Korea Shipping Corporation v Lord Energy SA

1. The respondent pay the appellant's costs of the stay application made on 14 November 2018.
2. The orders of the Full Court made on 14 November 2018 in relation to the outcome of the appeal be entered. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT'S REASONS WERE DELIVERED BY ALLSOP CJ: 1 This appeal was heard on Tuesday 13 November 2018. The Court made orders on 14 November 2018, but ordered that they not be entered until the hearing of a stay application today, 15 November 2018. That application was abandoned. The orders may now be entered. These are the Court's reasons for its orders. 2 On Friday 26 October 2018, the plaintiff, Lord Energy SA, commenced an action in rem against the ship MV Dangjin claiming in the writ a general maritime claim for over USD 7.5 million against Korea Shipping Corporation (KSC) as the relevant person. The claim arose under a charterparty dispute concerning another ship, DS Valentina, which was not owned by KSC, but in respect of which KSC fell within s 19(a) of the Admiralty Act 1988 (Cth) (the Act) as charterer or in possession or control of the first-mentioned ship. KSC was said to be the owner of the MV Dangjin at the time of the commencement of the in rem proceedings; that is, at the time of filing for the operation of the surrogate arrest provisions. By s 19(b) of the Act, KSC was said to be the owner of the second-mentioned ship. 3 Dangjin was arrested early on Sunday 28 October 2018 by a Marshal of the Court as she entered Newcastle Harbour to load coal. Dangjin is a 23 year old, 77,205 gross tonnage and 149,000 deadweight tonnage bulk carrier worth, at last valuation, USD 8 million or thereabouts. 4 On Tuesday 30 October 2018, KSC filed an interlocutory application seeking to set aside the arrest warrant and the arrest. The issue was said to be one of jurisdiction: whether KSC, as the relevant person, was the owner of Dangjin on 26 October 2018 when the proceedings were commenced. 5 The application was heard by the Sydney Admiralty judge on Tuesday 6 November 2018. On 7 November 2018, the primary judge delivered a clear, succinct reasoned judgment in which his Honour concluded that KSC was the owner. His Honour thus dismissed the interlocutory application. 6 An application for leave to appeal was filed on Friday 9 November 2018, and heard concurrently with the appeal on Tuesday 13 November 2018. The need for leave arose because the determination by the primary judge on the jurisdiction question did not resolve all matters in issue between the parties. 7 There was no substantive opposition to leave. The decision was, in effect, a final decision on the issue of jurisdiction and Decor Corporation Pty Ltd v Dart Industries Inc. [1991] FCA 844; 33 FCR 397 is clearly satisfied. The balance of these reasons will deal with why the appeal should be allowed. 8 Having had the benefit of clear and succinct submissions from both parties, we have the misfortune to disagree with the learned primary judge. Our disagreement is on two crucial points at the centre of his Honour's reasoning. We would otherwise agree with the general approach his Honour took and we would pay tribute to the clarity of the reasons brought forward in circumstances of considerable despatch and urgency. 9 Prior to 15 March 2018, KSC was the registered owner of Dangjin on the Korean shipping register. There was no suggestion that prior to that date the state of affairs of ownership was other than true ownership for the purposes of provisions such as ss 17 and 19 of the Act. 10 From March 2018, the affairs of KSC as concerned Dangjin were rearranged. A trust arrangement was created under Korean law whereby Dangjin was transferred to IBK Securities Co Ltd (IBK), which became the registered owner. IBK became trustee of Dangjin under the Korean Trust Act. The parties to that arrangement were IBK as trustee, KSC as trustor (sometimes spelt truster) and secondary beneficiary, and the Nonghyup Bank (the Bank) representing a private equity trust as primary beneficiary. The arrangement was to support the financial accommodation of KSC by the Bank, originally in the sum of KRW 19.5 billion, which is equal to approximately USD 19 million. 11 Mr K M Moon, an expert brought on behalf of the plaintiff described the arrangement helpfully in his report of 18 October 2018, as follows: According to trust book attached in the vessel register, the preferred beneficiary right is bestowed to domestic private entity fund which took over corporate bond of KSC, and thus trust had been set as security. 12 The essence of the debate before the primary judge and on appeal was whether the arrangement under Korean law was effective to divest sufficient rights in the vessel, such that when examined under Australian law the position could or could not be properly characterised as ownership of the ship by KSC. 13 The parties were agreed on the proper approach, which was, as reflected in the reasons of the Full Court in Tisand (Pty) Ltd v The Owners of the Ship MV "Cape Moreton" (ex "Freya") [2005] FCAFC 68; 143 FCR 43 (The "Cape Moreton") at 78-79 [140], that the law of Australia would govern the characterisation of the rights of the parties as they are derived from the relevant foreign transaction. The existence, nature and extent of such rights created by the relevant transaction would be governed by the law that Australian rules of private international law regarded as relevant. See also the approach to characterisation of maritime liens in The Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26; 246 FCR 337. 14 The parties agreed that the relevant law to determine the existence, nature and extent of the rights in and to the ship was Korean law. This was, in accordance with the reasons in The "Cape Moreton", the law of the flag of a working commercial ship. It was also the law chosen by the parties in the operative and constituent documents to the transaction, to which reference will be made shortly. It is also the law to which the transaction had its closest and most real connection. 15 Both sides led evidence of Korean law. Mr K M Moon provided an opinion for the plaintiff and Mr S W Kwon provided an opinion for KSC. The Korean Trust Act was in evidence, as were the relevant constituent documents. 16 There was an agreement between the parties as to the use of the expert evidence, which resulted in a ruling by the primary judge. The experts gave conflicting opinions on the ultimate issue as to "beneficial ownership". Neither was reasoned nor clearly tied to a relevant principle. Reading Mr Moon, it may be that the notion of beneficial ownership was linked to the control of the use of the vessel, notwithstanding the lack of ownership in KSC. In any event, it matters not. The parties agreed that this evidence was not to be relied upon. Otherwise, their reports were agreed to be admissible as expressions of their opinion. Where there was a difference, it was agreed that the Court was to resolve the issue by reference to the materials, especially the Trust Act and the constituent documents. The ruling by his Honour as to use of the experts' evidence made under s 136 of the Evidence Act 1995 (Cth) was that the use of the opinions was governed by the agreement of the parties. 17 Thus, the first task was to identify the nature of the rights of the parties created under Korean law by the transactions on and after March 2018. 18 The rearrangement that occurred involved the transfer of Dangjin to IBK as trustee and the latter's registration as owner on the Korean shipping register. The tripartite trust relationship is identified in the Trust Book, which is available as part of the shipping register. This named the parties as Trustor (KSC), Trustee (IBK), Preferred Beneficiary (the Bank), and Beneficiary (KSC). There was a Trust Agreement in the Trust Book. The introductory clause stated: Trustor and Beneficiary Korea Shipping Corporation (hereinafter referred as "Trustor") hereby trust a property defined below to Trustee IBK Securities Co., Ltd. (hereinafter referred as "Trustee") and Trustee accepts such trust. For Trustee to bestow beneficiary right to Nonghyup Bank (in the position as trustee of ADFKFB Investment Private Equity Trust Trustee under Capital Market and Financial Investment Services Provider Act) (hereinafter referred as "Preferred Beneficiary"), Trustor, Trustee, Beneficiary and Beneficiary hereby enter into a property trust agreement (hereinafter referred as "Trust Agreement") as below to define rights and obligations of each party. 19 The purpose of the trust was set out in article 1 as follows: Article 1 (Purpose of Trust) Purpose of Trust Agreement is to determine necessary terms for Trustor to trust a property to Trustee and Trustee to collect · supervise · manage · dispose upon acquisition of Trust. 20 The General Trust Agreement contained a provision (article 26) that additional agreements could be entered into. The Special Terms of Trust Agreement was such an additional agreement and was contained in the Trust Book. 21 The arrangement initially concerned an accommodation by the bank of KRW 19.5 billion (about USD 19 million) and was for a trust period of 14 March 2018 to 23 September 2019. This sum was repaid prior to 28 August 2018 and replaced by a sum of KRW 9.5 billion, and a trust period of 28 August 2018 to 28 August 2019. 22 The arrangements for the vessel and the proceeds of its working are otherwise contained within the constituent documents. 23 By article 8 of the General Trust Agreement, in the event of the default of KSC, the trustee may dispose of the vessel upon request of the Bank. 24 Article 17 of the General Trust Agreement concerned early termination. It was in the following terms: Article 17 (Early Termination and Liability) (1) Trustor shall not terminate Trust Agreement without fault of Trustee except in case agreed by all concerns parties including Trustee and Beneficiary, (2) Despite Section 1, Trustee may terminate Trust Agreement if it is impossible or remarkably difficult to accomplish purpose of Trust or perform task for Trust and shall not be liable for such termination without fault of Trustee. As can be seen, there was no apparent express contractual right to terminate the Trust Agreement in the trustor - that is, KSC by those terms - otherwise than with the fault of the trustee. 25 Article 4 of the Special Terms of Trust Agreement dealt with the disposal of trust property. It was in the following terms: Article 4 [Disposal of Trust Property] (1) In addition to Section 1 of Article 8 of this Agreement, even though it is before the termination of the Period of Trust, trust Property may be disposed on demand of Preferred Beneficiary or others when any of the following occurs; 1. When any of the reasons defined in subsections of Section 1 of Article 12 of the Contract of Private Placement Bonds occur; 2. When Trustor violates the Contract of Private Placement Bonds(including violation of Testimony and Guarantee under Article 9 thereof) 3. When a factor of realization occurs because of the decrease of security value including the case when it is not possible to secure receivables of Preferred Beneficiary from Trust Property because of financial reasons and others. (2) When any of the reasons defined in Article 8 of this Agreement and Section 1 of this Article occur and Preferred Beneficiary makes a request by designating a purchaser, Trustee may dispose Trust Estate under a free contract, and Trust Fee from disposing Trust Estate shall be calculated in accordance with the rates regulated by Annex 1 Rates of Fee for Disposal based on the disposal amount of Trust Estate. (3) In the case of disposal under Section 2 of this Article, all and any conditions associated with such disposal including price or condition shall be decided by Preferred Beneficiary and notified to Trustee. The above are not, of course, general rights of disposal of the Trustee or the Bank, but rest on the operation of the constituent documents and of the accommodation arrangement. 26 Article 7 of the Special Terms of Trust Agreement dealt with the management of the ship: Article 7 [Management of Trust Property] (1) Trustee only handles management task of ownership of Trust Property and Trustor bears all expenses and taxes concerning Trust Property. (2) Truster has duty to maintain and manage charterparty of the Vessel (including amendment, extension, supplement and renewal) concerning Trust Property at the time of signing this Agreement and other charterparty of the Vessel to be entered in the future and Trustor bears all debts concerning the charterparty entered during and after terms of Trust Agreement. (3) Despite Article 10 of this Agreement, charter hire from charterparty under Section 2 of this Article and profits from management of Trust Property (the Vessel) itself shall be excluded from Trust Property. (4) Trustor is obliged to notify other party at the time of entering the charterparty (in case when the charterparty is already entered, at the time of entering this Agreement) that the Vessel was trusted to Trustee, and such notification shall include that Trustee may dispose Trust Property when Trustor breaches own obligation. (5) Trustor is required to receive consent from Preferred Beneficiary in prior to signing a charterparty. 27 There was a separate arrangement for the dealing with the proceeds of the use of the vessel in the constituent documents. Whilst the Trust Book appeared to place the beneficial use of the vessel in the hands of KSC, for its benefit, the cognate documents provided for a creation of a trust relationship over those funds and a requirement on KSC to pay proceeds of the working of the ship up to a certain value per month to the Bank in reduction of the accommodation. 28 Article 10 of the Special Terms of Trust Agreement also dealt with termination of the trust. It was in the following terms: Article 10 [Termination of Trust] Notwithstanding Article 17 of this Agreement, Trustor shall not terminate Trust without an approval from the Preferred Beneficiary. However, in the event that Trustor repays the full amount of debts to the Preferred Beneficiary, Trustor may terminate Trust with the written consent of the Preferred Beneficiary. Again, this provision tells against an unfettered right of KSC to pay out the loan and to terminate the trust, an issue of some importance that we will deal with in due course. 29 Thus, the Bank's consent was required for early termination, including when KSC repaid the full debt. 30 The Private Placement Bond Underwriting Agreement was the lending document. This document set out the rights and obligations of KSC as "investee company" and the Bank as "investor". The terms of the bond were 6% interest with a maturity of 28 August 2019. Early repayment was provided for in article 11, paragraph 12 of the Private Placement Bond Underwriting Agreement. That paragraph was in the following terms: Article 11 (Conditions for the issue of bonds) … 12. Early repayment of bonds a. Repayment before expiry (Call option): The Investee Company may repay the full face value of the Bonds on 28 May 2019 (hereinafter called "Early Repayment Date"). b. Claim for early repayment (Put option): The Investor, on 28 May 2019 (hereinafter called "Early Repayment Due Date"), may demand repayment of the full face value of the Bonds. c. Period for early repayment claim and claim method: The Investee Company or the Investor who wish to make early repayment must notify in writing to the other party 14 days before the Early Repayment Date and the Early Repayment Due Date and the Investee Company must repay the Bonds (there are no fees for early repayment) on the Early Repayment Date and the Early Repayment Due Date ("Early Repayment Date" in this subsection) (if the day is bank holiday, then the following bank business day). The Investee Company must pay the principal and interest accrued from the date following the issue date to the Early Repayment Date deducting the interest already paid and less than one KRW is truncated. If the principal and interest payable on the Early Repayment Date is not paid, interest will accrue calculated at 20% per annum on the amount unpaid from the date following the Early Repayment Date until the actual date of payment. 31 Article 14 of the Private Placement Bond Underwriting Agreement provided for security by the granting of a trust over the subject vessel, a monetary bond trust for the vessel's freight receivables, the transfer of an insurance claim, and related guarantees. 32 It is unnecessary to go further into the detail of the Trust Monetary Receivables Contract, other than to say that KRW 780 million per month was required to be paid to the Bank. 33 KSC requires the consent of the Bank from these documents to enter any charterparty or dealing with the ship and with the receivables thereunder. 34 Both experts describe the trustee as being the owner of the vessel "internally and externally". This phrase was not elaborated upon by either. Both said that KSC did not have the right to dispose of the vessel without the consent of the Bank. 35 In his evidence, Mr Kwon referred to article 22 of the Trust Act. That provision was in the following terms: Article 22 (Prohibition of Compulsory Execution, etc.) (1) No compulsory execution or auction for exercise, etc. of security rights, conservative measure (hereinafter referred to as "compulsory execution, etc.") or disposition of default on national taxes, etc. may be made against any trust property: Provided, That the same shall not apply where it is based on any right arisen by a cause existing prior to the creation of a trust, or in the course of performing trust affairs. (2) A truster, beneficiary or trustee may raise an objection against any compulsory execution, etc. made in violation of paragraph (1). In such cases, Article 48 of the Civil Execution Act shall apply mutatis mutandis. (3) A truster, beneficiary or trustee may raise an objection against the disposition of default on national taxes, etc. made in violation of paragraph (1). In such cases, procedures for raising an objection against the disposition of default on national taxes, etc. shall apply mutatis mutandis. 36 Mr Kwon said in his report that "the effect of article 22 … was to protect the ship from arrest because it was held in trust and that KSC 'may not' have the right to terminate the trust at its 'pleasure'". Mr Moon said in his report: Under Korean Trust Law … a trustee acquires actual ownership of a trusted property internally and externally when ownership of the trusted property had been indeed transferred to a trustee. In this regard, without any cause for cancellation/invalidity of such trust, IBK's acquisition of the ownership shall not be denied under the Korean law. 37 Mr Kwon also referred to a decision of the Supreme Court of Korea to the effect that when a trust contract is made regarding specific property, the ownership of such property is fully transferred from trustor to trustee, so that the trustor may no longer claim his or her ownership or exercise any rights over the property. 38 Mr Moon did not contest either of these last two matters in Mr Kwon's evidence. Indeed, the opinion of Mr Moon to which I have just referred was consistent with it. Mr Moon also stated that KSC does not retain a right of sale. In an email to London solicitors on 19 October 2018, he said: Please be advised that the Trustor (KSC) does not retain the right to dispose the Vessel themselves and so KSC can dispose the Vessel only under the consent of the Trustee (IBK) and the Preferred Beneficiary (NH Bank). Furthermore, under the Trust Agreement, the proceeds of sale should be applied first to the secured claims of the Preferred Beneficiary, and if there is the proceeds left after paying such secured claims, KSC can receive the remainder out of the proceeds as the Beneficiary. 39 Under the cognate constituent documents, KSC was left in control of the vessel to work, but the consent of the Bank was required for any charterparty, and KSC was required to pay the Bank from the product of the working of the ship the identified amounts to which we have referred. 40 The essential reasoning of the primary judge is to be found at [61]-[77] of his reasons. The legal framework was set out by his Honour at [61]-[64], which contain no error. This approach is contained in a series of well-known judgments in this Court, such as Kent v The Vessel "Maria Luisa" as Surrogate for the Vessels "Monika" and "Boston Bay" [2003] FCAFC 93; 130 FCR 12, The "Cape Moreton" and Shagang Shipping Co Ltd v Ship 'BULK PEACE' as surrogate for the Ship 'DONG-A-ASTREA' [2014] FCAFC 48; 314 ALR 230 in particular. 41 The reasoning on that framework that KSC was indeed the owner is contained in [65]-[77] of the primary judge's reasons, which, for convenience, we will set out: 65 Here, the transaction documents in evidence demonstrate that, consistently with the purpose of a trust in Art 2 of the Trust Act, KSC created a security interest for the benefit of the Bank under Korean law, in the form of the trusts over Dangjin and the marine freight receivables, to ensure that KSC would repay the secured debt and interest. Under those arrangements, KSC retained possession of Dangjin and the right to control her operation and trading. However KSC also assumed an obligation to pay KRW780 million per month into the trust account, because the revenue that it earned from its business of carrying freight on Dangjin was impressed with a trust obligation up to that sum each month. 66 The various transaction documents all expressly contemplated that KSC could repay the Bank in full before 28 August 2019, and as Art 6(1) of the trust agreement provided, the trust would terminate notwithstanding other provisions when distribution of the disposal amount, relevantly to the Bank, occurred following disposal of the trust estate (see Arts 6(1), 8(1) and 10 of the special agreement and Arts 5(1) and 29(1) of the receivables special agreement). 67 No doubt the Bank and IBK, as trustee and legal owner of the ship, would have to consent to early repayment and cooperate with KSC in providing documents to effect a transfer of ownership on completion of any sale of the ship that KSC might arrange. However, under Arts 31-35 of the Trust Act, IBK had to act solely in the interests of the beneficiaries with fiduciary care as a good administrator. Once the Bank ceased to have a financial interest to secure through the trust (after repayment in full), IBK would only have a fiduciary duty to act in KSC's interest. 68 Importantly, Art 8 of the special agreement recorded that IBK had already been paid all its fees due up to 28 August 2019, so that nothing would be due to it (cf. Art 99 of the Trust Act). 69 While theoretically the Bank might refuse an early repayment in full, that outcome is so commercially unlikely that I am not persuaded that the possibility could negate a finding that KSC had the right to sell its own ship. In the event of such an unexpected outcome, KSC could apply to the Korean courts under Art 88(3) of the Trust Act to modify the trust. 70 All the transaction documents contemplated that at the end of the trust and agreement periods, when KSC repaid what it owed to the Bank in full, the legal title in the ship would revert to KSC. The purpose of the trust (consistently with Art 2 of the Trust Act) was to hold the ship (and the marine freight receivables) as security for KSC's performance of its obligations under the bond contract to pay the Bank the debt and interest that the transaction documents secured (see eg: Art 8(1) of the trust agreement and Art 3(1) of the special agreement). As Art 10 of the special agreement and Art 29(1) of the receivables special agreement provided (see too the other provisions to which I refer at [66] above), if KSC repaid the full amount due to the Bank, KSC could terminate the trust then and there. There is no basis to think that in such a case the Bank had a legal right to withhold consent or, even if it did have such a right, it could exercise it to interfere with or prevent KSC from completing a sale of the ship. 71 Moreover, there was nothing in the transaction documents to restrict KSC, for example, from arranging a sale of the ship, prior to the termination of the trust, that either would be completed on 28 August 2019 in order to enable KSC to make final payment or after the termination of the trust. 72 I am of opinion that KSC was the beneficial owner of Dangjin. Its interest, as the residuary beneficiary under the trust, was comparable to that of a mortgagor of land holding the equity of redemption. As Lord Hardwicke LC said in Casborne v Scarfe (1735) 1 Atk 603 at 605 [26 ER 377 at 379], in a passage approved by Lord Selborne LC, Baggallay and Brett LJJ in Heath v Pugh (1881) 6 QBD 345 at 360 (affirmed Pugh v Heath (1882) 7 App Cas 235) and by Cohen J in Schmeling v Stankovic (1984) 1 BPR 1 at 3: The person….entitled to the equity of redemption is considered as the owner of the land… the interest in the land must be somewhere and cannot be in abeyance, but it is not in the mortgagee and, therefore, must remain in the mortgagor. 73 Here, Art 7 of the special agreement made clear the respective roles of IBK as trustee and KSC. IBK's role was simply to hold the legal title in the ship, while KSC was free to operate it, as it chose, as its own commercial, income earning chattel. As Lawrence LJ explained in In re Sir Thomas Spencer Wells: Swinburne Hanham v Howard [1933] Ch 29 at 52 (see too per Lord Hanworth MR at 45 applying Casborne 1 Atk 603; and City Mutual Life Assurance Society Ltd v FCT (1948) 77 CLR 363 at 367 per Williams J): In equity the right of the mortgagee is limited to the money secured and he holds the land only as security for his money…although he has the legal estate in the land… In equity the mortgagor is regarded as the owner of the mortgaged land subject only to the mortgagee's charge… 74 Once the sum secured by a mortgage is paid in full, the purpose for the provision of the security is at an end: Noakes & Co Limited v Rice [1902] AC 24 at 34 per Lord Davey; see too at 30 per Lord Macnaghten. The same concept is evident in Art 2 of the Trust Act. 75 Under Australian law, it would be essential to look at the substance of the transactions and not their mere form: G and C Kreglinger v New Patagonia Meat and Cold Storage Company Limited [1914] AC 25 at 47 per Lord Parker of Waddington; see too Ciaglia v Ciaglia (2010) 269 ALR 175 at 180 [12]-[13] per RW White J. I have done so here only after finding what the effect of the transaction documents is under Korean law in order to characterise the interests of KSC, the Bank and IBK for the purposes of applying Australian law. 76 On their face, the transaction documents contemplated that the trust would continue until 28 August 2019 (or to 28 May 2019 if there were early repayment under Art 11(12) of the bond contract) or when KSC repaid in full. If KSC had repaid the sum secured in full, there was no evidence of how Korean law would have treated its position. In my opinion, common sense, Arts 2 and 31-35 of the Trust Act and the presumption that, in the absence of evidence to the contrary, the foreign law is the same as that of the lex fori, support a finding that Korean law would have treated KSC as the owner and would not have prevented it from selling the ship and receiving the proceeds. Thus, for the purposes of s 19(b), KSC is the owner of Dangjin. 77 KSC had real and complete control of the ship, how she operated and where she sailed. It only owed money to the Bank whose sole interest, in combination with that of IBK, was having security over the ship and the marine freight receivables until KSC repaid its secured debt in full. 42 The critical reasoning that separated the parties on appeal covered the right of KSC to repay the debt early and thereby sell or dispose of the vessel so to do. This can be seen in particular at [69] of the primary judge's reasons. 43 Article 88 of the Trust Act, referred to in [69], is in the following terms: Article 88 (Modification of Trusts upon Agreement, etc. of Parties to Trusts) (1) A trust may be modified upon agreement of the truster, the trustee and the beneficiary: Provided, That the deed of trust shall govern, if it prescribes otherwise. (2) No modification of trust under paragraph (1) shall impair the legitimate interests of any third person. (3) Where any special circumstances unexpected as at the time of deed of trust occur, the truster, beneficiary or trustee may request the court to modify the trust. (4) No modification shall be made from a purpose trust to a trust for the interests of beneficiary, or from a trust for the interests of the beneficiary to a purpose trust. 44 The primary judge considered that KSC was the owner. The first step in that reasoning was that, as a practical matter, it could repay the debt: [69]. The second step was that KSC's rights were analogous with a mortgagor's equity of redemption and thus subsisting equitable beneficial interests or ownership: see [70]-[76]. 45 Respectfully, we do not agree with either step. For the first step, the documents do not disclose such a right. We refer in particular at this point to article 17 of the General Trust Agreement. There may have been good reason for the Bank to prefer the running of the arrangement on the terms agreed. In support of the conclusion of the primary judge, the respondent/plaintiff relied on articles 88, 98, 99, 100 and 101 of the Trust Act to support this approval. Article 88 is set out above. The other articles are hereafter set out. Article 98 (Causes for Termination of Trusts) A trust shall terminate in any of the following circumstances: 1. Where the purpose of trust is fulfilled or becomes impossible to fulfil; 2. Where the trust is merged; 3. Where the trust property of a limited liability trust is declared bankrupt under Article 138; 4. Where a new trustee has not been appointed continuously for one year after the completion of the duties of the trustee; 5. Where a new trustee has not been appointed continuously for one year in a purpose trust; 6. Where any cause for termination prescribed by the deed of trust arises. Article 99 (Termination of Trust by Agreement) (1) A truster and a beneficiary may terminate a trust at any time by agreement: Provided, That the same shall not apply where no truster exists. (2) A trust, the benefits of which are wholly enjoyed by the truster may be terminated at any time by the truster or his/her heir. (3) Where the truster, beneficiary or heir of the truster terminates the trust at the time disadvantageous to the trustee without any just reason, the truster, beneficiary or heir of the truster shall compensate for the loss. (4) Notwithstanding paragraphs (1) through (3), the deed of trust shall govern, if it prescribes otherwise. Article 100 (Termination of Trusts by Court Orders) Where it is evident that terminating a trust coincides with the interests of the beneficiary due to special circumstances unexpected at the time of the deed of trust, the truster, trustee or beneficiary may request the court to terminate the trust. Article 101 (Devolvement of Trust Property after Termination of Trusts) (1) Where a trust is terminated pursuant to subparagraphs 1, 4 through 6 of Article 98, or Article 99 or 100, the trust property shall devolve on the beneficiary (where the beneficiary of remaining property has been designated, referring to such beneficiary of residuary property): Provided, That where a person entitled to the devolvement of the residuary property of the trust property (hereinafter referred to as "rightful person on whom trust property devolves") has been designated by the deed of trust, it shall devolve on such person entitled to devolvement. (2) A beneficiary and a rightful person on whom trust property devolves renounces their rights to the residuary property of the trust, the residuary property shall devolve on the truster and his/her heir. (3) Where a trust is terminated under Article 3 (3), the trust property shall devolve on the truster. (4) Where a trust is terminated, the trust shall be deemed existing until the trust property is transferred to a person on whom it will devolve under paragraphs (1) through (3). In such cases, the person on whom the trust property will devolve shall be deemed the beneficiary. (5) Where the devolvement of the remaining property fails to be decided as prescribed in paragraph (1) or (2), the remaining property shall devolve on the State. 46 None of these articles, individually or taken collectively, when understood with article 22 and the evidence of Mr Kwon and Mr Moon, suggests that KSC had ownership or proprietary rights in the vessel before any approval or agreement for early repayment or before any modification of the trust by application of the court. Nor do they support any legal right to make early repayment. Nor do the constituent documents reveal that. Indeed, the put and call option tends to the contrary. 47 The second step of the primary judge was the arrangements in Korea were sufficiently close and analogous with a mortgage in Australia and that KSC's position was as if it were a mortgagor with an equity of redemption and thus a beneficial interest or ownership in the subject property. Again, we respectfully disagree. This was an arrangement for a financial accommodation, it can be accepted; but the evidence was that the proprietary interests of KSC were divested under Korean law while the trust arrangements were in place. 48 In this respect, the evidence seems to go all one way. Neither expert in his exposition of Korean law referred to any concept of equity of redemption, any principle concerning any clog on the equity of redemption and any consequent form of proprietary interest recognised by Korean law which would stem from, or arise out of, some such principle of Korean law. Thus, the ending of the rights and interests of KSC by the transaction under the foreign law is to be characterised, not altered, by reference to Australian law. 49 As we have said, there is no evidence of the equivalent of an equity of redemption or a principle of a clog on the equity of redemption and/or of any consequent beneficial or equitable interest or ownership of a mortgagor in these circumstances under Korean law. The evidence was, if anything, to the contrary, and it was the evidence of both experts. In our opinion, it would be a misuse of the relevant presumption that foreign law is the same as the lex fori, in the absence of evidence, to use the presumption to deal with a topic not, on one view, expressly addressed, in circumstances where the evidence of foreign law that was comprehensively brought forward, is, if anything, contrary to or inconsistent with the consequences of applying Australian law in this way. 50 In these circumstances, Australian law would not characterise the arrangements under the Trust Act and the constituent documents as equivalent to beneficial ownership of a mortgagor holding an equity of redemption when the evidence of the foreign law supports the conclusion that the trustor (borrower) has no proprietary rights in the vessel until the trust arrangement comes to an end. 51 Even if it be the case that we are wrong and that there was somehow implied in the arrangement a right of early termination or a right of early repayment, we do not see the balance of the evidence on Korean law as leading to any conclusion other than that the proprietary rights of the party with the early right to repay would not arise until there had been repayment. 52 Counsel for the respondent asked for an inference as to a right of early repayment from the fact that the earlier loan had been repaid and replaced with a new loan in August 2018. We do not think that any such inference should be drawn. The facts are entirely equivocal. 53 Further, there was no evidence that it would be unreasonable to reject an early repayment in the light of the fixed term of the bond and the period of one year of the loan. 54 Thus, for these reasons, we would disagree with the learned primary judge that the rights in Korea under Korean law over the ship at the time of the commencement of proceeding could or should be characterised as ownership under Australian law. It was for these reasons that the Court made the orders it did yesterday. 55 There was an application for a stay yesterday, which Allsop CJ refused to entertain in the absence of security for an undertaking as to damages. At the time of arrest, the ship was in a queue to load 149,000 tonnes of coal on a voyage charter fixture from Newcastle to China. She was taken out of the queue when she was arrested. She does not go back into the queue until the arrest is lifted. The arrest was lifted yesterday. The court was informed yesterday, and acted on the basis of the accuracy of the information, that the laycan period for this voyage charter had expired, and that there was an imminent threat of cancellation of the voyage charter. There were third party interests involved, the voyage charter's interests and those of the seller of the coal to the voyage charterer. The question of the urgency of international trade in these circumstances would, in all likelihood, have been paramount. 56 The stay application was stood over to today to allow counsel and solicitors to obtain instructions from Switzerland from Lord Energy SA as to the obtaining of security for the undertaking. The Court was informed this morning that, upon reflection, the respondent/plaintiff will not be seeking special leave to appeal to the High Court. Therefore, the stay application is not brought. 57 There should, however, be an order for costs of yesterday's application and the Court orders that the respondent to the appeal pay the appellant's costs of the stay application made on Wednesday 14 November 2018. 58 We direct that the orders made yesterday in relation to the outcome of the appeal be entered. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop, and Justices Besanko and McKerracher.