Stolyar v Scott

AND: ANDREW SCOTT IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATES OF IAN STOLYAR AND BETH NGOC NGUYEN Respondent

AND BETWEEN: ANDREW SCOTT IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF IAN STOLYAR AND BETH NGOC NGUYEN Cross-Appellant

AND: FAINA STOLYAR (and another named in the Schedule) First Cross-Respondent

order made by: BANKS-SMITH, DOWNES AND JACKMAN JJ DATE OF ORDER: 27 April 2023

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.

THE COURT: 1 This is an appeal from the decisions of Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar [2022] FCA 691 and Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 2) [2022] FCA 1118. There is also a cross-appeal, which depends upon findings being made that the primary judge was in error in relation to certain matters raised in the appeal (which were denied). 2 The proceedings below were brought by the Trustee in Bankruptcy (the Trustee) of the estates of Ian Stolyar and Beth Nguyen (also known as Beth Stolyar). They became bankrupt on 29 September 2016, and the date of commencement of their bankruptcies was 3 October 2014. The proceedings were brought against Faina Stolyar, who is the mother of Ian Stolyar, and a company, Fanchel Pty Ltd (Fanchel), of which Faina Stolyar is the sole director and shareholder. For ease of reference, and without intending any disrespect, we will refer to the natural persons involved in the proceedings as Ian, Beth and Faina. 3 The Trustee sought relief in the proceedings in relation to a number of acquisitions of property and other transactions, of which the following remain relevant for this appeal: the acquisition of the property known as 27/26 Ocean Street, North Bondi, New South Wales (the Ocean Street Property) on 20 July 2007, the acquisition of the property at 701/152-162 Campbell Parade, Bondi Beach, New South Wales (the Campbell Parade Property) on 18 May 2009, the property known as 2C Dumaresq Road, Rose Bay, New South Wales (the Rose Bay Property) on 18 May 2015, and transfers of shares pursuant to a share arrangement commencing in March 2008. 4 Each of the Trustee, Ian, Beth and Faina gave evidence at the trial and was cross-examined. The learned primary judge found that the Trustee was a considered and frank witness. Her Honour found that Ian, who was cross-examined over four days, was in many respects an unsatisfactory witness and, as her Honour set out in detail in the judgment, in many instances his account of what occurred could not be accepted. Her Honour also found that Faina was an unreliable witness, and her Honour observed that Beth gave evidence on only a few discrete topics, whereas there were a number of matters about which it could reasonably have been expected that Beth might have given evidence. 5 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 6 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. 7 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. 8 Beth was born in Ho Chi Minh City, Vietnam in 1974, and migrated to Australia with her family in 1982. 9 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. 10 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. 11 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. 12 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. 13 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. 14 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. 15 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. 16 On 24 December 2001, Ian and Beth were married. From late 2001, Ian and Beth, or entities associated with them, embarked on a series of acquisitions of real property, including: (a) on 2 August 2001, Bethian acquired 702/5 Carey Street, Drummoyne, New South Wales for $795,000; (b) on 21 November 2001, Ian and Beth acquired 97 Broughton Street, Kirribilli, New South Wales for $760,000. This property was sold on 30 June 2003 for $910,000; (c) on 4 April 2002, Ian and Beth acquired 501/40-44 Ocean Street, Bondi, New South Wales for $610,000; (d) on 17 January 2003, Ian and Beth acquired 4/31A Carabella Street, Kirribilli, New South Wales for $2.75 million; and (e) on 24 December 2003, Ian and Beth acquired 8/2-4 Benelong Crescent, Bellevue Hill, New South Wales for $2,080,000. 17 On 21 October 2004, Dibelle Financial Services Pty Ltd (DFS) was registered, with Faina as its sole director, secretary and shareholder. DFS conducted a broking business, referring potential borrowers to Royal Guardian Mortgage Management Pty Ltd (Royal Guardian), a lender for residential and commercial property purchases. At the time DFS was incorporated, Faina signed two declarations of trust which provided that she held her shares, dividends and other interests in her shares on trust for Ian and Beth, and agreed to deal with her shareholding as directed by them. 18 On 1 February 2005, Vietruss Pty Ltd (Vietruss) was established. Ian was its sole director and Beth was its sole shareholder. Vietruss was established for the purpose of becoming the general partner in the Canchel Limited Partnership (the Canchel Partnership). 19 On 8 February 2005, Vietruss as the general partner, and Ian as the limited partner, entered into a limited partnership in the name of the Canchel Partnership. The deed of partnership between Vietruss and Ian provides that Vietruss is entitled to 1%, and Ian is entitled to 99%, of the Canchel Partnership's profits. 20 On 24 June 2009, Stoligor Investments Pty Ltd (Stoligor) was registered. Ian was its sole director and Faina was its sole shareholder. 21 On 14 December 2007, Fanchel was incorporated, with Faina as its sole director, secretary and shareholder. It was initially incorporated for the purposes of share trading, and is now an investment company. 22 On 29 April 2010, Royal Guardian commenced proceedings against Beth and Ian in the New South Wales Supreme Court, alleging that they had received approximately $2 million in commissions in breach of duty owed to Royal Guardian. Ian and Beth cross-claimed for breach of their employment contract. The Royal Guardian proceedings were listed for hearing in May 2013, and judgment was given on 28 May 2014 in favour of Ian and Beth. Royal Guardian was then successful on appeal in setting aside the judgment at first instance on the grounds that the trial judge's conduct at the trial had not been impartial: see Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88. The Court of Appeal remitted the matter for re-hearing, but Royal Guardian has not sought to take any further action in relation to the proceedings. No re-hearing has been initiated, despite the lapse of about seven years since the appeal was decided. 23 On 29 September 2016, a sequestration order was made against Ian and Beth, based upon an act of bankruptcy committed by them on 3 October 2014.

The acquisition of the Ocean Street Property 24 The learned primary judge found that on 20 July 2007, Faina acquired the Ocean Street Property for $1,013,150.52 (inclusive of stamp duty). The primary judge found that the purchase of that property was funded as to: (a) $824,681.70 from the sale of 1.1 million shares in Allegiance Mining NL (AGM) which were owned by Ian; and (b) $180,452.52 from the sale of 500,000 shares in Uranium Exploration Australia Ltd (UXA) which were beneficially owned by Ian, or Ian and Beth: [197]. That left a small balance of $8,016.30, which the primary judge inferred was contributed by Ian, acknowledging that it was not known how that balance was funded: [198]. 25 Her Honour thus found that Ian contributed the whole of the purchase price for the Ocean Street Property. Her Honour then found that in the absence of any evidence to the contrary, Faina received the Ocean Street Property on a resulting trust in favour of Ian. 26 It should be noted at this point, although the point applies more generally to all the property acquisitions in dispute, that early in the judgment, the learned primary judge noted that the presumption of a resulting trust arising from the payment of the purchase price of the property in question may be rebutted by evidence to the contrary, and then added the following at [18]: I pause to note that in this case the respondents did not lead any such evidence in relation to any of the transactions where the Trustee contended that the asset, or a portion of it, was held on trust by one or both of the respondents for Ian or Ian and Beth. Instead, the respondents deny that the transactions occurred in the manner alleged by the Trustee. That being so, if the Trustee's contentions in relation to the purchase of assets by Ian and/or Beth in Faina's name are accepted it will follow that those assets (or any of them, as the case may be) are held by Faina on resulting trust for the Trustee in whom Ian's and Beth's interests are vested pursuant to s 58 of the Bankruptcy Act. 27 In reaching that conclusion as to the source of the purchase money for the Ocean Street Property, her Honour rejected Ian's and Faina's evidence that the source of the purchase price of the Ocean Street Property was Faina herself, arising from a number of share sales by Faina, and that the deposit had been raised by Faina by way of a deposit guarantee. The evidence given by Ian in his affidavit concerning the source of the funds to purchase the property was the subject of cross-examination by Senior Counsel for the Trustee, in particular by reference to contradictory evidence given by Ian in the Royal Guardian proceedings, in which Ian had said that he and Beth had paid $700,000 to Faina for the purchase of a property. Given the timing, her Honour found that that property could only have been the Ocean Street Property: [184]. Her Honour found that, based on Ian's evidence, the only possible source of those funds was the sale by the Canchel Partnership of its 1.1 million AGM shares, which resulted in the receipt of $824,681.70. Her Honour then rejected Ian's evidence that that money was simply spent on things other than the purchase of the Ocean Street Property. 28 As to the $180,452.52 from the sale of 500,000 UXA shares, there was no dispute between the parties that part of the purchase price for the Ocean Street Property was paid from those proceeds. The factual contest between the parties was whether Faina, on the one hand, or Beth and Ian (or Ian alone), on the other hand, were the beneficial owners of those shares. Her Honour conducted a detailed analysis of the available documentary evidence concerning the source of funds for the purchase of those UXA shares in Faina's name, and held that those shares had been purchased in Faina's name from the proceeds of sale of 1 million AGM shares which were beneficially held by Ian or Ian and Beth, as were the sale proceeds of those shares when sold. Her Honour rejected Ian's evidence as to Faina having been the beneficial owner of the 1 million AGM shares. Her Honour pointed to the lack of contemporaneous documentary evidence to support Ian's version of events. In the course of that analysis, a question arose as to an off market transfer of 1 million AGM shares to Faina in 2006, which the Trustee contended had been made for no consideration on the part of Faina. Her Honour drew an inference that that was the case, pointing out that at the time when Faina became the owner of those 1 million AGM shares she was on a widow's pension and by her own representations to Centrelink, had limited assets.

The acquisition of the Campbell Parade Property 29 On 18 May 2009, the Campbell Parade Property was purchased in Faina's name for $6.75 million. The primary judge found that the acquisition was funded in part with two bank cheques, being a Westpac bank cheque for $3.1 million and a CBA bank cheque for $1,071,580. Her Honour found, after a detailed review of the evidence and a rejection of Ian's evidence, that the source of funds for those bank cheques was contributions by Ian and Beth or by Ian: [279]. Her Honour concluded that, in the absence of any evidence of a contrary intention, Faina held the Campbell Parade Property on a resulting trust for Ian and Beth in the proportion to which they contributed to its purchase price, namely 58.17%. 30 Her Honour dealt in detail with the evidence given by Ian to the effect that Faina herself was the source of the two bank cheques in question. Faina also sought to give evidence to that effect. An aspect of the evidence of Ian and Faina was the proposition that the purchase price for the Campbell Parade Property was in fact only $3.8 million, contending that a discount had been agreed with the developer which sold the property by virtue of a dispute with the developer concerning the property not having the features which were said to have been depicted on the original plans. Her Honour rejected that evidence, and disbelieved Ian and Faina's version of the transaction. Her Honour found that the purchase price was the stated figure of $6.75 million, and a total of $7,171,297.54 including stamp duty and adjustments was paid at settlement on 18 May 2019. 31 In the course of her Honour's reasoning concerning the source of funds for the two bank cheques, her Honour found that the Westpac bank cheque for $3.1 million was drawn with funds from Fanchel's transaction account on 18 May 2009, representing the proceeds of sale of shares in AGM which had been transferred to Fanchel by Vietruss in January 2008: [248] and [257]. 32 Further, as to the CBA bank cheque of $1,071,580, her Honour inferred that the cheque was drawn from an amount of $4,405,211.31 (the Redraw Sum). The Redraw Sum was an amount credited to the "business account Ian Stolyar Canchel Ltd Partnership 221710581769": [266]. In a later passage, her Honour referred to that account as being in the name of the Canchel Partnership: [472].

The acquisition of the Rose Bay Property 33 On 18 May 2015, the Rose Bay Property was acquired in Faina's name for $10.7 million. The trial judge upheld the Trustee's claim to a beneficial interest in the Rose Bay Property arising out of two contributions made by Ian and Beth to its purchase. One was a contribution of $3.6 million (the Rose Bay Contribution) which was traceable to the proceeds of sale of a property owned by Ian and Beth at Point Piper (the Point Piper Repayment Amount). The other was an amount of $760,002.97 (the May Deposits), borrowed by Beth from her family members. 34 It was not in dispute that the funds used to complete the purchase of the Rose Bay Property included the Rose Bay Contribution and the May Deposits. The dispute concerned whether those amounts were contributions by Ian and Beth. 35 Dealing first with the Rose Bay Contribution, it is necessary to refer to her Honour's findings concerning the anterior transaction involving the property at 5/6 Buckhurst Avenue, Point Piper, New South Wales (the Point Piper Property), acquired by Ian and Beth on 31 March 2011, and also the purchase of the Campbell Parade Property on 18 May 2009. 36 The purchase of the Campbell Parade Property was completed on 18 May 2009. On 20 May 2009 a bank cheque for $2.2 million was deposited into the Campbell Parade Mortgage Account, reducing the balance owed by Faina to the bank to $800,000: [215]. The Trustee's case was that that money came from Ian or Ian and Beth, and caused Faina to become indebted to Ian, or Ian and Beth, in the amount of $2.2 million. Her Honour found that the $2.2 million came from the Redraw Sum of $4,405,211.31 which were funds redrawn by Ian and Beth on their home loans, noting that the funds passed through an account called the "business account Ian Stolyar Canchel Ltd Partnership 221710581769": [266], [480]. (We have noted above that the source of the CBA bank cheque of $1,071,580.46 used in part to purchase the Campbell Parade Property was also found to be the Redraw Sum.) The primary judge rejected Ian's and Beth's competing version as to the source of the $2.2 million in a series of detailed findings, including credit-based findings: [466]-[480]. It followed that the deposit of the $2.2 million into the Campbell Parade Mortgage Account did not give rise to any indebtedness to Faina by Ian and Beth (see [499]); rather, any indebtedness was by Faina to Ian and Beth, which as her Honour later found was in due course discharged. 37 On 28 October 2010, the further amount of $1.1 million was paid into the Campbell Parade Mortgage Offset Account, which the next day was transferred into the Campbell Parade Mortgage Account, reducing its balance by $1.1 million: [484(1) and (2)]. The primary judge held that the monies were paid in by Ian and Beth using funds obtained by a further set of drawings upon their home loans: [484(3)] and [498]. Again, the primary judge rejected Ian's evidence as to the source of the deposit for the $1.1 million: [490]-[498], referring to that evidence as "mere speculation and fabrication". 38 On 5 November 2010, $1.3 million was redrawn from the Campbell Parade Mortgage Account by a series of transfers on that date, and the amount was paid into an account in Ian and Beth's names where it secured a bank guarantee in Ian and Beth's names, used as the deposit for the Point Piper Property: [429]-[430]. On 31 March 2011, the purchase of the Point Piper Property was completed with funds paid over on settlement. It was not in dispute that included within the funds supplied for the purchase of the Point Piper Property, $3,032,000 came from the Campbell Parade Mortgage Account made up as follows: (a) $1.3 million which had been redrawn from the Campbell Parade Mortgage Account; and (b) $1,732,000 drawn down on 31 March 2011. 39 There was a dispute between the parties as to whether the amount of $3,032,000 was a loan by Faina to Ian and Beth. 40 In October 2011, instructions were given to solicitors to prepare a mortgage and a loan agreement reflecting a $3 million loan from Faina to Ian and Beth: [456]-[457]. The loan agreement does not seem ever to have been executed, and was not referred to further in the judgment. The mortgage was ultimately executed and registered on 24 August 2012: [458]. The Royal Guardian proceedings were on foot at the time, having been commenced against Ian and Beth in April 2010: [93]. 41 In December 2013, the Point Piper Property was sold by receivers appointed by the National Australia Bank. The sale produced a surplus, of which an amount of $3,932,500 was paid at the direction of Ian to Faina purportedly in repayment of the loan by Faina and which had purportedly been secured by the second registered mortgage granted to Faina: [464]. At this time, the Royal Guardian proceedings had been heard and judgment was reserved: [94]. 42 From the amount of $3,932,500, $3.6 million was ultimately used towards the purchase of the Rose Bay Property on 18 May 2015: [512]. It was the Trustee's case that there was no net debt owed by Ian and Beth to Faina, given that Faina was already indebted to Ian and Beth in the amount of $3.3 million by way of the two payments of $2.2 million and $1.1 million referred to above. Accordingly, the registered mortgage given to Faina over the Point Piper Property did not secure any indebtedness to her. The learned primary judge accepted that argument and concluded that the funds drawn from the Campbell Parade Mortgage Account were redraws of Ian and Beth's money and did not give rise to any relevant indebtedness to Faina, that the second registered mortgage granted by Ian and Beth over the Point Piper Property to Faina did not secure any indebtedness, and the payment of the Point Piper surplus of $3,932,500 to Faina following the sale of the Point Piper Property (which was purportedly in discharge of Ian's and Beth's supposed indebtedness to Faina) ought not to have been made: [499]. 43 Accordingly, her Honour found that the amount of $3,932,500 paid to Faina was held on a resulting trust for Ian and Beth: [500]. Therefore, when the $3.6 million of that money held on trust was applied to the purchase of their Rose Bay Property, Ian and Beth acquired a corresponding beneficial interest in the property by way of resulting trust: [512]. 44 Turning then to the May Deposits of $760,002.97, which were also applied in the acquisition of the Rose Bay Property, that amount came from advances by members of Beth's family. The dispute between the parties was whether they were loans to Ian and Beth, on the one hand, or to Faina, on the other hand. The learned primary judge considered the documentary evidence in detail, contrasting it with the testimony of Ian and Beth, and concluded that Beth's family members had lent money to Beth, not Faina: [561]. This was a credit-based finding, involving the rejection of the evidence given by Ian, Beth and Faina: [561]. Her Honour pointed out that the contemporaneous emails from Beth's family members requested Beth's account details and referred to the payment to be made to Beth, and made no mention of Faina. Similarly, Beth did not mention Faina in any of her email communications with her family: [562]. Her Honour also referred to an email of 18 January 2016, written at a time when the proceedings were not on foot, in which Beth clearly referred to her family giving her all of their life savings with no paperwork because they trusted her, adding that it was Ian who was to repay her family: [563]. 45 It was not necessary for the primary judge to go further and decide whether the loans by Beth's family members to Beth (or to Ian and Beth) were ever repaid. It was sufficient to find that the May Deposits contributed to the purchase of the Rose Bay Property. In the absence of any evidence of a contrary intention, that contribution by Ian and Beth gave rise to a resulting trust in favour of Ian and Beth in the proportion to which the total of the May Deposits bears to the purchase price of the property.

The Share Arrangement 46 The background to the Share Arrangement was as follows. In early January 2008, the Canchel Partnership had a margin loan with CommSec to the value of, and secured by, 10 million AGM shares that it held at the time. From 16 January to 10 March 2008, on behalf of the Canchel Partnership, Ian caused CommSec to sell a total of 5.5 million AGM shares to pay down that margin loan. By March 2008, the Canchel Partnership's remaining shareholding had decreased in value by approximately $2 million. In order to crystallise that loss, and offset the capital gain that the Canchel Partnership was likely to make from the sale of its AGM shares in the financial year ending 30 June 2008, the Canchel Partnership needed to sell its remaining shares. However, at the time there was no demand in the market for those shares. Thus Ian raised with Faina the possibility of selling all of the Canchel Partnership's shareholding to Fanchel. 47 Against that background, Ian gave evidence in his affidavit of 16 October 2020 at [138] of a conversation he had with Faina in Russian in March 2008 to the following effect: Ian: Canchel needs to sell its remaining shares to Fanchel so that its tax liability can be reduced. Faina: That's fine as long as Fanchel doesn't have to repay that debt. Ian: Don't worry. The amount of the debt will reflect the actual amount Fanchel gets from the sale of those shares, if it can sell them. Ultimately, if the shares aren't worth anything, Fanchel won't have to pay anything. And if Fanchel does sell the shares then the proceeds should be passed on to Canchel. Faina: OK, Ian. Her Honour noted at [318] that this arrangement, which was said to be struck between Faina and Ian, is referred to by the Trustee as the "Share Arrangement". Her Honour adopted that term for the purposes of her Honour's reasons, although the description just referred to indicates a degree of detachment and that her Honour may not necessarily have intended to find that the conversation occurred in those exact terms. 48 It was accepted by the parties that the Share Arrangement applied to shares in Westside Corporation Limited (WCL), and shares in Gullewa Limited (GUL), but there was an issue between the parties as to whether the Share Arrangement also applied to shares in eBet Limited (eBET). The primary judge rejected Ian's evidence to the effect that the eBet shares were not the subject of the Share Arrangement, and concluded that those shares and their proceeds of sale are to be dealt with in accordance with the Share Arrangement: [349]. Her Honour then said that Fanchel was and is liable to pay the proceeds of sale from the eBet shares to Ian, and in the meantime, holds those proceeds "for Ian's benefit" or on trust for him. In expressing her Honour's overall conclusions at [598], her Honour referred to having accepted the Share Arrangement: [598(4)]. As we have said, it is not clear whether her Honour intended to find that the conversation in March 2008 occurred in precisely the terms set out by Ian in his affidavit. The reference in [349] to Fanchel being liable to pay the proceeds of sale to Ian and holding those proceeds for Ian's benefit, suggests that her Honour's acceptance of the conversation at [318] was subject to the qualification that the proceeds would be passed on to Ian, rather than to the Canchel Partnership. In our view, that is the better reading of her Honour's findings taken as a whole. In any event, it was common ground between the parties, as established by an admission on the pleadings, that it was Ian who would be entitled to be paid any amounts received by Fanchel from the sale of the shares which were the subject of the Share Arrangement: that was alleged by the Trustee in the amended statement of claim at [142A(b)], and admitted by Faina and Fanchel in their defence, again at [142A(b)]. We read her Honour's judgment as accepting that admission as a qualification to be made to the terms of the Share Arrangement in the conversation set out at [318]. 49 One issue raised by the pleadings was whether the Share Arrangement gave rise to a trust. That was alleged by the Trustee in the amended statement of claim at [142A(a)], but denied by Faina and Fanchel in the corresponding paragraph of their defence. However, as discussed below, other aspects of Faina and Fanchel's defence on this issue are more equivocal. 50 The relevant shares which were transferred to Fanchel pursuant to the Share Arrangement were as follows: (a) 7,421,000 shares in eBet; (b) 1,400,000 in WCL; (c) 9,083,648 shares in GUL. 51 As to the eBet shares, 1,900,000 were transferred by the Canchel Partnership, and 5,521,000 were transferred by Ian personally: [337], [340]. Her Honour held that those shares and their proceeds of sale were held on trust by Fanchel in favour of Ian pursuant to the Share Arrangement: [349]. The eBet shares were sold pursuant to a scheme of arrangement in December 2016, yielding an amount of $3,537,340.95: [330(8)]. Fanchel received that amount and paid it into the Campbell Parade Mortgage Offset Account, an account held by Faina, and not to Ian or, as should have been the case, to the Trustee, given that by the time of the sale pursuant to the scheme of arrangement, Ian was a bankrupt: [350]. Her Honour found that in paying the proceeds of sale of the eBet shares to Faina, Fanchel committed a breach of trust and was liable to account to the Trustee for the full amount paid to Faina: [351]. Her Honour also found that Faina personally was liable to account to the Trustee for those funds, having received trust property with knowledge of the breach of trust, by reason of Ian's knowledge as her agent being attributed to her: [362]. 52 As to the WCL shares, all 1.4 million shares were transferred by the Canchel Partnership to Fanchel pursuant to the Share Arrangement: [365]. Between 2008 and 2010, Fanchel engaged in buying and selling WCL shares, reaching a minimum balance at one point of 1,308,213 shares, but from 2010 onwards Fanchel significantly increased its shareholding in WCL, reaching a total of 5,616,333 shares on 30 June 2014. Those shares were acquired from Fanchel pursuant to a takeover on 18 September 2014, yielding a total of $2,246,533.20, which was deposited into the Fanchel transaction account: [364]. In quantifying the amount which Fanchel was liable to pay Ian pursuant to the Share Arrangement, her Honour applied the presumption that a trustee which mixes its own funds with that of another, thereby creating a mixed fund, will draw out its own money first: In re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696. Accordingly, the WCL shares which were the subject of the share arrangement were presumed to be disposed of last, and her Honour multiplied the takeover price by the minimum holding in the period April 2008 to September 2014 of 1,308,213 shares, yielding an amount of $523,285.20. Her Honour found that the proceeds of Fanchel's WCL shares acquired in the takeover were paid to Faina, rather than to Ian, and given that Faina had given no consideration for the transfer of those proceeds which had occurred in the five years prior to the commencement of Ian's bankruptcy, the transfer was void against the Trustee pursuant to s 120 of the Bankruptcy Act 1996 (Cth). 53 As to the GUL shares, these were the subject of various transactions in 2008 and 2009, but were ultimately returned to Fanchel, and were sold by Fanchel between August 2017 and September 2018. Her Honour held that Fanchel received the sale proceeds on trust for the Trustee because, by that time, Ian's interest in the Share Arrangement had vested in the Trustee by reason of his bankruptcy, and Fanchel was therefore liable to account to the Trustee for the proceeds of sale of the GUL shares: [413]-[414].

The appellants' principal arguments on appeal 54 The amended notice of appeal contains nineteen grounds, but the appellants have helpfully identified three principal submissions which run through most of those grounds. We propose to deal with those three principal submissions, before turning to the nineteen particular grounds individually. The three principal submissions were that the presumption of a resulting trust was either rebutted or did not arise in the first place, that the resulting trusts found by the primary judge should have been in favour of entities other than Ian and Beth, and that the Share Arrangement was merely a contractual arrangement rather than an arrangement creating a trust. We note that neither senior nor junior counsel who appeared for the appellants before us had appeared at the trial.

The presumption of a resulting trust 55 At the trial, there was no dispute about the principles applicable to establish an express trust or a resulting trust: [11]. Her Honour summarised those principles as follows. 56 To establish the existence of an express trust, there must be an intention to create a trust, a clear identification of the trust property and reasonable certainty as to the identification of the beneficiaries: Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62 at [7] (French CJ), [109] (Gageler J) and [204] (Keane J). 57 In relation to resulting trusts, her Honour set out the summary of the principles stated in El-Debel v Micheletto (Trustee) (2021) 153 ACSR 15; [2021] FCAFC 117 at [7] (Markovic, Derrington and Colvin JJ) as follows: (1) A presumption of a resulting trust arises where one person provides the purchase price of property which is conveyed into the name of another person. (2) In deciding whether a presumption of a resulting trust has been rebutted the Court must reach a conclusion on the whole of the evidence. (3) The presumption of a resulting trust may be rebutted by evidence which manifests an intention to the contrary, but should not give way to slight circumstances. (4) The extent of the beneficial interest of the parties arising by reason of a resulting trust must be determined when the property was purchased. (5) It is the intention of the person who provides part of the purchase price that is relevant when considering whether the presumption may be displaced by contrary evidence. (6) If part of the purchase price is provided by being borrowed on a mortgage, the presumption of a resulting trust is applied by treating the monies raised by the mortgage as a contribution by the person who is liable to repay that money. 58 Her Honour also referred to the principle that where a person funds part of the purchase price for a property which is registered or conveyed into the name of another person, the property is presumed to be held on trust for the person providing the funding to the extent reflecting his or her proportionate contribution to the property: Calverley v Green (1984) 155 CLR 242 at 246-247. Where that occurs, contributions by way of borrowing are taken to be contributed by the person or persons liable to repay the loan: Calverley v Green at 251 (Gibbs CJ), 257-258 (Mason and Brennan JJ) and 267-268 (Deane J). 59 It should be noted that the hearing occurred on 19-30 April 2021 and 22 June 2021, and judgment was given on 16 June 2022. There was much debate on appeal concerning the High Court's decision in Bosanac v Commissioner of Taxation (2022) 405 ALR 424; [2022] HCA 34, which was argued on 16 August 2022 and decided on 12 October 2022. 60 The appellants sought to argue that the learned primary judge had wrongly focused on the source of the purchase money of the various properties as determinative of the question whether a resulting trust arose in the circumstances of the case. The appellants pointed to passages in Bosanac describing the presumption as "weak", and submitted that the presumption arises only where there is an absence of evidence revealing the objective intention of the person providing the funds for the purchase of the relevant property at the time of the purchase or where the presumption resolves a factual contest where that evidence is uninformative or truly equivocal. The appellants submitted that where the objective circumstances at the time of the transaction establish an intention inconsistent with the creation of the trust, the presumption does not arise. Further, the appellants submitted that a resulting trust will be presumed only where the objective circumstances at the time of purchase establish an intention to create a trust. Even where the presumption does arise, the appellants submitted that it will be displaced even by weak evidence. The appellants submitted that that the primary judge had given insufficient regard to the objective facts and circumstances at the time of the impugned transactions, and gave undue weight to the subjective evidence of the witnesses at the time of the trial. 61 The Trustee submitted that there had been no dispute at the trial as to the principles applicable to establishing the resulting trust and further pointed to the passage at [18] of the primary judgment (quoted above) in which her Honour said that Faina and Fanchel had not sought to lead any evidence which was relied upon as rebutting the presumption, and made no submissions in opposition to the Trustee's reliance upon the presumption. The Trustee submitted that the case was fought squarely on the question of whether the Trustee had proved the factual basis for the existence of the presumption, namely that each of the properties had been purchased with funds provided in whole or part by Ian and Beth. The Trustee submitted that the appellants were bound on appeal by the conduct of their case at trial, and having made the forensic choice not to seek to rebut the presumption by offering some alternative explanation (such as an intention to make a gift) for the valuable transfers which were made in Faina's favour, the appellants were not entitled to raise a new issue of fact that, if it had been raised below, could have meant the trial would have been run differently. The Trustee submitted that if this issue had been in play at the trial it would have changed the manner in which the trial was conducted. 62 In our view, it is not open to the appellants to contend on appeal that the presumption of a resulting trust either did not arise, or was rebutted in the circumstances. A party on appeal is generally bound by its conduct of the case at first instance, and is not entitled to raise new issues on appeal. In a case where, had the issue been raised in the Court below, evidence could have been given which by any possibility could have prevented the point from succeeding, the point cannot be taken afterwards: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Coulton v Holcombe (1986) 162 CLR 1 at 7-8; Water Board v Moustakas (1988) 180 CLR 491 at 497; University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 60 ALR 68 at 71. 63 The proceedings below were clearly fought as a contest between two opposing views as to the source of the purchase money for the property acquisitions. The Trustee contended that Ian and Beth had provided the purchase money in amounts totalling approximately $9 million towards the purchase of properties in Faina's name, such that they were held by Faina on resulting trust. By way of response, Faina and Fanchel denied that any such transfers had occurred, and instead claimed that the property held by Faina had been acquired using Faina's own money and resources. The appellants did not seek to oppose the Trustee's claims by adducing or pointing to any evidence, or making any submissions, in support of a finding that any monies or property which may have come from Ian and Beth were gifts to Faina with the intention that she would receive them beneficially. That would have been a difficult, if not impossible, line of argument given that the appellants were adamant at the trial that none of the purchase money was contributed by Ian and Beth. The appellants' case was confined to the proposition that the financial contributions by Ian and Beth asserted by the Trustee never occurred and therefore the presumption of a resulting trust did not arise. That was the point which the primary judge made emphatically at [18] of her Honour's reasons. 64 The new case sought to be advanced for the appellants proceeded on the assumption that the payments and transfers alleged by the Trustee had occurred and had been applied in the purchase of the assets as alleged by the Trustee, but that the objective circumstances indicated that they were intended to be absolute and unconditional payments and transfers, so that Faina's acquisitions did not give rise to any resulting trust in favour of Ian and Beth. That is a case which could well have been met by evidence at the trial, such evidence going (for example) to the question whether Ian and Beth ever intended to make gifts to Faina of that size and nature. Such evidence would almost certainly have included various lines of cross-examination of Ian, Beth and Faina. It is also likely to have included further documentary evidence. In this regard, the trial was conducted on the basis that, after the close of evidence, the 18,000 page court book was replaced by an agreed court book containing only the materials to which the primary judge was required to have regard. That led to the removal of documents which may well have been relevant to the arguments now sought to be advanced by the appellants on appeal. 65 Accordingly, it is not open to the appellants to contend that the presumption of a resulting trust either did not arise or had been rebutted in the circumstances. 66 For completeness, we should add that we do not read the reasoning in Bosanac as containing any binding ratio by a majority of the High Court which would require departure from the principle that there is a presumption of a resulting trust in circumstances where a person advances purchase money for property which is held in the name of another person. That presumption was upheld expressly in the judgments of Kiefel CJ and Gleeson J at [12], referring also at [13] to the ways in which the presumption may be rebutted, and at [19]-[22] to the relative weight of the presumption. Similarly, Gageler J upheld the presumption at [51] and [58]-[60], and the rebuttal of, and weight of, the presumption were referred to at [64]. There is a passage in the joint judgment of Gordon and Edelman JJ at [109] which suggests that where the objective facts based on evidence led by the plaintiff tend to establish, even weakly, an objective intention inconsistent with a declaration of trust, then there will be no case for the defendant to meet and the presumption of resulting trust will not arise. There is no corresponding statement in the reasons of Kiefel CJ and Gleeson J, or Gageler J.

The identity of the beneficiaries of the resulting trust 67 The appellants submitted that the primary judge had not given sufficient consideration to the various legal structures involved in the relevant transactions, in particular the limited partnership known as the Canchel Partnership. They submitted that the Canchel Partnership had been found by the primary judge to have contributed money towards the purchase of the properties, and therefore any resulting trust should have been in favour of the Canchel Partnership to the extent of its contributions. For example, the amount of $824,681.70 contributed to the purchase of the Ocean Street Property was found to have had its source in the sale of 1.1 million AGM shares held by the Canchel Partnership. The appellants submitted that neither the Canchel Partnership nor Vietruss was a party to the proceedings below, and accordingly the suit should have failed. In relation to the Share Arrangement, it was contended that that was an agreement between the Canchel Partnership and Fanchel, even though it was an agreement to pay the proceeds to Ian. The submission was made that the agreement could only be enforced by the Canchel Partnership, and not by Ian who was a stranger to the contract. 68 The Trustee submitted that this was another argument which was not run at the trial. Ian and Faina's evidence was that the purchase money in each case was provided by Faina, and no argument was put that the funds had been provided by others and any presumption of resulting trust should therefore arise only in favour of those entities rather than in favour of Ian and Beth. The Trustee submitted that such an argument would inevitably have raised factual issues which would have been investigated at the trial in light of Ian and Beth's ownership and control of those entities. The Trustee also observed that he is the court-appointed receiver of the Canchel Partnership, and that if the appellants had raised this argument at first instance, the Trustee could have conducted his case differently by also relying upon his status as receiver of that partnership and by being joined as a plaintiff in that capacity. Further, an application to reinstate Vietruss, which had been deregistered, could have been made, and Vietruss could then have been joined as an applicant. 69 In our view, the Trustee's submission should be accepted. It is clearly the case that no argument was put at first instance to the effect that any resulting trust should have been in favour of any entity other than Ian and Beth. Nor was there any indication in the defence filed by Faina and Fanchel that the Trustee's claim was not maintainable for this reason. Such a point must be expressly pleaded: see r 16.08(c) Federal Court Rules 2011 (Cth). We accept the Trustee's argument that, if this point had been taken at the trial, the trial may well have been conducted differently. 70 It is therefore not necessary for us to form a view as to the merits of the submission. For completeness, however, we observe that the deed establishing the Canchel Partnership conferred on Ian a 99% profit entitlement as limited partner, with the remaining 1% held by Vietruss, of which Ian was the sole director and Beth was the sole shareholder. We also observe that the Full Court held in El-Debel v Micheletto at [9]-[11] that the question of which party provided funds to purchase properties invites consideration of all the evidence concerning the source of funds, and the fact that the funds used to purchase a property may be shown to have come from a bank account in the name of a particular party is not determinative of that question. For example, the funds that came from the bank account may not have been funds of the holder of the bank account when they subsequently came to be applied to the purchase of the property.

Did the Share Arrangement give rise to a Trust? 71 The appellants submit that the primary judge erred in finding that the Share Arrangement constituted a trust of the shares and the proceeds thereof in favour of Ian, rather than merely being a contractual arrangement in his favour. 72 The Trustee submits that no such argument was put at first instance, and that it had been accepted by Faina and Fanchel at the trial that the Share Arrangement did give rise to a trust. 73 In our view, the Trustee is correct to contend that the trial was conducted on the basis that the Share Arrangement did give rise to a trust of the shares and proceeds thereof which were transferred to Fanchel under that arrangement. To the extent that the pleadings are relevant to that question, the defence of Faina and Fanchel is somewhat equivocal. In [142A(b)] they denied that the shares transferred under the Share Arrangement were held on express or implied trust by Fanchel, but in [142C(g)] they contended that the proceeds of sale of WCL shares were "his" (ie Ian's) and that shares which had been substituted for the WCL shares and fell under the Share Arrangement were held "for Ian's benefit". In [142E(f)] similar contentions were made in relation to the proceeds of sale of the GUL shares and the substitution of the GUL shares for shares in another entity, TCM. Of more significance in terms of the way the trial was conducted is the way in which Ian expressed the transaction in his affidavit of 16 April 2021. In that affidavit, Ian referred to the shares which he had transferred to Fanchel, including the GUL shares, as having been "held for me" (at [43]). In a later passage, Ian said that he did not consult his mother in relation to the sale of the GUL shares as "I considered the money to be mine pursuant to the arrangement referred to" in his earlier evidence, being the Share Arrangement. In his cross-examination, Ian referred to the WCL shares as being held by Fanchel on his behalf: T 474.11-13; Appeal Book Part C, page 1064. Faina said in her cross-examination in respect of the shares held by Fanchel that she was keen to avoid any mixing of shares between her own shares held by Fanchel and those which had been transferred by the Canchel Partnership and Ian to Fanchel, referring to the latter as "his shares": T 604.43 to 605.1; Appeal Book Part C, pages 1194 to 1195. While that evidence is conclusory in nature, and of dubious admissibility had it been objected to, it does serve to demonstrate that Faina and Fanchel did not raise any issue at the trial as to whether the shares the subject of the Share Arrangement and the proceeds thereof were held by Fanchel on trust, and spoke of the Share Arrangement in terms which reflected such a trust. 74 In terms of submissions, no argument was put by Faina or Fanchel at any point in the proceedings at first instance to the effect that the Share Arrangement did not give rise to a trust. A submission was put in closing submissions that the arrangement was: "A sort of 'pay when paid' agreement. The trustee has embraced and pleaded this agreement." (Closing written submissions for Faina and Fanchel at Appeal Book C, Tab 11 at [76].) That did not amount to a submission that no trust had been created. Trusts frequently arise out of the terms of contracts, and there is no dichotomy between trusts and contracts given that the contractual relationship provides one of the most common bases for the establishment or implication and for the definition of a trust: Gosper v Sawyer (1985) 160 CLR 548 at 568-569 (Mason and Deane JJ). No submission appears to have been put to the effect that the finding of a trust is inconsistent with the express references in the relevant conversation to a debt, and the lack of any apparent obligation on Fanchel to keep the proceeds of sale separate from its own money. 75 We accept the Trustee's submission that if an issue had been raised as to whether the Share Arrangement gave rise to a trust, rather than merely giving rise to debts, the trial could well have been conducted differently, particularly in relation to the question of remedies under both the general law and the Bankruptcy Act 1966 (Cth) and the parties against whom the remedies would be granted. 76 While there may have been considerable force in an argument that the Share Arrangement did not give rise to a trust, having regard to the express language of "debt" which was used in the conversation and the apparent lack of any obligation arising from that conversation for Fanchel to keep the proceeds of sale of the shares separate from Fanchel's own money, the point was not taken at the trial, and it is not open to the appellants to take the point for the first time on appeal.

The nineteen grounds of appeal 77 Ground 1 claims that the primary judge erred in: (a) finding the Share Arrangement gave rise to a trust relationship as between Faina and the Trustee; and/or (b) failing to find that the only remedy which could have arisen by reason of the Share Arrangement was a claim in contract by the Canchel Partnership against Fanchel for proceeds of the sale by Fanchel of shares the subject of the Share Arrangement. We have held above that it is not open to the appellants to run this point on appeal, having failed to raise it at the trial. 78 Ground 2 claims that the primary judge erred in finding that Fanchel's sale of 494,733 shares in eBet gave rise to a breach of trust in circumstances where the eBet shares were subject to the Share Arrangement. This appears to be the same point as Ground 1 and was not developed in any different way in argument before us. 79 Ground 3 claims that the primary judge erred in finding that Faina knowingly received the sum of $3,537,340 on the basis that this sum was the proceeds of sale of the eBet shares by Fanchel in breach of trust. Putting to one side the appellants' arguments that the Share Arrangement did not give rise to a trust at all, and that if it did give rise to a trust then it was in favour of the Canchel Partnership rather than Ian, this ground raises the issue whether Faina received the proceeds of sale of the eBet shares as a volunteer and as a knowing recipient of funds in breach of trust under the first limb in Barnes v Addy (1874) LR 9 Ch App 244 at 251-252. The appellants argue that there was no finding that Faina was more than a "passive" recipient of the interest or that Ian's conduct was within the scope of his authority as agent for Faina. 80 The appellants do not challenge the primary judge's finding at [353] that Ian has at all times been responsible for managing Faina's financial affairs and Faina has relied on Ian to assist her in that regard and to undertake activities on her behalf in relation to her financial affairs. The primary judge also referred to Ian's cross-examination in which he confirmed that he had acted on behalf of Faina in the purchase and sale of shares since about 1983, that Faina had never met or spoken directly with a stockbroker about her portfolio, that he acted as the conduit between Faina and the broker and that the understanding he had with Faina was that he was authorised to deal on Faina's behalf with stockbrokers: [354]. The primary judge also referred to Faina's evidence that since Anchel passed away in 2001 she had relied on Ian to assist her with her financial affairs, she has permitted Ian to undertake share transactions on her behalf and to give instructions to stockbrokers in relation to shares held in her name, she has never personally met with an accountant in relation to the preparation of the accounts or tax returns for Fanchel which Ian has done and brought any documents to her to sign, and she left it entirely to Ian to ensure that there was no mixing between Fanchel's shares and the shares transferred to Fanchel under the Share Arrangement: [355]. The primary judge also found that Ian was clearly aware that the eBet shares were subject to the Share Arrangement, and described his evidence of an alternate agreement relating to those shares as a fabrication: [357]. 81 After referring to Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425 and Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664; [2017] VSC 101 at [389]-[390] for the propositions that the title of a registered proprietor of Torrens title land may be invalidated on the ground of fraud brought home to the registered proprietor or to his or her agents and that in order to bring fraud home to the registered proprietor, it is necessary to show that the agent's fraud was within the scope of the agent's authority given by the registered proprietor, her Honour held that here the fraud was brought home to Faina. That was because: (a) Ian knew that the eBet shares were subject to the Share Arrangement; (b) Ian acted as Faina's agent in relation to the sale and purchase of shares in Faina's and Fanchel's names and more generally in relation to Faina's financial affairs; and (c) Faina received the proceeds of sale of the eBet shares knowing that she was in fact receiving trust property, with Ian's knowledge being attributed to her as her agent: [362]. 82 That reasoning is wholly unexceptional. The fact that Cassegrain v Cassegrain was a case concerning Torrens title land is not a basis for disregarding it as authority for the orthodox proposition that a principal is imputed with the knowledge of his or her agent acting as agent within authority. Her Honour made findings as to Ian's authority to act on behalf of Faina in relation to her financial affairs generally, and specifically in relation to share transactions, and no submission appears to have been put by the appellants at first instance that Ian's actions were not within his actual authority as granted by Faina. 83 Ground 4 claims that the primary judge erred in finding that the transfer of 1.4 million shares in WCL to Fanchel was without consideration in circumstances where the transfer was undertaken in accordance with the Share Arrangement. This ground was not developed in argument on appeal. Rather, the argument put on appeal was that any trust would have been in favour of the Canchel Partnership rather than in favour of Ian. As we have discussed above, this argument was not open to the appellants on the appeal, not having taken the point in the Court below. 84 In any event, the ground of appeal proceeds on a misreading of her Honour's finding at [394]. In that paragraph, the learned primary judge said that the transfer of the proceeds of sale of Ian's WCL shares which were part of the shares transferred under the Share Arrangement to Faina occurred in the five years prior to the commencement of Ian's bankruptcy and was a transfer for which Faina gave no consideration, and therefore the transfer was void against the Trustee pursuant to s 120 of the Bankruptcy Act 1966 (Cth). That is a finding in relation to the proceeds of sale of shares being transferred to Faina for no consideration, not a finding as to the original transfer of shares themselves to Fanchel under the Share Arrangement. There is no evidence of any consideration having been given by Faina for the transfer of the proceeds of sale. 85 Ground 5 claims that the primary judge erred in finding that the transfer of the sale proceeds from the sale of the WCL shares from Fanchel to Faina was void against the Trustee pursuant to s 120 of the Bankruptcy Act, by reason that Faina gave no consideration for the transfer. That ground does more accurately reflect the primary judge's reasoning at [394], but we were not taken to any evidence of any consideration having been given by Faina for the transfer of the proceeds of shares. Further, the ground was not developed in argument before us, apart from the submissions already considered concerning the Share Arrangement not giving rise to any trust, or that any trust was in favour of the Canchel Partnership rather than Ian. 86 Ground 6 claims that the primary judge erred in finding that Fanchel is liable to account to the Trustee for the proceeds of sale of 9,083,648 shares in GUL in circumstances where the GUL shares were subject to the Share Arrangement. This ground does not appear to raise any argument beyond the propositions that the Share Arrangement did not give rise to a trust, or that the trust was in favour of the Canchel Partnership rather than Ian. 87 Ground 7 claims that the primary judge erred in finding that Ian contributed the whole of the purchase price for the Ocean Street Property in circumstances where: (a) the primary judge found that the payment of $700,000 was a repayment of a loan owed by Ian and Beth to Faina; (b) further and in any event, the Canchel Partnership not Ian held and caused the sale of 1.1 million shares in AGM from the proceeds of which the sum of $824,681.70 was paid towards the purchase price for the Ocean Street Property; (c) Bethian, not Ian, transferred 1 million shares in UXA to Faina who then caused 500,000 UXA shares to be sold from which the sum of $180,452.52 was paid towards the purchase price for the Ocean Street Property; and (d) there was no evidence that Ian contributed $8,016.30 towards the purchase price. 88 As for sub-paragraph (a), the primary judge made no such finding. Her Honour referred at [177] to Ian's evidence in the Royal Guardian proceedings as to a $700,000 payment by Ian and Beth to Faina which they claimed was a repayment of a loan to them from Faina, in pointing out that Ian's evidence at the trial about the source of the funds to purchase the Ocean Street Property was contrary to evidence which he had given in his affidavits in the Royal Guardian proceedings. But at [160], her Honour rejected the contention that there was any such loan owed by Ian and Beth to Faina. The appellants drew attention to the primary judge's finding at [180] rejecting Ian's attempt in cross-examination to resile from his evidence in the Royal Guardian proceedings referred to at [177], but [180] must be read in the context of [179], in which her Honour found that Ian and Beth paid Faina $700,000 (or a sum proximate to that amount) in about August 2007 to purchase the Ocean Street Property. Her Honour made no finding at [179]-[180] that the payment by Ian and Beth of $700,000 to Faina was a repayment of a loan owed by Ian and Beth to Faina, and indeed her Honour found to the contrary at [160]. The point is made abundantly clear at [184] of the primary judge's reasons, in which her Honour stated that Ian and Beth paid $700,000 to Faina for the purchase of a property (namely, the Ocean Street Property), and those funds were not paid to discharge a debt owed by Ian and Beth to DFS (the company through which Faina held the shares on trust for Ian and Beth). The amount of $700,000 appears to have been an approximation for the amount of $824,681.70 contributed by Ian to the purchase of the Ocean Street Property. 89 As to (b), we have already held that it is not open to the appellants to contend that any resulting trust should be in favour of the Canchel Partnership rather than Ian. As to (c), the appellants did not engage with the detailed reasoning of the primary judge at [186] to [196] as to the provenance of the UXA shares, the sale of which produced the amount of $180,452.52 which was applied to the purchase of the property. No error in any aspect of that reasoning has been identified in the appellants' submissions. As to (d), we see no error in the primary judge's inference that, given that Ian (or Ian and Beth) had funded over 99% of the purchase price for the Ocean Street Property, the small balance of $8,016.30 should also be found to have come from Ian. 90 Ground 8 claims that the primary judge erred in finding that Ian and/or Beth contributed, or held a beneficial interest in, $3.1 million by way of a Westpac bank cheque towards the purchase price of the Campbell Parade Property in circumstances where: (a) in about January 2008, Vietruss transferred 3 million shares in AGM to Fanchel; (b) on or about 3 April 2008, Fanchel sold its 3 million shares in AGM, realising the sum of $3.3 million; and (c) Fanchel paid or made available $3.1 million of the sum referred to in paragraph (b) above for the purposes of the acquisition of the Campbell Parade Property. 91 The argument put on appeal was that the primary judge had held that the source of the $3.1 million was Fanchel's sale of 3 million shares in AGM which had been transferred by Vietruss to Fanchel in January 2008: [248], [257]. Accordingly, the argument was put that the beneficiary of any resulting trust would be Fanchel or, perhaps, Vietruss; not Ian and Beth. As we have said above, it was not open to the appellants to run that argument, in the absence of it having been run at first instance. 92 Ground 9 claims that the primary judge erred in finding that either or both of Ian or Beth contributed $1,071,580 by way of a CBA bank cheque towards the purchase price of the Campbell Parade Property. The argument put to us on appeal was that the primary judge found that the cheque was drawn from the Redraw Sum which was an amount credited to the Canchel Partnership's account: [266], [472]. The appellants contended that it follows that any resulting trust would be for the Canchel Partnership. As we have said, it was not open to the appellants to run that argument on appeal. 93 Ground 10 claims that the primary judge erred in finding that Ian and Beth held a beneficial interest in the Rose Bay Property in the proportion of their contribution of $3.6 million towards the purchase price, in circumstances where the Rose Bay Contribution of $3.6 million was made by way of a loan. We have referred above to her Honour's detailed findings leading to the conclusion that the funds drawn from the Campbell Parade Mortgage Account were redraws of Ian and Beth's money and did not give rise to any relevant indebtedness to Faina, and thus the second registered mortgage granted by Ian and Beth over the Point Piper Property to Faina did not secure any indebtedness. Those findings included findings adverse to the credit of Ian. The trial judge had the advantage of seeing and hearing the witnesses in making those credit findings, and no attempt was made on appeal to argue that those credit findings were flawed by reference to incontrovertible facts, glaring improbability or compelling inferences to the contrary: see Fox v Percy (2003) 214 CLR 118 at [26]-[29]. The argument put for the appellants was that the funds were paid into the Campbell Parade Mortgage Offset Account, which was an account owned by Faina, and accordingly, those funds were Faina's funds. The argument was that when Faina drew down on that account by causing funds to be deployed for the acquisition of the Point Piper Property, taking as security a second mortgage, Faina was making a loan to Ian and Beth. The appellants contended that if Ian and Beth's monetary contribution gave rise to a resulting trust, then they would not have conducted themselves in that way; rather the objective circumstances pointed towards a secured loan by Faina to Ian and Beth for that financial contribution to the Point Piper Property. 94 The critical question on which the appellants' argument turns is to identify what was the intention of the parties when the $3.6 million was paid to Faina from the surplus proceeds of the sale of the Point Piper Property. The learned primary judge had found that the $3.6 million was comprised of redraws of Ian and Beth's money, and was not a loan by Faina to Ian and Beth. It was never contended by Ian and Beth at the trial that they had made a gift to Faina of $3.6 million. Rather, the case put at the trial was that Ian and Beth had not contributed any of the $3.6 million, which was said by them to be entirely Faina's money. In light of her Honour's findings that Faina was already indebted to Ian and Beth, and in the absence of any suggestion that the $3.6 million constituted a gift by Ian and Beth to Faina, it followed that the second mortgage granted by Ian and Beth to Faina did not secure any indebtedness at all, as her Honour found at [499]. The Trustee argued on appeal that an obvious available inference was that the second mortgage to Faina was for the purpose of generating a paper trail explaining the movement of wealth out of Ian and Beth's names and into Faina's name, so as to protect that money from claims by creditors if the Royal Guardian proceedings ended adversely for Ian and Beth. It is not necessary for us, just as it was not necessary for the primary judge, to make a finding as to that submission. It is sufficient to conclude on the basis of the primary judge's detailed findings of fact and credibility, that the $3.6 million drawn from the Campbell Parade Mortgage Account were redraws of Ian and Beth's money and did not give rise to any relevant indebtedness to Faina. There has not been any effective challenge to that conclusion. 95 Ground 11 claims that the primary judge erred in finding that a resulting trust arose in favour of Ian and Beth in respect of the Rose Bay Property by reason that they contributed an amount of $760,002.97 (the May Deposits) towards the purchase price of the Rose Bay Property, in circumstances where the May Deposits were provided by Beth's family to Faina (through Beth) as a loan for the purposes of Faina purchasing the Rose Bay Property. 96 The fundamental flaw in this ground is that the primary judge held, in credit-based findings, that the loans by members of Beth's family were loans to Beth, rather than loans to Faina. The primary judge reviewed the evidence in great detail at [504]-[565], rejecting the testimony given by Ian, Beth and Faina, and preferring the contemporaneous and near-contemporaneous documentary evidence. The appellants made no attempt to grapple with the force of that detailed reasoning. The appellants submitted that the members of Beth's family who lent the money clearly intended that the money be repaid, and those loans did not give rise to any form of trust. That submission misses the point of the primary judge's analysis, which was that the money was indeed lent by members of Beth's family to Beth with an obligation of repayment, but that money in Beth's hands was her money which she then contributed towards the purchase price of the Rose Bay Property. The appellants also contended that the loans from Beth's family members were repaid, a matter on which there was in fact no finding by the trial judge and a matter which was not relevant to the primary judge's analysis. 97 Grounds 12, 13 and 14 related to the purchase of a different property in Ocean Street, Bondi, namely 11/2 Ocean Street, Bondi, New South Wales. Those grounds were abandoned in written submissions on the appeal. 98 Ground 15 was expressed as an additional general ground, claiming that the primary judge erred in drawing inferences of, or presuming, resulting trusts in favour of Ian or Beth or both as against Faina or Fanchel without having regard to the whole of the evidence including the contemporaneous records, which manifested intentions to the contrary. As argued on appeal, this ground went no further than the first of the appellants' primary submissions to the effect that in light of all the objective evidence, any presumption of a resulting trust either did not arise or was rebutted. As we have indicated above, this argument was not open to the appellants on appeal given the way that the trial was conducted. 99 Ground 16 claims that the primary judge misapplied the principles of laches to the facts of the case because the relevant question was not whether the Trustee delayed in bringing proceedings after his appointment, but whether the defence of laches was available to the appellants as against either or both of Ian and Beth, given that the Trustee stands in the shoes of Ian and Beth and any claims the Trustee might have against the appellants could not rise above theirs. The appellants submitted that the three elements of the defence of laches are knowledge of the wrong, delay and unconscionable prejudice to the opponent by the delay, referring to Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [415]. The appellants submitted that delay is assessed from the time the plaintiff had sufficient knowledge of the facts giving rise to the claim, referring to Orr v Ford (1989) 167 CLR 316 at 343 (Deane J); Twigg v Twigg [2022] NSWCA 68 at [86]. The appellants criticised the primary judge's finding that there was "no evidence of any relevant delay on the part of the Trustee": [580]. The appellants do not contend that there was any relevant delay on the part of the Trustee. Rather, their submission was the Trustee stands in the shoes of Ian and Beth, and the relevant question is therefore the conduct of Ian and Beth. The submission was that, given the central role played by Ian in the impugned transactions and the knowledge which he had at all relevant times of those transactions, he not only acquiesced in the transactions but instigated them. Similarly, Beth was said to be relevantly involved with knowledge. 100 The fundamental flaw in those submissions is that there was never any suggestion that Faina acted inconsistently with any of the trusts to which she was subject until after Ian and Beth were made bankrupt. As the Trustee submitted, there was no wrong until the Trustee's appointment, and the primary judge was entirely correct to focus the analysis of laches on the Trustee's conduct. There was simply no reason for any action to be brought before the Trustee was appointed. In any event, there does not appear to be any relevant prejudice suffered by Faina. The only prejudice asserted by the appellants in support of their defence of laches is that the effect of the primary judge's orders will be to deprive Faina of various assets and to leave her homeless. That is not prejudice arising out of delay, and there is no evidence of future homelessness in any event. 101 The primary judge noted that the defence of laches was pleaded, but was not the subject of any written or oral submissions at the trial, and it would have been open to have inferred that the defence was abandoned. However, the trial judge did deal with the defence on its merits, and for completeness we have taken the same approach. 102 Ground 17 claims that the primary judge erred in making findings and orders which directly affected the rights or liabilities of third parties including the Canchel Partnership, Vietruss and Bethian, when none of those entities was a party to the proceedings such that the proceedings were and are improperly constituted. We have dealt above with this contention, being the second of the appellants' primary submissions on appeal. As we have indicated above, this argument was not open to the appellants on appeal, given that they had not taken the point below. 103 Ground 18 claimed that the primary judge erred in finding that Faina had no, or only limited, assets at relevant times. This was a credit-based finding, or set of findings, which depended in part on her Honour's findings as to Faina's disclosures to Centrelink up until 2007 as the recipient of a widow's pension: [132] and [170]. The appellants contend that irrespective of what Faina may have disclosed to Centrelink, the primary judge's finding as to Faina's asset position failed to take into account the following evidence: (a) upon Anchel's death in 2001, Faina became the sole owner of their matrimonial home; (b) Anchel had received $102,000 together with $500 per month from 1992, in compensation from the German government; (c) since 1983, Ian had invested money on behalf of Faina in shares, and there was no evidence that those investments had been dissipated, and Fanchel was incorporated in December 2007 for the purposes of share trading and was an investment company; and (d) it was therefore evident from at least the 1990s and at the time of each of the impugned transactions, that Faina had considerable assets. 104 This ground was raised in argument on appeal in relation to the purchase of the Ocean Street Property. However, as the Trustee submitted, nothing turns upon this asserted error in circumstances where the appellants do not challenge any of the primary judge's findings as to how the Ocean Street Property was paid for, other than the specific matters raised in Ground 7 which do not turn on anything to do with Faina's overall financial position. Further, as the Trustee again submitted, pointing to evidence that Faina had received or had available money or assets at earlier times, even with some presumption or inference of continuance, this is no substitute for the primary judge's detailed analysis of the evidence, including Faina's representations to the welfare authorities. 105 Ground 19 claims that the primary judge erred in concluding that the Trustee is entitled to an order that the appellants pay his costs of the proceedings on the indemnity basis after 1 April 2021, in circumstances where: (a) the settlement offer was made on 1 April 2021 and open for acceptance until 12 April 2021, the Trustee had filed an amended statement of claim on 23 March 2021 and then filed a further amended originating application on 20 April 2021; (b) the settlement offer far exceeded the balance of the proofs of debt in the bankrupt estates of Ian and Beth; (c) the proceedings, including the nature of the relief sought, were complex and in the circumstances, it was not unreasonable for the appellants not to accept the settlement offer; (d) the settlement offer was calculated by reference to the unverified values of two different properties (the Ocean Street Property and the Campbell Parade Property); and/or; (e) the settlement offer was not capable of being accepted, alternatively, it was not unreasonable for the settlement offer not to be accepted, because: (i) it was not practicable for the parties, within the settlement period, to reach agreement on the value of the real property to be transferred pursuant to the settlement offer and then to effect the transfers, given that the transfers required the involvement of third parties, including mortgagees; and (ii) the appellants did not have cash to pay the settlement sum. 106 The submissions of the appellants in relation to this ground were perfunctory, saying merely that the reasons for disturbing the indemnity costs orders are set out in paragraph 19 of the amended notice of appeal. The Trustee submitted (in our view correctly) that the appellants had not identified any way in which the primary judge's costs discretion is said to have miscarried in the sense discussed in House v The King (1936) 55 CLR 499. In reply, the appellants merely said the primary judge's costs discretion erred for the reasons set out in paragraph 19 of the amended notice of appeal. Nothing was put in oral submissions by the appellants in support of this ground of appeal. 107 In a separate costs judgment, Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 2) [2022] FCA 1118, the learned primary judge was satisfied that it was unreasonable for Faina and Fanchel to reject an offer to settle the proceedings dated 1 April 2021 pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333. That letter offered to settle the proceedings by payment by Faina and Fanchel of $11.5 million, either by way of a transfer of real property (provided the parties reach agreement regarding its value), or a cash payment in cleared funds, or a combination of real property and cash. Her Honour found that it was unreasonable for Faina and Fanchel to reject that offer because: (a) the offer was made approximately three weeks before the commencement of the hearing by which time the preparation of the proceedings was at an advanced stage; (b) the period of twelve days given to Faina and Fanchel to consider the offer was sufficient in the circumstances, particularly where the proceedings were at an advanced stage of preparation; (c) the offer contained a real compromise of the Trustee's claim, particularly where the total judgment pursuant to her Honour's final orders would far exceed the compromise which was the subject of the offer; (d) the offer was expressed in clear terms and foreshadowed an application for indemnity costs in the event of its rejection; and (e) given the stage of the proceedings at which the offer was made, Faina and Fanchel must have understood the nature of the claims against them, the available evidence and their relevant strengths. 108 In addition, her Honour noted that the proposition that there may have only been one creditor who had lodged a proof of debt for a sum far less than the amount of the offer did not assist Faina and Fanchel, nor did it provide a basis to say that the rejection of the offer was reasonable. The liability of Faina and Fanchel did not turn on the value of creditors who had lodged proofs of debt in Ian's and Beth's bankrupt estates. 109 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 110 Accordingly, the appeal should be dismissed with costs. 111 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. I certify that the preceding one hundred and eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Banks-Smith, Downes and Jackman.

SCHEDULE OF PARTIES NSD 792 of 2022 Cross-Respondents Second Cross-Respondent FANCHEL PTY LTD