Hung v Warner, in the matter of Bellpac Pty Ltd

Date of hearing: 13 May 2013

Date of last submissions: 13 May 2013

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 70

Counsel for the Appellants: Mr I R Pike SC and Mr J E Lazarus

Solicitor for the Appellants: JT Law Pty Ltd (t/a) Tomaras Lawyers

Counsel for the First and Second Respondents: Mr N Cotman SC and Mr S A Wells

Solicitor for the First and Second Respondents: Breene and Breene Solicitors

Solicitor for the Third Respondent: Filed a Submitting Notice on 29 October 2012

Solicitor for the Fourth Respondent: Filed a Submitting Notice on 25 October 2012

Solicitor for the Fifth Respondent: Filed a Submitting Notice on 29 October 2012

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1492 of 2012

AUSTCORP INTERNATIONAL LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 003 132 090)

AND: ANTHONY JOHN WARNER & STEVEN KUGEL IN THEIR CAPACITIES AS JOINT & SEVERAL LIQUIDATORS OF BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

JUDGES: JACOBSON, GORDON & ROBERTSON JJ DATE OF ORDER: 17 May 2013 WHERE MADE: SYDNEY

1. The appeal is dismissed.
2. The appellants pay the respondents' costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth). IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1493 of 2012

AUSTCORP INTERNATIONAL LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 003 132 090)

AND: ANTHONY JOHN WARNER & STEVEN KUGEL IN THEIR CAPACITIES AS JOINT & SEVERAL LIQUIDATORS OF BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

JUDGES: JACOBSON, GORDON & ROBERTSON JJ DATE OF ORDER: 17 may 2013 WHERE MADE: SYDNEY

1. The draft notice of appeal comprising Ex D to the affidavit of John Tomaras sworn 2 October 2012 stand as the Notice of Appeal.
2. The appeal is dismissed.
3. The appellants pay the respondents' costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth)

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1492 of 2012

AUSTCORP INTERNATIONAL LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 003 132 090)

AND: ANTHONY JOHN WARNER & STEVEN KUGEL IN THEIR CAPACITIES AS JOINT & SEVERAL LIQUIDATORS OF BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

JUDGES: JACOBSON, GORDON & ROBERTSON JJ DATE: 17 may 2013 PLACE: SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1493 of 2012

AUSTCORP INTERNATIONAL LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 003 132 090)

AND: ANTHONY JOHN WARNER & STEVEN KUGEL IN THEIR CAPACITIES AS JOINT & SEVERAL LIQUIDATORS OF BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

BELLPAC PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 101 713 017)

JUDGES: JACOBSON, GORDON & ROBERTSON JJ DATE: 17 may 2013 PLACE: SYDNEY

A. INTRODUCTION 1 These two appeals (NSD 1492 of 2012 and NSD 1493 of 2012) concern the ownership of a parcel of convertible bonds with a face value of $2 million (the Bonds). 2 On 5 August 2008, Gujarat NRE Minerals Limited (Gujarat) issued convertible bonds to the second respondent (Bellpac) with a face value of $10 million. The $10 million convertible bonds included the Bonds. The terms and conditions on which each of the Bonds was issued included that: … Title Title to a Bond is vested absolutely in the person entered in the Register as the holder of the Bond (the Bondholder) and passes by transfer and registration. … Transfer Bonds are freely transferable. Application for a transfer of Bonds must be made by the lodgement with the Issuer (or an agent designated by it for such purpose) of a duly completed Transfer Form. … Legal & Jurisdiction The Bonds are issued subject to the laws applying in New South Wales and the jurisdiction of its courts.

At all times, Bellpac remained listed in the Register as the holder of the Bonds. 3 The first appellant, Ken Yuk Kee Hung (Ken Hung), attempted to become registered as the holder of the Bonds. Ken Hung had asked Gujarat to register him as the holder of the Bonds, having presented certificates in respect of the Bonds together with transfers purportedly signed on behalf of Bellpac (defined by the trial judge as the Impugned Transfers). That attempt to register the transfer of the Bonds prompted the commencement of these proceedings by Bellpac and the first respondent, the liquidators of Bellpac (collectively, the Bellpac Parties) seeking a declaration that Bellpac was entitled to ownership of the Bonds as against Ken Hung and the second appellant, Austcorp International Limited (Austcorp). 4 The trial judge concluded that Bellpac was the "true owner" of the Bonds: Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (in liquidation) (No 2) [2011] FCA 1123 (the Substantive Judgment). The Substantive Judgment was handed down on 30 September 2011. On 27 September 2012, the trial judge made the following declaration and order: 2. DECLARES that [Bellpac] is the true owner of the 8% convertible bonds issued to [Bellpac] by Gujarat … on or about 23 July 2008 and described as: a. Series I bonds (1000001-1000010); b. Series II bonds (2000001-2000010); c. Series III bonds (3000001-3000010); and d. Series IV bonds (4000021-4000030); (the … Bonds). 3. ORDERS that [Ken Hung] deliver up, or otherwise do all things as are reasonably necessary to cause to be delivered up, to [the Bellpac Parties] the original certificates and the originals and copies of all signed transfer forms in connection with the … Bonds, which are presently in the custody of Mr Brian Gillard, solicitor, in his capacity as independent stakeholder. (the Declaration and Order). Ken Hung and Austcorp have appealed the making of the Declaration and Order (NSD 1492 of 2012). 5 In addition to the challenge to the trial judge's conclusion that Bellpac remained the "true" owner of the Bonds, Ken Hung and Austcorp also sought leave to appeal from the dismissal of an amended interlocutory process filed by Ken Hung and Austcorp on 23 March 2012 (as amended on 26 March and 14 May 2012) (referred to as the Dismissal Application): Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (in liquidation) (No 3) [2012] FCA 819 (the Dismissal Judgment). The Dismissal Application was heard after the Substantive Judgment was delivered but before the Declaration and Order were made. The Dismissal Application sought an order that Ken Hung and Austcorp be granted leave to file an amended defence asserting that the proceeding was improperly constituted and defective for want of proper joinder with the result that the Court was precluded from making the Declaration and Order. Ken Hung and Austcorp also sought an order that the proceeding be dismissed for want of proper joinder. The parties who were the subject of the Dismissal Application, and who Ken Hung and Austcorp submitted should have been joined, were other bondholders who had received transfers of bonds and who had become registered on the Register as bondholders (Other Holders). The trial judge dismissed the Dismissal Application and made the Declaration and Order. Although the appellants sought leave to appeal, it was common ground that the appellants did not require leave to appeal from the trial judge having dismissed the Dismissal Application. 6 For the reasons that follow, we would dismiss both appeals. These reasons will consider the proceedings below and then each appeal in turn.

B. THE PROCEEDINGS BELOW 7 Much of the factual matrix was not in dispute. 8 There was no dispute that Gujarat issued convertible bonds with a face value of $10 million to Bellpac on about 5 August 2008 and that the terms on which those bonds were issued included the terms extracted at [2] above. As noted above, it was Ken Hung's attempt to become registered as the holder of the Bonds that prompted the commencement of these proceedings by the Bellpac Parties seeking a declaration that Bellpac was the true owner of the Bonds as against Ken Hung and Austcorp. It is that step that is said to provide the foundation for much of this appeal. 9 Paragraph 3 of the amended statement of claim filed by the Bellpac Parties pleaded that Ken Hung "purports to be current owner of the [Bonds]". Ken Hung filed a defence in which he claimed to have acquired beneficial ownership of the Bonds by a series of transactions involving Bellpac, Alfred Chi Wai Wong (Alfred Wong), Shan Pei Investments Limited (Shan Pei) and Austcorp. The series of transactions was listed in para 3(a) of Ken Hung's defence as follows: (i) on about 5 August 2008, Gujarat issued the Convertible Bonds to Bellpac; (ii) on about 6 August 2008, Bellpac assigned its interest in the Convertible Bonds to Shan Pei; (iii) on about 6 August 2008, Shan Pei assigned its interest in the Convertible Bonds to Alfred Wong; (iv) on about 17 October 2008, Alfred Wong assigned his interest in [the relevant $2 million of convertible bonds to Austcorp]; and (v) on about 17 November 2009, Austcorp assigned its interest in [that $2 million of convertible bonds] to Ken Hung. Paragraphs 3(ii)-(v) (inclusive) were defined by the trial judge as the Impugned Transactions. A defence was filed in the same terms by Austcorp. 10 The Bellpac Parties admitted para 3(a)(i). In relation to paras 3(a)(ii)-(v), the Bellpac Parties' reply stated that, if it was found that the transactions contended for by Ken Hung and Austcorp did take place (which was denied in relation to para 3(a)(ii) and not admitted in relation to paras 3(a)(iii)-(v)), then: 1. the alleged transactions did not validly assign any legal or equitable interest in the Bonds and were ineffective by reason of the requirements of the Conveyancing Act 1919 (NSW) (Conveyancing Act); and 2. such a transaction was voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth) (the Corporations Act) because it was an uncommercial transaction within the meaning of s 588FB of the Corporations Act and / or an insolvent transaction within the meaning of s 588FC of the Corporations Act. 11 As the trial judge noted (at [40]), the principal focus of the proceedings was whether at some time after the convertible bonds were issued by Gujarat (and prior to the signature of the Impugned Transfers), there was an effective assignment of the $10 million convertible bonds from Bellpac to Shan Pei and then from Shan Pei to Alfred Wong. As the trial judge explained it, if there was no effective assignment from Bellpac to Shan Pei and from Shan Pei to Alfred Wong, Ken Hung had no entitlement to have the Impugned Transfers registered and had no entitlement to retain possession of the certificates in respect of the Bonds: at [40]. 12 At trial, the appellants were represented by the same counsel and solicitors. Danny Kam Yun Au-Yeung (Danny Au-Yeung) was also represented by solicitors and counsel. His primary position was to support the Bellpac Parties' contentions that there was no effective transfer or assignment of the Bonds by Bellpac to Shan Pei. Although one firm of solicitors filed defences on behalf of Alfred Wong, Danny Au-Yeung and Shan Pei, ultimately those solicitors withdrew representation for Alfred Wong and Shan Pei. Alfred Wong appeared in person and Shan Pei did not thereafter participate in the proceedings at first instance or on appeal.

C. THE APPEAL - NSD 1492 of 2013 13 The notice of appeal filed by Ken Hung and Austcorp raised four appeal grounds: 1. His Honour erred in finding (at [56]) that the appellants bore the onus of establishing that Bellpac disposed of its beneficial ownership of the convertible bonds, in light of the following matters: a. the [Bellpac Parties] were the moving parties in the Court below, in that they sought a declaration that Bellpac was the "true owner" of the bonds; b. neither of the appellants sought any relief in the proceedings below; c. the legal title to the relevant bonds was not in issue in the proceedings, the only issue being their beneficial ownership; d. contrary to his Honour's finding at [55], there is no presumption that the legal owner of the bonds owns them in Equity; e. his Honour failed to apply the presumption that the possessor of property is presumed to be its owner; and f. that the [Bellpac Parties] were alleging what in effect amounted to fraud affected the question of onus, and ought to have resulted in the [Bellpac Parties] bearing an even heavier onus in the circumstances. 2. His Honour erred in failing to find that [the Bellpac Parties] failed to discharge their onus of proving that Bellpac did not dispose of its interest in the convertible bonds for value and/or that the impugned transactions either did not occur or were otherwise invalid. 3. His Honour erred in drawing adverse inferences arising from the failure to call … Au-Yeung or Eric Ng (at [78]). 4. His Honour erred in finding (at [139]) that s 23C(1)(c) of the Conveyancing Act 1919 (NSW) applied to render ineffective each of the impugned transactions …: 14 Grounds 1 and 2 may be described as the onus grounds. Ground 3 is concerned with Jones v Dunkel (1959) 101 CLR 298. Ground 4 is concerned with the application of the s 23C(1)(c) of the Conveyancing Act. The onus grounds will be addressed first. Grounds 3 and 4 will then be addressed. Alfred Wong (a former director of Bellpac) and Shan Pei filed a submitting notice, save on the question of costs. Danny Au-Yeung, also filed a submitting notice. The appellants accepted that they had to succeed on Appeal Grounds 1 and 3 before it became necessary to consider Appeal Ground 2 and that, unless they succeeded on Appeal Grounds 1, 2 and 3, it was unnecessary to consider Appeal Ground 4.

Appeal Ground 1 - Onus 15 An appeal to the Full Court of the Federal Court of Australia in its appellate jurisdiction under s 24 of the Federal Court of Australia Act 1976 (Cth) is not an appeal in the strict sense: Western Australia v Ward (2002) 213 CLR 1 at [71]. It is a rehearing. Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at [75]; Allesch v Maunz (2000) 203 CLR 172 at [23] and CDJ v VAJ (1998) 197 CLR 172 at [111]. 16 The question for the Full Court is whether there was error in the judgment at first instance: Jia Legeng at [75] and Allesch at [23]. But that error is of a particular kind: "[t]he powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error" (emphasis added): Allesch at [23] citing CDJ v VAJ at [111]. 17 That was not how the appellants approached the appeal. They contended that, as the Bellpac Parties were the moving parties, the Bellpac Parties bore the onus of establishing on the balance of probabilities all facts necessary for the conclusion that no assignment of the Bonds had occurred with the result that Bellpac remained the "true owner" of the Bonds: see, by way of example, Hume v Munro (No 2) (1943) 67 CLR 461 at 474. Consistent with that contention, the appellants further submitted that it was insufficient for the Bellpac Parties to seek to discharge their onus of proof by merely pointing to the fact that Bellpac was registered as the owner of the Bonds in Gujarat's records. 18 Parties are bound by the way in which they conduct their cases at trial: Coulton v Holcombe (1986) 162 CLR 1 at 11. The appellants participated at trial. The appellants did not make a no case submission at the end of the Bellpac Parties' case. And they did not stand mute. Their participation in the trial extended to adducing oral evidence in support of the "transactions" in paras 3(a)(ii) and (iii) of their defence which were said to have occurred on about 6 August 2008 (the day after the Bonds were issued by Gujarat). The oral evidence the appellants relied upon included that of Alfred Wong. The trial judge found that Alfred Wong was not an impressive witness and that his evidence ought not be accepted if it were contradicted unless corroborated by independent contemporaneous documents: at [62]. But that was not the end of their difficulties. The trial judge's findings as to the credit of Alfred Wong were not challenged. Moreover, there was no documentary evidence of the transactions themselves (at [70] and [116]) and, finally, the documentary evidence tendered by the appellants in support of Alfred Wong's evidence was found by the trial judge to be of little or no utility: at [62]. 19 The substance and effect of the appellants' submissions was that the appellate court should ignore a large part of the evidence before it. That is neither a possible, nor appropriate, course for an appellate court: Allesch at [23] citing CDJ v VAJ at [111]. The evidence that the appellants would have us ignore is substantial. It was also contrary to the appellants' interests. 20 Next, even if it was appropriate for an appellate court to approach the appeal by considering which party or parties bore the "onus" and then exclude some part of the evidence in assessing that question (a view we do not hold), there is no identifiable error on the approach adopted by the trial judge. That conclusion requires some explanation. 21 The trial judge addressed the question of onus in the Substantive Judgment as follows: [46] As a general rule, the burden of proof of a fact that is an essential element in a claimant's cause of action lies on the claimant. A party who seeks relief has the burden of satisfying the Court of facts that, in the absence of proof of other facts, would justify the grant of that relief. What those facts might be will depend on the nature of the relief sought and the operation of any relevant presumptions. In the case of relief by declaratory order, the precise terms of the declaration sought assume particular significance. Thus, the party seeking a declaratory order has the burden of proof of any matter that is a necessary element of the declaration sought, even if, in a proceeding by that party for relief of another kind, or in a proceeding by the other party, that matter would not arise unless raised, and the burden of proof consequently assumed, by that other party (see Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657 at 660). [47] Putting it another way, when a person commences a declaratory proceeding, that person bears the legal onus of proof. That is so even though the majority of the facts that are relevant may be in the opposing camp. It is for the claimant to establish the ambit of the rights to be declared, and to prove all the facts necessary to enable the declaration to be made (see Blanch v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653 at 655). When a party seeks a negative declaration, such as, for example, a declaration that an acquisition will not contravene s 50 of the Competition and Consumer Act 2010 (Cth), that party bears the onus of proving that negative proposition (see Australian Gas Light v Australian Competition and Consumer Commission (No 3) (2003) 137 FCR 317 at [355]-[356]). … [50] However, if an allegation made by a defendant is not a denial of an essential ingredient in the cause of action, but is one that, if established, would constitute a good defence, being an avoidance of the claim that the plaintiff might prima facie appear to have, the burden of proof of that allegation is on the defendant (see Currie v Dempsey (1967) 69 SR (NSW) 116 at 125). The Liquidators and Bellpac contend that Ken Hung and Austcorp bear the burden of proving that the Impugned Transactions involving the convertible bonds did in fact occur. They rely on the fact that Bellpac is registered as the holder of the convertible bonds as giving rise to a presumption that it is beneficially entitled to them, which presumption offers prima facie support for the claim for declaratory relief. That, they say, is the effect of the terms and conditions on which the convertible bonds were issued. 22 The appellants identified four so called "errors" in the approach adopted by the trial judge. They were described as: 1. a failure to apply the principles relating to the burden of proof in cases where declaratory relief was sought; 2. misapplication of the statement of principle in Currie v Dempsey [1967] 2 NSWR 532; 3. rejection of the submission that "possession" of the Bonds gave rise to a presumption of ownership; and 4. reliance on an alleged presumption that the owner of legal title to property is also entitled to beneficial ownership of it. Each "error" will be addressed.

Alleged error 1 - burden of proof where declaratory relief sought 23 The appellants submitted that the trial judge applied the wrong principle relating to the burden of proof in cases where declaratory relief was sought. The appellants submitted that the trial judge ought to have applied the principle expressed by Latham CJ in Hume v Munro (No 2) at 474 that: … In an action for a declaration that a right alleged to be claimed by the defendant does not exist the onus rests upon the plaintiff of establishing first that a claim sufficiently definite and intelligible in its terms to be a proper subject of adjudication has been made against him by the defendant … Next, the plaintiff seeking a declaration denying any possible foundation for the alleged claim of right must exhaust the possibilities and show that the claim cannot possibly be supported. It is not for the defendant in such a proceeding to make a claim and to justify that claim. 24 The submission that the trial judge applied the wrong principle is rejected. The Bellpac Parties were the moving parties. But the declaration sought by the Bellpac Parties was not a declaration that a right alleged to be claimed by a defendant (the appellants in this case) did not exist. The relief sought by the Bellpac Parties was relevantly limited to a declaration that Bellpac was the true owner of the Bonds: see [3] above. Contrary to the appellants' submission, the Bellpac Parties did not seek "negative" declaratory relief: Hume v Munro at 474. 25 The appellants contended that, although the declaration sought by the Bellpac Parties was to the effect that Bellpac was the "true owner" of the Bonds, it was clear from the amended statement of claim filed by the Bellpac Parties that the declaration was sought in the context of a competing claim to the Bonds by Ken Hung. That proposition, on its own, without more, does not assist the appellants. It does no more than identify the "matter" which was to be determined by the Court. 26 The appellants then referred to the fact that the amended statement of claim filed by the Bellpac Parties pleaded the relevant Impugned Transfer, pleaded that Ken Hung was not entitled to be registered as the owner of the Bonds and that Bellpac was not a party to any transaction by which it had disposed of the Bonds legally or beneficially. It was for these reasons that the appellants contended that the Bellpac Parties were also "implicitly seeking a declaration refuting Ken Hung's claim to ownership of the Bonds". Indeed, the appellants went so far as to submit that the Bellpac Parties had "assumed the mantle" of satisfying the Court that Bellpac was and remained the beneficial owner of the Bonds and that it had not disposed of them for value. If "assumed the mantle" was intended to imply that those elements (that Bellpac was and remained the beneficial owner of the Bonds and that it had not disposed of the Bonds for value) were essential elements of the claim made by the Bellpac Parties, then that contention is rejected. 27 It is necessary to understand the circumstances in which Bellpac sought the declaration. Bellpac was entered in the Register as the holder of the Bonds. The Register and the terms of the Bonds were in evidence. And, under the terms of the Bonds, title to the Bonds vested "absolutely" in the person entered in the Register as the holder of the Bond (referred to as the Bondholder): not just legal title but, "assuming that there can be a separate beneficial interest in equity", beneficial title to the Bonds: see [55]. Those were the essential elements of the claim made by the Bellpac Parties and that was what the Bellpac Parties established. The manner in which Bellpac established those essential elements was to demonstrate that it was at all times the person entered in the Register as the holder of the Bonds (the Bondholder) and, by the terms of the Bonds, had absolute title to the Bonds. 28 The appellants submitted that it was "insufficient" for the Bellpac Parties to seek to point to the fact that Bellpac was registered as the owner of the Bonds in the Register on the basis that those records established something not in issue - that Bellpac held the legal title to the Bonds - and nothing more. We reject that contention. As just explained, that contention proceeds from a misunderstanding of the proper construction of the terms of the Bonds and, in particular, which party had absolute title to the Bonds. The terms of the Bonds were clear. Title to the Bonds was vested absolutely in the person entered in the Register: see [2] above. That term was not surprising. It provided the Issuer with certainty as to the party with which it had to deal when seeking to accelerate payment by seeking to redeem all or any part of the Bonds prior to conversion and when faced with a duly completed transfer form. On each occasion, the Issuer was to deal with the party identified as "the Bondholder", being "the person entered in the Register as the holder of the Bond". And the Bondholder did not lose absolute title to the Bonds until "transfer and registration": see [2] above. 29 A property right is a relationship between a person and an object; the right to an object: Edgeworth B, Rossiter C, Stone M and O'Connor P, Sackville & Neave: Australian Property Law (9th ed, LexisNexis Butterworths, 2013) at [1.5]-[1.14]; see, eg, Yanner v Eaton (1999) 201 CLR 351 at [17] and Wily v St George Partnership Banking Ltd (1999) 84 FCR 423 at 431. The object itself is not property. Indeed, referring to a person's property rather than the object of a person's property conflates the object with the property and results in focussing on the object rather than the rights to the object: Bentham J (Burns JH and Hart HLA (eds)), An Introduction to the Principles of Morals and Legislation (Athlone Press, 1970) at 211. Here, the only party with any rights to the object (the Bonds) was Bellpac. It had absolute title to the Bonds because, consistent with the terms of the Bonds, it was and remained entered on the Register as the holder of the Bonds. The appellants had no interest in the Bonds. At best, the appellants had interests in the Impugned Transfers which, if established, gave them rights as against the Bondholder and the Issuer, not the Bonds. The rights if established may have entitled the appellants to seek relief restraining the Bondholder or the Issuer (or both) from dealing with the Bonds pending the effective registration and transfer of the Bonds to them. We say may because the timing of certain transactions, for example an early redemption by the Issuer, may well preclude the ability of the holder of the transfer to seek to register that transfer. 30 Indeed, that was made abundantly clear by the trial judge in the following passages: [53] Possession of goods gives rise to a presumption of ownership (see Russell v Wilson (1923) 33 CLR 538 at 546-7). Thus, actual possession may be sufficient to found an immediate right to possession that, in turn, could be the basis for an action in detinue. Ken Hung and Austcorp say that, since Ken Hung is in possession of the transfers and certificates in respect of the convertible bonds, he is presumed to be the owner of the convertible bonds, unless Bellpac can prove a better title. [54] However, the possession of goods is clearly distinguishable from the circumstances of the present case. Ken Hung may be in possession of transfers and certificates, which are chattels, but he cannot have possession of incorporeal property such as convertible bonds. Possession of a chattel is very much different from entitlement to a chose in action, such as the convertible bonds. For as long as Ken Hung is in possession of the transfers and certificates in relation to the convertible bonds, there may be a presumption that he is entitled to possession of the transfers and certificates. However, that does not necessarily say anything about his entitlement to the beneficial ownership of the underlying convertible bonds. His position is comparable to that of a financier holding a mortgage over shares to secure a loan. That financier would ordinarily have possession of the mortgagor's share certificates, but such possession would not give rise to any presumption of title. Accordingly, no presumption arising from possession operates in favour of Ken Hung and Austcorp in the present case. [55] If the existence of a fact alleged is a condition precedent to a plaintiff's right to maintain a cause of action, or if the fact is otherwise an essential element in the cause of action, then the burden of proof of that fact will be on the plaintiff (see Currie v Dempsey at 125). The non-disposition for value of the convertible bonds by Bellpac is certainly a condition precedent to the right of the Liquidators and Bellpac to maintain their claim for declaratory relief in respect of the convertible bonds. However, as I have said, the terms on which the convertible bonds were issued included a provision that title to the convertible bonds is vested absolutely in the person entered in the register as the holder of the bond, and passes by transfer and registration. One effect of that provision is to raise a presumption that the registered holder of a bond is its owner at law and, assuming that there can be a separate beneficial interest in equity, the owner of that beneficial interest. That is to say, in the absence of something further, the fact that Bellpac is the registered holder of the convertible bonds in question gives rise to a presumption substantiating a prima facie case that Bellpac is the true owner of those convertible bonds. 31 The first of the alleged errors is not established. The trial judge applied the correct principle. The trial judge did not fail to apply the correct principles relating to the burden of proof in cases where declaratory relief is sought.

Error 2 - Misapplication of the statement of principle in Currie v Dempsey 32 The second error asserted by the appellants was that the trial judge misapplied the following statement of principle in Currie v Dempsey at 539: … the burden of proof … lies on a plaintiff, if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, eg, if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established, will constitute a good defence, that is, an "avoidance" of the claim which, prima facie, the plaintiff has. 33 There was no error. The Impugned Transfers (pleaded by the appellants in paras 3(a)(ii)-(v) of the defence) were not an essential element of the Bellpac Parties' causes of action: see [7]-[9] above. The Impugned Transfers were, if established, a defence to the claim made by the Bellpac Parties: see [9]-[11] above.

Errors 3 and 4 - Presumptions about ownership 34 The third "error" was said to be the trial judge's rejection of the submission that Ken Hung's possession of the Impugned Transfers and certificates in respect of the Bonds gave rise to a presumption of ownership. The fourth "error" was said to be the fact that the trial judge gave determinative weight to the proposition that the terms of the Bonds gave rise to a presumption that the registered holder of the Bonds was also the owner of the beneficial interest. Each "error" is dismissed. 35 The appellants' contentions proceeded upon a fundamental misconception. The issue at trial was whether Bellpac was entitled to a declaration about its ownership rights in respect of the Bonds. The appellants' possession of the certificates and transfers created possessory rights or title to the certificates and transfers: Russell v Wilson (1923) 33 CLR 538 at 546. It did not create possessory rights or title to the Bonds. Moreover, pursuant to the terms of the Bonds, the absolute owner of the Bonds was Bellpac by reason of its name being entered in the Register as the holder of the Bonds. The position was no different from that of shares in a company: Sydney Futures Exchange Ltd v Australian Stock Exchange (1995) 56 FCR 236 at 255-6.

Appeal Ground 2 - Bellpac Parties failed to discharge onus 36 Appeal ground 2 relied upon by the appellants depended upon the success of Appeal grounds 1 and 3. That is, it was predicated on the success of the submissions that it was the Bellpac Parties who bore the onus of disproving the Impugned Transactions (Appeal ground 1) and that the trial judge ought not to have drawn any adverse inferences from the failure to call Danny Au-Yeung and Eric Ng (Appeal ground 3). 37 The appellants put the proposition in this way: "in the absence of adverse inferences being drawn, and if the onus of proof had remained with the [Bellpac Parties], then a different result would have ensued". The "different result", so the appellants submitted, was that the trial judge should have found that Bellpac disposed of the Bonds for value. That submission comprised a number of elements: 1. although there was no evidence of any of the relevant transactions being recorded in writing, that does not mean that they did not occur; 2. although the trial judge accepted that there were entries in the books of Bellpac and Shan Pei consistent with the transactions having occurred, the trial judge erred in dismissing the book entries as having no evidentiary value; 3. the trial judge ought to have proceeded on the factual premise that Bellpac's debt to Compromise Creditors Management Pty Ltd (CCM) was reduced by $10 million in about July 2008; 4. the only explanation consistent with the facts was that Bellpac received a substantial benefit in return for the transfer of, or assignment of its interest in, the bonds to Shan Pei, namely a reduction in its indebtedness in the amount of $10 million (which the trial judge referred to as the Bellpac Indebtedness). There was some uncertainty as to whether the Bellpac Indebtedness was owed to CCM or Shan Pei or had been assigned by CCM to Shan Pei. The appellants submitted that it did not matter to whom it was owed, provided it could be shown that Bellpac received the benefit of the extinguishment of the Bellpac Indebtedness. It will be necessary to return to that issue. 38 The first appeal ground, in relation to burden of proof, has been considered and rejected: see [31], [34] and [35] above. The Bellpac Parties were required to prove (and did prove) those elements which entitled Bellpac to a declaration that it was the true owner of the Bonds. Bellpac established that it was the absolute owner of the Bonds by reason of its name being entered in the Register as the holder of the Bonds. The third appeal ground, in relation to the failure to call Danny Au-Yeung and Eric Ng, is considered at [50]-[57] below. That ground also fails. 39 However, even if Appeal grounds 1 and 3 did not fail, this appeal ground fails. It fails because having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is not shown to be the subject of any legal, factual or discretionary error. It is to the evidence that we now turn. It is necessary to consider the evidence the subject of the trial judge's reasons in some detail. That evidence (in relation to the Impugned Transactions and the Bellpac Indebtedness) consisted of evidence given by Hollis Ho (the sole director of CCM), Alfred Wong, Thomas Lo (the only current director of Shan Pei) and documentary evidence. 40 Hollis Ho's evidence was summarised by the trial judge as follows: [65] There are no accounting records of Compromise Creditors and there is no other record of Compromise Creditors reflecting upon any of the Impugned Transactions. Hollis Ho said that no accounts have been prepared because of lack of funds. That assertion was not disputed by the Liquidators and Bellpac. [66] Both Hollis Ho and Alfred Wong gave evidence of conversations they said they had had with Danny Au-Yeung, in which Danny Au-Yeung reported discussions that he said he had had with Eric Ng. Hollis Ho gave hearsay evidence of discussions between Danny Au-Yeung and Eric Ng on the topic of the assignment of the Bellpac Indebtedness to Shan Pei. He said in an affidavit that, in about September 2007, he had a conversation with Danny Au-Yeung, in which Danny Au-Yeung told him that the owner of Shan Pei was proposing that Shan Pei take over the benefit of all of the Bellpac Indebtedness, in return for which Shan Pei would undertake to pay Hollis Ho and the other GPC Creditors, within five years, the full amount of the debts owing to them. Hollis Ho said that Danny Au-Yeung told him that he did not know Shan Pei's financial position but did know that, once a restructure of GPC's debt was complete, Shan Pei would own 70 per cent of GPC. Hollis Ho said that, since Danny Au-Yeung recommended that he accept Shan Pei's proposal, he told Danny Au-Yeung that he could tell Shan Pei that Compromise Creditors, as trustee for the GPC Creditors, accepted Shan Pei's proposal. [67] The evidence I have just described was admitted only as evidence concerning discussions between Hollis Ho and Danny Au-Yeung. It was not admitted as evidence of the fact of any discussion between Danny Au-Yeung and Eric Ng. 41 Hollis Ho was cross-examined. His evidence was that: 1. he did not have a conversation in about August 2008 in which it was suggested that the $10 million convertible bonds (including the Bonds) would be transferred to Shan Pei in partial discharge of a debt owing by Bellpac to CCM; 2. in fact, as at August 2008, there was no debt owing by Bellpac to CCM; 3. on 6 August 2009, he lodged a proof of debt on behalf of CCM with Bellpac on the basis that there had been no transfer or assignment of the Bellpac Indebtedness to Shan Pei. Hollis Ho's evidence did not support the appellants' contention that Bellpac disposed of the Bonds for value. 42 Next, Alfred Wong. The trial judge found that Alfred Wong was not an impressive witness and was not disposed to accept his evidence if it were contradicted, unless that evidence were corroborated by independent contemporaneous documents: at [62]. The effect of Alfred Wong's evidence was that the absence of documents evidencing the Impugned Transactions was quite normal in the context of Chinese businessmen who had a long business association: at [64]. His evidence in relation to the Impugned Transactions themselves was summarised by the trial judge as follows: [68] Alfred Wong gave oral evidence that he considered Shan Pei and Compromise Creditors to be, in effect, the same entity. He said that, once he had been told by Danny Au-Yeung and Hollis Ho of internal arrangements as between Compromise Creditors and Shan Pei, whereby Shan Pei effectively became the creditor of Bellpac in respect of the Bellpac Indebtedness, that was sufficient for him to conclude that Shan Pei and Compromise Creditors were the same. [69] Alfred Wong gave hearsay evidence of discussions between Danny Au-Yeung and Eric Ng on the topic of the assignment of the convertible bonds in consideration for a reduction of the Bellpac Indebtedness. He said in an affidavit that, in late July or early August 2008, Danny Au-Yeung told him that he had spoken to Eric Ng and Hollis Ho, and that they had agreed for Bellpac to transfer all of the convertible bonds to Shan Pei by way of partial payment, in the amount of $10,000,000, of Bellpac's indebtedness to Shan Pei and the other GPC Creditors. Alfred Wong said that he and Danny Au-Yeung, as directors of Bellpac, resolved that the proposed transfer of convertible bonds to Shan Pei, in return for the reduction of the Bellpac Indebtedness by $10,000,000, was favourable to Bellpac, and resolved to accept and proceed with the proposal. Alfred Wong said that he told Danny Au-Yeung to tell Eric Ng that, once Gujarat issued the convertible bonds, they would be Shan Pei's. [70] There was no evidence of any minute of any such resolution, and Alfred Wong's affidavit was not admitted as evidence of the fact of the alleged resolution. It was admitted only as evidence of the fact of the discussion between Alfred Wong and Danny Au-Yeung, to the extent that that bore relevantly upon Alfred Wong's state of mind, and not as evidence of the fact of any discussion between Danny Au-Yeung and Eric Ng or between Danny Au-Yeung and Hollis Ho. [71] Alfred Wong also said that he had a discussion with Danny Au-Yeung, in which he asked Danny Au-Yeung to put a proposal to Eric Ng for Shan Pei to transfer the convertible bonds to him, Alfred Wong, in return for which he, Alfred Wong, would undertake to pay Shan Pei the face value of the convertible bonds and all accrued interest, as and when each of the convertible bonds became eligible for conversion. Alfred Wong said that, some time later, Danny Au-Yeung told him that he had spoken with Eric Ng and submitted Alfred Wong's proposal to Shan Pei. Alfred Wong said that Danny Au-Yeung told him that Eric Ng accepted the proposal on Shan Pei's behalf, and that Shan Pei would transfer the $10,000,000 of convertible bonds to Alfred Wong on the basis proposed. [72] Alfred Wong gave oral evidence that he himself had had discussions from time to time with Hollis Ho and Eric Ng. However, that evidence was highly generalised, and Ken Hung and Austcorp did not make any submissions concerning that evidence. The evidence does not appear to have any probative value. [73] Alfred Wong said that he intended to apply the convertible bonds to discharge debts to his private creditors, including Austcorp, and it is Ken Hung and Austcorp's case that he in fact did so. As I have said, the Liquidators and Bellpac contend that, if there was an effective assignment of convertible bonds by Bellpac to Shan Pei, the assignment involved a breach of fiduciary and statutory duties on the part of Danny Au-Yeung and Alfred Wong as directors of Bellpac. Alfred Wong's belief as to the alleged discussions involving Eric Ng may have some relevance in relation to that alternative case. Accordingly, his hearsay evidence was admitted for that limited purpose, although, as I have said, it was not admitted as evidence of the fact of any discussion between Danny Au-Yeung and Eric Ng. Alfred Wong's evidence, taken at its highest, was arguably consistent with the existence of the Impugned Transactions. However, it was contradicted by Hollis Ho and not supported by independent contemporaneous documents. It was not accepted. 43 The third witness was Thomas Lo. His evidence was that he was asked by Danny Au-Yeung to become a director of Shan Pei in late November 2009: at [80]. Upon becoming a director, Thomas Lo asked Eric Ng (another existing director of Shan Pei) for the financial records of Shan Pei: at [81]. In response, he received by mail a bundle of documents referred to be the trial judge as the Shan Pei Documents: see [47] below. The Shan Pei Documents consisted of 36 pages, 17 of which relate to the year ended 30 June 2008, and 19 of which relate to the year ended 30 June 2009: at [81]. The Shan Pei Documents were the only accounting documents concerning Shan Pei which Thomas Lo held: at [81]. Further, Thomas Lo's understanding of the Shan Pei Documents was no more reassuring. The trial judge found that: [82] Thomas Lo said that he did not know how the Shan Pei Documents had been prepared, or when they had been prepared. He agreed that, in order to know whether or not the Shan Pei Documents were properly prepared, and the time of the transactions that they purport to record, he would need to look at the cash books and journals. Thomas Lo does not have a complete ledger for Shan Pei. Nor does he have any cash books or journals. He has no documents recording or evidencing any of the transactions or events that the Shan Pei Documents purportedly record. [83] Thomas Lo said that, in order to prepare accounts for the year ended 30 June 2010, he would need to know what the transactions of Shan Pei were during that period. He said that nobody has told him of any transactions in relation to the payment of secretarial or record keeping fees. He said that he might try his luck and contact the former director of Shan Pei, Eric Ng. There is no evidence that he made any further effort to do so. 44 The substance of the documentary evidence was summarised by the trial judge in the following terms: [84] The accounting records and related documents that are in evidence cannot be said to present a clear picture. It is difficult to extract a cogent history of transactions from them, let alone a persuasive one. I found much of the evidence given by witnesses about the accounting records to be unhelpful, and some of it to be almost incomprehensible. [85] The Bellpac accounting records that are in evidence were amongst the financial records produced to the Liquidators upon their appointment as liquidators. The records that are in evidence consist of detail from Bellpac's general ledger, a copy of which is set out in Appendix 1 to these reasons (the General Ledger Extract), and an account in the name of Compromise Creditors, a copy of which is set out in Appendix 2 to these reasons (the Compromise Account). Those appear to be the only formal records of Bellpac that contain any reference to either the convertible bonds issued by Gujarat or the Bellpac Indebtedness. [86] The General Ledger Extract deals with an account numbered 2-5101, in the name of Compromise Creditors, between the dates 1 July 2007 and 18 May 2009. It begins with an opening credit balance of $9,093,955.82 and ends with a credit balance of $23,246,386.76. That balance is arrived at after substantial credits for interest and three minor debits, in addition to a debit of $10,000,000 on 1 July 2008 with the narration "release of royal", and a further debit entry of $4,700,000 with the narration "correct prev tfr j". [87] Alfred Wong asserts that he instructed Ivan Wong and the clerical staff of Bellpac to record the transfer of the convertible bonds to Shan Pei in the manner in which the debit entry of $10,000,000 of 1 July 2008 appears in the General Ledger Extract. He also says that he gave instructions for the narration "release of royal" to be recorded in order to provide an explanation for the consideration moving from Bellpac to Gujarat, namely, the release by Bellpac of Gujarat's royalty payment obligations to Bellpac. That contention by Alfred Wong is puzzling, and the explanation it offers does not appear to be satisfactory, since there is no obvious reason why entries in an account in the name of Compromise Creditors should be concerned with transactions involving the convertible bonds. Alfred Wong's evidence was inconsistent in drawing a distinction between Compromise Creditors and Shan Pei, … . [88] There is no mention of Shan Pei in the General Ledger Extract. The General Ledger Extract is quite equivocal as to any question of the assignment of the convertible bonds. [89] There is a handwritten note, dated 17 October 2008, that deals with the transfer of the $2,000,000 of convertible bonds to Austcorp, which was amongst the records produced to the Liquidators. That document appears to deal with delivery of the Impugned Transfers and certificates to Austcorp. There is nothing in the document to suggest any involvement of Shan Pei or Bellpac with the convertible bonds. The document does, however, contain the word "Alfred". In the course of cross-examination, Alfred Wong agreed that, on 17 October 2008, he intended to engage in a personal dealing with Austcorp in connection with the convertible bonds. However, he said that he had not seen the note before, and that he was unable to identify its author by the handwriting. The significance of the notation "Alfred" is not and has not been otherwise explained. [90] The Compromise Account apparently records the Bellpac Indebtedness. It shows a balance owing, as at 30 June 2007, of $26,940,240.33. On that day, interest of $343,211.28 was charged, giving a balance of $27,283,451.61. Repayments of $2,000,000 on 22 October 2007 and $2,700,000 on 26 October 2007, made by cheque, are also recorded. Bank records that are in evidence show that the sum of $2,000,000 was for an overseas telegraphic transfer, the beneficiary of which was View Plan Enterprises Limited. The sum of $2,700,000 was also for an overseas telegraphic transfer, the beneficiary of which was All Seasons Resources Inc. The Bellpac books originally showed those payments as being made for the benefit of Austcorp. However, the corrected entry in the General Ledger Extract shows Compromise Creditors as the beneficiary of those payments. [91] Alfred Wong said in an affidavit that the two cheques that I have just described were drawn on funds advanced by Gujarat under the 2007 Settlement Deed. However, the reasons for those payments and the circumstances of the correction are quite unexplained. There is nothing to connect the payments to Shan Pei. Further, Hollis Ho gave evidence that View Plan Enterprises Limited and All Seasons Resources Inc were not part of the Compromise Creditors group, that he was unfamiliar with those companies, and that he had not authorised the payment of moneys to those companies that might otherwise have been payable to Compromise Creditors. I am unable to draw with confidence any conclusions concerning how the two cheques, or the payments effected by them, may have borne upon or related to any of the Impugned Transactions. [92] Entries for interest appear in the Compromise Account for successive months down to 30 May 2008, when the balance owed is shown as $26,079,011.01. There is an entry of $10,717.40 for interest on 30 June 2008, to give a balance owing of $26,089,728.41. There is then a repayment of $10,000,000 recorded as at 1 July 2008, giving a balance of $16,089,728.41 on 1 July 2008. Successive monthly debits of interest are then shown in the account, which ends with a balance, as at 30 April 2009, of $18,206,503.34. [93] The balance of the account in the name of Compromise Creditors as at 30 April 2009, as shown in the Bellpac General Ledger Extract, is $23,246,386.76. On the other hand, the balance shown in the Compromise Account is $18,206,503.34. Alfred Wong said that the difference of $5,039,883.42 represented a guarantee fee payable by Bellpac to GPC as part of the Bellpac Indebtedness. … . [94] Bellpac's balance sheets as of June 2007, June 2008, April 2009 and June 2009 are also in evidence. Each of those documents records borrowings from "Compromise Creditors Mngt" under the heading "Non Current Liabilities". None of the documents makes reference to Shan Pei. [95] The Shan Pei Documents [a set of documents purporting to be accounting records of Shan Pei] include balance sheets of Shan Pei as at 30 June 2008 and 30 June 2009. The balance sheet as at 30 June 2009 records, as an asset of Shan Pei, a loan to Bellpac of $18,996,787.34. The balance sheet as at 30 June 2008 records, as an asset of Shan Pei, a loan to Bellpac of $26,361,849.81. Both documents also make reference to a loan called "Bellpac Guarantor Fee", in the amounts of $4,499,986.25 and $3,504,986.25 respectively. [96] The balance sheets as at 30 June 2008 and 30 June 2009 show, as liabilities, loans as follows: Burnaby $1,179,897.29 Pioneer $323,757.64 Sausalito $2,997,198.62 Hollis Ho $237,575.35 The first three amounts are identical to the amounts shown in schedule 1 to the Deed of Compromise. The amount shown for Hollis Ho is similar to the amount shown in schedule 1 to the Deed of Compromise. [97] The Shan Pei Documents include several extracts from the general ledger of Shan Pei for the period 1 July 2007 to 30 June 2008. One extract, in respect of an account called "Bellpac P/L", shows a debit entry of $28,224,586.66, dated 30 September 2007, with the narration "Assignment of", and credit entries, dated 22 October 2007 and 26 October 2007, of $2,000,000 and $2,700,000 respectively, with the narration "Repayment for". The Shan Pei Documents also include extracts in respect of accounts in the names of the GPC Creditors other than Shan Pei, showing credits in the amounts shown in the balance sheets. Each has the narration "Settlement Clea". [98] The Shan Pei Documents also include several extracts from the general ledger of Shan Pei for the period 1 July 2008 to 30 June 2009. One extract, in respect of an account called "Gujarat Bond", records two entries on 6 August 2008. One is a debit of $10,000,000, with the narration "Repayment Guj". That appears to be a reference to Gujarat. The other is a credit of $10,000,000, with the narration "Loan to AW". That appears to be reference to Alfred Wong. A second extract, in respect of an account called "Bellpac P/L", shows a credit of $10,000,000, on 6 August 2008, with the narration "Repayment Guj" and a debit, on 30 June 2009, of $2,634,937.53, with the narration "Interest income". A third extract, in respect of an account called "Alfred Wong", shows a debit of $10,000,000, on 6 August 2008, with the narration "Loan to AW", and three debits, on 1 October 2008, 1 January 2009 and 1 April 2009, each with the narration "Interest income", and each of approximately $200,000. [99] In the light of the matters I have just set out, the most that can be said is that there are entries in the books of Bellpac, apparently authorised by Alfred Wong, and entries in the Shan Pei Documents, the authority for which has not been the subject of evidence, that may be consistent with the Impugned Transactions having occurred. However, under Australian law, unlike the situation under the obligatio litterarum of Roman law (see Gaius, Institutes 3.128-130 and Justinian, Institutes 3.21), a mere book entry cannot by itself give rise to indebtedness or its discharge. A book entry can do no more than record the effect of a transaction that has otherwise taken effect according to law. (Emphasis added.) 45 As mentioned above, one critical aspect of the appellants' case before the trial judge was establishing that Bellpac received some benefit from the alleged assignment of the $10 million convertible bonds (including the Bonds) to Shan Pei. The appellants submitted that the extinguishment of the Bellpac Indebtedness constituted that benefit. The trial judge approached the issue by considering whether Shan Pei was in fact entitled to the Bellpac Indebtedness (at the relevant time) and thereby able to offer its extinguishment as consideration for the second of the Impugned Transactions: see [8]-[21], [38] and [100]-[115]. The trial judge was not persuaded, on the balance of probabilities, that there was an arrangement whereby Shan Pei became entitled to the whole of the Bellpac Indebtedness: at [114]. The first transaction, in the series of transactions constituting the Impugned Transactions, therefore fell away. If Shan Pei was not entitled to the Bellpac Indebtedness, it could not be asserted that Shan Pei extinguished that indebtedness in exchange for the assignment of the $10 million convertible bonds (including the Bonds). 46 On appeal, the appellants submitted that, even if Shan Pei did not become legally entitled to the Bellpac Indebtedness, that did not affect the validity of the Shan Pei / Bellpac transaction, so long as it could be shown that Bellpac received some benefit in the form of the extinguishment of the Bellpac Indebtedness. Hollis Ho's evidence given during cross-examination (see [41] above) was a complete answer to that submission. 47 Accordingly, while it is trite law that the absence of documentary evidence does not preclude a finding that a transaction, here the Impugned Transactions, occurred, that submission fails to engage with what the trial judge in fact found. As the Bellpac Parties submitted, in circumstances where the appellants have not identified any errors in the trial judge's findings concerning the accounting records (at [84]-[98]) and given that none of those findings are challenged, the appellants' submissions cannot be accepted. Further, the submission that the trial judge accepted that there were entries in the books of Bellpac and Shan Pei consistent with the transactions having occurred misstates the finding at [99] that the "entries in the books of Bellpac, apparently authorised by Alfred Wong, and entries in the Shan Pei Documents, the authority for which has not been the subject of evidence may be consistent with the Impugned Transactions having occurred" (emphasis original). When read in the context of the whole of the trial judge's reasons, it is clear that statement was intended to go no further than indicating that, while both sets of documents appear to refer to the Bellpac Indebtedness, the critical link between the two (ie, that Shan Pei was entitled to the Bellpac Indebtedness) had not been established. 48 As the Bellpac Parties pointed out, the trial judge found that: 1. there was no admissible evidence as to any communication between Shan Pei, on the one hand, and CCM or the other GPC Creditors, on the other, as to the assignment of the Bellpac Indebtedness to Shan Pei (at [100]); 2. there was no mention of Shan Pei in the books of Bellpac (at [101]); and 3. the Shan Pei Documents were "manifestly incomplete" and, in the circumstances of their tender through Thomas Lo who offered no evidence in relation to their creation or content, "difficult to accord any weight to" (at [103] and [122]). 49 This appeal ground is dismissed. The evidence does not support the appellants' contention that Bellpac disposed of the Bonds for value.

Appeal Ground 3 - Jones v Dunkel inferences 50 The trial judge considered that the failure to call Danny Au-Yeung or Eric Ng was of some significance and proceeded to draw an adverse inference that there was a strong basis for concluding that the evidence of Danny Au-Yeung and Eric Ng may not have assisted the appellants' case: at [78]. That finding was the subject of this appeal ground. 51 The appellants submitted that there was no basis for applying the principle in Jones v Dunkel (1959) 101 CLR 298 to the failure to call Danny Au-Yeung and Eric Ng. 52 The trial judge's reasons were as follows: [76] The failure of any party to call evidence from Danny Au-Yeung or Eric Ng is of some significance. As I have said, their evidence would be critical in establishing the arrangements involving Shan Pei contended for by Ken Hung and Austcorp. The gist of Alfred Wong's evidence is that he was informed that Danny Au-Yeung had spoken to Eric Ng and Hollis Ho and that, in the course of those conversations, Danny Au-Yeung entered into the agreements for Bellpac to transfer the convertible bonds to Shan Pei and then for Shan Pei to transfer the convertible bonds to Alfred Wong. Alfred Wong does not say that he, Alfred Wong, entered into the agreements or made the relevant Impugned Transactions. [77] … [78] The explanation provided by Ken Hung and Austcorp for their failure to call Danny Au-Yeung or Eric Ng is that neither could be said to be in their camp. Ken Hung and Austcorp claim to be mere downstream purchasers for value without notice. However, Ken Hung and Austcorp had no difficulty in calling Alfred Wong. There is nothing to suggest that Danny Au-Yeung declined to assist Ken Hung and Austcorp in the case that they advanced. While Danny Au-Yeung indicated in the course of final address that he did not support the case advanced by Ken Hung and Austcorp, he had taken no step in the proceeding adverse to their interests. He filed a defence in which there was virtually no joinder of issue in relation to the Impugned Transactions involving Shan Pei. Danny Au-Yeung was the very person who could prove all of the Impugned Transactions. It was open to Ken Hung and Austcorp to adduce evidence from him, yet they do not appear to have attempted to do so. Likewise, there is no reason to conclude that Eric Ng would have been antagonistic towards the case advanced by Ken Hung and Austcorp. In all of those circumstances, there is a strong basis for concluding that the evidence of Danny Au-Yeung and Eric Ng may not have assisted that case. (Emphasis added.) 53 The appellants' submissions were a restatement of their submissions before the trial judge (see emphasised portion above). That is, they submitted that: 1. it cannot be said that either Danny Au-Yeung or Eric Ng would have been expected to have been called by the appellants rather than the Bellpac Parties; and 2. nor can it be said that either of them was in the appellants' "camp". The appellants submitted that Danny Au-Yeung or Eric Ng were mere downstream purchasers for value without notice. The appellants submitted that Danny Au-Yeung was hostile to the appellants' interests and indicated through his counsel that he did not support their case. In their amended statement of claim, the Bellpac Parties alleged he had breached his directors' duties and he was joined as a respondent to the proceeding. In relation to Eric Ng, the appellants submitted that he was in fact contacted by the Bellpac Parties but an application to lead hearsay evidence from him was ultimately not pursued. 54 The Bellpac Parties submitted that both Danny Au-Yeung and Eric Ng would be expected to be called by the appellants in light of the following circumstances: 1. Danny Au-Yeung had sworn a number of affidavits for the appellants, which were filed and served in the proceedings; 2. none of the affidavits sworn by Danny Au-Yeung were ultimately read; 3. the evidence advanced by the appellants was that the transfer of the beneficial interest in the Bonds from Bellpac to Shan Pei was pursuant to a verbal agreement between Danny Au-Yeung (for Bellpac) and Eric Ng (for Shan Pei). Further, the evidence advanced by the appellants was that the next transfer of the beneficial interest in the Bonds from Shan Pei to Alfred Wong was, again, pursuant to a verbal agreement between Danny Au-Yeung and Eric Ng; and 4. Eric Ng was the only director of Shan Pei for the period 10 July 2007 to 23 November 2009, which was the relevant period during which the alleged transactions between Bellpac and Shan Pei and subsequently Shan Pei and Alfred Wong took place. 55 There was no dispute that the significance of the principle in Jones v Dunkel depended upon an evaluation of the closeness of the relationship between the absent witness and the party who did not call the witness: Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157 at [64]. Both parties referred to the decision of Payne v Parker [1976] 1 NSWLR 191 at 201-2 where Glass JA identified three conditions for the exercise of the principle: (a) the missing witness would be expected to be called by one party rather than the other, (b) the evidence of the witness would elucidate a particular matter and (c) the absence of the witness is unexplained. In these appeals, the appellants' submissions were directed solely to the first condition, namely, whether the missing witness would be expected to be called by one party rather than the other. In relation to that condition, Glass JA said (at 201-2): (7) The first condition is also described as existing where it would be natural for one party to produce the witness … or the witness would be expected to be available to one party rather than the other … , or where the circumstances excuse one party from calling the witness, but require the other party to call him … , or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him … or where the witness' knowledge may be regarded as the knowledge of one party rather than the other … , or where his absence should be regarded as adverse to the case of one party rather than the other … . It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary … . If the witness is equally available to both parties, for example, a police officer, the condition, generally speaking, stands unsatisfied. … Evidence capable of satisfying this condition has been held to exist in relation to a party's foreman: … ; his safety officer … ; his accountant … ; his treating doctor … . (Citations omitted.) See also Director, Office of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCAFC 8 at [100]. 56 The appeal in respect of ground 3 fails in relation to both Danny Au-Yeung and Eric Ng. Danny Au-Yeung was a witness who was in the appellants' "camp". He provided the appellants with two sworn affidavits which were filed and served on behalf of the appellants. Subsequent to those affidavits being filed and served, the appellants submitted that he was hostile to their interests and, for that reason, the inference was not available to be drawn in his case. They relied on Smith v Samuels (1976) 12 SASR 573 at 581 as authority for that proposition, where Bray CJ stated: For the unfavourable inference to be justified the witness not called must be available: it must be "in the power" of the party to call him. He may be unavailable through absence or illness. He may be unavailable because he would not be a competent witness. In my view he may also be unavailable in the relevant sense, or at least no unfavourable inference should be drawn from his absence, when there are strong reasons for not calling him other than the falsehood of the story he might be expected to confirm, such as his hostility to the party or, I would say, jeopardy or grave prejudice to the witness himself. … (Emphasis added.) That proposition does not support the appellants in this case. It is necessary to read the italicised portion as a whole. The fact that Danny Au-Yeung was joined as a respondent and counsel for Danny Au-Yeung later indicated that he was hostile to the appellants' interests does not amount to "strong reasons for not calling him … such as his hostility to the party". As the Bellpac Parties submitted, the affidavits could have been read and Danny Au-Yeung made available for cross-examination. 57 Eric Ng is in a different category. He had not provided sworn evidence. However, the appellants' case was that the Impugned Transactions critically included the following: 1. a transfer of the beneficial interest in the Bonds from Bellpac to Shan Pei pursuant to a verbal agreement between Danny Au-Yeung (for Bellpac) and Eric Ng (for Shan Pei); and 2. then a transfer of the beneficial interest in the Bonds from Shan Pei to Alfred Wong pursuant to a verbal agreement between Danny Au-Yeung and Eric Ng. Given the nature of the Impugned Transactions and the identity of the participants, it would be "natural" to expect the appellants to call Eric Ng. The fact that the Bellpac Parties sought unsuccessfully to tender an email from Eric Ng (at [75]) does not tend against that conclusion. Put another way, Eric Ng would be expected to be available to the appellants rather than the Bellpac Parties.

Appeal Ground 4 - Absence of writing 58 The appellants submitted that the trial judge erred in holding that the requirements of s 23C(1)(c) of the Conveyancing Act applied to each of the Impugned Transfers with the result that none of them was effective to pass title. In particular, the appellants submitted that the trial judge erred: 1. in concluding that the requirement for writing in s 23C(1)(c) applied to equitable dispositions of all property and not just real property; 2. in concluding that the agreement between Bellpac and Shan Pei satisfied a pre-condition to the operation of s 23C(1)(c), namely it was a disposition of an equitable interest; and 3. in rejecting the contention that the requirements of s 23C(1)(c) had been displaced by part performance on the part of the transferee. 59 Section 23C(1)(c) of the Conveyancing Act relevantly provided: … a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person's will, or by the person's agent thereunto lawfully authorised in writing. 60 As noted, the trial judge held that the requirement of writing in s 23C(1)(c) applied to the alleged dispositions of an equitable interest in the Bonds and was not confined to dispositions of real property: at [139]. No appellate court had considered this question. The trial judge followed the decision of Giles J in PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241. In that decision at 251F (after referring to Grey v Inland Revenue Commissioners [1960] AC 1; Oughtred v Inland Revenue Commissioners [1960] AC 206; Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 and Adamson v Hayes (1973) 130 CLR 276), Giles J said: There is no compelling reason to require writing for the disposition of an equitable interest in land but not for the disposition of an equitable interest in personalty, as the English decisions demonstrate. In my opinion the better view is that par (c) extends to the disposition of equitable interests in personalty. But for the context of s 23C, that conclusion would follow both in principle (there being no reason to distinguish between interests in land and interests in personalty in this respect), from the terms of s 23C itself as construed by the majority in Adamson v Hayes, and from the application of an equivalent subparagraph to interests in personalty by the House of Lords. I would reach the same conclusion notwithstanding the context in which s 23C appears. As the authorities to which I earlier referred show, headings are but one factor to be taken into account in the event of uncertainty. It is undesirable that provisions in the same or substantially the same terms, which it must be taken were enacted to achieve the same purposes, should be given a meaning in New South Wales different from that which they have been held to have in England and possibly in Western Australia because of the uncertain indication provided by the position of s 23C in the Act. 61 The appellants submitted that as a matter of statutory construction, the conclusion of both Giles J in PT Ltd and the trial judge was wrong. In particular, the appellants submitted that the words in the context in which they appeared in the Conveyancing Act did not support the "expansive" construction adopted but supported the conclusion that s 23C(1)(c) only applies to real property. 62 In light of the conclusions reached in relation to Appeal grounds 1 to 3 (inclusive), it is unnecessary to address this appeal ground. Accordingly, in the absence of extensive submissions and argument, this is not the appropriate appellate court to consider whether s 23C(1)(c) of the Conveyancing Act is confined to dispositions of real property.

D. SECOND APPEAL - NSD 1493 OF 2012 63 The facts giving rise to the appellants' second appeal are set out at [5] above. The notice of appeal raised four grounds. At the hearing of the appeal, the appellants only pursued the second appeal ground - that the trial judge erred in finding that the orders sought by the Bellpac Parties (the Declaration and Order) did not have a direct effect on the rights or liabilities of the Other Holders. 64 The applicable principle was not in dispute. It was set out by the Full Court in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 525 as follows: … The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction … . The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential. Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. Where the question arises after final orders have been made in the proceedings, the inquiry must be directed to the orders actually made, or which, on appeal it is contended should be made … . (Emphasis added.) 65 In support of their contention that the Declaration and Order did have a direct effect on the rights or liabilities of the Other Holders, the appellants commenced with a summary of the evidence before the trial judge to the effect that: 1. the Other Holders would, in seeking to establish their title, rely on transfers to them on the basis that Alfred Wong was the beneficial owner of the relevant bonds at the time of the relevant transfers; 2. proceedings impugning the title of the Other Holders had already been commenced by the Bellpac Parties by the time of hearing the Dismissal Application; and 3. there was a real possibility that Gujarat would take action to have the names of the Other Holders removed from the register upon the Court making final orders in the proceeding below. 66 The appellants then submitted that the risk of having their registration removed from the register was a direct effect with a sufficient connection to the making of the orders sought by the Bellpac Parties so as to render the Other Holders necessary parties. The appellants' submissions are rejected. 67 The Declaration and Order deal with the Bonds and only the Bonds. The Bonds the subject of the Declaration and Order were specifically identified by number. Other bonds held by the Other Holders were not the subject of any declaration or order. 68 The appellants' assertion that Gujarat would take steps to remove the Other Holders from its register as a result of the orders in this proceeding was a matter of conjecture. There was evidence of correspondence from Gujarat's solicitors to the Other Holders questioning whether the Other Holders ought to be recorded on the register in light of the findings below. That evidence may be put to one side. Gujarat could well have cause to question the accuracy of the Register, but no order of the trial judge required or directed it to change, amend or delete any entry in the Register. Gujarat was not a party to the proceeding. 69 This appeal ground is dismissed.

E. CONCLUSION 70 For those reasons, we would dismiss both appeals. In each appeal, the appellants should pay the respondents' costs of the appeal. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Gordon and Robertson.