezing orders is required to permit them to pay expenses relating to the Dubai businesses.[96] They submitted they should be permitted to use any deposit moneys released to Mrs Kostakis to pay expenses associated with the Dubai businesses as set out in the Expenses Schedule.
[96]T71.7.

They contended that the Deposit Moneys are a family asset and that it is unreasonable and unrealistic to suggest that couples should not be entitled to pool resources for their and their family’s mutual benefit.[97] Further, without investment in the new businesses the Kostakis family will be unable to support itself. They submitted the freezing order was not intended to ‘stifle their usual activities’.[98]
[97]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 65; T20.25–31.
[98]Submissions of the Kostakis Parties dated 16 September 2025, paragraph 66.

The Kostakis parties relied on affidavit evidence from or on behalf of Mr and Mrs Kostakis filed earlier in the RTL Proceeding to demonstrate that their only assets of meaningful value are the Brighton Property and monies held in an illiquid investment fund.[99] Apart from those assets, as at 22 July 2025 the total funds in the Kostakis parties’ bank accounts was $22,046.23.[100] It is their evidence that have no other current source of funds.[101]
[99]Sixth Affidavit of C Lam dated 18 July 2025, paragraph 11.
[100]Seventh Affidavit of C Lam dated 24 July 2025, paragraph 10.
[101]Affidavit of J Kostakis dated 26 August 2025, paragraph 23 to 24.

The affidavit evidence relied on does not go into detail about any assets the family may have in Dubai or elsewhere outside Australia as at the date of the hearing but is to the effect that the assets identified in Australia to which I have referred are the only assets of the family.

The only future source of income identified are the two new businesses established, and being set up, by Mr Kostakis in Dubai.[102]
[102]Sixth Affidavit of C Lam dated 18 July 2025, paragraph 14.

The evidence is silent on the assets, if any, of the two Dubai businesses. Affidavit evidence filed in the RTL Proceeding indicates that the businesses have been incorporated but are not yet operational.[103] Mr Kostakis has deposed that numerous business expenses for stock and fit-out works related to the Dubai businesses are overdue.[104]

RTL’s submissions

[103]Sixth Affidavit of C Lam dated 18 July 2025, paragraphs 8 to 10.

[104]Affidavit of J Kostakis dated 26 August 2025, paragraph 11.

RTL submitted that expenses of the Dubai businesses are not expenses of Mr or Mrs Kostakis. To treat the expenses otherwise would be to impermissibly look through the corporate veil.[105]
[105]T51.23–30.

Acknowledging that the Kostakis parties had made an application to vary the freezing orders, rather than fit the Dubai business expenses under existing carve-outs, RTL submitted that there were deficiencies in the evidence for each of those expenses.[106]
[106]T51.23–53.4.

H.3 Consideration and disposition

I am not satisfied that the Kostakis parties have discharged the burden they bear to establish that the freezing orders should be varied to permit the payment of expenses relating to the apparently embryonic Dubai businesses. There are two key reasons why I hold that view:

1)First, as Derham AsJ held in Vasilaras & Co Pty Ltd v Laprese, it may be appropriate in the interests of justice to refuse a variation where the variation requested, if granted, would give rise to a substantial risk that any judgment obtained by the plaintiffs would be rendered nugatory due to the limited remaining assets held by the defendants.[107] In this case I consider if the proposed variation were granted, there is a substantial risk that would be the result. The effect of the variation would be to permit the wholesale transfer of funds from Australia to Dubai, not to Mr or Mrs Kostakis personally but to entities associated with them incorporated overseas.
2)Second, I can see no justification in the evidence to permit such a variation. The onus is on the applicant for a variation to establish that the expenses in question cannot be met from unfrozen assets. That onus has not been discharged.
On 12 September 2025 I invited counsel for the Kostakis parties to file copies of the disclosure affidavits the subject of the 10 July 2025 orders. I repeated that invitation during the hearing. Those affidavits required disclosure of assets worldwide. For whatever reason Mr and Mrs Kostakis did not wish to file those affidavits. Instead, they have chosen to rely on piecemeal references to their financial position identified via pinpoint references in their written submissions.

[107]Vasilaras & Co Pty Ltd v Laprese (2019) 58 VR 155; [2019] VSR 56, [73(g)] (Derham AsJ).

To describe the variation application as ambitious is to understate what I regard as its audacious nature. Stripped back, what Mrs and Mr Kostakis ask the Court to do is to make an order permitting the release of deposit funds held in a solicitor’s trust account in Australia, the subject of a freezing order, so that those funds can be transferred out of Australia to be used to pay expenses in another jurisdiction, not expenses of the parties but of non‑parties. On no view do I consider that the interests of justice favour such a variation.

I. Disposition and orders

The application by the Kostakis parties for the release of the funds held in ELG’s trust account pursuant to s 27 of the Sale of Land Act is refused.

The application by the Kostakis parties for the transfer of funds from ELG’s trust account is refused.

The application by the Kostakis parties for variation of the freezing orders is refused.

I will make a declaration that the amount of $27,000 representing one payment of the monthly licence fee in respect of the Brighton Property held by ELG on trust is not held by that firm as deposit money and is not money subject to the provisions of the Sale of Land Act. I will direct the amount of $27,000 be transferred from the trust account to ELG on account of legal costs owed to that firm.

I will order that to the extent Mr and Mrs Kostakis have assets in Australia other than the deposit money in the ELG trust account, that Mr and Mrs Kostakis are at liberty to apply and to deal with such assets to meet expenses agreed or determined by me to fall within the carve‑out to the existing freezing orders as discussed in section H of these reasons.

I will order that Mr and Mrs Kostakis pay the costs of ELG and of RTL of and incidental to the applications the subject matter of these reasons in the RTL Proceeding including the costs of appearing on 12 and 17 September 2025 on a standard basis.

I will otherwise make orders for the further conduct of the RTL Proceeding in accordance with the orders foreshadowed at paragraphs 27 to 31.

The solicitors for RTL should prepare a draft form of order that gives effect to these reasons so far as they relate to the RTL Proceeding and provide it to my Chambers and to the other parties by no later than 12:00pm on 25 September 2025.

Mrs Kostakis has failed in her efforts to obtain the relief sought by her in the ELG Proceeding. I will dismiss the ELG Proceeding and order that Mrs Kostakis pay ELG’s costs on a standard basis.

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[2025] VSC 605

23 September 2025