Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 6)

The case of Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 6) involved a dispute over the distribution of proceeds from the sale of a property. The parties involved were the Trustee, Scott, and Mrs Stolyar. The legal issues that the court was required to decide centred around the equitable right of exoneration, which applies in favour of the Trustee, and whether any amount was payable to Mrs Stolyar following the sale of the Campbell Parade Property.

The court explained that the Trustee had a 38.1% beneficial ownership in the Rose Bay Property and was entitled to be paid 38.1% of the proceeds of sale from that property. The Trustee had been granted security over the Campbell Parade Property for any amount to which he was found by the court to be entitled. The court accepted that no amount was payable to Mrs Stolyar following the sale of the Campbell Parade Property. The court considered that the Trustee’s security captured any residual amount that might otherwise have been payable to Mrs Stolyar. The court concluded that no amount was payable to Mrs Stolyar following the sale of the Campbell Parade Property and a declaration and order should be made in accordance with paragraphs 1 and 3 of the Trustee’s interlocutory application.

The court also considered the applicable legal principles, including the equity of exoneration, which arises where a person has mortgaged his property to secure the debt of another. The court noted that the doctrine is not limited to husband and wife and will apply in other cases. The court concluded that the equitable right of exoneration applies in the Trustee’s favour, and the Trustee is entitled to the proceeds of sale from the Campbell Parade Property. The court ordered that the applicant’s solicitors distribute the balance of the proceeds of sale held pursuant to Order 24 of the orders made on 6 September 2022 and any interest which has accrued upon it to the applicant. The court also ordered that the first respondent is to pay the applicant’s costs of paragraphs 1 to 4 of the applicant’s interlocutory application filed on 13 November 2023, and paragraph 3 of her interlocutory application filed on 15 November 2023.