Stolyar v Scott (Trustee)

Case [2023] FCAFC 61

FEDERAL COURT OF AUSTRALIA

Stolyar v Scott (Trustee) [2023] FCAFC 61

Appeal from:

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar [2022] FCA 691

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 2) [2022] FCA 1118
File number(s): NSD 792 of 2022
Judgment of: BANKS-SMITH, DOWNES AND JACKMAN JJ
Date of judgment: 27 April 2023
Catchwords:

APPEAL AND NEW TRIAL – where arguments sought to be advanced which were not advanced at first instance – where the arguments may have been met by evidence at the trial – arguments that a claim is not maintainable must be expressly pleaded under r 16.08(c) of the Federal Court Rules 2011 (Cth) – whether the primary judge erred in their exercise of discretion in ordering indemnity costs

EQUITY – whether the primary judge erred in focussing on the source of purchase moneys as being determinative of whether a resulting trust arises – whether the presumption of a resulting trust is “weak” and only arises where there is an absence of objective evidence as to the intention of the person providing the funds – whether any resulting trust should have been in favour of entities other than the bankrupt – whether oral agreement gave rise to a trust or merely to a contractual arrangement – whether analysis of the availability of the defence of laches should have focussed on the conduct of the bankrupt or the trustee in bankruptcy

Legislation:

Bankruptcy Act1966 (Cth) s 120

Federal Court Rules 2011 (Cth) r 16.08(c)
Cases cited:

Barnes v Addy (1874) LR 9 Ch App 244

Bosanac v Commissioner of Taxation (2022) 405 ALR 424; [2022] HCA 34

Calderbank v Calderbank [1975] 3 All ER 333

Calverley v Green (1984) 155 CLR 242; [1984] HCA 81

Cassegrain v Gerard Cassegrain& Co Pty Ltd (2015) 254 CLR 425; [2015] HCA 2

El-Debel v Micheletto (Trustee) (2021) 153 ACSR 15; [2021] FCAFC 117

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gosper v Sawyer (1985) 160 CLR 548; [1985] HCA 19

House v The King (1936) 55 CLR 499; [1936] HCA 40

Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6

Orr v Ford (1989) 167 CLR 316; [1989] HCA 4

In re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696

Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar [2022] FCA 691

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 2) [2022] FCA 1118

Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664; [2017] VSC 101

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35

Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33

Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462

Twigg v Twigg [2022] NSWCA 68

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Details
AGLC
Stolyar v Scott (Trustee) [2023] FCAFC 61
Case
[2023] FCAFC 61
Decision Date

CaseChat Overview and Summary

Stolyar v Scott (Trustee) concerned a dispute over the ownership of property and funds, with the central issue being whether a resulting trust had been created in the property and funds held by Faina, the widow of Anchel. The case reached the court after a decision by the primary judge, which the appellants challenged, and the trustee in bankruptcy of Anchel brought a cross-appeal. The Federal Court of Australia was tasked with reviewing the primary judge's decision and the subsequent orders made by the court.

The court had to decide whether the primary judge erred in his exercise of discretion in ordering indemnity costs, given the arguments advanced at appeal that were not raised at the first instance. The court also considered whether the primary judge was correct in his analysis of the resulting trust, focusing on the source of the purchase moneys as determinative of whether such a trust arose. Additionally, the court examined whether the presumption of a resulting trust was weak and only arose in the absence of objective evidence regarding the intention of the person providing the funds. The court further assessed whether any resulting trust should have been in favour of entities other than the bankrupt, and whether an oral agreement gave rise to a trust or merely a contractual arrangement. Lastly, the court scrutinised whether the analysis of the availability of the defence of laches should have focussed on the conduct of the bankrupt or the trustee in bankruptcy.

The court found that there was no error in the primary judge's reasoning, and no error which would come close to providing a reason to set aside the primary judge’s exercise of discretion in ordering indemnity costs. The court concluded that the appeal should be dismissed with costs, and the cross-appeal should also be dismissed. However, as the cross-appeal was brought in response to the appeal, the Trustee should bear the costs of the cross-appeal.

The court made the following orders: 1. The appeal and cross-appeal be dismissed. 2. The appellants pay the respondent’s costs of the appeal. 3. The cross-respondents pay the cross-appellant’s costs of the cross-appeal. The entry of these orders is governed by Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The appeal and cross-appeal be dismissed.

2. The appellants pay the respondent’s costs of the appeal.

3. The cross-respondents pay the cross-appellant’s costs of the cross-appeal.

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

Background

Background to the litigation

We set out below the salient facts as found by the learned primary judge, to the extent that they are relevant to the appeal.Salient facts found by the primary judge Faina was born in 1941 in Odessa, Ukraine. She married Anchel Stolyar, who for ease of reference and without any disrespect we will refer to as Anchel, in about 1964 in Ukraine. In August 1979, Faina and Anchel moved to Australia with their son, Ian, who was then about 12 years old. Faina and Anchel both worked hard: Anchel worked six days a week in a factory and five nights a week helping Faina in a cleaning job, and Faina worked two jobs seven days and nights each week. Sometime prior to 2001, Faina ceased paid employment to care for Anchel, who had become ill. Beth was born in Ho Chi Minh City, Vietnam in 1974, and migrated to Australia with her family in 1982. When Ian was 16 years old, he developed an interest in share trading. Initially he received funds from his parents which he used to invest in shares in Faina’s name. As time went on he received larger sums, which he continued to invest in shares in Faina’s name, provided that he discussed his proposed investments with her first. In 1989, Ian obtained a Bachelor of Economics degree. He then commenced working with the Commonwealth Bank of Australia. From 1992, he worked for other institutions in the financial industry in various roles. In 1993, he obtained a Master of Commerce degree. He continued to trade in shares in his own name and, on an increasingly regular basis, in Faina’s name. In 1992, Anchel received a reparation payment of $102,000 from the German government in compensation for his having been imprisoned in a Nazi concentration camp. In addition, and by way of further reparation, Anchel thereafter received from the German government $500 per month until his death in 2001. From 1992 until 2007, Faina was in receipt of a carer’s allowance and then a widow’s pension that depended upon regular disclosures of her assets to the welfare authority. On 23 May 2001, Bethian Enterprises Pty Ltd (Bethian) was registered. Ian was a director and shareholder holding one ordinary and one “B” class share. Beth was the other director, the secretary and a shareholder holding one ordinary and one “A” class share. On 1 June 2001, Anchel passed away and Faina became the sole registered proprietor of the property which had been their matrimonial home since 1985 at 5/41 Francis Street, Bondi, New South Wales. Faina also became the beneficiary of funds in Anchel’s bank account, the balance of which she transferred into a bank account in her name. There was no evidence that Faina purchased any other property after that date, until the acquisitions which were the subject of these proceedings. Since the death of Anchel, Faina had relied upon Ian to assist her with her financial and property matters, including share trading. Faina does not know how to use a computer. Faina’s ability to speak English is limited and she often discussed matters with Ian in Russian. Faina trusted Ian and generally did not review any documentation relating to financial matters in any great detail, but relied upon what Ian told her. Since the commencement of electronic banking in the 1990s, Ian had the authority to operate electronic bank accounts in Faina’s name.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

There is no error in any of that reasoning, and certainly no error which would come close to providing a reason to set aside the primary judge’s exercise of discretion in ordering indemnity costs from 1 April 2021.Conclusion Accordingly, the appeal should be dismissed with costs. The cross-appeal should also be dismissed. However, as it was brought in response to the appeal, the Trustee should have his costs of the cross-appeal also.

Ratio Decidendi

Legal Principle Established

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