Georges v Seaborn International

Date of hearing: 24-27 October & 2 November 2011

Date of last submissions: 30 January 2012

Place: Melbourne

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 307

Counsel for the Plaintiffs: Mr I Martindale SC with Dr P Vout & Ms T Spencer Bruce

Solicitor for the Plaintiffs: Norton Rose

Counsel for the First Defendant: Mr AP Young

Solicitor for the First Defendant: James Conomos Lawyers

Counsel for the Second Defendant: Dr I Hardingham QC with Mr J Mereine

Solicitor for the Second Defendant: Asian Pacific Group Pty Ltd

Counsel for the Third and Fourth Defendants: Mr P Fary

Solicitor for the Third and Fourth Defendants: Middletons

Counsel for the Fifth Defendant: Mr P Crutchfield SC with Ms L Nichols

Solicitor for the Fifth Defendant: Slater & Gordon

Counsel for the Sixth Defendant: Mr N Cotman SC with Mr D Forbes

Solicitor for the Sixth Defendant: Hall & Wilcox

FEDERAL COURT OF AUSTRALIA Georges v Seaborn International (Trustee), in the matter of Sonray Capital Markets Pty Ltd (in liq) [2012] FCA 75 CORRIGENDUM 1 It is accepted that the Orders as pronounced and entered do not accurately carry into effect the Reasons for Decision that were published on 10 February 2012. In particular, it is accepted that what is presently recorded as Order 2 which in its terms is said to relate to the pooling of assets requires alteration. 2 The parties proffered a particular and elaborate form of alteration which I consider neither necessary nor appropriate to give effect to the Reasons for Decision. The simplest and clearest manner of expression of what was intended by the Orders is to tie the powers given by Order 2 (as was intended) to the disbursement of the Client Fund. That is achieved by: (a) deleting the words "pooling under Order 1" and "are directed to" in the introductory sentence and substituting "Order 3" and "may" respectively; and (b) deleting the words "to give effect to Order 1" in Order 2.4. 3 I direct that Order 2 as entered be amended pursuant to Rule 39.05(e) of the Federal Court Rules 2011 by deleting the words "pooling under Order 1" and "are directed to" in the introductory sentence and substituting "Order 3" and "may" respectively, and deleting the words "to give effect to Order 1" in Order 2.4. 4 Order 2 will now read: (2) For the purpose of Order 3, the Liquidators may: 2.1 give directions to Interactive Brokers to liquidate all financial products held under Sonray's consolidated account at Interactive Brokers (excluding Transferred Shares and shares referred to in paragraph 5.3); 2.2 give directions to Saxo to liquidate all Saxo Shares (excluding Transferred Shares and shares referred to in paragraph 5.3); 2.3 convert into Australian dollars any foreign currency in their or Sonray's control (but excluding the money referred to in Order 7); and 2.4 give to Interactive Brokers, Saxo or any bank which maintains a Segregated Account any instructions necessary or desirable. I certify that the preceding four (4) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate: Dated: 9 May 2012 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 562 of 2010

IN THE MATTER OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) BETWEEN: GEORGE GEORGES (IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

JOHN ROSS LINDHOLM (IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

AND: SEABORN INTERNATIONAL (AS TRUSTEE FOR THE SEABORN FAMILY TRUST)

MARYLAND PTY LTD (AS TRUSTEE FOR THE NORWEGIAN TRUST)

ROLAND MARK WARD (AS TRUSTEE FOR THE AWARD SUPERANNUATION FUND (ABN 66 473 078 418))

JUDGE: GORDON J DATE OF ORDER: 10 FEBRUARY 2012 WHERE MADE: MELBOURNE

the Court directs that: 1. The Liquidators are directed to pool the following assets into the Client Fund: 1.1 The Segregated Accounts (but excluding the funds held in the HSBC USD Singapore Segregated Account, being account number 260-696760-178 held at the Singapore Branch of HSBC); 1.2 The Saxo Shares (but excluding shares referred to in Order 5) to the extent they come within the Liquidators' Control; 1.3 The Interactive Broker Balances (but excluding shares referred to in Order 5); and 1.4 The Recovered Money. 2. For the purpose of pooling under Order 1, the Liquidators are directed to: 2.1 give directions to Interactive Brokers to liquidate all financial products held under Sonray's consolidated account at Interactive Brokers (excluding Transferred Shares and shares referred to in paragraph 5.3); 2.2 give directions to Saxo to liquidate all Saxo Shares (excluding Transferred Shares and shares referred to in paragraph 5.3); 2.3 convert into Australian dollars any foreign currency in their or Sonray's control (but excluding the money referred to in Order 7); and 2.4 give to Interactive Brokers, Saxo or any bank which maintains a Segregated Account any instructions necessary or desirable to give effect to Order 1. 3. The Liquidators and Sonray are directed to disburse the Client Fund in the following order: 3.1 in payment of the Remuneration and Expenses in accordance with Order 6; 3.2 in payment of the indemnity for defendants in accordance with Order 4 made on 5 September 2011; 3.3 in payment of $2,000 to Michael Hart in respect of his legal expenses of participating in this proceeding; and 3.4 all Entitlements in full and, if the Client Fund is insufficient to meet the Entitlements in full, proportionately to each Sonray Client's respective Entitlements. 4. For the purpose of calculating and paying disbursements under Order 3, the Liquidators are directed to treat Sonray Clients with an Entitlement of $50 or less as having no entitlement to participate in the Client Fund. 5. The Liquidators are directed to deliver to any Sonray Client any: 5.1 Transferred Shares held by or on behalf of Saxo or Interactive Brokers at the date of these orders; 5.2 the Proceeds of Transferred Shares but excluding Proceeds mixed with Tainted Money; and 5.3 any other shares purchased with Proceeds of Transferred Shares but excluding shares purchased partly with Tainted Money. 6. To the extent that the Remuneration and Expenses of the Liquidators, whether as former Administrators or as Liquidators, exceed the assets of Sonray which it holds beneficially, the Liquidators and Administrators are entitled to have recourse to: 6.1 the Client Fund; and 6.2 the Transferred Shares (but only to extent that the Remuneration and Expenses relate to dealing with claims of Sonray Clients claiming an in specie entitlement the Transferred Shares). 7. The Liquidators are directed to sell sufficient Transferred Shares and/or shares referred to in paragraph 5.3 to pay amounts payable under Order 6.2. 8. The Liquidators are directed to have their Remuneration, whether as former Administrators or as Liquidators, determined by: 8.1 a resolution of Sonray's creditors as if ss 473(3)(b)(i), (4), (4A), (5), (6), (10) and (12) of the Corporations Act apply mutatis mutandis; or 8.2 as if r 9 of the Federal Court (Corporations) Rules 2000 (Cth) applied mutatis mutandis. 9. In these Orders the following words have the following meaning: Administration means the administration of Sonray by the Administrators pursuant to Pt 5.3A of the Corporations Act commencing on 22 June 2010 and ending on 27 October 2010; Administrators means George Georges and John Ross Lindholm in their capacities as administrators of Sonray during the period of its Administration; Client Fund means an account at an authorised deposit-taking institution under the control of the Liquidators established for the purposes of Order 1 to be disbursed according to these Orders; Corporations Act means the Corporations Act 2001 (Cth); Entitlement means the amount of a particular Sonray Client's Proposed Adjusted Account Balance or Proposed Account Balance on the Client Fund determined in accordance with the adjudication process set out in Annexure A; Expenses means expenses incurred by the Liquidators in the Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts, including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 8. identifying claims which may be brought to benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 9. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; 10. instructing lawyers to: 10.1 advise in relation to any of the matters referred to above; and 10.2 commence this application. 11. the Liquidators' costs in respect of the procedure referred to in paragraph 5 of the order made by Justice Finkelstein on 8 December 2010; 12. the Liquidators' costs and expenses of this application on an indemnity basis. HIN means Holder Identification Number; Interactive Broker Balance means the Entitlement of a Sonray Client in respect of the trading platform provided to Sonray by Interactive Brokers; Interactive Brokers means Interactive Brokers LLC (a company incorporated in Delaware in the United States); Liquidation means the liquidation of Sonray by the Liquidators pursuant to Pt 5.5 of the Corporations Act commencing on 27 October 2010; Liquidators means George Georges and John Ross Lindholm in their capacities as liquidators of Sonray during the period of its Liquidation; Proceeds means the proceeds of sale, interest, dividends or other corporate actions paid or affecting shares; Proposed Adjusted Account Balance has the definition given in Annexure A; Proposed Account Balance has the definition given in Annexure A; Recovered Money means the following money received by the Liquidators: 1. $725,000 received from Russell Johnson, Jill Murray, John Murray and Merrilee Murray; 2. $199,116.15 received from Scott Murray; 3. $400,000 from John Murray on behalf of Swann Global Pty Limited; and 4. $457,818.91 from RJ Capital Pty Ltd in respect of the Sorrento Property; Remuneration means such remuneration of the Liquidators in respect of their Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. realising or attempting to realise funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 8. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 9. identifying claims which may be brought which may directly or indirectly benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 10. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; and 11. instructing lawyers to: 11.1 advise in relation to any of the matters referred to above; and 11.2 commence and continue this application. Segregated Accounts means: 1. Australia and New Zealand Banking Group account numbers 013006-1087-85428, 120824CAD00001, 120824USD00001, 120824NZD00001, 120824JPY00001, 120824GBP00001, 120824EUR00001, 120824CHF00001; 2. Hong Kong Shanghai Banking Corporation account numbers 001-225333-002, 001-225333-003, 001-225333-901, 001-225333-160, 001-225333-904, 001-225333-900, 001-225333-902, 001-225333-903, 001-225333-159 and 260-696760-178; and 3. Macquarie Cash Management Account number 961006129. Saxo means Saxo Bank A/S ARBN 109 605 610 (a company incorporated in Denmark); Saxo Shares means shares held by Saxo and acquired on the instructions of any Sonray Client and including dividends or other corporate actions paid or affecting those shares on and from 22 June 2010; Sonray means Sonray Capital Markets Pty Limited (in liquidation) ACN 104 482 993; Sonray Client means a client of Sonray, whether transacting on the SonrayTrader, Sonray Global and/or WebTrader trading platforms; Sorrento Property means volume 08826 folio 535, known as 32 Boston Court, Sorrento; Tainted Money means any money that has passed through Australia and New Zealand Banking Group Limited BSB 013-006 account number 1087-85428; Transferred Shares means shares transferred direct from a Sonray Client's HIN to Saxo or Interactive Brokers (or their respective custodians). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A 1 Subject to paragraph 5, in respect of Sonray Clients whose accounts appear to the Liquidators to have unfunded transactions the Liquidators will reverse out: (a) the unfunded deposits; (b) the unfunded withdrawals; (c) the trading or withdrawals attributable to the unfunded deposits and unfunded withdrawals (including GST, interest, commission and sundry items), to arrive at the Proposed Adjusted Account Balance. 2. Subject to paragraph 5 and except for Sonray Clients with an Entitlement of $50 or less, in respect of Sonray Clients whose accounts do not appear to the Liquidators to have unfunded transactions, the Liquidators will write to each such Sonray Client indicating the Liquidators propose to adopt the account balance as it stood at 22 June 2010 according to the trading platform on which that particular investor traded with Sonray to calculate that investor's entitlement (Proposed Account Balance). 3. The Liquidators will invite any Sonray Client who does not agree with the Proposed Account Balance or the Proposed Adjusted Account Balance (as the case may be) to provide, within 21 days, additional information and particulars about the adjustments that the Sonray Client contends ought be made to the Proposed Account Balance or the Proposed Adjusted Account Balance (as the case may be). 4. Within 28 days of receipt of any information provided pursuant to paragraph 3, the Liquidators will notify the Sonray Client whether or not the Liquidators propose to vary or alter the Proposed Account Balance or Proposed Adjusted Account Balance (as the case may be) and that determination shall be binding unless and until the Liquidators and the Sonray Client each agree to a different balance or a Court determines an appeal by that investor pursuant to s 1321 of the Corporations Act and directs or orders a different balance be adopted. 5. For the purposes of determining a Proposed Account Balance or a Proposed Adjusted Account Balance, the Liquidators shall set-off any positive account balances against any negative account balances in all accounts owned by the same Sonray Client on any trading platform (both positive and negative account balances to be determined as at 22 June 2010).

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 562 of 2010

IN THE MATTER OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) BETWEEN: GEORGE GEORGES (IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

JOHN ROSS LINDHOLM (IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

SONRAY CAPITAL MARKETS PTY LTD (IN LIQUIDATION) (ACN 104 482 993)

AND: SEABORN INTERNATIONAL (AS TRUSTEE FOR THE SEABORN FAMILY TRUST)

MARYLAND PTY LTD (AS TRUSTEE FOR THE NORWEGIAN TRUST)

ROLAND MARK WARD (AS TRUSTEE FOR THE AWARD SUPERANNUATION FUND (ABN 66 473 078 418))

JUDGE: GORDON J DATE: 10 FEBRUARY 2012 PLACE: MELBOURNE

TABLE OF CONTENTS A INTRODUCTION [1] B FACTS [6] B.1 Sonray and its Activities [6] B.2 Segregated Accounts [7] B.3 The Providers [13] B.3a Saxo [15] i) The Contractual Terms [15] ii) The Manner in which Sonray used the Saxo System [19] iii) Saxo's Trading Account with UBS and the Funding of Share Purchases [27] B.3b Interactive Brokers [32] B.3c MF Global [45] B.3d Macquarie [46] B.3e FXCM [47] B.4 Defalcations [48] B.4a Unfunded Commissions [49] B.4b Net unfunded transactions [52] B.4c Rebates [54] B.4d Margin Manipulation [56] B.4e Client funds diverted to General Account [59] B.5 Sorrento Property Proceeds [60] B.6 Swann Global Recovery [65] B.7 Scott Murray Payment [67] B.8 Toorak Property Recovery [68] B.9 Money Held by Sonray [72] C RELEVANT LEGAL PRINCIPLES [74] C.1 Accounts - Corporations Act and Regulations [74] C.2 Applicability to deficient mixed fund? [82] D POOLING [87] D.1 Directions sought [87] D.2 Amounts and Assets subject to the pooling application [90] D.2a Balances in the Segregated Accounts [91] D.2b Foreign Currency Balances [95] D.2c Funds Which Are Not 'Tainted' [103] D.2d The Recovered Money Account [104] D.2e Saxo Shares [110] D.2f IB balances [111] D.3 Date to be used to calculate rateable entitlement? [112] D.4 Set-Off? [113] D.5 Methodology to be used to calculate rateable entitlement? [116] D.5a Clients who traded through Saxo [122] D.5b Sonray Clients who traded through Interactive Brokers [128] E INDIVIDUAL CLAIMANTS [129] E.1 SONRAY CLIENTS WITH $50 OR LESS [129] E.2 SEABORN INTERNATIONAL PTY LTD AS TRUSTEE FOR THE SEABORN FAMILY TRUST [137] E.2a Introduction [137] E.2b Analysis [144] i) Foreign currency converted to AUD for pooling [146] ii) Foreign currency "money" under r 7.8.03(6) of the Corporations Rules? [147] iii) Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where funds used for trading [148] iv) Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where funds not for trading [150] v) Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where, on the day those funds were transferred to that account from the ANZ AUD Segregated Account was subject to Defalcations? [151] E.3 MARYLAND PTY LTD AS TRUSTEE FOR THE NORWEGIAN TRUST [152] E.3a Entities and accounts associated with Maryland [152] E.3b The HSBC USD Singapore Segregated Account [156] E.3c Sonray Client accounts in name of APBC [161] i) Accounts [161] ii) Analysis [166] E.4 BON RIVER PTY LTD AND ALISANTE PTY LTD [179] E.4a Facts [179] i) Transferred Cash [182] ii) Transferred Shares [183] iii) Bon River B Account [185] iv) Bon River A Account and Alisante Super Account [186] v) Remaining Transferred Shares [190] (A) AUY Shares [190] (B) CDE Shares [191] (C) STL Shares [196] (D) DYE Shares [197] (E) LTBR Shares [198] vi) Cash Position of the IB Brand Account [204] vii) HIN and Saxo [208] E.2b Analysis [209] i) Transferred Shares [209] ii) Bon River B Account [211] iii) Brand Trust Account [212] iv) Shares on Platform not purchased with Tainted Funds (whether Australian or Non-Australian) [214] v) Australian Shares on IB Platforms purchased with Tainted Funds [215] vi) Non-Australian Shares [219] vii) STP Shares [221] viii) Australian Shares on IB Platform purchased with a combination of proceeds of Transferred Shares and Tainted Funds [222] E.5 WARD AS TRUSTEE FOR THE AWARD SUPERANNUATION FUND [226] E.2a Introduction [226] E.5b Application of reg 7.8.03(6) to IB platform and/or the unallocated deposits? [230] E.5c Ward [232] E.5d Analysis of the accounts on the IB platform [236] i) IB Investor funds never deposited into Segregated Accounts [237] ii) IB Investors who transmitted funds through ANZ AUD or HSBC Segregated Accounts [241] E.5e Pooling and Proof of debts? [244] E.6 EFAX PTY LTD AND LIKE SONRAY CLIENT ACCOUNTS [249] E.2a Introduction [249] E.2b Analysis [261] E.7 TRAVEL ARCADE PTY LTD AND ROBERT JOSEPH SCOLARO [286] F REMUNERATION AND EXPENSES [291] F.a Client Fund [294] F.b Transferred Shares [295] F.c Funds in the HSBC USD Singapore Segregated Account [302] G ORDERS [307]

A. INTRODUCTION 1 This application is made under s 511 of the Corporations Act 2001 (Cth) (the Corporations Act) and s 63 of the Trustee Act 1958 (Vic) (the Trustee Act) for directions by the First and Second Plaintiffs (the Liquidators) in their capacity as liquidators of Sonray Capital Markets Pty Ltd (in liquidation) (ACN 104 482 993) (Sonray) and by Sonray, the Third Plaintiff (the Application). The Liquidators were appointed administrators of Sonray on 22 June 2010 and became the liquidators on 27 October 2010. 2 A principal issue for determination is the whether the Liquidators should be granted a direction that they are justified: 1. in pooling the balance of the Segregated Accounts, as listed at [8] below, into a single bank account and then applying reg 7.8.03(6) of the Corporations Regulations 2001 (Cth) (the Regulations) to that single bank account; 2. subject to the rights of identified clients of Sonray, in converting any balances in foreign currency in the Segregated Accounts into Australian dollars for the purpose of such pooling; 3. in treating foreign currency as money for the purposes of reg 7.8.03(6) of the Regulations; and 4. subject to the Liquidators being satisfied of the account balance recorded in Sonray's books and records, setting off positive account balances against negative account balances in all accounts owned by the same client of Sonray. 3 The Application is not straightforward. Approximately 4,000 investors in Sonray are affected. Those investors, which transacted on the SonrayTrader, Sonray Global and/or WebTrader trading platforms (see [4(3)] below) are defined in these reasons for judgment as Sonray Clients. The funds and assets, most of which are or have been the subject of a statutory trust or trusts (s 981B of the Corporations Act) of which Sonray is trustee, are spread over a number of Segregated Accounts, denominated in various currencies, with numerous shareholdings and open trading positions held by or with a range of third party institutions and custodians. The trust funds and assets (save for the Distinguishable Accounts) (collectively the Property) also have been, from the outset, mixed and the subject of thousands of authorised deposits, withdrawals, transfers and other dealings. The phrase Distinguishable Accounts means the accounts belonging to Holder Identification Number (HIN) Investors (see [4(3)] below) and what is described as the ANZ CAD Segregated Account (see [8] below). Next, the Property also has been subjected to substantial unauthorised withdrawals, dealings and trading (see [48]-[59] below) resulting in some $45.6 million in losses. To make matters worse Sonray's records are incomplete. 4 It is therefore unsurprising that there are conflicting claims on, and views about entitlement to, the Property or parts of it. As a result, on 5 September 2011, the Court joined the following parties as defendants to the Application to provide the necessary contradictors to the course proposed by the Liquidators: 1. Seaborn International Pty Ltd (as trustee for the Seaborn Family Trust) (Seaborn) to represent itself and all Sonray Clients claiming an entitlement to any foreign currency in any of the Segregated Accounts held by Sonray, excluding any investors claiming an entitlement to the sum of USD 778,630.49 in the HSBC USD Singapore Segregated Account, being account number 260-696760-178 held at the Singapore Branch of HSBC; 2. Maryland Pty Ltd (as trustee for the Norwegian Trust) (Maryland) to represent itself and all Sonray Clients to ascertain the basis upon which a Sonray Client was entitled to be paid money from the Segregated Accounts. Maryland was also granted leave to be heard in relation to the question of its entitlement to the sum of USD 778,630.49 in the HSBC USD Singapore Segregated Account; 3. Bon River Pty Ltd and Alisante Pty Ltd (Bon River and Alisante) to represent all Sonray Clients that transferred shares from that Sonray Client's HIN to the HIN of a Trading Platform (HIN Investors). The phrase Trading Platform means any of the following: 3.1 Sonray Global (or the IB Platform), the internet based trading system owned by Interactive Brokers LLC (Interactive Brokers) and used by Sonray Clients to direct the execution of trades in financial instruments by Interactive Brokers; 3.2 SonrayTrader (or the Saxo Platform), the internet based trading system owned by Saxo Bank A/S (Saxo) and used by Sonray Clients to direct the execution of trades in financial instruments by Saxo; 3.3 WebTrader, the internet based trading system owned by Sonray and used by Sonray Clients to direct the execution of trades in financial instruments by third parties (including Saxo and Interactive Brokers) contracted with Sonray to provide such services; 4. Roland Mark Ward (as trustee for the Award Superannuation Fund (ABN 66 473 078 418)) (Ward) to represent himself and all Sonray Clients claiming an entitlement to financial instruments and/or money held by Interactive Brokers (excluding those Sonray Clients represented by Bon River and Alisante pursuant to [4(3)] above); 5. Efax Pty Ltd (ACN 001 886 120) (Efax) to represent itself and all Sonray Clients claiming an entitlement to shares acquired on the instructions of Sonray where the Sonray Clients instructed the acquisition of shares and paid or released money to Sonray for the purchase of those shares, and dividends paid or declared on the relevant shares, where the shares and the dividends are held by or on behalf of Saxo, excluding: 5.1 those Sonray Clients represented by Bon River and Alisante pursuant to [4(3)] above; and 5.2 Sonray Clients that instructed the acquisition of shares and paid or released money to Sonray for the purchase of those shares, which shares are presently held by or on behalf of Saxo, but who used a form of "Client Agreement and Disclosure Document" different to that used by Efax. 6. Travel Arcade Pty Ltd (Travel Arcade) and Robert Joseph Scolaro to be heard by way of written submission. 5 These persons and entities (collectively the Contradictors) were joined as defendants to represent those Sonray Clients who assert an entitlement to trace or claim directly against a particular fund or asset which they contend should not be included in any pool. As is readily apparent, the issues (whether the assets should be pooled and whether particular Sonray Clients should be treated separately from the general class of Sonray Client) are interrelated.

1 Sonray and its Activities 6 From 4 May 2005, Sonray was the holder of Australian Financial Services Licence Number 231151. Prior to 22 June 2010 (the date the Liquidators were appointed administrators of Sonray), Sonray provided financial product advice and services to its clients about trading in financial products and provided access to trading platforms to enable clients to trade in financial products. Sonray's sole director (according to the Australian Securities and Investments Commission database), was Russell Johnson. Its Chief Executive Officer was Scott Murray. Before entering into commercial relations with Sonray, clients were required to sign a client application form containing a set of terms and conditions. The form was entitled "Client Agreement and Disclosure Document". The requirement for the form to be signed was not always observed. From time to time, Sonray revised the terms and conditions of the "Client Agreement and Disclosure Document". Ultimately, there were 29 different versions.

2 Segregated Accounts 7 In the majority of cases, Sonray Clients deposited funds into one or more of the Segregated Accounts where they were comingled with funds of other Sonray Clients. Segregated Accounts were used by Sonray to receive deposits from Sonray Clients in respect of margin calls and proposed trades and to return funds to Sonray Clients upon receipt of a withdrawal request. Each Segregated Account was an account within the meaning of ss 981A and 981B of the Corporations Act. 8 The balances in AUD of the Segregated Accounts, as at 3 July 2011, were as follows: Bank Account Name Account Number Currency Definition Balance as at 3 July 2011 (AUD) ANZ Client Segregated Account 1087-85428 AUD ANZ AUD Segregated Account 3,230,339.14 ANZ FX account - Canadian Dollars 120824CAD00001 CAD ANZ CAD Segregated Account 23,977.54 ANZ FX account - US Dollars 120824USD00001 USD ANZ USD Segregated Account 1,651,779.00 ANZ FX account - New Zealand Dollars 120824NZD00001 NZD 63.79 ANZ FX account - Japanese Yen 120824JPY00001 JPY 87.88 ANZ FX account - Sterling Pounds 120824GBP00001 GBP ANZ GBP Segregated Account 309,202.45 ANZ FX account - Euro 120824EUR00001 EUR ANZ Euro Segregated Account 39,348.17 ANZ FX account - Swiss Franc 120824CHF00001 CHF 84.18 HSBC (Australia) Client Segregated Account 001-225333-002 AUD HSBC AUD Segregated Accounts 348,770.48 HSBC (Australia) Client Segregated Account 001-225333-003 AUD 456.42 HSBC (Singapore) FX account - US Dollars 260-696760-178 USD HSBC USD Singapore Segregated Account 722,369.40 HSBC (Australia) FX account - Sterling Pounds 001-225333-901 GBP HSBC GBP Segregated Account 23,831.84 HSBC (Australia) FX account - Canadian Dollars 001-225333-160 CAD 0.00 HSBC (Australia) FX account - Swiss Franc 001-225333-904 CHF 0.00 HSBC (Australia) FX account - Euro 001-225333-900 EUR 0.00 HSBC (Australia) FX account - Japanese Yen 001-225333-902 JPY 0.00 HSBC (Australia) FX account - New Zealand Dollars 001-225333-903 NZD 0.00 HSBC (Australia) FX account - US Dollars 001-225333-159 USD 0.00 Total 6,350,310.29

9 The balance of the Macquarie Cash Management Account (account number 961006129 held with Macquarie Bank Limited), as at 29 July 2011, was AUD 3,507,006.94. 10 The ANZ AUD Segregated Account, ANZ USD Segregated Account and ANZ Euro Segregated Account (collectively the Deficient Segregated Accounts) are deficient. That is, there are insufficient funds in those accounts to meet all Sonray Clients' entitlements as represented by their account balances on the Trading Platforms. The remaining foreign currency accounts are not deficient. 11 The ANZ AUD Segregated Account has been deficient since February 2005. As at 22 June 2010, no Sonray Client held shares that were purchased, or transferred in, prior to 16 February 2005. From 17 March 2009 to 22 June 2010, there were unauthorised withdrawals from the ANZ AUD Segregated Account. However, there was no transfer from the ANZ AUD Segregated Account to Saxo of an amount of money appropriated to a Sonray Client's account on the Trading Platform. From time to time, Sonray transferred money to Saxo solely in response to margin calls calculated on the global position of Sonray's Omnibus Account (see [19] below) with Saxo. 12 As will be explained later in these reasons for decision (see [91]-[94] below), as a result of the deficiencies, transactions between Segregated Accounts and other transactions, the funds in the Deficient Segregated Accounts and at least three other accounts (the HSBC AUD Segregated Accounts and the Macquarie Cash Management Account) (collectively, the Tainted Segregated Accounts) have been so thoroughly mixed that it is now practically impossible to ascertain entitlements to each of the Segregated Accounts. For the sake of completeness it should be stated that the Macquarie Cash Management Account was a Tainted Segregated Account because funds were transferred to it from the ANZ AUD Segregated Account.

3 The Providers 13 Because Sonray was not a market participant on the Australian Stock Exchange or any other exchange, it could not execute, clear or settle trades directly on exchanges. It therefore contracted with the Providers to do so, or arrange to do so, at the direction of Sonray or a Sonray Client. Each Provider entered into an arrangement with Sonray to provide those services to Sonray. Consolidated holding, or 'omnibus' trading, accounts were established with Providers and funds in those consolidated accounts were used by the Providers to execute, clear and settle transactions for Sonray Clients. Saxo would transfer funds from one of its Segregated Accounts to the consolidated (or omnibus) account of one of the Providers as required to fund client trading or to meet client margin calls. It will be necessary to consider each arrangement separately. 14 There were five Providers - Saxo, Interactive Brokers, MF Global Australia Limited (MF Global), Macquarie Equities Limited (Macquarie) and Forex Capital Markets LLC (FXCM). Each will be considered in turn.

i The Contractual Terms 15 Saxo's contractual relationship with Sonray was contained in three agreements - The White Label Trading System Agreement dated 23 December 2003 (as amended by 13 addenda and amendments dated from 30 June 2005 up to and including 14 September 2009) (the White Label Agreement), the Margin Trading Agreement with Institutional Client dated 23 December 2003 (Margin Trading Agreement) and the ISDA Master Agreement and Schedule to the ISDA Master Agreement both dated 23 December 2003 (the ISDA Master Agreement). 16 The White Label Agreement regulated the provision by Saxo of a white label "SONRAY-online multi product trading platform" to Sonray which enabled Sonray to trade with Saxo via the platform and for Sonray Clients to download a "SONRAY Client Station" directly from the Sonray website and trade with Sonray using that station: cl 1. Under the White Label Agreement, Saxo agreed to: 1. configure a Sonray branded version of the SaxoTrader Platform for use by Sonray and its clients (cl 3(a)) which, when developed, became known as the "SonrayTrader"; 2. provide the facility to support any number of subaccounts: cl 2(f); and 3. provide technical and customer relations support to Sonray dealers: cl 2(g). As at 17 October 2011, Saxo had white label agreements with eight other Australian clients similar to the White Label Agreement. The White Label Agreement provided that "Saxo's … market-makers [would] operate trading facilities for SONRAY's clients": cl 2(c). 17 Under the Margin Trading Agreement, Saxo agreed to grant Sonray margin trading facilities including futures transactions, options transactions, contracts for difference transactions, spot and outright forward foreign exchange transactions and over the counter foreign exchange options: cl 3.1. Sonray was responsible for any balances that arose from time to time in the accounts it held: cl 3.7. 18 Individual transactions between Saxo and Sonray were governed by the ISDA Master Agreement which they signed on 23 December 2003. Under the ISDA Master Agreement, Saxo and Sonray acknowledged that they had entered and/or anticipated entering into one or more transactions (each defined as a "Transaction") that would be governed by the agreement. All Transactions entered into in reliance on the ISDA Master Agreement formed a single agreement between Sonray and Saxo and the parties would not otherwise enter into any Transactions: cl 1(c).

ii The Manner in which Sonray used the Saxo System 19 Saxo did not require Sonray to transfer funds to Saxo on trade-by-trade basis. Instead, Sonray was required at all times to maintain a balance in an account (known as the Omnibus Account) which was sufficient to satisfy the overall requirement for coverage of Sonray's open margin positions. The balance in the Omnibus Account was tracked on a real time basis and included: 1. Sonray's overall cash balance with Saxo including the balance in Saxo's bank account maintained in respect of Sonray at Australia and New Zealand Banking Group Ltd (Saxo ANZ Sonray Account) and amounts received into Saxo's bank accounts with Deutsche Bank in London (including its general USD bank account (Saxo Float Account)) or other Saxo bank accounts which were acknowledged by Saxo as being a credit to the Omnibus Account; 2. any unrealised profit and loss; and 3. the value of interests in equities, bonds and other financial assets held by Saxo in respect of Sonray. 20 Saxo would make a margin call on Sonray when the aggregate value in the Omnibus Account fell below a certain preset percentage of Sonray's total exposure to Saxo. The margin calls were sent automatically by email to Sonray, to one of two nominated email addresses. On some occasions, the margin call would be followed up by a telephone call or further email to an officer of Sonray. 21 To bring itself back within margin, Sonray would reduce its exposure to Saxo in relation to open derivative positions and further or alternatively increase the value of the assets in the Omnibus Account. 22 Saxo permitted Sonray's Cash Management Staff to log onto its accounting systems using Saxo's proprietary software called "Client Configuration Manager" (CCM). CCM enabled Sonray staff to establish and manage subaccounts with Saxo on its accounting systems. Sonray's staff could record deposits and withdrawals with respect to individual Sonray Clients into the subaccounts maintained on the Saxo accounting systems. These subaccounts were also used by Sonray as its client accounts to report to Sonray Clients about their account balance and the history and composition of the transactions constituting that balance. 23 Each morning, Sonray's Cash Management Staff conducted a Deposits Identification Process and entered deposits into the "Internal Saxo Transfer Spreadsheet". Deposits in the ANZ AUD Segregated Account referenced with "SXH999999" and deposits in the HSBC Segregated Accounts referenced with "263160" were deposits, by or in relation to, Sonray Clients who used or intended to use the Saxo Platform (the Saxo Deposits). 24 Particulars of the Saxo Deposits were uploaded by the Cash Management Staff to the relevant client specific subaccount using CCM. Section 9.1 of the Cash Management Manual provided: Each client deposit and withdrawal is not sent individually to and from Saxo. Rather, the total amounts are netted off each day to determine if overall Saxo must provide funds to Sonray, or if Sonray is to provide funds to Saxo. 25 From 22 January 2007 to March 2009, the netting arrangement (or sweep) between Sonray and Saxo referred to in section 9.1 of the Cash Management Manual was employed so that total amounts at the end of each day were netted off to determine if Saxo had to provide funds to Sonray or if Sonray was to provide funds to Saxo. 26 From March 2009, the netting arrangement and the daily flow of funds between Saxo and Sonray ceased. From March 2009, cash flows between Sonray and Saxo were irregular and generally represented moneys being sent to Saxo by Sonray in response to, or in anticipation of, margin calls on Sonray by Saxo.

iii Saxo's Trading Account with UBS and the Funding of Share Purchases 27 Saxo used UBS AG, London Branch (UBS) to purchase shares to fulfil orders placed by Sonray. For Sonray, other Australian clients of Saxo, and non-Australian clients of Saxo trading in Australian financial products, Saxo maintained a separate account with UBS (account number I0003200 (UBS Omnibus Account)). Under the UBS Omnibus Account were subaccounts for each of Saxo's Australian White Label Clients (being Australian clients of Saxo which entered into agreements similar to the White Label Agreement). Sonray's subaccount number was I0003202. 28 The purpose of the subaccounts was to record trades relating to the specific Australian White Label Clients. The subaccounts were not funded separately. All funding by Saxo took place at the UBS Omnibus Account level. However, individual trades (purchase and sale of shares) by Saxo's Australian White Label Clients were individually recorded on the appropriate subaccounts. Instructions about trades to be executed by UBS were sent by Sonray to Saxo through the SaxoTrader and generally automatically routed to UBS for execution. 29 A cash management team at Saxo monitored the balance in the UBS Omnibus Account. If at the end of the day there were insufficient funds in the UBS Omnibus Account to cover the next day's trade settlements, Saxo would deposit funds into the account from one of more than 400 different bank accounts held with more than 20 different banks. Conversely, if there was excess liquidity, Saxo might have withdrawn the funds to be used in another part of Saxo's business. Thus, at any given time, the UBS Omnibus Account could have contained funds: 1. transferred from any of the bank accounts Saxo maintained in respect of its Australian White Label Clients; 2. originating from proceeds of sale of shares or instruments at the direction of any of the Saxo's Australian White Label Clients; 3. originating from proceeds of sale of Australian financial products by Saxo's non-Australian clients; 4. transferred from other UBS accounts maintained by Saxo; and 5. transferred from any of Saxo's 400 plus bank accounts with other banks. 30 Two other important matters about the UBS Omnibus Account should be noted. First, funds from one or more of the sources listed in [29] above could be and were used for trading to purchase new shares and products. Secondly, the UBS Omnibus Account did not record all stock trades conducted on the subaccounts. It recorded stock trades by Saxo or by Saxo's non-Australian clients trading in Australian securities. Trading by Saxo's Australian White Label Clients were recorded on the relevant subaccount and would only be recorded on the UBS Omnibus Account when the trades could not be reconciled to a single subaccount. 31 Saxo also held, in the name of a custodian, the Saxo Shares. Those shares appear to have been lodged as margin cover for the total amount owed by Sonray to Saxo from time to time. The value of the Saxo Shares, as at 29 June 2010, was USD 16,135,896. As at 30 August 2011, the value of the shares was AUD 18,433,805. It is unclear whether the stated value of the Saxo Shares included dividends or other corporate actions paid or affecting those shares on and from 22 June 2010.

b Interactive Brokers 32 Sonray and Interactive Brokers executed an agreement entitled "Interactive Brokers Consolidated Account Clearing Agreement" on 6 February 2006 (the Interactive Brokers Agreement). Clause 3 of the Interactive Brokers Agreement required that: 1. Sonray introduce its clients to Interactive Brokers on an undisclosed basis; 2. the Consolidated Account held with Interactive Brokers be in Sonray's name; and 3. all transactions be effected through the Consolidated Account. 33 Clause 13B(2) of the Interactive Brokers Agreement provided that: As an administrative service to [Sonray], Interactive [Brokers] will establish Sub-Accounts of [Sonray's] Consolidated Account, with each Sub-Account to be used for trading of [a Sonray] Customer Account… 34 Clause 13F(8) of the Interactive Brokers Agreement entitled Interactive Brokers to liquidate any account upon, inter alia, Sonray's "insolvency or filing a petition in bankruptcy or for protection from creditors". 35 Clause 13K(8) of the Interactive Brokers Agreement provided that: … (ii) Close-Out Netting. In the event [Sonray]: (a) incurs a margin deficit in any Account or a Risk Management Requirement deficit in any Sub-Account, (b) defaults in the payment or performance of any obligation to Interactive under any agreement with Interactive, (c) becomes the subject of a bankruptcy, insolvency or other similar proceeding, or (d) fails to pay its debts generally as they become due, Interactive shall be entitled in its discretion at any time or from time to time liquidate all or some of [Sonray's] collateral in Interactive's possession or control on any commercially reasonable basis and apply the proceeds of such collateral to any amounts owing by [Sonray] to Interactive resulting from the close-out of such foreign currency transactions. … (Emphasis added.) 36 Clause 19B of the Interactive Brokers Agreement required Sonray to indemnify Interactive Brokers for, inter alia, all costs and expenses in connection with "the care of the collateral". 37 Interactive Brokers maintained two Master Trading Accounts in the name of Sonray: Interactive Brokers account no. I266951 (Sonray General I-Account) and Interactive Brokers account no. I472655 (for Sonray Clients referred by one of Sonray's "Introducing Brokers", CK Locke & Partners) (Sonray CK Locke I-Account) (together the Sonray Interactive Brokers Master Accounts). 38 The Sonray Interactive Brokers Master Accounts were each linked with client specific subaccounts, which were recorded in the names of Sonray Clients and allocated account numbers using the format U##### (U-Accounts). This account structure was referred to by Interactive Brokers as a "non-disclosed broker" account. 39 According to Interactive Brokers, a non-disclosed broker account had the following features: 1. Sonray brokers provided their clients with customer service, marketing, a registration process and cashiering functions; 2. Clients of Sonray brokers could electronically trade or the broker could input trades for the client; and 3. Sonray brokers configured client accounts based on information provided during the application process. 40 Interactive Brokers permitted Sonray's Cash Management Staff to log onto its website and record deposits and withdrawals with respect to client specific subaccounts. Each morning Sonray's Cash Management Staff conducted the Deposit Identification Process. Deposits by Sonray Clients to the ANZ AUD Segregated Account referenced with "U99999" related to Interactive Brokers (IB Deposits). IB Deposits identified by Sonray staff were entered into the "Interactive Brokers Transfers" section of the "Internal Saxo Transfer Spreadsheet". The IB Deposits were then transferred by electronic funds transfer from the ANZ AUD Segregated Account to an Interactive Broker's bank account, which was then allocated to either the Sonray General I-Account or the Sonray CK Locke I-Account. Transfers of funds could be effected by a bulk transfer of all IB Deposits for a given day or by separate transfers of each IB Deposit. 41 As soon as the transfer(s) was effected, Sonray was required to send a "deposit notification" to Interactive Brokers to advise Interactive Brokers of the deposit. If Sonray did not send a "deposit notification" then Interactive Brokers would not allocate the deposit to I266951 or I472655. 42 Sonray Clients could request withdrawals of cash from their account held with Interactive Brokers. Sonray staff would act on such a request by entering details for each Sonray Client withdrawal in the "Cash Transfers" section of the Interactive Brokers website. As a consequence of those instructions, Interactive Brokers would effect the transfer of the recorded Sonray Client withdrawal from the Consolidated Account maintained with Interactive Brokers (see [32] above) into the ANZ AUD Segregated Account. However, receipt of the requested funds from Interactive Brokers into the ANZ AUD Segregated Account was not required before transferring funds into the Sonray Client's nominated bank account. Rather, Sonray's Cash Management Staff were required to confirm that the Sonray Client had sufficient available funds to withdraw the requested funds from their subaccount and, once that step was satisfactorily completed, the funds in the amount requested to be withdrawn by the Sonray Client, less a withdrawal fee of $15, was transferred from the ANZ AUD Segregated Account to the Sonray Client's nominated bank account. 43 Clauses 13F(8), 13K(8) and 19B of the Interactive Brokers Agreement (see [34]-[36] above) refer to Interactive Brokers' entitlement to close out and liquidate any or all of the open positions in Sonray's Interactive Brokers Master Accounts in the event of Sonray becoming insolvent. 44 The Interactive Broker client accounts have been in 'closing only' mode since the date of the Liquidators' appointment. As at 5 July 2011, there was approximately $11.1 million held by Interactive Brokers in Sonray's Consolidated Account (which sum includes money recorded in individual subaccounts) (IB Balances).

c MF Global 45 MF Global dealt with Sonray as principal and without an omnibus account. M Global had no contractual relationship with Sonray Clients. MF Global did not provide credit to Sonray. Sonray was required by MF Global to have sufficient funds to cover the initial margin to commence a trade before a trade position would be opened by MF Global. On 2 August 2010, MF Global closed Sonray's account and transferred $3,165,468.79 into the ANZ AUD Segregated Account, being all the money held by MF Global on Sonray's account as at 22 June 2010 after the closing out of positions and conversion to cash.

d Macquarie 46 Macquarie dealt with Sonray as principal and without an omnibus account. Macquarie had no contractual relationship with Sonray Clients. Sonray Clients were required by Sonray to have sufficient funds to cover the initial margin to commence a trade before a trade position would be opened by Macquarie. By 3 July 2010, all financial positions that were open as at 22 June 2010 had been closed by Macquarie and the balance of the cash management account in the name of Sonray was $3,334,149.02. As at 22 June 2010, Macquarie held no equities for or on behalf of Sonray.

e FXCM 47 FXCM provided Sonray with an omnibus account that did not provide for subaccounts referrable to Sonray Clients. FXCM had no contractual relationship with Sonray Clients. On 26 August 2010, $484,982.48 was transferred by FXCM into the ANZ AUD Segregated Account. On 3 May 2011, $57,059.00 was transferred into the ANZ AUD Segregated Account. Those payments represent the total funds held by FXCM on behalf of Sonray or Sonray Clients.

4 Defalcations 48 Between 16 February 2005 and 22 June 2010, there were at least 1049 unauthorised dealings and other breaches of trust by officers of Sonray (Defalcations) which directly or indirectly affected the funds held in the ANZ AUD Segregated Account.

a Unfunded Commissions 49 Saxo paid a total of $25,058,799 in commission to Sonray between 2007 and 2010. That commission was paid as follows: 1. $18,170,980.07 by cash deposit into Sonray's general business account (the General Account); 2. $4,515,410.25 by cash deposit into the ANZ AUD Segregated Account; and 3. $2,372,408.79 by "inter-account transfer" from Saxo to Sonray's Omnibus Account. 50 Saxo would transfer commission into the ANZ AUD Segregated Account only on instruction from Scott Murray. The impetus for such an instruction was Sonray being close to margin or Scott Murray seeking to reduce the deficiency in the ANZ AUD Segregated Account. 51 The Liquidators' investigations revealed that when the balance of the General Account was nearing the overdraft facility limit of $90,000, round value deposits (for example, $75,000 or $250,000) would be made into the General Account with the narration "From Sonray Commission". The Liquidators were able to match these commission deposits in the General Account with withdrawals from the ANZ Segregated Account. In some instances, however, there were no corresponding deposits of commission into the ANZ AUD Segregated Account. Sonray withdrew a total of $2,986,884.92 in unfunded commissions from the ANZ AUD Segregated Account.

b Net unfunded transactions 52 The Liquidators identified over 300 unfunded transactions (that is, transactions in which there is no corresponding deposit or withdrawal of cash in the ANZ AUD Segregated Account) affecting 168 Sonray Client accounts and comprising: 1. 240 unfunded deposits totalling $48.7 million; and 2. 78 unfunded withdrawals totalling $13.1 million. Accordingly, the unfunded transactions account for approximately $35.6 million of the $45.6 million deficiency in the ANZ AUD Segregated Account. 53 The analysis undertaken by the Liquidators in relation to unfunded transactions including unfunded deposits and rebates was based, in part, on the end of day (EOD) file database. The Liquidators cannot be certain that the EOD file database was complete and accurate, and that all unfunded client transactions, including all client rebates, have been identified. Indeed, it is possible that the Liquidators have not identified every client account impacted by unfunded transactions.

c Rebates 54 Sonray paid rebates to clients totalling approximately $1.5 million. These rebates relate to Sonray Client accounts managed by an alleged "rogue trader" who failed in a number of circumstances to put adequate "stop losses" in place which caused Sonray Clients to lose money when the market turned. The majority of complaints to Sonray by Sonray Clients about this practice were resolved by Sonray agreeing to compensate (or "rebate") those Sonray Clients for their losses. 55 The payment of rebates involved Sonray using CCM to record a deposit in a Sonray Client's account on SonrayTrader notwithstanding that no corresponding amount of money was deposited into the ANZ AUD Segregated Account. A number of these clients then withdrew funds from their accounts which included these unfunded rebates.

d Margin Manipulation 56 Scott Murray processed unfunded deposits in various Sonray Client accounts in order for him to execute trades for the purpose of "hedging" Sonray's entire client portfolio held with Saxo. That "hedging" is more appropriately described as "margin manipulation" as it did not involve the reduction of risk but rather the entering into trades on behalf of Sonray for the sole purpose of avoiding or responding to margin calls made by Saxo on the Omnibus Account. 57 The Liquidators' investigations have revealed that the margin manipulation activity began in response to Sonray receiving margin calls from Saxo in relation to the entire Sonray portfolio in circumstances where Sonray did not have sufficient money in the Segregated Accounts to respond to the margin call. These margin manipulation trades involved Sonray entering into a proprietary trade that would either counteract a trade that had been conducted by a Sonray Client, or generate cash in order to meet Saxo's requirements for cash collateral. A failure by Sonray to address margin calls in respect of its Omnibus Account could have resulted in Sonray's entire client portfolio with Saxo being closed out: see cl 3.10 of the Margin Trading Agreement and cl 8 of the White Label Agreement. 58 Sonray would use "house accounts" (being accounts held by Russell Johnson or Scott Murray) and in some circumstances Sonray Client accounts, to take opposite positions, and thereby create opposite exposures, to the positions taken by Sonray Clients. For this purpose, funds would be "virtually" uploaded to those accounts using CCM but there would be no corresponding actual deposit of funds. In other words, unfunded deposits were used for the purpose of margin manipulation.

e Client funds diverted to General Account 59 In addition to the above Defalcations, there is one instance of Sonray Client funds of nearly $2 million being diverted into the General Account rather than a Segregated Account. On 4 May 2009, Asian Pacific Building Corporation Pty Ltd (APBC) deposited $1,990,000 into Sonray's General Account and intended that money be used for trading purposes. The funds were used by Sonray to pay business expenses.

5 Sorrento Property Proceeds 60 On 27 October 2010, Sonray and RJ Capital Pty Ltd entered into a deed of settlement (Sorrento Deed) in relation to a dispute concerning the entitlement to the proceeds of sale of the land described in certificate of title volume 08826 folio 535 or otherwise known as 32 Boston Court Sorrento (the Sorrento Property). 61 The recitals to the Sorrento Deed recorded the allegations of each party in relation to the dispute. In Recital F it stated that from about August 2003 to about June 2010, Sonray made payments to ANZ totalling $349,239.56 in reduction of the debt owing from RJ Capital to ANZ secured by the mortgage over the Sorrento Property (Mortgage). The payments from Sonray to ANZ were made from Sonray's General Account. 62 Of the total $389,747.50 which Sonray paid in relation to the Sorrento Property, $213,775.75 or 55% was paid before 13 April 2007. The remaining 45% was paid after 13 April 2007. The Liquidators' investigations have revealed that the first of a number of unauthorised withdrawals of funds from the ANZ AUD Segregated Account, paid into the General Account, took place on 13 April 2007. 63 All the parties (other than Seaborn which did not make submissions on this point) agreed that it is impractical to attempt to determine the proportion of funds in the General Account that was available as a direct result of payments made into the General Account from the ANZ AUD Segregated Account due to the mixing of moneys in the General Account and because the General Account was in overdraft from to time. 64 On 1 November 2010, RJ Capital Pty Ltd paid to Sonray $457,818.91 in discharge of its obligations under the Sorrento Deed.

6 Swann Global Recovery 65 On 14 October 2009, Sonray advanced $100,000 to Swann Global Pty Ltd which sum was paid from funds in the General Account. On 20 November 2009, Scott Murray withdrew $325,000 from the ANZ AUD Segregated Account into his personal bank account. He then advanced $300,000 to Swann Global Pty Ltd from his personal bank account. 66 On 15 November 2010, Scott Murray assigned to Sonray his right and interest in the repayment of the loan to Swann Global Pty Ltd of $300,000. On or about 15 November 2010, Swann Global Pty Ltd paid $400,000 to Sonray.

7 Scott Murray Payment 67 On 21 June 2011, Scott Murray paid $199,116.15 to the Liquidators representing Mr Murray's half share of the available equity in the property located at 37 Richardson Street Albert Park. The $199,116.15 was applied to reduce the quantum of any claim by Sonray against Scott Murray arising from the fraudulent withdrawal of funds from Sonray's Segregated Accounts in breach of fiduciary and other obligations by Scott Murray.

8 Toorak Property Recovery 68 Between April 2009 and June 2010, a total of $238,741.19 was taken without authority by Russell Johnson from the ANZ AUD Segregated Account and paid into an ANZ account in the joint names of Russell Johnson and Jill Merrilee Murray (Joint Account). The relevant deposits into the Joint Account, all referred to as "Deposit - from Sonray account" were as follows: DATE $ 20/04/2009 12,341.19 05/05/2009 30,000.00 28/05/2009 10,000.00 26/06/2009 15,000.00 12/06/2009 20,000.00 10/07/2009 5,000.00 06/08/2009 20,000.00 08/10/2009 35,000.00 26/11/2009 20,000.00 23/12/2009 25,000.00 05/01/2010 5,000.00 04/02/2010 31,000.00 15/02/2010 4,500.00 05/03/2010 3,800.00 01/04/2010 900.00 07/05/2010 1,200.00 TOTAL 238,741.19

69 On 14 April 2009, a further $12,341.19 was withdrawn from the ANZ AUD Segregated Account and paid into an ANZ mortgage account (ANZ Mortgage 1) to reduce the debt owed by Jill Merrilee Murray to the ANZ secured by the Toorak Property. 70 Amounts totalling $105,987.88 (see Sch 1 below) were withdrawn from the Joint Account and paid into ANZ Mortgage 1 and amounts totalling $26,153.60 (see Sch 2 below) were withdrawn from the Joint Account and paid into another ANZ mortgage account (ANZ Mortgage 2) to reduce the debt owed by Jill Merrilee Murray to the ANZ secured by a mortgage over 1073 Malvern Road, Toorak (Toorak Property) (of which Ms Murray was the sole registered proprietor). Schedule 1 DATE REFERENCE $ 20/04/2009 Deposit 7,009.72 20/05/2009 Deposit 6,620.82 22/06/2009 Deposit 6,840.15 11/08/2009 Deposit 6,618.41 14/09/2009 Deposit 6,858.61 20/10/2009 Deposit 6,736.34 23/12/2009 Deposit 7,561.75 8/02/2010 Deposit 7,818.00 3/06/2010 Deposit 40,756.96 20/08/2010 Deposit 9,167.12 TOTAL 105,987.88

Schedule 2 DATE REFERENCE $ 20/04/2009 Deposit 1,870.22 20/05/2009 Deposit 1,749.18 22/06/2009 Deposit 1,816.47 11/08/2009 Deposit 1,762.79 20/08/2009 Deposit 1,819.21 20/10/2009 Deposit 1,771.84 21/12/2009 Deposit 2,005.89 8/02/2010 Deposit 1,068.00 3/06/2010 Deposit 9,853.83 20/08/2010 Deposit 2,436.17 TOTAL 26,153.60

71 On or about 15 July 2011, the Liquidators, John Kenneth Murray, Merrilee Colleen Murray and Jill Merrilee Murray entered into a deed of settlement in relation to a dispute concerning the entitlement to the proceeds of sale Toorak Property and a payment of $441,000 to Merrilee Colleen Murray and John Kenneth Murray (the Murrays) alleged to have constituted an unreasonable director related transaction. On 15 July 2011, Jill Murray paid $284,000 to the Liquidators and the Murrays paid $441,000 to the Liquidators.

9 Money Held by Sonray 72 1,328 Sonray Clients have an overall net balance of less than $50, the average balance being $6.76, with a total balance for those Sonray Clients of $8,980.89. 73 As at 10 August 2011, the balance of the Recovered Money Account was $1,915,749.59 and comprised the following amounts: Source Amount - AUD ANZ AUD Segregated Account Interest Income $112,967.92 Debtors collection (negative account balances) $9,941.51 Sorrento Property Proceeds: see [56] above $457,818.91 Swann Global Recovery: see [58] above $400,000.00 Scott Murray Payment: see [59] above $199,116.15 Toorak Property Settlement: see [63] above. $725,000.00 Interest Income (until 10 August 2011) $10,905.10 TOTAL as at 10 August 2011 $1,915,749.59

1 Accounts - Corporations Act and Regulations 74 Section 981B(1) of the Corporations Act, read with s 981A(1), requires a financial services licensee to ensure that money paid by a client, or by a person acting for a client, in connection with a financial service provided, or to be provided, to a client, or a financial product held by a client, into "an account" of a prescribed kind. That is, client money is to be paid into an account which is separate from the licensee's own accounts. 75 Section 981B provides: (1) The licensee must ensure that money to which this Subdivision applies is paid into an account that satisfies these requirements: (a) the account is: (i) with an Australian ADI; or (ii) of a kind prescribed by regulations made for the purposes of this paragraph; and is designated as an account for the purposes of this section of this Act; and (b) the only money paid into the account is: (i) money to which this Subdivision applies (which may be money paid by, on behalf of, or for the benefit of, several different clients); or (ii) interest on the amount from time to time standing to the credit of the account; or (iii) interest, or other similar payments, on an investment made in accordance with regulations referred to in section 981C, or the proceeds of the realisation of such an investment; or (iv) other money permitted to be paid into the account by the regulations; and (c) if regulations made for the purposes of this paragraph impose additional requirements--the requirements so imposed by the regulations; and (d) if the licence conditions of the licensee's licence impose additional requirements--the requirements so imposed by the licence conditions. The money must be paid into such an account on the day it is received by the licensee, or on the next business day. (2) The licensee may, for the purposes of this section, maintain a single account or 2 or more accounts. (Emphasis added.) 76 Where a financial service or a financial product referred to in s 981A(1) relates to dealing in a derivative or is a derivative, the money paid by a client may be used by the licensee for the purpose of meeting obligations incurred by the licensee in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives by the licensee, including dealings on behalf of other people: s 981D of the Corporations Act. However, money paid by a client and the investments made with it are incapable of being attached or otherwise taken in execution, or being made the subject of a set-off, charge or charging order or any process of a similar nature except at the suit of a person who is otherwise entitled to the money or investment: s 981E of the Corporations Act. 77 The Liquidators submitted, and I accept, that the effect of these provisions is to create one or more mixed trust funds with special characteristics: they are intended to be used specifically for the provision of financial services and for the holding of and dealing in financial products; they can be used to meet margin calls and to act as security for dealings in derivatives, including dealings on behalf of clients other than the depositing client; however, they cannot be used to satisfy the creditors of the licensee. Such money "is taken to be held on trust by the licensee for the benefit of the client": s 981H(1) and cf re Lehman Brothers International (Europe) (In Administration) [2010] EWCA Civ 917 at [67]-[72] and [181]. 78 Where a licensee ceases to be licensed, or becomes insolvent, reg 7.8.03(6) of the Regulations determines how money in "the account" of the licensee maintained for the purposes of s 981B is to be paid. Regulation 7.8.03 provides: (1) For paragraph 981F(a) of the Act, this regulation applies if a financial services licensee ceases to be licensed (including a cessation because the financial services licensee's licence has been suspended or cancelled). (2) For paragraph 981F(b) of the Act, this regulation applies if a financial services licensee: (a) becomes insolvent under an administration; or (b) is the subject of any of the following arrangements: (i) the appointment of an administrator under section 436A, 436B or 436C of the Act; (ii) the commencement of winding up; (iii) the appointment of a receiver of property of the financial services licensee, whether by a court or otherwise; (iv) the appointment of a receiver and manager of property of the financial services licensee, whether by a court or otherwise; (v) entry into a compromise or arrangement with creditors of the financial services licensee, or a class of creditors; … (4) For each person who is entitled to be paid money from an account of the financial services licensee maintained for section 981B of the Act, the account is taken to be subject to a trust in favour of the person. (5) If money in an account of the financial services licensee maintained for section 981B of the Act has been invested, for each person who is entitled to be paid money from the account, the investment is taken to be subject to a trust in favour of the person. (6) Money in the account of the financial services licensee maintained for section 981B of the Act is to be paid as follows: (a) the first payment is of money that has been paid into the account in error; (b) if money has been received on behalf of insureds in accordance with a contract of insurance, the second payment is payment to each insured person who is entitled to be paid money from the account, in the following order: … (c) if: (i) paragraph (b) has been complied with; or (ii) paragraph (b) does not apply; the next payment is payment to each person who is entitled to be paid money from the account; (d) if the money in the account is not sufficient to be paid in accordance with paragraph (a), (b) or (c), the money in the account must be paid in proportion to the amount of each person's entitlement; (e) if there is money remaining in the account after payments made in accordance with paragraphs (a), (b) and (c), the remaining money is taken to be money payable to the financial services licensee. (7) This regulation applies despite anything to the contrary in the Bankruptcy Act 1966 or a law relating to companies. (Emphasis added.) 79 So, for example, where moneys are paid into a segregated account and the balance in that account represents a particular client's payment or the proceeds of that payment, the client will be entitled to an equitable charge over the whole balance of the account: s 981H of the Corporations Act read with reg 7.8.03(4). Regulation 7.8.03(6)(c) provides for the realisation of that entitlement. Where a number of clients have an entitlement to be paid moneys in a segregated account but the balance is insufficient to meet each entitlement in full, then the money is paid in proportion to each client's entitlement: reg 7.8.03(6)(d). 80 Next, where a client paid moneys directly to a Provider at the direction of Sonray, and those moneys were then credited by the Provider to the account of Sonray, it is common ground that the moneys should be regarded as moneys paid to Sonray for the purposes of s 981A of the Corporations Act and subject to the statutory trust imposed by s 981H. Thus, those funds are subject to an entitlement in the client. 81 One further aspect should be noted. Because of s 981H of the Corporations Act, all moneys paid to Sonray by, or on behalf of, a person in connection with a financial service or a financial product are deemed to be held on trust for the client (thus giving rise to an entitlement to be paid), whether or not those moneys are paid into a separate account in accordance with s 981B of the Act. In other words, entitlement in respect of moneys paid to a licensee such as Sonray is not dependent upon those moneys being paid into a segregated account. The client's trust entitlement arises at the time of payment to Sonray.

2 Applicability to deficient mixed fund? 82 In the present case, applying these provisions of the Corporations Act and the Regulations is not straight forward. First, the words "entitled" and "entitlement" are not defined in the Corporations Act or the Regulations. Given the statutory trust imposed by s 981H(1) of the Corporations Act, the Liquidators submitted (and I accept) that these words import the principles applicable to trusts and, in particular, to deficient mixed trust accounts: cf re Lehman Brothers at [67]-[72] and [181]. 83 Those principles provide that all contributors to a deficient mixed fund hold an equitable charge over the entire fund and its traceable proceeds to the value of their contributions, subject to any dealings and costs (Sutherland Re; French Caledonia Travel Services Pty Ltd (in liq) (2003) 59 NSWLR 361 and Australian Securities and Investments Commission v Letten (No 7) (2010) 80 ACSR 401) or are equitable tenants in common of the mixed fund as a whole, including its traceable proceeds, and subject to such deductions: Goode, Royston Miles, Goode on Legal Problems of Credit and Security (4th ed, 2008, Sweet & Maxwell/Thomson Reuters) [6-11 to 6-14]. 84 Next, the Corporations Act and the Regulations do not deal with the situation where it is not possible to work out precisely who is entitled to what moneys in particular segregated accounts. It was common ground that all the Court can do in such circumstances is to permit the moneys in the segregated accounts to be pooled with a view to their proportionate distribution. The basis for the rateable distribution is the mixing of the funds: Re French Caledonia at [127] and [187]. 85 Such a course of action is consistent with the purpose of the statutory regime, namely the achievement of a fair outcome between clients by a pragmatic and even-handed distribution amongst them: see, by way of example, s 983E of the Corporations Act which provides that where the money received is insufficient to pay all proved claims, the Court may "despite any rule of law or equity to the contrary, apportion the money among the claimants in proportion to their proved claims and show in the scheme how the money is so apportioned" and the second reading speeches in relation to the Financial Services Reform Bill 2001 (Cth) which indicate that the legislation was designed to produce a harmonised regulatory regime for market integrity and consumer protection across the financial services industry. 86 Of course, rateable distribution is subject to an important qualification - it does not apply if the claimants do not have equal claims: Re French Caledonia at [176] and [185]. Put another way, it is necessary to determine whether there should be differential treatment of claimants. That question is determined on available evidence. Thus, if a claimant can establish a remedy founded on tracing, the Court will grant relief founded on that evidence because it permits it to reach a different conclusion in respect of that claimant: Re French Caledonia at [178], [187] and [189].

1 Directions sought 87 The Liquidators seek three directions: 1. a direction as to whether the Liquidators would be justified in: 1.1 pooling the balance of each Segregated Account into a single bank account and applying reg 7.8.03(6) of the Regulations to that single bank account; 1.2 converting any balances in foreign currency into Australian dollars for the purpose of such pooling; and 1.3 treating foreign currency as money for the purposes of reg 7.8.03(6); subject to the satisfaction of the Liquidators of the account balance that is recorded in Sonray's books and records and setting off positive account balances against negative account balances in all accounts owned by the same Sonray Client. 2. a direction as to the date on which, and the basis on which, a Sonray Client's entitlement to be paid money from the Segregated Accounts is to be determined. 3. a direction that the Liquidators are entitled to treat Sonray Clients whose entitlement to participate in the Segregated Accounts is $50 or less as having no entitlement to participate in the Segregated Accounts. 88 Two classes of Sonray Clients were excluded from the direction sought by the Liquidators in subparagraph 1(2) above - (1) Sonray Clients who transferred shares from that Client's HIN to a Provider's HIN and did not deal with those shares prior to 22 June 2010 and (2) Sonray Clients who deposited foreign currency directly into a foreign currency Segregated Account which is not a Tainted Segregated Account. 89 Each Contradictor had a different view about what was to go into the pool and what was to be excluded from the pool. It is therefore first necessary to identify what is the subject of the Liquidators' application for directions about pooling.

2 Amounts and Assets subject to the pooling application 90 For the purpose of direction 1.1 at [87] above, the Liquidators sought to pool the following four broad categories: 1. the balances in the Segregated Accounts: see [8] above; 2. the Recovered Money Account: see [73] above; 3. the Saxo Shares: see [31] above; and 4. the IB Balances: see [44] above. I will deal with each category in turn.

a Balances in the Segregated Accounts 91 As discussed at [48] above, there were at least 1049 Defalcations which directly or indirectly affected the funds held in the ANZ AUD Segregated Account. Due to the nature, number and frequency of the Defalcations and the number and frequency of legitimate deposits, withdrawals, transfers, dealings and trading by Sonray Clients, officers and Providers, that account cannot practically or economically be the subject of a cash tracing exercise. 92 When Sonray Client money from the ANZ AUD Segregated Account was transferred into other Segregated Accounts, or was used for trading by Sonray Clients who had deposited money into another Segregated Account for that purpose (the Tainted Transactions), those Segregated Accounts became 'tainted' with both the deficiency in the ANZ AUD Segregated Account and the equitable joint charge over, or the equitable tenancy in common in, the money transferred or the money deposited but not used in the trading: see [83] above. Those accounts share with the ANZ AUD Segregated Account the character of being irreversibly deficient and mixed and too can no longer practically or economically be the subject of a cash tracing exercise. 93 Indeed, the Liquidators' investigations revealed that: 1. transfers of funds to and from Providers occurred predominantly through the ANZ Segregated Accounts listed at [8] above, notwithstanding that deposits from Sonray Clients in respect of margin calls and anticipated trades were made into other Segregated Accounts, for example, one of the HSBC AUD Segregated Accounts; 2. money from the ANZ AUD Segregated Account was transferred into other accounts, including the ANZ USD Segregated Account, which in turn was subject to transfers into the ANZ Euro Segregated Account and the Macquarie Cash Management Account; 3. according to Sonray's Cash Management Manual, the ANZ AUD Segregated Account was to be used for deposits of USD, GBP, EUR, NZD and JPY, notwithstanding that separate bank accounts denominated in those currencies were maintained; 4. money was transferred between foreign currency segregated accounts as and when requested by a Sonray Client and not necessarily in connection with trading; 5. Sonray Clients were permitted to make withdrawals of USD from the ANZ USD Segregated Account notwithstanding that they had not deposited USD into that account; and 6. all margin calls by Saxo in relation to all trading through that Provider were met from the ANZ AUD Segregated Account and, on at least one occasion, the ANZ USD Segregated Account, irrespective of individual Sonray Clients and their trading and the currency in which trading was denominated. 94 For those reasons, the Tainted Segregated Accounts (see [12] above) must be pooled before Sonray Client entitlements can be meaningfully calculated and entitlements distributed. The pooled Tainted Segregated Accounts (the Pool), after deductions for any set-offs, net offs and Liquidators' Remuneration and Expenses (as defined in Annexure B), must be distributed rateably to those Sonray Clients who contributed to the Tainted Segregated Accounts, either by operation of r 7.8.03(6)(d) or by application of the relevant equitable principles: see [83] above.

b Foreign Currency Balances 95 Some of the balances in the Segregated Accounts are in foreign currency. It was common ground that these balances should be converted to AUD and then pooled. The issue is whether that is a course open to the Liquidators. The first question is whether foreign currency is "money" for the purposes of reg 7.8.03(6)? The issue arises because the relevant provisions of the Corporations Act (see [74]-[76] above) and the Regulations (in particular reg 7.8.03(6) at [78] above) do not define the word "money". 96 The legislative purpose of reg 7.8.03(6) is to ensure that, in the event of a deficiency in the money in "the account" of a financial services licensee maintained for s 980B of the Corporations Act, a pro rata distribution of the money in the account is effected as the fairest means of dealing with such a deficiency. 97 In the present case, that purpose, and the purpose of Pt 7.8 of both the Regulations and the Corporations Act generally, would be undermined if those Segregated Accounts denominated in foreign currencies escaped that regulation: see s 15AA of the Acts Interpretation Act 1901 (Cth) and CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408. Put another way, any contrary construction would lead to harsh and unintended results. 98 The approach of converting foreign currency has also been adopted in England. Following the decisions of the Court of Appeal in Miliangos v George Frank (Textiles) Ltd [1976] AC 443 on foreign currency obligations and Camdex International Ltd v Bank of Zambia (No 3) [1997] CLC 714 on the nature of money, the previous distinction between pounds sterling as a means of exchange and foreign currencies as a commodity disappeared. In Camdex, Lord Phillips said at 731-732: … I do not think it helpful, or even possible, to differentiate between money as a commodity and money as a means of exchange, by reference to the nature of the transaction under which it falls to be transferred ... It seems to me that whether money is lent or borrowed, whether it is used to buy goods or services, or whether it is exchanged against a different currency, it retains its character as a medium of exchange. In each case the transaction will involve a particular specified currency or currencies. This reflects the fact that there exist different media of exchange, that their relative values fluctuate over time and that for this reason parties to a transaction may be concerned to stipulate for a particular currency. The fact that the identity of the currency may be a material feature of the transaction does not translate the currency into a commodity, whatever the nature of the transaction. 99 In Proctor, Charles, Mann on the Legal Aspect of Money (6th ed, 2005, Oxford University Press), the learned author stated that in the vast majority of cases, foreign money would fall to be regarded as "money". He referred to (and approved) the statement of Brandon J in The Halcyon The Great [1975] 1 WLR 515 at 520 to the effect that "money" includes "money in foreign currency as well as in sterling" and concluded (at p 46) that in England: ... foreign money is to be regarded as "money" under precisely the same circumstances as sterling is to be regarded - ie it is always to be regarded as "money" except where delivered for its intrinsic metallic, rarity or curiosity value. This parity of treatment flows inexorably from the Court of Appeal judgment in Camdex ... It must also be said that the decision in the Miliangos case and the dismantling of exchange controls in the United Kingdom have tended progressively to diminish the importance of a sharp distinction between sterling and foreign currency obligations. 100 There is no rationale basis for reaching a different conclusion in relation to the Corporations Act or the Regulations. Indeed, s 554C of the Corporations Act deals with the conversion into Australian currency of foreign debts or claims. 101 The next question is whether those amounts should be pooled? Again, subject to the individual claims of Contradictors, this is not in dispute. It is common ground that since individual entitlements to funds in the Tainted Segregated Accounts denominated in a foreign currency are unascertainable, there is no basis upon which to make distributions to some Sonray Clients in, say, USD, and others in AUD. Further, it is common ground that the foreign currency Segregated Accounts which are not in deficit and are unclaimed should be converted to AUD to enable pooling and distribution. 102 For those foreign currency accounts which are not Tainted Segregated Accounts (the ANZ CAD Segregated Account; the ANZ GBP Segregated Account, the HSBC GBP Segregated Account and the HSBC USD Singapore Segregated Account) but for which ascertainable client entitlements exist, it is common ground that provided the foreign currency in those accounts is not required for set-off or netting of client trading (see [113] to [115] below) or for contribution to the Liquidators' Remuneration and Expenses and fees, that currency should not be converted for the purpose of pooling or otherwise but should be distributed in the relevant denomination to those Sonray Clients with ascertainable entitlements.

c Funds Which Are Not 'Tainted' 103 Of course, Sonray Clients who can satisfy the Liquidators that money standing to their credit in their Sonray account balance as at 22 June 2011 (see [112] below) was never deposited in, or mixed with money from a Tainted Segregated Account and was not otherwise involved in a Tainted Transaction, are entitled to a refund of those moneys, subject to a deduction for any trading losses and a contribution to the Liquidators' Remuneration and Expenses costs and fees. Neither reg 7.8.03(6)(d) (see [78] above), nor the principles discussed in French Caledonia or Letten (No 7) (see [83] above), are applicable.

d The Recovered Money Account 104 There is no dispute that the funds in the Recovered Money Account comprising the Swann Global Recovery (see [65]-[66] above), the Scott Murray Payment (see [67] above) and the Toorak Property Settlement (see [68]-[71] above) should be pooled. 105 As to who whether the Sorrento Property Proceeds (see [60]-[64]) should be included in the Recovered Money Account, the Liquidators alleged that: 1. there was no proper basis for Sonray to have made any payments towards the Mortgage or other expenses associated with the Sorrento Property; 2. as a consequence of Russell Johnson's breach of fiduciary duty owed to Sonray, the Sorrento Property was held by RJ Capital Pty Ltd (a company controlled by Mr Johnson) on constructive trust for Sonray; 3. since the money used to fund the mortgage payments for the Sorrento property was paid out of Sonray's General Account and Mr Johnson's breach was of a duty owed to Sonray, it was Sonray in its own right which, in the first instance, is the proper claimant entitled to recovery of those funds. 106 Although it is accepted that the some of the funds paid from Sonray's General Account were only available to be paid because prior to payment there was an unauthorised transfer of money from the Segregated Accounts into the General Account, the Liquidators submitted that any ability of Sonray, in its capacity as a trustee of the Segregated Accounts, to trace into any of the funds that were paid from the General Account in relation to the Sorrento Property was complicated by the following factors: 1. any tracing exercising would be time consuming and very costly because there were thousands of transactions affecting the General Account and the Segregated Accounts, from 13 April 2007 the funds in the General Account were mixed with funds taken from the Segregated Accounts in circumstances which the liquidators allege were clearly a breach of trust and Sonray's General Account was in overdraft from time to time. As a result, there is great difficulty in determining whether any funds taken from the Segregated Accounts were used to reduce the overdraft and the funds used to reduce the overdraft cannot be traced. 2. even if it was possible to trace funds taken from the Segregated Account into the General Account and then into the Sorrento Property, the cost of the exercise means that it would be of doubtful ultimate benefit. 3. the Liquidators' Remuneration and Expenses in the administration and/or liquidation will far exceed Sonray's assets (even when those assets are swollen by the funds recovered by Sonray in its own right). Thus, after taking into account the trustee's right of indemnity from trust assets, the beneficiaries of the Segregated Accounts would not be benefitted by an entitlement to the Sorrento Property Proceeds because the first claim on those funds would be the Liquidator's Remuneration and Expenses. 107 It was for those reasons, and for the reasons explained in French Caledonia and Letten (No 7), that the Liquidators submitted that the rule in Clayton's Case should not be applied to the Sorrento Property Proceeds and those proceeds should be excluded from the definition of "Recovered Money" in the orders sought. 108 I reject that contention. The other items in the Recovered Money Account were not substantially different. The Swann Global Recovery also involved a withdrawal of funds from the General Account, the Scott Murray Payment was applied to reduce the quantum of a claim brought by the Liquidators on behalf of Sonray for breach of duties owed to Sonray and there is evidence that funds were moved between the Segregated and General Accounts: see [54] above. 109 On balance, and for those reasons, it is appropriate to treat the Sorrento Property Proceeds in the same manner as the other Recovered Money.

e Saxo Shares 110 Where shares or other financial instruments were purchased with money from a Tainted Segregated Account or otherwise connected to a Tainted Transaction, it was common ground that those shares or financial instruments must be sold and their proceeds pooled: see [84] above. Thus, subject to the claims of Contradictors (see [137]-[290]) below, the Saxo Shares, being shares held by Saxo and acquired on the instructions of any Sonray Client including dividends or other corporate actions paid or affecting those shares on and from 22 June 2010, should be pooled.

f IB balances 111 Similarly, where assets held by Interactive Brokers on behalf of Sonray Clients were funded (either wholly or partly) by money which passed through a Tainted Segregated Account, or was otherwise connected to a Tainted Transaction, then those assets should also be pooled.

3 Date to be used to calculate rateable entitlement? 112 Whichever date is used to calculate a Sonray Client's rateable entitlement to money from the Pool will possess a degree of arbitrariness and will be more beneficial or detrimental to some Sonray Clients. Fairness requires only that the same date be applied to all Sonray Clients and all accounts. The Liquidators submitted, and I accept, that 22 June 2010, being the date of their appointment as administrators, is the logical date because active trading by Sonray Clients ceased as at that date. No party expressed a different view.

4 Set-Off? 113 The Liquidators seek a direction as to whether they are entitled to set-off positive cash balances against negative cash balances in all accounts owned by the same Sonray Client. 114 In all versions of the Client Agreements there were the following common clauses: The Client is responsible to pay any deficit owing to Sonray after closure, and if Client defaults or refuses such payments, Sonray may apply the proceeds of any assets held by Sonray against that deficit. … Where amounts are payable by one party to the other, netting principles shall apply to enable the party owing the larger amount to pay the excess only to the other party. Amounts may be converted into the same currency in line with clause [**] of this Agreement. (Emphasis added.) 115 The Liquidators are obliged to recover debts owed to Sonray. The contractual terms between Sonray and each Sonray Client entitle the Liquidators on behalf of Sonray to set-off or net off positive cash balances with negative cash balances and to resort to trading balances. The common clause entitles the Liquidator to apply the proceeds of any assets held by Sonray.

5 Methodology to be used to calculate rateable entitlement? 116 The statutory scheme does not prescribe how a client's entitlement to be paid moneys is to be quantified. Initially, the Liquidators submitted that the proper basis for determining client entitlements to funds from the Pool was that Sonray Client's net account balance on the Trading Platform (the Proposed Account Balance) or its Proposed Adjusted Account Balance (as defined in Annexure A to these Orders) as at 22 June 2010. 117 Maryland submitted that it is not just and equitable in every case for a client's rateable distribution to be determined by their account balance and that the Court must be satisfied that the account balance is sufficiently accurate and reliable to form the basis of a quantification of the client's entitlement. 118 The Liquidators sought leave to reopen their case so far as it dealt with Maryland. No party objected to that course and it is therefore appropriate that leave be granted. In reopening their case, the Liquidators accepted Maryland's proposition that is not just and equitable in every case for a client's rateable distribution to be determined by their account balance and that the Court may be satisfied that a particular client's account balance as at 22 June 2010, or Proposed Adjusted Account Balance, is insufficiently accurate and reliable to quantify their entitlement, such that equity requires the adoption of an alternative basis. 119 The Liquidators submitted however that the Court could only arrive at such a conclusion where the adoption of that alternative basis does not in turn impose such costs on the administration as to be unfair to the remaining investors as a whole and undermine the rationale of a rateable distribution of the deficient mixed fund. 120 Accordingly, the Liquidators conceded that their submission that the proper basis for determining client entitlements to funds from the Pool is that Sonray Client's net account balance as at 22 June 2010 (see [116] above) can only uniformly apply where an investor's account has: 1. not been manipulated; or 2. been manipulated and it is possible to determine an accurate and reliable Proposed Adjusted Account Balance, by reconstructing the account. However, the Liquidators conceded that such an approach cannot apply where the Court is satisfied, on the balance of probabilities, that an investor's account has been so manipulated that it is impossible to determine an accurate and reliable Proposed Adjusted Account Balance which would reflect a client's entitlement to be paid money from the Segregated Accounts. 121 It is necessary to consider those propositions in the context of the Sonray Clients who traded through Saxo and the Sonray Clients who traded through Interactive Brokers. I will deal with each in turn.

a Clients who traded through Saxo 122 Sonray dealt with Saxo at an "Omnibus" level. If Sonray failed to address a margin call in respect of the Omnibus Account, Sonray's entire portfolio with Saxo may have been closed out: see [57] above. Scott Murray used actual Sonray Client accounts to manipulate Sonray's margin requirements: see [56]-[58] above. Maryland submitted that Sonray Clients who traded through Saxo (Saxo Clients) are likely to have an account balance which: 1. was directly manipulated by unauthorised or unfunded transactions; or 2. indirectly benefited from that manipulation because, without it, Saxo would not have been persuaded that required margins were adequate and would have ceased all trading on behalf of Saxo Clients. 123 Therefore, Maryland submitted that Saxo Clients should not be permitted to prove rateably against the Pool based on their account balances and that: 1. Saxo Clients whose accounts were fraudulently manipulated should prove on the equitable basis of contributions made subject to bringing withdrawals into account; and 2. Saxo Clients whose accounts were not directly manipulated should prove for the lower of the figure represented by the balance in their Sonray Client account and the figure produced by total contributions taking into account withdrawals. 124 Maryland submitted that their solution eliminated the possibility of a person who made bona fide trading losses making a windfall at the expense of other Sonray Clients and eliminated the possibility of profits being claimed when those profits were the indirect consequence of manipulation of other Saxo Clients' accounts. Furthermore, Maryland submitted the solution was calculated to produce a fair spread of the burden of Sonray's fraudulent behaviour between all Saxo Clients. 125 The main difficulty associated with Maryland's proposal is that it allows Sonray Clients whose accounts were manipulated, and who traded to their disadvantage prior to 22 June 2010, to avoid the consequences of that trading at the cost of those who did not trade or traded successfully. In addition, it disentitles those Sonray Clients who traded profitably to the benefits of that trading. Given that the making of a profit would be the underlying reason for trading on a Trading Platform, the Maryland solution is an unprincipled and unfair way to proceed. 126 In the end, the solution is a practical one. The Liquidators have identified 118 accounts affected by unfunded transactions. The 118 accounts are a subset of the 168 accounts referred to at [52] above. What has been excluded (50 accounts) are those accounts which were closed out prior to 22 June 2010 or house accounts. In respect of the 118 accounts, the Liquidators will reverse out from the Sonray Client's account balance, those unfunded transactions, to arrive at the Proposed Adjusted Account Balance. In respect of the remaining Sonray Clients' accounts (which did not form part of the 168 accounts identified in [52] above), the Proposed Account Balance will be used. However, where a Sonray Client can adduce evidence which satisfies the Liquidators, on the balance of probabilities, that reconstructing their account to arrive at a Proposed Adjusted Account Balance is an unreliable or inappropriate method of quantifying their entitlement, it will be open to the Liquidators to adopt an alternative methodology for the purposes of calculating that Sonray Client's entitlement to funds from the Pool. 127 Consistent with the usual approach, the Sonray Client will bear the cost of gathering together the material relevant to the proof of debt and submitting that claim to the Liquidators. The Liquidators will bear the cost of determining whether to accept or reject that proof in whole or in part. Any appeal will be determined in accordance with the Corporations Act, Regulations and Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules): see, by way of example, ss 554A and 1321 of the Corporations Act, reg 5.6.43A and r 14.1 of the Corporations Rules.

b Sonray Clients who traded through Interactive Brokers 128 Sonray Clients who traded through Interactive Brokers (IB Clients) are likely to have account balances which are sufficiently accurate and reliable to provide a guide to entitlement. This is because IB Client accounts were not the subject of improper manipulation by way of unauthorised or unfunded transactions. Further, IB Clients are unlikely to have benefited from any manipulation of Saxo Client accounts. Therefore, the basis for calculating IB Clients' entitlements to rateable distributions from the Pool should be their account balances.

1 SONRAY CLIENTS WITH $50 OR LESS 129 Before dealing with each of the six Contradictors in turn, it is appropriate to deal with the Liquidators' direction that they be entitled to treat Sonray Clients whose entitlement to participate in the Segregated Accounts is $50 or less as having no entitlement: see [87(3)] above. No Contradictor opposed this direction. It was common ground that the approach suggested by the Liquidators was sensible, practical and expedient in the circumstances. Only Maryland suggested a qualification - that the principle should not be applied to any account where manipulation occurred. 130 First, the facts - there are 1,328 Sonray Clients with an overall net balance less than $50, the average being $6.76. The total balance for those Sonray Clients is $8,980.89: see [72] above. The Liquidators submitted that if each account was subject to a cash tracing exercise they estimate that it would take up to 26,560 professional hours or 20 hours per Sonray Client with the result that the administration cost involved in distributing entitlements to the 1328 investors with an average balance of $6.76 would lack commercial sense and result in diminishing returns for everyone. The evidence disclosed that the cash tracing exercise cannot be automated and must be done manually and that the estimated time of 20 hours per Sonray Client was likely to be understated. 131 What then is the applicable principle? Is it open to adopt such an approach? In particular, what is the proper construction of the word "entitlement" in reg 7.8.03(6) and further or is it possible to apply the de minimus non curat lex principle? 132 The principle de minimus non curat lex (the law cares not about trifling matters) traditionally applies to the law relating to breach of contract (Shipton Anderson & Co v Weil Bros & Co [1912] 1 KB 574), although it has also been applied to causation in negligence (Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 621-622 per Lord Reid which was discussed and distinguished in Amaca Pty Ltd v Ellis (2010) 240 CLR 111 at [66]-[68]), to criminal possession of prohibited substances (Williams v R (1978) 140 CLR 591) and to small accretions of land as a result of changes in water level: Williams v Booth (1910) 10 CLR 341. Its application to income tax law was left unresolved by Gibbs J in The National Mutual Life Association of Australasia Limited v The Commissioner of Taxation of the Commonwealth of Australia (1970) 122 CLR 13 (cf J Hammond Investments Pty Ltd v Federal Commissioner of Taxation (1977) 31 FLR 349). Should it apply to client entitlements pursuant to reg 7.8.03(6)? 133 In Peake, in the matter of Australian Housewares Pty Ltd (in liq) [2003] FCA 170, the liquidators sought orders pursuant to s 564 of the Corporations Act that they pay all of the recovered funds only to those creditors who had contributed funds to bring an action against the directors for insolvent trading. Finkelstein J noted the wide discretion offered by s 564. His Honour also noted that there would have been no surplus to distribute had the contributing creditors not put up funds for the litigation. Finkelstein J observed (at [7]) that if some moneys were distributed to the non-contributing creditors, "the amount that each of them would receive in this case is so small as to be de minimus". Of course, the present application does not involve exercising a s 564 discretion. It concerns the word "entitlement" in reg 7.8.03(6) and the applicability of the de minimus principle. 134 One fact is obvious. For those Sonray Clients with a balance of less than $50 in the Segregated Accounts, if the tracing exercise was attempted "[t]he difference that remains is the difference between vanishing point and nothing - a difference which is appropriately dealt with by mathematicians, but not cognisable in practical affairs or by the Courts": The Eastern Extension Australasia and China Telegraph Company Ltd v The Commonwealth (1908) 6 CLR 647 at 683 per Higgins J (dissenting). 135 Regardless of that fact, I do not consider that reg 7.8.03(6) should be interpreted by reference to the de minimus test. The "entitlement" referred to in reg 7.8.03(6) is an entitlement which is to be determined. In the present case, that entitlement has been determined. The Liquidators have undertaken the exercise to determine the entitlement of those with an overall net balance of less than $50 and determined that the value or amount of that entitlement is zero or negative because of the costs involved, and the inherent uncertainties that exist, in the tracing exercise. In the circumstances of the present case, I consider that the approach adopted by the Liquidators is not only consistent with reg 7.8.03(6) but the only approach that can be adopted. Put another way, if the task was undertaken on a case by case analysis, the cost would be greater than the highest possible entitlement of any one Sonray Client. The Liquidators should have the direction that they seek. 136 If, of course, those Sonray Clients with a balance of less than $50 in the Segregated Accounts assert an entitlement greater than $50, then that Sonray Client may request that the tracing exercise be undertaken. Subject to any further order of the Court, the Sonray Client should bear the cost of that exercise.

2 SEABORN INTERNATIONAL PTY LTD AS TRUSTEE FOR THE SEABORN FAMILY TRUST

a Introduction 137 On 5 August 2009, Seaborn International Pty Ltd as trustee for the Seaborn Family Trust (Seaborn) executed a Sonray Client Agreement and Disclosure Document marked "version v.1.0 041208" containing terms and conditions governing the relationship between it and Sonray. 138 On 20 October 2009, Seaborn International Pty Ltd as trustee for the Seaborn Family Trust executed a Sonray Client Agreement and Disclosure Document marked version "v2.1 090909/SL Global Macro" containing terms and conditions governing the relationship between it and Sonray. The Client Agreement and Disclosure Document contained an Individually Managed Account Mandate thereby giving discretion to Sonray to trade on its behalf. 139 On 20 October 2009, GBP 200,006.78 was deposited into the ANZ GBP Segregated Account and, on 21 October 2009, the deposit was credited to account number PJM011GBP, being an account of Seaborn International Ltd with Sonray. 140 Between 31 March 2008 and 30 June 2009, the ANZ GBP Segregated Account had a balance of GBP 52.16CR, with no deposits or withdrawals recorded. The balance in the ANZ GBP Segregated Account was not referable to any Sonray Client. 141 Between 30 June 2009 and 22 June 2010, there were only four transactions upon the ANZ GBP Segregated Account as follows: 1. On 22 July 2009 - a deposit of GBP 1,000; 2. On 23 July 2009 - a withdrawal of GBP 6.07 referable to "Sonray Capital"; 3. On 20 October 2009 - a deposit of GBP 200,006.78 (the deposit on behalf of Seaborn international Pty Ltd); and 4. On 10 February 2010 - a deposit of GBP 6,285.77. 142 As a consequence of the deposit on 10 February 2010, the ANZ GBP Segregated Account had a credit balance of GBP 207,338.64. As at 22 June 2010, the ANZ GBP Segregated Account had a credit balance of GBP 207,338.64. 143 Between 23 October 2009 and 10 June 2010, there were 29 trades referrable to Seaborn International Pty Ltd's account with Sonray. As at 22 June 2010 Seaborn International Pty Ltd's account balance indicated cash of GBP 3,260.51 and shares with a value of GBP 203,091.47. As at 22 June 2010, the shares that comprised a value of GBP 203,091.47 referable to Seaborn International Pty Ltd's account number PJM011GBP were: Company Name Exchange Number of Shares ishares FTSE UK Dividend Plus GBP LSE 10,250 Goldman Sachs NYSE 206 BHP Billiton Plc LSE 500 BP Plc LSE 4000 HSBC Holdings Plc LSE 2500 Xstrata Plc LSE 2100 Berkshire Hathaway Inc. NYSE 200 Becton Dickinson & Co. NYSE 280 Aviva plc LSE 4100 Aquarius Platinum Ltd LSE 3000

b Analysis 144 There are five issues: 1. whether foreign currency should be converted to AUD for pooling? 2. whether foreign currency is "money" for the purposes of r 7.8.03(6) of the Corporations Rules? 3. whether a Sonray Client is beneficially entitled to funds deposited directly into a foreign currency segregated account where those funds were used for trading? 4. whether a Sonray Client is beneficially entitled to funds deposited directly into a foreign currency segregated account where those funds were not used for trading? 5. whether a Sonray Client is beneficially entitled to funds deposited directly into a foreign currency segregated account where, on the day those funds were transferred to that account from the ANZ AUD Segregated Account, the ANZ AUD Segregated Account was subject to Defalcations? 145 I will deal with each issue in turn.

i Foreign currency converted to AUD for pooling 146 There was no dispute that if a Sonray Client is beneficially entitled to an asset designated in a foreign currency, that asset should be distributed to that Sonray Client without conversion to AUD: see [102] above.

ii Foreign currency "money" under r 7.8.03(6) of the Corporations Rules? 147 The answer is yes: see [95] to [100] above.

iii Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where funds used for trading 148 A distinction must be drawn between a foreign currency segregated account that is tainted and one that is not tainted. As a matter of general principle, a client with funds in a foreign currency segregated account that is not tainted is beneficially entitled to those funds. Those accounts are: 1. the ANZ CAD Segregated Account; 2. the ANZ GBP Segregated Account; 3. the HSBC GBP Segregated Account; and 4. the HSBC USD Singapore Segregated Account. 149 Sonray Clients with funds in the other foreign currency segregated accounts (which by definition are tainted) are not beneficially entitled to those funds. Funds in a foreign currency Segregated Account that have transfers into it from the ANZ AUD Segregated Account or have otherwise been involved in a Tainted Transaction have been tainted by those events and the transfer, irrespective of whether those funds were used for trading. Therefore, for the reasons stated at [83] to [86] above, such Sonray Clients are entitled to a rateable distribution from the Pool.

iv Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where funds not used for trading? 150 The same distinction needs to be drawn between a foreign currency Segregated Account that is tainted and that which is not tainted. The same result ensues: see [101]-[102] above.

v Sonray Client beneficially entitled to funds deposited directly into a foreign currency segregated account where, on the day those funds were transferred to that account from the ANZ AUD Segregated Account, the ANZ AUD Segregated Account was subject to Defalcations? 151 The answer is no. For the reasons stated above (see [92]), as soon as funds passed through the ANZ AUD Segregated Account, they were tainted. Those Sonray Clients are not beneficially entitled to those funds. For the reasons stated at [92] to [94] above, they are entitled to a rateable distribution from the Pool.

3 MARYLAND PTY LTD AS TRUSTEE FOR THE NORWEGIAN TRUST

a Entities and accounts associated with Maryland 152 There were a number of relevant individuals, entities and accounts associated with Maryland Pty Ltd, as trustee for the Norwegian Trust (Maryland): 1. Asian Corporate Advisors Ltd (ACAL), trustee of the Norwegian Trust until early 2011; 2. Maryland, trustee of the Norwegian Trust from early 2011; 3. WHD International Pty Ltd (WHD International), a Sonray Client; 4. APBC, a Sonray Client; 5. David William Deague, a director of Maryland; 6. William Hunter Deague, a director of APBC; and 7. Other members of the Deague family - Anthony Deague, Kristene Deague and Jono Deague. 153 The accounts recorded on SonrayTrader in the names of the following entities have been identified by the Liquidators as associated with Maryland and/or the Deague family: 1. APBC, which was assigned the identifier SKM000101 on SonrayTrader and linked to subaccounts SKM000101USD and SKM000101USDA; 2. WHD International, which was assigned the identifier SKM000112 on SonrayTrader and was not linked to any subaccount; and 3. Anthony Deague, who was assigned the identifier SXH000518 and linked to subaccount SXH000518A. 154 So far as the Liquidators are aware, neither APBC nor WHD International signed Client Application forms. 155 At all times that ACAL dealt with Sonray, ACAL was the trustee of the Norwegian Trust. In early 2011, Maryland replaced ACAL as trustee of the Norwegian Trust. Maryland is presently the trustee for the Norwegian Trust and the evidence was that in all its dealings with Sonray, Maryland only ever acted as trustee for the Norwegian Trust.

b The HSBC USD Singapore Segregated Account 156 On about 23 February 2010, Sonray opened the HSBC USD Singapore Segregated Account. On 23 February 2010, ACAL (as trustees of the Norwegian Trust) deposited USD 778,637 in the HSBC USD Singapore Segregated Account. 157 On 24 February 2010, a deposit fee of $6.99 was charged to the HSBC USD Singapore Segregated Account, reducing the balance of that account to USD 778,630.49. There were no further deposits to, or withdrawals from, the HSBC USD Singapore Segregated Account. The balance of the HSBC USD Singapore Segregated Account was, and has remained, USD 778,630.49. 158 Since depositing the moneys, ACAL has not withdrawn or received any moneys from the HSBC USD Singapore Segregated Account. 159 It was common ground that: 1. the funds deposited in the HSBC USD Singapore Segregated Account were not mixed and were not the subject of trading; 2. the HSBC USD Singapore Segregated Account is not deficient; 3. Regulation 7.8.03(6)(d) does not apply to the HSBC USD Singapore Segregated Account because the funds in the account were sufficient to meet payments under reg 7.8.03(6)(a)-(c); and 4. the funds deposited in the HSBC USD Singapore Segregated Account have not been mixed, have not been the subject of trading and the account cannot be pooled. 160 The Liquidators accepted that Maryland was entitled to the USD 778,637 in the HSBC USD Singapore Segregated Account. Regulation 7.8.03(6)(c) applies to the HSBC USD Singapore Segregated Account and Maryland is the only person entitled to be paid money from it. Accordingly, Maryland is entitled to a refund of the moneys deposited. However, there was a dispute about whether the Liquidators are entitled to set-off trading losses and claim a contribution for the Remuneration and Expenses against those funds. The Liquidators submitted they were entitled to do both. Maryland submitted that the Liquidators are required to immediately pay Maryland the entire balance of the HSBC USD Singapore Segregated Account without set-off or deduction. There are two answers. Maryland's entitlement to a refund is subject to set-off: see [113]-[115] above. However, as will be apparent, the Liquidators are not entitled to claim a deduction from the funds in the HSBC USD Singapore Segregated Account for their Remuneration and Expenses: see [302]-[306] below.

i Accounts 161 Sonray recorded three client accounts, SKM000101, SKM000101USD and SKM000101USDA, in the name of APBC. The Liquidators provided Maryland with client transaction reports for each of these accounts (Client Reports). Maryland submitted that all deposits recorded in the Client Reports for these accounts appeared to relate to deposits made by ACAL on behalf of the Norwegian Trust to Saxo. 162 The Liquidators determined that transactions relating to the following Deague family members and related entities were recorded in SKM000101, SKM000101USD, SKM000101USDA and SKM000112: 1. APBC; 2. David Deague; 3. ACAL/Maryland as trustee for the Norwegian Trust; 4. Kristene Deague; and 5. Jono Deague. 163 Sonray Client account number SKM000101 was denominated in AUD. Between 1 March 2010 and 22 June 2010 trading was conducted on SKM000101. As at 22 June 2010, it had a negative balance of $922,651.70. 164 Maryland submitted that SKM000101 was highly manipulated and recorded one deposit of Norwegian Trust moneys and that the Court should therefore find that SKM000101: 1. cannot be said to be an account of the Norwegian Trust; 2. records significant unauthorised withdrawals and unauthorised deposits; and 3. does not contain an account balance that is reliable. 165 Sonray Client account number SKM000101USD was denominated in USD. As at 1 March 2010, SKM000101USD had a nil balance. On 1 March 2010, USD 778,630.49 was credited to Sonray Client account number SKM000101USD, denominated in USD. There was no further activity recorded in SKM000101USD (i.e. no further deposits, withdrawals or trading recorded in that account) so that the balance of the Sonray Client account has remained USD 778,630.49. Following their investigations, the Liquidators concluded that the funds in SKM000101USD were used as collateral for trading conducted in SKM000101. Sonray Client account number SKM000101USDA, was denominated in USD. As at 22 June 2010, SKM000101USDA had a nil balance.

ii Analysis 166 Between September 2005 and September 2008, ACAL on behalf of the Norwegian Trust made 12 deposits into two accounts maintained by Saxo: 1. 11 deposits totalling USD 2,073,018.03 and AUD 239,249.70 into an account in the name of Saxo denominated in USD and held with Deutsche Bank in London; and 2. one deposit of AUD 121,737.29 into an account in the name of Saxo denominated in AUD and held with Deutsche Bank in London. 167 The deposits were recorded in one of SKM000101, SKM000101USD and SKM000101USDA. Unusually, those funds did not pass through a Segregated Account but went directly to Saxo. Saxo's accounts held with Deutsche Bank in London were part of its Omnibus Account: see [19] above. Funds in the Omnibus Account were not referable to any particular Sonray Client. Funds were not transferred to Saxo's Omnibus Account on a trade-by-trade basis but were transferred in order to remain within margin: see [19]-[26] above. In other words, those funds became part of the overall balance available for the assessment of Sonray's overall margin position with Saxo. 168 Maryland therefore seeks to prove for the moneys referred to at [166] against the Pool. As discussed at [81] above, Maryland's entitlement to a rateable distribution from the Pool arose upon payment of these funds to Sonray, whether or not those funds happened to have passed through a Segregated Account. Maryland is entitled to a rateable distribution from the Pool.. 169 Maryland submitted that the Liquidators are not permitted to set-off the balances in accounts SKM000101, SKM000101USD and SKM000101USDA because there is no mutuality of ownership and the account balances are unreliable. Maryland submitted that SKM000101USD and SKM000101USDA were not accounts of APBC, and only record moneys paid on behalf of the Norwegian Trust to Sonray. On the other hand, Maryland submitted SKM000101 cannot be said to be an account of the Norwegian Trust. 170 The Liquidators initially contended that the account name was determinative of whose account it is for the purposes of determining client entitlements. However, in reopening their case (see [118] above), the Liquidators accepted that who is a "client" was to be determined by reference to s 981A(1) of the Corporations Act, not by the name of a client account opened by the licensee. The Liquidators submitted that while ordinarily a client within the meaning of s 981A(1) will have an account opened in their name, that will not invariably be the case particularly where a fraud is committed. Accordingly, the Liquidators submitted the Court should accept that a person or entity could have an entitlement even though an account was not opened in that person's or entity's name. 171 The Liquidators attempted a reconstruction of SKM000101, SKM000101USD and SKM000101USDA, all being accounts in the name of APBC. The Liquidators were unable to do so because the exercise very quickly produced unrealistic results. For that reason, the Liquidators did not attempt a reconstruction of SKM000112. 172 The Liquidators determined that transactions relating to various Deague family members and related entities were recorded in SKM000101, SKM000101USD, SKM000101USDA and SKM000112. 173 The Liquidators accepted that it was open for the Court to conclude on the evidence that it could not be satisfied that the net account balance, or any Proposed Adjusted Account Balance, for SKM000101, SKM000101USD, SKM101USDA or SKM000112 was sufficiently accurate and reliable as a basis to determine entitlements because: 1. the Liquidators' attempt to reconstruct SKM000101 produced such an unrealistic result that it would be inappropriate to rely on it; 2. those accounts record deposits and withdrawals by various Deague family members and related entities, without any apparent regard for the intention of those entities; 3. during the hearing, evidence was given that: 3.1 David William Deague and William Hunter Deague were provided spreadsheets by Scott Murray on behalf of Sonray which they believed represented the account balance of a number of different Deague family members and related entities, but they were a complete fiction; 3.2 until Sonray went into voluntary administration, David William Deague and William Hunter Deague were not aware of the existence of the accounts identified as SKM000101 and SKM000112 on SonrayTrader; and 3.3 APBC, ACAL as trustee for the Norwegian Trust, and other Deague family members each believed they were clients of Sonray and authorised payments on their own behalf; 4. in the circumstances, it was reasonable to assume that SKM000101, SKM000101USD and SKM000101USDA and SKM000112 were house accounts used by Scott Murray to conduct risky trades on behalf of Sonray, rather than on behalf of APBC or any other Deague family member or related entity. 174 The Liquidators therefore concluded that APBC, ACAL/Maryland as trustee for the Norwegian Trust and the various Deague family members were in a different category to other Sonray Clients whose investment decisions exposed them to fluctuations in the market and whose entitlement should reflect the outcome of those decisions. The trading on SKM000101, SKM000101USD, SKM000101USDA and SKM000112 appeared to bear no relationship to any legitimate exercise of the general discretion given to Scott Murray to trade on behalf of any Deague related entity and, apart from actual deposits and withdrawals of money, were purely house accounts. Accordingly, the Liquidators submitted equity may require the adoption of a different basis for the calculation of the entitlements of these parties for the purposes of a rateable distribution of the Pool. 175 The Liquidators accepted Maryland's submissions that: 1. the evidence establishes that ACAL paid moneys on behalf of the Norwegian Trust to Saxo at the direction of Sonray; 2. those moneys should be regarded as moneys paid to Sonray for the purpose of s 981A(1); and 3. those moneys should therefore be taken into account in determining Maryland's entitlement on behalf of the Norwegian Trust. 176 Accordingly, the Liquidators agreed with Maryland that the Court should find that those clients whose deposits and withdrawals are recorded in SKM000101, SKM000101USD, SKM000101USDA and SKM000112 should be entitled to prove against the Pool on the equitable basis of their contribution taking into account withdrawals: see [123] above. In the circumstances, the Liquidators submitted this was a fair and appropriate basis to determine the entitlement of each of these clients to claim on funds in the Segregated Accounts. 177 The Liquidators further submitted that the adoption of a different basis for the calculation of the entitlements of APBC, ACAL/Maryland as trustee for the Norwegian Trust and the various Deague family members, has not and will not impose such costs on the administration as to be unfair to the remaining investors as a whole. Nor does it undermine the rationale for a rateable distribution of the deficient mixed fund. 178 As discussed at [126] above, if a Sonray Client considers that there is a more reliable basis on which to determine its entitlement to funds from the Pool, it will be open to that Sonray Client to adduce evidence to that effect, which if accepted by the Liquidators, will form the basis for calculating that Sonray Client's entitlement to funds from the Pool. Accordingly, where a Sonray Client comes forward with material which satisfies the Liquidators that it is inappropriate and/or unreliable to reconstruct their account(s) for the purposes of arriving at a Proposed Adjusted Account Balance, there is no reason in principle why the Liquidators cannot adopt an alternative methodology, such as contributions less withdrawals (see [123] above). Similarly, there may be circumstances in which an account is opened in one name but held for or on behalf of another by the named account holder. Any factual and legal questions of that kind could only and should only be made after a proper adjudication process and upon sufficient evidence. They are matters for the Liquidators during the proof of debt process. Having formed that view on sufficient evidence in respect of Maryland, there is no reason for the Court to interfere.

a Facts 179 Each of Bon River Pty Ltd ACN 059 666 750 (Bon River), Alisante Pty Ltd ACN 067 268 802 (Alisante) as trustee for the Neil Alexander Brand Family Trust and Alisante as trustee for the Alisante Super Fund executed a Client Agreement and Disclosure Document, being 'Version 10', dated 6 February 2009, containing terms and conditions governing the relationship between it and Sonray. 180 The following Sonray accounts were held by Alisante and/or Bon River: Sonray Account no. Account name Platform Provider U724665 Bon River A Account Interactive Brokers 80700/SXH001424 Bon River B Account Saxo U769048 Brand Trust Account Interactive Brokers U724670 Alisante Super Account Interactive Brokers

(collectively, the Brand Accounts). The Bon River A Account, the Brand Trust Account and the Alisante Super Account are all Sonray Client accounts linked with the Sonray Global I-Account (IB Brand Accounts). The Bon River B Account is a Sonray Client account linked with the Sonray master account maintained by Saxo. 181 The IB Platform enabled Bon River and Alisante to trade in single-stock futures, stocks, options, warrants, bonds, foreign exchange, futures and futures options.

i Transferred Cash 182 On 23 February 2009, Alisante deposited $50,000 into the ANZ AUD Segregated Account which was transferred to Interactive Brokers on 25 February 2009 and credited to the Alisante Super Account. On or about 24 February 2009, Alisante deposited AUD 40,000 to the ANZ AUD Segregated Account, which was ultimately credited to the Alisante Super Account held by Interactive Brokers. On or about 26 February 2009, Alisante and/or Bon River deposited $72,083.16 into the ANZ AUD Segregated Account, which was transferred to Interactive Brokers on 5 March 2009. On or about 1 June 2009, Brand deposited $60,000 into the ANZ AUD Segregated Account, which was transferred to Interactive Brokers on 2 June 2009 and credited to the Brand Trust Account. These amounts are collectively referred to as Transferred Cash.

ii Transferred Shares 183 The following shares (collectively the Transferred Shares) were transferred from the E*Trade accounts of Bon River and Alisante to their Bon River A, Bon River B and Alisante Super Accounts on various dates in the period between 24 February 2009 and 20 March 2009: Code Description Quantity Bon River A Account CFU Ceramic Fuel Cells Limited 50,000 AUY Yamana Gold Inc 6,500 CDE Coeur D'Alene Mines Corporation 17,600 SA Seabridge Gold Inc 3,000 Bon River B Account SMBMF SembCorp Marine Ltd 56,000 Alisante Super Account 1063 SunCorp Technologies Limited 44,000 ACTC Advanced Cell Technology Limited 213,868 DYE DYE Dyesol Ltd 3,000 LTBR Lightbridge Corporation 28,000 RXII RXi Pharmaceuticals Corporation 1,200

184 As at 22 June 2010, the following Transferred Shares remained in the respective accounts (collectively, Remaining Transferred Shares) as set out below: Code Description Quantity Bon River A Account CFU Ceramic Fuel Cells Limited 50,000 AUY Yamana Gold Inc 2,100 CDE Coeur D'Alene Mines Corporation 1,760 SA Seabridge Gold Inc 3,000 Bon River B Account SMBMF SembCorp Marine Ltd 56,000 Alisante Super Account 1063 SunCorp Technologies Limited 36,000 ACTC Advanced Cell Technology Limited 213,868 DYE DYE Dyesol Ltd 500 LTBR Lightbridge Corporation 2,433 RXII RXi Pharmaceuticals Corporation 1,200

iii Bon River B Account 185 No trading was ever conducted on the Bon River B Account maintained with Saxo. Cash held on that account relates to dividends and interest paid in respect of the SembCorp Marine Ltd shares: see [183] above.

iv Bon River A Account and Alisante Super Account 186 Share trading conducted on the Bon River A Account and Alisante Super Account was funded through the sale of Transferred Shares as well as Transferred Cash. That is, the acquisition of new shares was funded from the proceeds of trading in Transferred Shares as well as Transferred Cash. Bon River and Alisante also used the proceeds of sale of Transferred Shares and Transferred Cash to trade on the futures, options, forex and margin fx markets on the IB Brand Accounts. 187 Using the IB Platform, it was possible for account holders to purchase shares on their accounts even if there were insufficient funds available in cash to fund those share purchases, effectively creating a loan for the shortfall from Interactive Brokers. At no stage did Bon River or Alisante deposit cash to the IB Brand Accounts other than the Transferred Cash. 188 The IB Platform is able to generate activity statements for client accounts, which record that: 1. Interactive Brokers maintained separate balances for each of the AUD, USD, CAD, HKD, EUR positions traded on the IB Brand Accounts. These were reported in "Cash Reports" accessible from the IB Platform; 2. funds relating to Bon River and Alisante moved from the IB Brand Accounts maintained by Interactive Brokers to Sonray General I-Account only when Bon River or Alisante instructed that cash be withdrawn from Sonray and transferred to their own bank accounts; 3. funds relating to Bon River and Alisante moved from Sonray General I-Account to the IB Brand Accounts only when Bon River or Alisante deposited funds from their external bank account through the ANZ AUD Segregated Account; 4. whenever shares in the IB Brand Accounts were bought or sold: i. the purchase price or sale proceeds were directly debited from or credited to the relevant U Account in the currency corresponding with the exchange trading in the shares; ii. any cash realised from a sale remained in the relevant U Account and remained in a currency that corresponded with the exchange trading in the shares; and iii. funds relating to Bon River or Alisante were not subsequently transferred between the relevant IB Brand Accounts and the Sonray General I-Account, unless Bon River or Alisante deposited or withdrew cash from the accounts; 5. If there were insufficient funds in a particular currency recorded on a U Account to process a transaction, the transaction nevertheless proceeded, resulting in a negative cash balance for that currency being recorded on the U Account. If this occurred, the activity statements did not record any corresponding transfer of cash in or out of the account; and 6. all other cash credits or debits relating to shares on the U Accounts (dividends, commissions, broker interest) were allocated against the cash balance in the currency corresponding with the relevant share (for example, dividends paid into an account in respect of US shares was credited to the USD cash balance). 189 All non-Australian shares purchased by Bon River or Alisante on the IB Platform (ie all non-Australian shares other than the Remaining Transferred Shares) were acquired utilising one or a combination of: 1. the proceeds of sale of non-Australian Transferred Shares owned by Bon River or Alisante; 2. other cash credited in respect of non-Australian Transferred Shares (e.g. from dividends received in respect to non-Australian Transferred Shares or interest received in respect in respect to foreign currency balances); 3. funds "lent" by Interactive Brokers (giving rise to a negative cash balance on the accounts denominated in a currency corresponding to the foreign exchange on which the shares were acquired).

a. AUY Shares 190 Subsequent to the transfer of 6,500 shares in Yamana Gold Inc (a US company) (AUY Shares) from E*Trade to Bon River A Account on 4 June 2010, Bon River sold 4,400 AUY Shares for USD 47,389.04 leaving a balance of 2,100 AUY shares held in the Bon River A Account at 22 June 2010. After deduction of commission and tax, USD 35,552 was credited to the USD cash balance of the Bon River A Account.

b. CDE Shares 191 17,600 shares in Coeur D'Alene Mines Corporation (a company listed on the NYSE) (CDE Shares) were transferred from E*Trade to the Bon River A Account on or around 9 March 2009. On 7 May 2009, Bon River purchased 10,000 CDE Shares for USD 16,100 plus USD 200 in commissions/tax. The USD cash balance of the Bon River A account was debited with USD 16,300 and the Bon River A Account was credited with 10,000 CDE Shares. 192 On 8 May 2009, Bon River purchased 10,000 CDE Shares for USD 14,800 plus USD 200 in commissions/tax. The USD cash balance of the Bon River A account was debited with USD 15,000 and the Bon River A Account was credited with 10,000 CDE Shares. 193 At the opening of the New York Stock Exchange on 27 May 2009, all CDE shares were consolidated 10:1 such that Bon River's 37,600 CDE Shares were consolidated into 3,760 shares. 194 On 29 May 2009, Bon River purchased 1,000 CDE Shares for USD 14,820 plus USD 20 in commissions/tax. The USD cash balance of the Bon River A account was debited with of USD 14,840 and the Bon River A Account was credited with 1,000 CDE Shares. On 1 June 2009, Bon River purchased 1,000 CDE Shares for USD 15,249.90 plus USD 20 in commissions/tax. The USD cash balance of the Bon River A account was debited with USD 15,269.90 and the Bon River A Account was credited with 1,000 CDE Shares. 195 On 4 June 2010, Bon River sold: 1. 1,100 CDE Shares for USD 15,620.03 less USD 5.50 in commissions/tax. The USD cash balance of the Bon River A Account was credited with USD 15,614.53 and 1,100 CDE Shares were debited from the Bon River A Account; 2. 300 CDE Shares for USD 4,263 less USD 1.50 in commissions/tax. The USD cash balance of the Bon River A Account was credited with USD 4,261.50 and 300 CDE Shares were debited from the Bon River A Account.

c. STL Shares 196 Subsequent to the transfer of 44,000 shares in SunCorp Technologies Limited (STL) (referred to on the Hong Kong Stock Exchange as 1063) from E*Trade to the Alisante Super Account, Alisante sold 8,000 shares in STL for the sum of HKD 1,160 leaving a balance of 36,000 of the transferred STL shares in the Alisante Super Account at 22 June 2010. After deduction of commission and tax, the amount of HKD 1,139.95 was credited to HKD cash balance of the Alisante Super Account.

d. DYE Shares 197 Subsequent to the transfer of 3,000 shares in Dyesol Ltd (DYE) (a company listed on the ASX) from E*Trade to the Alisante Super Account, Alisante subsequently sold: 1. 1,200 DYE shares on 25 May 2010 for AUD 1,194, leaving a balance of 1800 DYE shares. After deduction of commission and tax, the amount of AUD 1,188 was credited to the AUD cash balance of the Alisante Super Account; and 2. 1,300 DYE shares on 7 June 2010 for AUD 1,280.50, leaving a balance of 500 DYE shares in the Alisante Super Account at 22 June 2010. After deduction of commission and tax, the amount of AUD 1,274.50 was credited to the AUD cash balance of the Alisante Super Account.

e. LTBR Shares 198 Subsequent to the transfer of 28,000 shares in Lightbridge Corporation (LTBR) (a US company listed on the NASDAQ, formerly known as Thorium Power Ltd (NASDAQ:THPW) from E*Trade to the Alisante Super Account, Alisante purchased: 1. 10,000 LTBR shares on 27 July 2009 for USD 3,000 plus USD 200 in commissions/tax. The USD cash balance of the Alisante Super Account was debited for the sum of USD 3,200 and the Alisante Super Account was credited with 10,000 LTBR shares; and 2. 35,000 LTBR shares on 28 July 2009 for the sum of USD 9,800, plus USD 700 in commissions/tax. The USD cash balance of the Alisante Super Account was debited for the sum of USD 10,500 and the Alisante Super Account was credited with 30,000 LTBR shares. 199 As at 28 July 2009, Alisante held 73,000 LTBR shares in the Alisante Super Account. 200 At the opening of the NASDAQ on 29 September 2009, Thorium Power Ltd changed its name to Lightbridge Corporation and all LTBR shares were consolidated 30:1 such that Alisante's 73,000 LTBR Shares were consolidated into 2433 shares. As at 22 June 2010, 2,433 LTBR shares were held in the Alisante Super Account. 201 The following non-Australian shares, which are not Transferred Shares, remain in the Bon River A Account and Alisante account: Code Description Quantity Bon River A Account CDE Coeur D'Alene Mines Corporation 2,600 ISCO International Stem Cell Corp 141,500 LTBR Lightbridge Corp 6,666 NNVC Nanoviricides 50,000 STP Suntech Power Holdings 500 Alisante Super Account BTX Biotime Inc 2,691 ISCO International Stem Cell Corp 20,000 STP Suntech Power Holdings 1,950

202 All Australian shares purchased by Bon River or Alisante on the IB Platform (i.e. all Australian shares other than Remaining Transferred Shares) were acquired utilising one or a combination of: 1. Transferred Cash; 2. the proceeds of sale of Australian Transferred Shares; 3. other cash credited in respect of Australian Transferred Shares (e.g. dividends, interest); and 4. funds "lent" by Interactive Brokers (giving rise to a negative AUD cash balance). 203 The following Australian shares, which are not Transferred Shares, remain in the Bon River A Account and Alisante account: Code Description Quantity Bon River A Account ARU Arafura Resources Limited 75,000 AZM Azumah Resources Limited 100,000 CTP Central Petroleum Limited 400,000 KCN Kingsgate Consolidated Limited 100 LNG Liquefied Natural Gas Limited 88 MEO OMEO Australia Limited 200,000 Alisante Super Account GLL Galilee Energy Limited 50,000 LNG Liquefied Natural Gas Limited 20,800 MOL Moly Mines Ltd 22,000 RMS Ramelius Resources Limited 10,000

vi Cash Position of the IB Brand Accounts 204 As at 22 June 2010, the position of the following accounts was as follows: Account Name Base currency (AUD) Net Asset Value Balance $ Bon River A $721,064.47 Bon River B $186,026.16 Brand Trust $29,617.56 Alisante Super $151,989.67

205 As at 30 June 2010, the position of the following accounts was as follows: Account Cash Stock Interest Accrual Dividend Accrual Net Position Bon River A ($118,708.60) $751,427.83 $1,083.17 $37.41 $633,839.80 Bon River B $9,874.88 $180,744.02 - - $190,618.90 Alisante Super ($61,822.67) $203,081.06 $8.12 - $141,266.50 Brand Trust $32,693.32 - $161.15 - $32,854.46

206 The Bon River A Account and the Alisante Super Account both show negative cash balances. Although the value of the Bon River A and Alisante Super Accounts is denominated in Australian dollars in the table above, the money held in those accounts is in various currencies including USD, the Canadian dollar, the Hong Kong dollar and the Japanese Yen (collectively, Foreign Currencies). 207 Between 30 June 2010 and 6 April 2011, there have been movements in the exchange rates between the Australian dollar and the Foreign Currencies. Generally, the Australian dollar has appreciated against the Foreign Currencies resulting in the positive cash balances in the Bon River A and Alisante Super Accounts being shown as at 6 April 2011 as follows: Account 30 June 2010 6 April 2011 Bon River A ($118,708.60) $12,316.09 Alisante Super ($61,822.67) $55.12

vii HIN and Saxo 208 The Liquidators are aware of: 1. 31 Sonray Client accounts on the Saxo Platform with account balances containing shares transferred from a client HIN to a HIN associated with Saxo valued at 22 June 2010 at $1,567,073.39; and 2. six Sonray Client accounts on the IB Platform with account balances containing shares transferred from a Sonray Client's HIN to a HIN associated with Interactive Brokers with a value as at 22 June 2010 of $1,213,783.66.

i Transferred Shares 209 As explained at [80] above, it is common ground that: 1. a Sonray Client is beneficially entitled to shares that were transferred from that Sonray Client's HIN to a Trading Platform (or a Provider's HIN) (Transferred Shares) where, as at the date of the Liquidators' appointment, the Transferred Shares remained on the Trading Platform in the relevant Sonray Client's account (Remaining Transferred Shares); and 2. Sonray Clients who deposited foreign currency directly into a foreign currency Segregated Account which is not a Tainted Segregated Account were entitled to those funds. These classes of Sonray Clients were not the subject of this application. 210 So, for example, the Liquidators accepted that: Bon River … and Alisante … executed Account Application Forms and transferred from their respective E*Trade accounts to Sonray accounts shares in a number of companies. They also opened cash accounts denominated in a number of foreign currencies. Since the shares thus transferred were never purchased with funds deposited into a Segregated Account, and therefore never mixed with other investor funds or tainted by unauthorised dealings, the Liquidators do not seek to include the shares of Alisante, Bon River and other investors in their position in any direction for pooling and rateable distribution.

ii Bon River B Account 211 This category is related to the Transferred Shares. As noted at [185] above, no trading was ever conducted on the Bon River B account maintained with Saxo. Cash held on that account was derived from dividends and interest paid in relation to one of the Transferred Shares, namely SembCorp Marine Ltd. Given the fact that the shares were not 'tainted', the Sonray Client is beneficially entitled to the income generated from those shares.

iii Brand Trust Account 212 The Brand Trust Account was on the IB Platform. It had no shares transferred to it. It contained Transferred Cash, being cash which went through the ANZ AUD Segregated Account) (see [182] above) and which is therefore 'tainted': see [92] above. These Sonray Clients are not beneficially entitled to the cash on the IB Platform. They are entitled to a rateable distribution from the Pool. 213 However, in respect of the IB Investors represented by Ward (see [226]ff below), the Liquidators and Ward agreed that IB Investors who deposited moneys into the ANZ AUD Segregated Account, and for whom between the time of their deposit to the Segregated Account and the transfer to the Interactive Brokers account, no unauthorised withdrawal occurred, they would be at liberty to seek to trace those funds. An IB Investor's ability to trace would be determined by ascertaining whether, between the time of the investor's deposit to the ANZ AUD Segregated Account and the relevant transfer to the Sonray Global I-Account, there was any Defalcation. The cost of gathering together the material relevant to the proof of debt in respect of the Brand Trust Account and submitting that claim to the Liquidators would be borne by Bon River and Alisante: see [241]-[248] below.

iv Shares on Platform not purchased with Tainted Funds (whether Australian or Non-Australian) 214 The Liquidators accepted that a Sonray Client is beneficially entitled to shares on a their subaccount on a Trading Platform provided that the shares were not purchased with money that passed through a Tainted Segregated Account or the proceeds of shares purchased with such money and were not otherwise "connected with" a Tainted Transaction.

v Australian Shares on IB Platform purchased with Tainted Funds 215 Bon River and Alisante accept that the Australian Shares in the Alisante Super Account and the Bon River A Account were acquired using funds including Transferred Cash. The Transferred Cash went through a Tainted Segregated Account, the ANZ AUD Segregated Account (see [182] above), and is therefore 'tainted': see [92] above. 216 The Transferred Cash was applied as follows: DATE AMOUNT DESTINATION 23.02.09 AUD 50,000 Alisante Super Account 24.02.09 AUD 40,000 Alisante Super Account 26.02.09 AUD 72,083.16 Bon River A Account 01.06.10 AUD 60,000 Brand Trust Account

217 The Transferred Cash was then used to: 1. acquire Australian Shares: see by way of example, [202] above; 2. withdraw funds from the IB Platform by Bon River and/or Alisante; 3. pay fees and commissions owing to IB and/or Sonray; 4. pay broker interest; and / or 5. engage in spot forex trading. 218 Shares purchased with Transferred Cash are assets purchased with deficient mixed client funds and should be treated as subject to the equitable charge or equitable tenancy in common in favour of all contributors to the Tainted Segregated Accounts: see [83] above. These Sonray Clients are not beneficially entitled to the Australian Shares on the IB Platform. They are entitled to a rateable distribution from the Pool.

vi Non-Australian Shares 219 In dealing with non-Australian Shares, it is necessary to exclude the shares held in Suntech Power Holdings (STP) because of the manner in which their acquisition was funded. STP will be dealt with under the next heading. 220 The balance of the non-Australian Shares (see [201] above) were all acquired utilising one or a combination of the proceeds of sale of non-Australian Transferred Shares owned by Bon River or Alisante, other cash credited in respect of non-Australian Transferred Shares (for example, from dividends received in respect to non-Australian Transferred Shares or interest received in respect in respect to foreign currency balances) and funds "lent" by Interactive Brokers: see [189] above. Those shares are held in the Sonray Client's name on the Interactive Brokers sub-platform. Those Sonray Clients are beneficially entitled to those shares which remain recorded in those accounts.

vii STP Shares 221 STP is a non-Australian share. Bon River and Alisante submitted that because the shares were purchased using funds loaned by Interactive Brokers denominated in USD which were debited to an account always in deficit (and not the proceeds of spot forex funds), the STP Shares were untainted. Thus Bon River and Alisante submitted that the STP Shares were to be treated along with the other non-Australian shares. I reject that contention. The evidence disclosed that the Interactive Brokers loan account was, at all relevant times, in deficit. However, the negative balance in that USD account does not alter the fact that the account was tainted. To take just one example, the evidence disclosed that the balance in that account had been made less negative by the deposit of the proceeds of spot forex transactions which themselves were tainted. There is no basis, legally or factually, for treating the STP Shares on any different basis to other shares purchased with tainted funds.

viii Australian Shares on IB Platform purchased with a combination of proceeds of Transferred Shares and Tainted Funds 222 It was common ground that shares acquired on the IB Platform with a combination of proceeds of Transferred Shares and Transferred Cash are, as a matter of legal principle, held in tenancy in common between the transferring investor and the pool of investors in proportion to the funds used to acquire those shares. 223 The area of dispute between the Liquidators and Bon River and Alisante concerned how to practically resolve this apportionment. Bon River and Alisante submitted that there was no difficulty in ascertaining the proportion of tainted to untainted contributions because it was possible to trace the transactions. They submitted that unlike the Tainted Segregated Accounts, the Transferred Cash had not been intermixed with other Sonray Client funds and there is no deficiency in the IB Brand Accounts. Therefore, Bon River and Alisante contended it was possible for the Liquidators to trace the tainted contributions in (and through) the IB Brand Accounts by applying the rule in Clayton's Case. The Liquidators disputed this contention and submitted that it was practically difficult (although not impossible) to calculate the proportions. 224 Again, in the end the solution is a practical one. If a Sonray Client adduces evidence to the Liquidators sufficient to establish the proportion of tainted to untainted contributions, then the Sonray Client will be beneficially entitled to the untainted proportion and will be entitled to a rateable distribution from the Pool for the tainted proportion. 225 Consistent with the usual approach, the Sonray Client will bear the cost of gathering together the material relevant to the proof of debt and submitting that claim to the Liquidators. The Liquidators will bear the cost of determining whether to accept or reject that proof in whole or in part. Any appeal will be determined in accordance with the Corporations Act, Regulations and Corporations Rules: see, by way of example, ss 554A and 1321 of the Corporations Act, reg 5.6.43A and r 14.1 of the Corporations Rules

5 WARD AS TRUSTEE FOR THE AWARD SUPERANNUATION FUND

a Introduction 226 Roland Mark Ward (as trustee for the Award Superannuation Fund (ABN 66 473 078 418)) (Ward) represented himself and all Sonray Clients claiming an entitlement to financial instruments and/or money held by Interactive Brokers (excluding Bon River and Alisante) (collectively the IB Investors): see [4] above. 227 There are 210 Sonray Client accounts with account balances comprising financial products and cash held on the IB Platform, with a value as at 22 June 2010 of $8,829,887.30. As at 10 October 2011, the combined balance of those accounts was $10,658,968.70. The funds and products are held in 210 Sonray Client subaccounts. 228 With the exception of 12 "unallocated" deposits totalling $151,116.33 which the Liquidators believe are held in the ANZ AUD Segregated Account (the unallocated deposits), there are no funds in the Segregated Accounts representing deposits or withdrawals in relation to IB Investors. Thus, when Sonray Client positions were closed, funds were allocated to the relevant "U" account (the Sonray Client subaccount) on the IB Platform. No funds were returned to the Liquidators. 229 This section deals first with the unallocated deposits, then the specific facts of this Contradictor and finally analyses the situation of investors in the same position as this Contradictor.

b Application of reg 7.8.03(6) to IB platform and/or the unallocated deposits? 230 Ward submitted, and I accept, that reg 7.8.03(6) has no application to the accounts on the IB Platform. 231 However, that does not change the outcome in relation to the unallocated deposits. The unallocated deposits remain in the Segregated Accounts. It was common ground that the moneys remaining in the Segregated Accounts cannot be distinguished as belonging to any particular beneficiary. It was also common ground that the Segregated Accounts should be pooled either pursuant to s 981H of the Corporations Act and reg 7.8.03(d) and/or because contributors to a deficient mixed fund hold an equitable charge over that fund and its traceable proceeds: see [79] and [83] above.

c Ward 232 On 16 March 2010, Roland Mark Ward and Lisa Ward (as trustees for the Award Superannuation Fund (ASFT)) signed a Sonray Client Agreement 'Version 2.0 040909'. On or about 19 April 2010, Sonray opened Sonray Global trading account numbered U879674 for ASFT. On or about 9 June 2010, a new account (numbered U901847) was opened for ASFT, shortly after which time all cash and securities held in account U879674 were transferred into the new account. 233 On or about the following dates, ASFT purchased the following products via the IB Platform: 1. on 14 May 2010 - 1 unit of Market Vectors Junior Gold Miners EFT, for USD 29.01; 2. from 17 May to 14 June 2010 - 865 units of VXX ETN for a total price of USD 25,437.40; and 3. from 14 to 22 June 2010 - a further 150 units of VXX ETN. 234 On 28 June 2010, ASFT sold 1 unit of VXX ETN. 235 The total recorded holdings of cash and financial instruments held with Interactive Brokers as at 22 June 2010 was $30,342.19, consisting of cash of AUD 829.54 and exchange traded notes issued by Barclays Bank with a market value as at 22 June 2010 of AUD 29,512.65.

d Analysis of the accounts on the IB platform 236 There are two categories of IB Investors - those who transmitted funds through the ANZ AUD or HSBC Segregated Accounts and those who did not. I will deal with each in turn.

i IB Investor funds never deposited into Segregated Accounts 237 It was common ground that those IB Investors whose funds did not transmit through the ANZ AUD or HSBC Segregated Accounts are entitled to receive the assets (money and financial instruments) allocated to their respective "U" accounts on the IB Platform subject to any set-off for trading losses and any necessary deductions for Liquidators' Remuneration and Expenses. Thus, any order for pooling of the assets on the IB Platform must be subject to those claims. In fact, there was no evidence to suggest that there was any such IB Investor. 238 Although this aspect ultimately was not in dispute, it is appropriate that the reasons for adopting such an approach are stated. First, although it is accepted that where beneficiaries' funds are mixed in a common pool such that, after the mixing, the funds are partly dissipated and partly retained or invested in an asset held by the trustee, each beneficiary may assert a charge over the amount remaining in the account and any assets that can be identified as having been acquired, after the mixing, by the use of funds taken from the account, it cannot be assumed that particular moneys or instruments held on the IB Platform were acquired with funds passing through accounts affected by Defalcations. That conclusion, however, does not create difficulties for the Liquidators. The onus is on those seeking to trace into (and assert a charge over) the assets so "acquired", to prove their acquisition was made without the funds being paid into and/or passing through the Segregated Accounts: Re Diplock v Wintle [1948] Ch 465 at 521. 239 Mr Ward submitted that he was not in a position to know or to inform the Court as to how the moneys or instruments held on the IB Platform in subaccounts for the 210 or so IB Investors were derived and that each IB Investor should be given the opportunity on submitting a proof of claim, to assert and prove whether or not moneys used to acquire property now held on the IB Platform in a subaccount in their name, were transmitted through a Segregated Account. I agree. 240 Of course, if assets or moneys held on the IB Platform cannot be positively so identified, they will necessarily be treated as if they had been transmitted through the ANZ AUD or HSBC Segregated Accounts.

ii IB Investors who transmitted funds through ANZ AUD or HSBC Segregated Accounts 241 It was common ground that some IB Investors for whom money held on the IB Platform passed through the Segregated Accounts (or for whom financial instruments were acquired with such money) may well, if afforded the opportunity, be able to establish an interest in specific property by tracing and that those who can do so should be distinguished from those who cannot. In particular, Ward submitted that those who may be able trace are the IB Investors who deposited moneys into the ANZ AUD Segregated Account (rather than the HSBC Segregated Accounts) and for whom, between the time of their deposit to the Segregated Account and the transfer to the Interactive Brokers account, no unauthorised withdrawal occurred. Ward submitted that those investors have a realistic prospect of tracing because: 1. In the absence of a Defalcation occurring between (or on the same day as) a given client deposit and a transfer, the deposit is not "tainted" by Defalcations coming before or after: Re French Caledonia at [191]-[192]; and 2. Whether or not a Defalcation has occurred at the relevant time can be identified by reference to a Defalcations spreadsheet prepared by Liquidators which identified 1049 unauthorised dealings between 16 February 2005 and 22 June 2010 that affected the funds held in the ANZ AUD Segregated Account (Defalcations Spreadsheet). 242 The Defalcations Spreadsheet lists the amounts and dates of the Defalcations identified by the Liquidators. 243 The fact that Ward's submission has been recorded does not suggest that the Court accepts the submission. The accuracy of the Defalcations Spreadsheet is in doubt: see [53] above. It is for that reason that it is necessary to address the proof of debt process.

e Pooling and Proof of debts? 244 Given the uncertainties, Ward and the Liquidators reached agreement about the pooling order and the process for addressing proofs of debt from IB Investors (except Bon River and Alisante). 245 In relation to pooling, Ward and the Liquidators agreed that the assets on the IB Platform and the funds in the Segregated Accounts should be pooled subject to: 1. those IB Investors who can establish that their funds did not transmit through the ANZ AUD or HSBC Segregated Accounts are entitled to receive the assets (money and financial instruments) allocated to their respective "U" accounts on the IB Platform subject to any set-off for trading losses and any necessary deductions for Liquidators' costs; and 2. those IB Investors who deposited funds with Sonray through the ANZ AUD Segregated Accounts and who can establish that the assets held on the IB Platform and allocated to their respective "U" accounts should be excluded from the pooling order. 246 As a result, for those IB Investors that did not submit a tracing claim or whose claims failed, the assets allocated to their respective "U" accounts on the IB Platform would be pooled with the other assets and each of those investors would have an equitable charge over the residual pool of mixed funds. The charges would abate rateably (with the charges of all other Sonray Clients) and the rateable proportions would be determined by reference to the "U" account balance subject to any set-off for trading losses and any necessary deductions for Liquidators' Remuneration and Expenses. 247 The only other agreed aspect relates to the IB Investors who deposited moneys into the ANZ AUD Segregated Account (rather than the HSBC Segregated Accounts) and for whom, between the time of their deposit to the Segregated Account and the transfer to the Interactive Brokers account, no unauthorised withdrawal occurred. Ward and the Liquidators agreed that the effect of Defalcations from the Segregated Accounts on an investor's ability to trace would be determined by ascertaining whether, between the time of the investor's deposit to the ANZ AUD Segregated Account and the relevant transfer to the Sonray Global I-Account, there was any Defalcation. If there was no Defalcation, then the investor would be entitled to receive the assets (money and financial instruments) allocated to their respective "U" accounts on the IB Platform subject to any set-off for trading losses and any necessary deductions for Liquidators' costs. 248 For the purposes of determining whether there was a relevant intervening Defalcation, Ward and the Liquidators agreed that the Liquidators would not reject a proof of debt because the Defalcations had not been investigated and proved. Instead, the parties agreed that the Liquidators would determine the proofs on the basis of the Defalcations Spreadsheet and any specific additional Defalcations identified by them as relating to an individual claim. As Counsel for Ward submitted, the Sonray Clients bear the cost of gathering together the material relevant to the proof of debt and submitting that claim to the Liquidators. The Liquidators bear the cost of determining whether to accept or reject that proof in whole or in part. Any appeal will be determined in accordance with the Corporations Act, Regulations and Corporations Rules: see, by way of example, ss 554A and 1321 of the Corporations Act, reg 5.6.43A and r 14.1 of the Corporations Rules.

a Introduction 249 Efax Pty Ltd (Efax) is the trustee of the Paul Leonard Scharrer Family Trust. On 5 June 2009, Efax applied to open a trading account with Sonray. On 31 August 2009, Efax applied to open an account with E*Trade sponsored by Sonray as Efax's nominated financial advisor. In the application form Efax declared that it authorised Sonray to give effect to its instructions "regarding execution and settlement of my/our securities transactions" and that Efax would "be bound by all such instructions". 250 On or about 7 September 2009, Efax executed a Sonray Client Agreement and Disclosure Document 'Version 10'. By entering into this agreement, Efax appointed Sonray as its agent. The agreement included the following clauses: 1. PURPOSE [Efax] wishes Sonray to deal in exchange-traded and over-the-counter financial products on their behalf in accordance with the Client's instructions from time to time, and in accordance with the terms and conditions contained in this Agreement. … 2. INTERPRETATION … "agent" means a legal entity undertaking a transaction or function on behalf of another legal entity but in its own name; … 3. [EFAX] REPRESENTATIONS AND WARRANTIES … (xiv) in executing this Agreement, [Efax] will appoint Sonray as its agent for the purposes of dealing with financial products in accordance with this Agreement; … 4. [EFAX] ACKNOWLEDGEMENTS [Efax] acknowledges to Sonray that: (i) Sonray will deal or instruct third parties to deal on behalf of [Efax], in the financial products; (ii) Sonray will utilise the execution and settlement services of appropriately licensed third parties on behalf of [Efax] in order to provide the services detailed in this Agreement. … (ix) any benefit or right obtained by Sonray upon registration of an exchange traded or over-the-counter financial products with a clearing house is personal to Sonray and such benefit or right shall not pass to [Efax]; … 6. AUTHORISATIONS AND INSTRUCTIONS (a) [Efax] hereby authorises Sonray to trade in the financial products on their behalf pursuant to the prior approval and instruction of [Efax], or otherwise in accordance with Sonray's rights elsewhere under this Agreement. … (f) The Client has appointed Sonray as its agent for the purposes set out in this Agreement and conferred upon Sonray authority to do, or omit to do, all things reasonably necessary to perform its functions and all things reasonably incidental to the performance of its functions; (g) [Efax] will execute or otherwise authorises Sonray to execute all such agreements as required to enable the provision of the services contemplated in this Agreement. [Efax] appoints Sonray as [Efax's] attorney to do all things necessary to enter into such agreements on [Efax's] behalf. … 11. SEGREGATED ACCOUNTS [Efax] agrees and acknowledges that: i. All money and property deposited by [Efax] with Sonray, or received by Sonray on behalf of [Efax], shall be segregated by Sonray and invested in accordance with applicable legal and regulatory requirements; … iii Whist [Efax's] money and property is segregated from Sonray's money and property, it may be co-mingled with the money and property of other Sonray clients; … 251 Sonray allocated the account number "SXH001855" to Efax. Sometimes the account number carried a prefix "80700". 252 On or around the following dates, the following amounts were deposited by Efax into the ANZ AUD Segregated Account (a mixed fund): 1. 18 January 2010 - $176,000; and 2. 25 January 2010 - $3,000,000, (collectively the Efax Deposits). The payments were confirmed by ANZ to Efax by letters dated 26 July 2010. The letters record the "Agent Number" as "3352293". The credits to the ANZ AUD Segregated Account are recorded on the bank statements for that account. No deposits of those specific amounts were made by Sonray to the Saxo ANZ Sonray Account or the Saxo Float Account (see [19] above) in the following months. 253 On or about the following dates, Efax placed orders with Sonray to buy a total of 78,824 shares in BHP Billiton Limited (BHP Shares): 1. 16 April 2010 - 23,041 BHP shares; 2. 22 April 2010 - 23,724 BHP shares; and 3. 28 April 2010 - 32,059 BHP shares. 254 The following paragraphs demonstrate the sequence of events and involvement of the parties in purchase of the BHP Shares. 255 By way of example, Efax extracted the documentation which recorded the purchase on 16 April 2010 of 23,041 BHP shares as follows: 1. on 16 April 2010 (some three months after the deposit of funds to the ANZ AUD Segregated Account), Efax instructed Sonray to purchase 23,041 BHP Shares. Sonray's activity log records that on 15 April 2010 at 00:42:57 (GMT), an order was placed to buy 23.041 BHP Shares in relation to account 80700/SXH001855; 2. Saxo's records record that the order was placed with Saxo Bank A/S and lists account number "80700/SXH001855" and the "Counterpart ID" as "3352293"; 3. In turn, Saxo then placed the order with UBS. The statement produced by UBS records that the order was settled on 21 April 2010. The statement did not refer to Efax; 4. UBS then executed the order through UBS Securities Australia Limited (UBS Securities). If a Sonray Client (such as Efax) used SonrayTrader to give instructions to acquire particular shares in a company listed on the Australian Stock Exchange, Saxo would not enquire as to the identity of that Sonray Client. The instructions would be automatically routed to UBS Securities and UBS Securities would acquire the shares. The shares would be recorded in the UBS Omnibus Account and the particular subaccount of Saxo's White Label Client, in this case, Sonray; 5. Following settlement of the order on 21 April 2010: 5.1 Citicorp Nominees Pty Limited (Citicorp) received from UBS a settlement instruction in relation to the shares. The settlement instruction did not refer to Efax; 5.2 Sonray debited Efax's account with it in the sum of $1,000,357.10 and recorded the purchase of 23,041 BHP Shares; and 5.3 Sonray sent Efax a form entitled "Transfer of CHESS sponsored Holdings Out" (the Transfer Form). 256 The Transfer Form allowed a purchaser of shares to nominate the party in whose name the shares were to be registered. The form, signed on behalf of Efax, stated that Efax required the BHP Shares held in the following custodial account to be transferred to a HIN in the name of Efax: Citicorp Melbourne A/C UBS AG London branch A/C IPB Segregated Client A/C Swift: CITIAU3X UBS Securities Custodial A/C No. 2081220000 Further Credit: I0003202 (Designated Sonray A/C) PID: 20018 The form was signed by Efax and sent to Sonray. Sonray received the form after it had been placed in voluntary administration. 257 As at 22 June 2010, Efax's account summary on SonrayTrader (see [4] above) indicated a cash balance of AUD 41,039.62 and 78,824 BHP Shares to the value of AUD 3,167,199.45. Until recently, Citicorp still held the 23,041 BHP Shares in a CHESS account having HIN 0000607339 on behalf of UBS. An undertaking given to the Supreme Court of New South Wales prevented any dealing in the BHP Shares adverse to Efax's claim. 258 The manner in which Efax placed the orders and Sonray executed those orders has been described at [255] above. The funding of these orders occurred as follows: 1. The funds used to the purchase the BHP Shares came from the UBS Omnibus Account: see [27] above. As explained at [29] above, Saxo never deposited money into the UBS Omnibus Account or any other account for the specific purpose of purchasing these BHP Shares. Indeed, for the period from 16 to 29 April 2010, the only AUD transactions recorded were a deposit of AUD 600,000 on 16 April 2010 from ANZ and a deposit of AUD 100,000 from Saxo's CFD trading account with UBS; 2. No funds were received by Saxo from Sonray between 3 March and 14 May 2010; 3. In April 2010, the only transfer of funds between Saxo and Sonray was the payment of commission by Saxo to Sonray of AUD 774,969.57 on 8 April 2010. 259 BHP has since paid dividends on the BHP Shares. Efax believes that the money representing the dividends is held by UBS in an account with Citicorp. Efax asserts that as purchaser of the BHP Shares it is entitled to the dividends. 260 There are 766 similar Sonray Client accounts with account balances comprising shares held by Saxo with a value as at 22 June 2010 of $20,482,168.55.

b Analysis 261 It is common ground that the Court "should not sanction the release of funds to persons who have no legal entitlement to them": Australian Securities and Investments Commission v Edwards [2009] QSC 360 and Australian Securities and Investments Commission v Idylic Solutions Ltd (2009) 76 ACSR 129. 262 Efax submitted that it, not Sonray, was entitled to be registered as the owner of the BHP Shares on the basis that they were ordered on Efax's behalf at the instance of Sonray as Efax's agent. Thus Efax submitted that the Court should not direct the Liquidators to deal with the BHP Shares because Sonray has no legal or equitable interest in the BHP Shares. Put another way, Efax submitted that its entitlement to the BHP Shares did not arise in the administration as it was entitled to be registered as owner of the BHP Shares. 263 On the other hand, the Liquidators submitted that Efax was not entitled to be registered as owner of the BHP Shares because there was no identifiable or allocated property in which to trace and, without registration, Efax does not have and could not have legal title to the BHP Shares. For the reasons that follow, I reject the Liquidators' submissions. 264 First, Sonray was authorised to act on behalf of Efax in relation to the trading of financial products and acted as its agent when it purchased the BHP Shares: see [250] above and NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270 at [522]. That Sonray was authorised to act, and did act, as Efax's agent when it purchased the BHP Shares is apparent from the express terms of the Sonray Agreement and Disclosure Document between Sonray and Efax dated 23 July 2009: see [250] above. 265 Sonray not only acted as agent but it did so with Saxo's knowledge: see [15]-[31] and [250] above. For present purposes, I am prepared to assume that Saxo did not know the identity of the principal. However, the fact a principal existed and that Sonray was at all times acting for or on behalf of a principal, was disclosed to Saxo: see cf Maynegrain Pty Ltd v Compafina Bank [1982] 2 NSWLR 141 at 150. 266 The effect of the purchase by Sonray through Saxo was that Efax acquired beneficial title in the BHP Shares because that was what Sonray (as agent) was authorised to do and what Sonray (as agent) did do. Only Sonray, the agent, asserted any rights over the BHP Shares in competition with Efax. Given the legal relationship between the parties, Sonray has no right or title to those shares. 267 Saxo did not purchase shares for Sonray on executing the order placed by Sonray. Indeed, the custodian ultimately sought the name in which the shares were to be registered: see [255]-[256] above. Both Sonray and Saxo knew they were acting for Efax or a Sonray Client. The identification of the order and the transaction by Saxo was by an account number for a Sonray Client. Even if Saxo did not know Efax's identity, that does not alter the analysis. Saxo knew Sonray was acting on behalf of a client in placing the order. An unidentified principal is not the same as an undisclosed principal: Marsh & McLennan Pty Ltd v Stanyers Transport Pty Ltd [1994] 2 VR 232. 268 In my view, Saxo carried out Sonray's instructions in executing the orders so that Sonray, and no other, was Efax's agent to purchase. There was nothing preventing the agent (Sonray) engaging a third party to undertake certain tasks. That does not alter the conclusion that the purchaser was Efax. If there was any relationship between Saxo and Sonray in relation to the BHP Shares it was one of debtor and creditor. Saxo made the purchase using its own money, or that of UBS, and "on credit" at the instance of Sonray: see [15]-[30] and [255] above. Saxo does not contend that Sonray is indebted to it in relation to the BHP Shares. 269 Given the nature of the relationship between Sonray and Saxo and the fact that no claim is made by Saxo against Sonray, no question of any right of indemnity or any debt obligation to Saxo arises. 270 What then about the position between Efax and Sonray? Under the Client Agreement, Efax was obliged to pay the two sums into the ANZ AUD Segregated Accounts in January 2010. Sonray held those moneys subject to the statutory trusts imposed under the Corporations Regulations and as Efax's agent under a common law duty to make restitution of those moneys in the event that Efax required their return: Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662. That remained the position up to and until the order was placed for the BHP Shares. Once Efax placed the orders, it became obliged to pay Sonray or its agent the cost of the shares and any necessary commission or other incidentals. This sum was, to use the terms in subclause 9(b) of the Client Agreement, "an amount outstanding by the Client to Sonray or Sonray's agent in a transaction effected on the Client's behalf". Therefore, from the moment the first order was placed, Sonray became entitled under subclause 9(b) of the Client Agreement to appropriate the consideration for that order from the moneys received from Efax. 271 When Sonray debited Efax's account with the sum of AUD 1,004,357.10 on 16 April 2010, its obligation to account to Efax for the moneys deposited in January 2010 was reduced by that amount. Put another way, that entry in Sonray's accounts constituted a legitimate appropriation by Sonray (under subclause 9(b) of the Client Agreement) of the consideration for the first order. The position in relation to the subsequent orders of the BHP Shares is the same. 272 By carrying out its obligation to order the BHP Shares and settle or cause the settlement of those orders, Sonray discharged its obligation to account to Efax for the moneys deposited in January 2010 out of the Segregated Account or from its own assets. Sonray's debits to Efax's account on 16, 22 and 29 April 2010 with the amounts due on each order reflected that it had carried out the instructions of its principal, Efax. 273 The only step to complete the instructions that was not completed was to cause the BHP Shares to be registered in Efax's name by remitting the directions form at the request of Efax. Sonray discharged all of its other obligations under the Client Agreement and Efax discharged its obligations to pay for the BHP Shares. 274 The Liquidators' submission that the BHP Shares were held in a pool by custodian Citicorp and were not identifiable to any particular Sonray Client, in the case of Efax, is incorrect legally and factually. It is incorrect because Sonray purchased the BHP shares as Efax's agent and, moreover, Sonray's business records identify that the purchase of these BHP Shares by Sonray were referable only to Efax. Further, as noted earlier, no one except Sonray contests Efax's title to the shares. Sonray's claim contradicts a fundamental principle of agency that an agent is estopped from seeking to deny his principal's title in property acquired or held as agent: Lyell v Kennedy (1889) 14 App Cas 437 and Ward v Carttar (1865) LR 1 Eq 29. 275 Three other matters should be noted. First, Sonray, as Efax's agent, has in its possession the document to enable Efax to be registered as the owner of the BHP Shares. As Counsel for Efax submitted, that document is not an asset in the administration. It is a document provided by a principal to an agent to enable the agent to complete its instructions. Sonray should comply with Efax's instructions and effect the registration. 276 Secondly, the proposition that Sonray has a better title to the BHP Shares than Efax and Efax is left with a mere claim as a contributor of funds to the assets of Sonray is also incorrect legally and factually. Sonray did not purchase the BHP Shares in its own right. It purchased the BHP Shares on Efax's instructions. Moreover, any converse suggestion would be contrary to s 991B of the Corporations Act. Under s 991B(2), if a client instructs a financial services licensee (such as Sonray) to buy or sell financial products and the licensee has not complied with the instruction, then the financial services licensee is prohibited from entering into a transaction of purchase or sale of financial products of that class. It would be an absurd result if the Court was to sanction an illegal act. 277 Finally, such a contention is contrary to established principles of agency law. An agent is not necessarily a trustee. It is a fiduciary: Parker v McKenna (1874) LR 10 Ch App 96; Cave v McKenzie (1877) 46 LJ Ch 564 at 567; Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch D 339; Peninsular & Oriental Steam Navigation Co v Johnson (1938) 60 CLR 189; Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 at 350. Where property is sold by the intervention of an agent but legal title remains temporarily with the vendor, in equity the title vests in the principal, not the agent. Even where actual title has passed to the agent, he holds it as a trustee who is bound to follow the directions of his principal with respect to the property: Owners Strata Plan No 43551 v Walter Construction Group Ltd (2004) 62 NSWLR 169 at [46]; Zen Foundation One P/L & Ors v Sippy Downs Group P/L & Ors [2009] QSC 334 at [80]-[81]. 278 Indeed, when an agent has authority to receive and pay over moneys received on behalf of his principal, the principal will be deemed to have received and paid those moneys: Petersen v Moloney (1951) 84 CLR 91. In answer to this principle of agency law, the Liquidators relied upon cl 4(ix) of the Client Agreement (see [250] above) which stated "any benefit or right obtained by Sonray upon registration of an exchange traded or over-the-counter financial products with a clearing house is personal to Sonray and such benefit or right shall not pass to the Client". The Liquidators submitted that clause constituted an acknowledgement by Efax that it had no personal equitable interest in any of the shares held by Sonray. I reject that submission. The subject of the clause is a benefit or right obtained by Sonray. If, as I have found, Saxo was the purchasing agent, Sonray obtained no benefit or right in the BHP Shares. If, as I have found, Sonray was the agent to the purchase, any right was acquired for the principal Efax and, therefore, there is not a benefit or right "obtained by Sonray" on which the clause operates. Even if there were a benefit or right vested in Sonray, the clause would not operate to alter the fact that Sonray held that right as a bare trustee. As Counsel for Efax submitted, given the nature of the relationship between the parties, the preferable construction of cl 4(ix) is that it is dealing with any collateral benefits that Sonray may enjoy, such as commissions or rebates. 279 Before leaving Efax, it is necessary to address one of the Liquidators' submissions - that Efax did not acquire legal title to the BHP Shares because it was necessary for Efax to be registered as the holder of the shares. As Efax submitted, the submission that legal title to the shares was only obtained upon registration is wrong. Torrens land is the almost the only form of property in Australia where registration is the act that confers title: Breskvar v Wall (1971) 126 CLR 376 at 385. 280 Shares are not in the same category. Sections 168 and 169 in Ch 2C of the Corporations Act require a company to keep a register of its shareholders' names and addresses and details of shares held by individual shareholders. Section 176 of the Corporations Act provides that in the absence of evidence to the contrary, a register kept under Ch 2C is proof of the matters shown in the register. Section 176 is an evidentiary provision. It stands in stark contrast with Pt III of the Transfer of Land Act 1958 (Vic), which establishes a system of title by registration: see especially s 42, which provides that the estate of a registered proprietor is paramount. No equivalent provision is found in the Corporations Act. 281 Indeed, in Pt 7.11 of the Corporations Act, s 1070A provides that a share is personal property transferrable as provided by the company's constitution or the operating rules of a prescribed CS (clearing and settlement) facility if they are applicable. A CS (clearing and settlement) facility includes the ASX. Rule [4040] of the operating rules of the ASX states: Subject to [4041], upon matching in a Trading Platform of Trading Messages in accordance with these Rules, a contract is formed between the Trading Participants whose Trading Messages are matched: a in the case of Cash Market Transactions, for the sale and acquisition of the relevant Cash Market Products at the price and volume matched and subject to these Rules; … (Emphasis added.) 282 "Trading Participant" is defined to mean "a Market Participant which has a Trading Permission in respect of one or more Products". "Market Participant" does not extend to Efax or Sonray but it is effectively confined to members of the Exchange, such as UBS. The Operating Rules do not specify when legal title is transferred. Title is transferred in accordance with the terms of trade between the Market Participant and the client of the Market Participant. In the present, case, the Market Participant (UBS) purchased the shares for its client (Saxo) which, in turn, had purchased the BHP Shares as agent for Sonray. Title was transferred to Saxo (as agent for its principal) either at contract or upon settlement. Both had occurred here. Legal title was acquired at the instance of Efax by its agent - Sonray. 283 Shares are personal property. In fact, the contract was formed between two Market Participants, one of whom is UBS Securities and the other of whom is the vendor's broker. UBS obtained legal title for its principal (Saxo) by force of s 1070A of the Corporations Act and the ASX Operating Rules. It did so by settlement as agent of, or on behalf of Saxo, who was agent of Sonray who, in turn, was agent of Efax. 284 Contrary to the Liquidators' contention, Efax's position did not involve a tracing exercise. Efax claimed title as purchaser through its agent, whom it had paid, or caused to be paid. 285 At the end of the hearing, a Settlement Deed between Sonray and Saxo was tendered in evidence (Saxo Settlement Deed). Under the Saxo Settlement Deed, Saxo and HLB Mann Judd agreed to pay Sonray $18,500,000 as a settlement sum (the Settlement Sum). No payment was made to Saxo. Also, Saxo waived any right it had to prove in Sonray's liquidation and waived any right to the "Shares": cl 8. "Shares" was defined in Sch 4 to the Saxo Settlement Deed. The Shares included the BHP Shares. Saxo also agreed to transfer the "Shares" to Sonray: cl 3.4. Sonray holds the Shares not in its own right but as agent for Efax. It does not and cannot hold them on any other basis.

7 TRAVEL ARCADE PTY LTD AND ROBERT JOSEPH SCOLARO 286 As at 22 June 2010, the account balances for the accounts held by Travel Arcade Pty Ltd (Travel Arcade) and Robert Joseph Scolaro comprised the following amounts: Scolaro (U637855) Travel Arcade (U637854) Cash (230,958.87) (14,233.40) Stock 786,006.11 262,640.75 Options - (26,512.28) Interest accruals (786.70) 29.14 Dividend accruals 5,554.54 1,480.36 TOTAL 559,815.00 223,404.57

287 Mr Scolaro filed substantial written submissions and forwarded extensive material to the Court in support of a contention that particular aspects of his investments with Sonray should be treated in an identified manner. 288 In light of that material, it is apparent that the positions of Mr Scolaro and Travel Arcade have already been addressed. To the extent that Mr Scolaro and Travel Arcade were clients of Interactive Brokers, their position appears to be no different to that addressed by Mr Ward in his capacity as a representative of that category of investor. 289 One unusual feature of Travel Arcade's position as a client of Interactive Brokers was the assertion by Mr Scolaro (on behalf of Travel Arcade) that: Appendix 20 contains the Interactive Brokers statement for Travel Arcade for 1 July 2010 to 30 June 2011. This was after lnteractive Brokers placed the account in close-only mode. All events happened automatically without my intervention. During this period, 3 short Put options were assigned and the associated shares were received and paid for. The loan amount increased from $14,233.40 to $75,315.69 as seen in the Cash Report on page 4. Where did the money come from? It is inconceivable that the Liquidators transferred money from Sonray. The increased loan must have come from lnteractive Brokers. The Liquidators submitted (and I agree) that this issue is a factual matter that can be dealt with at the adjudication stage provided for in Annexure A to the Orders. 290 Mr Scolaro and Travel Arcade are also HIN Investors. To that extent, their position appears to be no different to that addressed by Bon River and Alisante and, in particular, Alisante: see [179] to [225] above.

F. REMUNERATION AND EXPENSES 291 On 8 December 2010, Finkelstein J directed that, pursuant to s 511 of the Corporations Act, if the assets of Sonray are insufficient to pay the Remuneration and Expenses of the Liquidators, the Liquidators would be justified, and would otherwise be acting reasonably, in causing the Remuneration and Expenses fixed by a Registrar to be paid from the Segregated Accounts in the manner prescribed by them for the attribution to particular Segregated Accounts or otherwise: Georges (Liquidator), in the matter of Sonray Capital Markets Pty Ltd (in liq) [2010] FCA 1371. 292 The Liquidators sought to supplement Finkelstein J's directions to: 1. accommodate any pooling of Segregated Accounts, shares and other money pursuant to any pooling order made by this Court; and 2. broaden the asset base from which their Remuneration and Expenses may be paid, to ensure that the cost burden of investigating and administering the affairs of Sonray, including entitlements to money and shares beneficially owned by Sonray Clients, is borne by most (if not all) who benefit from the work expended and the costs incurred in that endeavour. 293 To the extent that the Liquidators' Remuneration and Expenses, whether as former Administrators or as Liquidators, exceeds the assets of Sonray which it holds beneficially, the Liquidators sought recourse to: 1. any account created to receive the Pool (the Client Fund); and 2. the Transferred Shares, but only to the extent that the Remuneration and Expenses relates to dealing with claims of Sonray Clients claiming an in specie entitlement to the Transferred Shares.

a Client Fund 294 It is appropriate to supplement Finkelstein J's directions to accommodate the orders for pooling made by this Court. No party objected to the Liquidators having recourse to the Client Fund.

b Transferred Shares 295 To the extent that the Transferred Shares can be characterised as being subject to a trust other than a bare trust, the Liquidators are entitled to an equitable lien over those shares to secure their Remuneration and Expenses for certain activities in relation to that money: Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99. That equitable lien is not discretionary: French Caledonia at [211]. 296 In 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377 at 385, Finkelstein J stated that: … provided a liquidator is acting reasonably he is entitled to be indemnified out of trust assets for his costs and expenses in carrying out the following activities: identifying or attempting to identify trust assets; recovering or attempting to recover trust assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; distributing trust assets to the persons beneficially entitled to them. The position is a little more involved as regards work done and expenses incurred in what may be described as general liquidation matters. If that work is unrelated to the beneficiaries and their claims it is difficult to see how the cost could be charged against their assets. In the case of a company that has carried on business as a trustee it might be that much of the work involved in the liquidation is chargeable against trust assets if it can be shown that the liquidation is necessary for the proper administration of the trust. But it is unlikely that this will be so where the company did not act solely as trustee or at least did not act in that capacity to a significant extent. In that event the liquidator will be required to estimate the costs that are attributable to the administration of trust property and only those costs will be charged against the trust assets. 297 Alternatively, if the Transferred Shares are characterised as being held by or on Sonray's behalf as a bare trustee, those shares are still chargeable provided that what the Liquidators do is by way of vindication of the rights associated with the trust property: CGU Insurance Limited v One.Tel Limited (in liq) (2010) 242 CLR 174. 298 The Liquidators do not have an immediately enforceable right of recoupment for fees and expenses out of the trust property: Parbery (in their capacity as joint and several administrators of Trio Capital Ltd (Admin App)) v ACT Superannuation Management Pty Ltd (2010) 79 ACSR 425 at 431-432. The Liquidators are required to appeal to the Court's inherent equitable jurisdiction in the administration of trusts to seek allowance "where it appears clear that the remuneration and expenses are for work done for the benefit of the trust": Trio Capital at 431. Whether such allowance is granted is a matter for the Court's discretion, having regard to all of the circumstances of the case. Recourse to trust assets for remuneration and expenses is sparingly exercised: Trio Capital at 433. 299 In the circumstances, the Liquidators should be entitled to have recourse to the Transferred Shares for payment of their Remuneration and Expenses, but only to the extent that their Remuneration and Expenses relates to dealing with claims of an in specie entitlement to those shares. 300 The Liquidators submitted, and I accept, that they acted in the capacity of a trustee "to significant extent". The Liquidators acted reasonably in "identifying or attempting to identify trust assets" in the form of the Transferred Shares, as distinct from shares purchased with funds from a Tainted Segregated Account, or a mixture of the proceeds of the sale of Transferred Shares and money from a Tainted Segregated Account, and in arriving at a lawful basis for "distributing trust assets to the persons beneficially entitled to them". 301 Irrespective of whether the Transferred Shares were held by or for Sonray as a bare or other trustee, the work of the Liquidators and the expenses incurred by them in order to identify, ascertain and ultimately deliver the entitlements of Sonray Clients, including this application, should be met in part from those assets to ensure equality and fairness of treatment of all Sonray Clients: see French Caledonia at 428 discussing Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1989] Ch 32. The Transferred Shares should be charged with a fair share of the Liquidators' Remuneration and Expenses to the extent that they relate to dealing with claims of an in specie entitlement to those shares. That recourse should extend to the power to sell a sufficient number of the shares to cover the relevant portion of the Liquidators' Remuneration and Expenses.

c Funds in the HSBC USD Singapore Segregated Account 302 As discussed earlier (see [160]), subject to set-off, Maryland is entitled to a refund of the moneys deposited in the HSBC USD Singapore Segregated Account. Maryland submitted that no deduction should be made for the Liquidators' Remuneration and Expenses in relation to this application or any work associated with other Segregated Accounts or the liquidation generally, including work undertaken to ascertain, get in, protect and preserve the assets of Sonray. 303 The Liquidators were not faced with a complex set of facts in relation to the moneys in the HSBC USD Singapore Segregated Account: see [156]-[160] above. Save for a deposit fee, following the initial deposit of funds into the HSBC USD Singapore Segregated Account, there were no further deposits into, or withdrawals from, that account. There was no comingling of moneys. There was no deficiency. There was no Defalcation in relation to that account. There was no payment of moneys from the ANZ AUD Segregated Account into the HSBC USD Singapore Segregated Account and therefore no issue of tainted moneys. The identity of the depositing Sonray Client was clear. 304 Furthermore, the moneys were already in the Singapore Segregated Account on 22 June 2010. There is no evidence of any compensable effort being made or expenses being incurred to protect or preserve the trust moneys in the Singapore Segregated Account or to facilitate distribution of those moneys to Maryland. 305 The liquidators' application was not made to protect or preserve the trust moneys in the Singapore Segregated Account. It was made to protect the liquidators from subsequent claims that they acted unreasonably or inappropriately. Applying the regulatory regime, the only possible beneficiary of the moneys in the HSBC USD Singapore Segregated Account was Maryland on behalf of the Norwegian Trust. In circumstances where Maryland was requiring payment of the moneys in the HSBC USD Singapore Segregated Account, the Liquidators did not require protection from subsequent suit. The Liquidators (in their capacity as trustees) were under no duty to take advice in relation to payment of the trust moneys in the Singapore Segregated Account. There was already a clear regulatory regime which could have, and should have, been applied without the need for advice from the Court or otherwise. 306 Having regard to all the circumstances in relation to the HSBC USD Singapore Segregated Account, the Court should refuse to exercise its discretion (see [298] above) in favour of the Liquidators. No deduction for the Liquidators' Remuneration and Expenses should be made to the funds in the HSBC USD Singapore Segregated Account.

G. ORDERS 307 The Liquidators provided draft orders. The Contradictors each commented on the draft orders. In all the circumstances, the appropriate declaration and directions are as follows: 1. The Liquidators are directed to pool the following assets into the Client Fund: 1.1 The Segregated Accounts (but excluding the funds held in the HSBC USD Singapore Segregated Account, being account number 260-696760-178 held at the Singapore Branch of HSBC); 1.2 The Saxo Shares (but excluding shares referred to in Order 6) to the extent they come within the Liquidators' Control; 1.3 The Interactive Broker Balances (but excluding shares referred to in Order 6); 1.4 The Recovered Money. 2. For the purpose of pooling under order 1, the Liquidators are directed to: 2.1 give directions to Interactive Brokers to liquidate all financial products held under Sonray's consolidated account at Interactive Brokers (excluding Transferred Shares and shares referred to in paragraph 6(c)); 2.2 give directions to Saxo to liquidate all Saxo Shares (excluding Transferred Shares and shares referred to in paragraph 6(c)); 2.3 convert into Australian dollars any foreign currency in their or Sonray's control (but excluding the money referred to in order 8); 2.4 give to Interactive Brokers, Saxo or any bank which maintains a Segregated Account any instructions necessary or desirable to give effect to order 2. 3. The Liquidators and Sonray are directed to disburse the Client Fund in the following order: 3.1 in payment of the Remuneration and Expenses in accordance with Order 6; 3.2 in payment of the indemnity for defendants in accordance with Order 4 made on 5 September 2011; 3.3 in payment of $2,000 to Michael Hart in respect of his legal expenses of participating in this proceeding; and 3.4 all Entitlements in full and, if the Client Fund is insufficient to meet the Entitlements in full, proportionately to each Sonray Client's respective Entitlements. 4. For the purpose of calculating and paying disbursements under order 4, the Liquidators are directed to treat Sonray Clients with an Entitlement of $50 or less as having no entitlement to participate in the Client Fund. 5. The Liquidators are directed to deliver to any Sonray Client any: 5.1 Transferred Shares held by or on behalf of Saxo or Interactive Brokers at the date of these orders; 5.2 the Proceeds of Transferred Shares but excluding Proceeds mixed with Tainted Money; and 5.3 any other shares purchased with Proceeds of Transferred Shares but excluding shares purchased partly with Tainted Money. 6. To the extent that the Remuneration and Expenses of the Liquidators, whether as former Administrators or as Liquidators, exceed the assets of Sonray which it holds beneficially, the Liquidators and Administrators are entitled to have recourse to: 6.1 the Client Fund; and 6.2 the Transferred Shares (but only to extent that the Remuneration and Expenses relate to dealing with claims of Sonray Clients claiming an in specie entitlement the Transferred Shares). 7. The Liquidators are directed to sell sufficient Transferred Shares and/or shares referred to in 5.3 to pay amounts payable under order 6.2. 8. The Liquidators are directed to have their Remuneration, whether as former Administrators or as Liquidators, determined by: 8.1 a resolution of Sonray's creditors as if ss 473(3)(b)(i), (4), (4A), (5), (6), (10) and (12) of the Corporations Act apply mutatis mutandis; or 8.2 as if r 9 of the Federal Court (Corporations) Rules 2000 (Cth) applied mutatis mutandis. 9. In these Orders the following words have the following meaning: Administration means the administration of Sonray by the Administrators pursuant to Pt 5.3A of the Corporations Act commencing on 22 June 2010 and ending on 27 October 2010; Administrators means George Georges and John Ross Lindholm in their capacities as administrators of Sonray during the period of its Administration; Client Fund means an account at an authorised deposit-taking institution under the control of the Liquidators established for the purposes of order 2 to be disbursed according to these Orders; Corporations Act means the Corporations Act 2001 (Cth); Entitlement means the amount of a particular Sonray Client's Proposed Adjusted Account Balance or Proposed Account Balance on the Client Fund determined in accordance with the adjudication process set out in Annexure A; Expenses means expenses incurred by the Liquidators in the Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts, including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 8. identifying claims which may be brought to benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 9. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; 10. instructing lawyers to: 10.1 advise in relation to any of the matters referred to above; and 10.2 commence this application. 11. the Liquidators' costs in respect of the procedure referred to in paragraph 5 of the order made by Justice Finkelstein on 8 December 2010; 12. the Liquidators' costs and expenses of this application on an indemnity basis. Interactive Broker Balance means the Entitlement of a Sonray Client in respect of the trading platform provided to Sonray by Interactive Brokers; Interactive Brokers means Interactive Brokers LLC (a company incorporated in Delaware in the United States); Liquidation means the liquidation of Sonray by the Liquidators pursuant to Pt 5.5 of the Corporations Act commencing on 27 October 2010; Liquidators means George Georges and John Ross Lindholm in their capacities as liquidators of Sonray during the period of its Liquidation; Proceeds means the proceeds of sale, interest, dividends or other corporate actions paid or affecting shares; Proposed Adjusted Account Balance has the definition given in Annexure A; Proposed Account Balance has the definition given in Annexure A; Recovered Money means the following money received by the Liquidators: 1. $725,000 received from Russell Johnson, Jill Murray, John Murray and Merrilee Murray; 2. $199,116.15 received from Scott Murray; 3. $400,000 from John Murray on behalf of Swann Global Pty Limited; and 4. $457,818.91 from RJ Capital Pty Ltd in respect of the Sorrento Property; Remuneration means such remuneration of the Liquidators in respect of their Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. realising or attempting to realise funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 8. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 9. identifying claims which may be brought which may directly or indirectly benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 10. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; and 11. instructing lawyers to: 11.1 advise in relation to any of the matters referred to above; and 11.2 commence and continue this application. Segregated Accounts means: 1. Australia and New Zealand Banking Group account numbers 013006-1087-85428, 120824CAD00001, 120824USD00001, 120824NZD00001, 120824JPY00001, 120824GBP00001, 120824EUR00001, 120824CHF00001; 2. Hong Kong Shanghai Banking Corporation account numbers 001-225333-002, 001-225333-003, 001-225333-901, 001-225333-160, 001-225333-904, 001-225333-900, 001-225333-902, 001-225333-903, 001-225333-159 and 260-696760-178; and 3. Macquarie Cash Management Account number 961006129. Saxo means Saxo Bank A/S ARBN 109 605 610 (a company incorporated in Denmark); Saxo Shares means shares held by Saxo and acquired on the instructions of any Sonray Client and including dividends or other corporate actions paid or affecting those shares on and from 22 June 2010; Sonray means Sonray Capital Markets Pty Limited (in liquidation) ACN 104 482 993; Sonray Client means a client of Sonray, whether transacting on the SonrayTrader, Sonray Global and/or WebTrader trading platforms; Sorrento Property means volume 08826 folio 535, known as 32 Boston Court, Sorrento; Tainted Money means any money that has passed through a Australia and New Zealand Banking Group Limited BSB 013-006 account number 1087-85428; Transferred Shares means shares transferred direct from a Sonray Client's HIN to Saxo or Interactive Brokers (or their respective custodians). I certify that the preceding three hundred and seven (307) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate: Dated: 10 February 2012 ANNEXURE A 1 Subject to paragraph 5, in respect of Sonray Clients whose accounts appear to the Liquidators to have unfunded transactions the Liquidators will reverse out: (a) the unfunded deposits; (b) the unfunded withdrawals; (c) the trading or withdrawals attributable to the unfunded deposits and unfunded withdrawals (including GST, interest, commission and sundry items), to arrive at the Proposed Adjusted Account Balance. 2. Subject to paragraph 5 and except for Sonray Clients with an Entitlement of $50 or less, in respect of Sonray Clients whose accounts do not appear to the Liquidators to have unfunded transactions, the Liquidators will write to each such Sonray Client indicating the Liquidators propose to adopt the account balance as it stood at 22 June 2010 according to the trading platform on which that particular investor traded with Sonray to calculate that investors entitlement (Proposed Account Balance). 3. The Liquidators will invite any Sonray Client who does not agree with the Proposed Account Balance or the Proposed Adjusted Account Balance (as the case may be) to provide, within 21 days, additional information and particulars about the adjustments that the Sonray Client contends ought be made to the Proposed Account Balance or the Proposed Adjusted Account Balance (as the case may be). 4. Within 28 days of receipt of any information provided pursuant to paragraph 3, the Liquidators will notify the Sonray Client whether or not the Liquidators propose to vary or alter the Proposed Account Balance or Proposed Adjusted Account Balance (as the case may be) and that determination shall be binding unless and until the Liquidators and the Sonray Client each agree to a different balance or a Court determines an appeal by that investor pursuant to s 1321 of the Corporations Act and directs or orders a different balance be adopted. 5. For the purposes of determining a Proposed Account Balance or a Proposed Adjusted Account Balance, the Liquidators shall set-off any positive account balances against any negative account balances in all accounts owned by the same Sonray Client on any trading platform (both positive and negative account balances to be determined as at 22 June 2010). ANNEXURE B Expenses means expenses incurred by the Liquidators in the Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts, including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 8. identifying claims which may be brought to benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 9. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; 10. instructing lawyers to: 10.1 advise in relation to any of the matters referred to above; and 10.2 commence this application. 11. the Liquidators' costs in respect of the procedure referred to in paragraph 5 of the order made by Justice Finkelstein on 8 December 2010; 12. the Liquidators' costs and expenses of this application on an indemnity basis. Remuneration means such remuneration of the Liquidators in respect of their Administration of Sonray and Liquidation of Sonray relating to the Segregated Accounts including: 1. the ascertainment of the nature and value of the position of the assets and liabilities relevant to the Segregated Accounts; 2. the investigation of the financial relationship between Sonray and the Segregated Accounts; 3. the identification of the creditors who may claim in respect of the Segregated Accounts and any matters necessary to determine appropriate action to be taken in relation to the Segregated Accounts on behalf of Sonray including action to preserve and protect the Segregated Accounts; 4. identifying or attempting to identify the source of money held in the Segregated Accounts; 5. recovering or attempting to recover funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 6. realising or attempting to realise funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 7. protecting or attempting to protect funds or other assets the proceeds of which should have been held in the Segregated Accounts on or before 22 June 2010; 8. distributing funds held in the Segregated Accounts to the persons beneficially entitled to them; 9. identifying claims which may be brought which may directly or indirectly benefit the Segregated Accounts or reduce other claims against it, being in either case claims relating to funds or other assets which should have been held in the Segregated Accounts on or before 22 June 2010; 10. reviewing and dealing with claims by any person to any entitlements in respect of the Segregated Accounts; and 11. instructing lawyers to: 11.1 advise in relation to any of the matters referred to above; and 11.2 commence and continue this application.