Plaintiff v Defendants

EVIDENCE - Burden of proof - Unexplained failure to give evidence - Rules in Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63 and Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, applied.

PLEADINGS - Where some claims were made but not pleaded - Where Court informed the parties that the case would be decided on the pleadings - Where no amendment sought to make new claims - Where no fair notice of some new claims.

PERSONAL PROPERTY - Possession of goods - Direct or indirect control of goods - Relevance of possession of land to possession of goods on land - Proof of control - Relevance of third party access to goods.

BAILMENT - Whether bailment formed upon defendant taking possession of goods by an intentional act or dealing that is inconsistent with, repugnant to and an infringement of the rights of the plaintiff, the owner of the goods - Hobbs v Petersham Transport Co Pty Ltd [1971] HCA 26; (1971) 124 CLR 220, applied.

DETINUE - Whether unequivocal refusal of demand for return of goods - Whether wrongful failure to return goods on demand.

CONVERSION - Whether goods converted - Where defendant took possession of goods by an intentional act or dealing that is inconsistent with, repugnant to and an infringement of the rights of the plaintiff - Where goods used by defendant - Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; (2011) 82 NSWLR 420, applied.

TRESPASS TO GOODS - Whether plaintiff with immediate right to possession of goods entitled to sue defendant in trespass - Where defendant in possession of goods at the time of alleged trespasses - Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, applied.

DIRECTORS' LIABILITY IN TORT - Whether director defendant directed or procured conversion of goods - O'Brien v Dawson [1942] HCA 8; (1942) 66 CLR 18; Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd [2003] VSC 291; (2003) 9 VR 171; Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88; (2023) 111 NSWLR 304, applied.

AGENCY - Whether a company was the agent of another company and or a person - Where no express agency - Where plaintiff relied upon control - Where plaintiff abandoned pleaded case and sought to make a new case - ACN 007 528 207 Pty Ltd (in liq) v Bird Cameron [2005] SASC 204; (2005) 91 SASR 570; James Hardie & Co Pty Ltd v Hall (1998) 43 NSWLR 554; Premier Building & Consulting Pty Ltd v Spotless Group Ltd [2007] VSC 377; (2007) 64 ACSR 114, applied.

RESTITUTION - Unjust enrichment - Whether defendants unjustly enriched by retaining possession of goods - Opportunity to use goods - Whether there was 'no juristic reason' for defendant to retain possession of goods - Goods retained by defendant without plaintiff's consent - Value of benefit received - Whether 'reasonable hiring fee' appropriate - Redland City Council v Kozik [2024] HCA 7; (2024) 281 CLR 202; Carpenter v Morris (2023) 111 NSWLR 603, applied.

TRUSTS - Constructive trust - Misappropriation of goods - Whether constructive trust (institutional) arose over the goods - Principle in Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105 - Whether constructive trust (remedial) also arose over property obtained as a result of breaches of the constructive trust - Grimaldi v Chameleon Mining NL [No 2] [2012] FCAFC 6; (2012) 200 FCR 296, applied.

TRUSTS - Knowing receipt of trust property - Whether the cryptocurrency was trust property at the time of receipt by recipient - Whether person knowingly received trust property - Barnes v Addy (1874) LR 9 Ch App 244; GP Building Holdings Pty Ltd v Voitin [2022] VSCA 210; (2022) 69 VR 299, applied.

DAMAGES - Proof of common law damages - Compensatory principle - Proper approach to assessment of damages - Where several alternative bases for assessment of damages proposed - Whether plaintiff's basis for assessment is an appropriate assessment - Where plaintiff's preferred basis for assessment is appropriate, but there is a lack of reliable evidence - Nominal damages awarded - JLW (Vic) Pty Ltd v Tsiloglou [1994] VicRp 16; [1994] 1 VR 237; Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564, applied.

DAMAGES - Loss of commercial opportunity - Lost opportunity to make a profit from the operation of a cryptocurrency mining business - Where evidence of the value of lost opportunity to make a profit is inadequate and unreliable - Where the evidence was available to the plaintiff - Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, MA & J Tripodi Pty Ltd v Swan Hill Chemicals Pty Ltd [2019] VSCA 46, applied.

DAMAGES - Exemplary damages - Where not pleaded on bailment - Where no material facts pleaded for other claims, including detinue, conversion and trespass to goods - Where plaintiff provided material facts in closing submissions - Supreme Court (General Civil Procedure) Rules r 13.07(3), applied.

EQUITABLE COMPENSATION - Loss of commercial opportunity - Approach to assessing equitable compensation based upon a loss of commercial opportunity - Where evidence of the value of lost opportunity to make a profit is inadequate and unreliable - Where the evidence was available to the plaintiff - No compensation awarded - Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324; (2014) 101 ACSR 415, applied.

ACCOUNT OF PROFITS - Where defendant alleged to have knowingly received trust property - Where the trust property is alleged to be cryptocurrency.

TRUSTS - Trustees - Where plaintiff pleaded the defendant acted in its 'capacity' as a trustee - Where not relevant to pleaded causes of action - Where issue only relevant to enforcement of any judgment - Where no remedy sought for enforcement by, for example, a right of subrogation to any indemnity of the trustee - Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193; Nolan v Collie [2003] VSCA 39; (2003) 7 VR 287, applied.

Not a party by the time of the trial. Claim against it was dismissed on 23 October 2024.

1 Yimiao Australia Pty Ltd (Yimiao), the plaintiff, makes claims against 3V Development Australia Pty Ltd (3V), the second defendant, and Mr Dajian Li, the fifth defendant, in relation to their alleged possession and use of Yimiao's cryptocurrency mining machines (Yimiao Machines), including at land located in Clayton at 159-171 Wellington Rd (159 Wellington Rd) and 175 Wellington Rd (together, the Wellington Rd site). For convenience, I refer to 3V and Mr Dajian Li collectively as 'the defendants'. The claim against Star Mining Pty Ltd (Star Mining), formerly the first defendant, was dismissed by consent on the eve of trial. Cyber Intelligence Tech Pty Ltd (in liquidation) (Cyber), the third defendant, and Genesis Pty Ltd (in liquidation) (Genesis), the fourth defendant, went into liquidation prior to trial. For convenience, I have prepared a list of relevant persons, companies and entities (Annexure A). Yimiao provided a number of Aide Memoires concerning a number of issues. For convenience, I have included a number of these as annexures to this judgment as follows:

(a) Annexure B: summary of unitholders in the 3V Trust (Tab 4 of Yimiao's Aide Memoire, page 8);

(b) Annexure C: summary of Yimiao Machines inspected on 20 December 2023 at the Wellington Rd site (Tab 13 of Yimiao's Aide Memoire, pages 42 to 44);

(c) Annexure D: summary of electricity use and charges at the Wellington Rd site (Tab 6 of Yimiao's Aide Memoire, pages 12 to 13);

(d) Annexure E: alleged 'non-exhaustive summary' of the flow of cryptocurrency funds to the defendants and others (Tab 16 of Yimiao's Aide Memoire, including endnotes but not the tables of payments, pages 61 to 64);

(e) Annexure F: L7 Antminers photographed, inspected or collected since 21 August 2023 (Tab 10 of Yimiao's Aide Memoire, pages 28 to 36)

Standard of proof, seriousness of allegations and circumstantial evidence

2 The Court must find Yimiao's case proved if it is satisfied that the case has been proved on the balance of probabilities.[1] Dixon CJ in Jones v Dunkel said that the 'facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied'.[2] Dixon J (as he then was) in Briginshaw v Briginshaw stated:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. ... Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.[3]

3 Many of the allegations made by Yimiao involve very serious allegations of wrong doing. These include, but are not limited to, theft of the Yimiao Machines and knowing receipt of trust property.

4 The relationship between the standard of proof and 'the strength of evidence necessary to establish a fact' was succinctly set out in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd, where the majority of the High Court stated:

The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.[4]

5 The Court of Appeal in NOM v Director of Public Prosecutions stated:

Mere mechanical comparison of probabilities independent of a reasonable satisfaction will not justify a finding of fact. The fact finder must feel an actual persuasion of the occurrence or existence of the fact in issue before it can be found. Where, as in the present case, the standard of proof is to be applied to circumstantial evidence, satisfaction as to a reasonable and definite inference is required.[5]

6 The approach to circumstantial evidence and the drawing of inferences was set out by the High Court in Bradshaw v McEwans Pty Ltd:

The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available it is enough [if] the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture ... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise.[6]

7 The law proceeds upon a starting assumption that witnesses are creditworthy.[7] This position may, however, be displaced in the course of evidence.[8] It is recognised that human memory is a fallible reconstructive process and that '[e]xternal information can intrude into a witness's memory, as can [their] own thoughts and beliefs, and both can cause dramatic changes in recollection'.[9] Indeed, the memories of witnesses may be influenced by the partisan nature of civil litigation, whereby witnesses often have a stake in a particular version of events, which is 'obvious where the witness is a party or has a tie of loyalty ... to a party to the proceedings'.[10] Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd said:

[T]he best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose - though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross‑examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.[11]

8 In Sangha v Baxter, Basten JA cautioned against drawing inferences of credibility between different parts of a witness's evidence, stating:

There are risks in making global findings about credibility of any particular witness. Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful ...[12]

9 Cotter J in Muyepa v The Ministry of Defence said:

When evaluating the evidence of a witness whose evidence has been challenged it should be broken down into its component parts. If one element is incorrect it may, but does not necessarily, mean that the rest of the evidence is unreliable. There are a number of reasons why an incorrect element has crept in. Apart from the obvious loss of recollection due to the passage of time, there may be a process of conscious or subconscious reconstruction or exposure to the recollection of another which has corrupted or created the recollection of an event or part of an event.[13]

10 The position of a particular witness may also be significant. Evidence that a witness gives against his or her interest will ordinarily be preferred.[14] It is often necessary for a court to assess the credibility and reliability of witnesses who have no reason to be partisan, as their evidence may be decisive in resolving the conflicting evidence of interested parties.[15] As a starting point, when a court comes to evaluate the evidence of a witness, foremost importance should be placed upon contemporaneous documents.[16] As stated by Osborne J in 3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd:

The more appropriate course in evaluating competing evidence is 'to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence', and make 'inferences drawn from the documentary evidence and known or probable facts'.[17]

11 A lie may be accepted as an admission of guilt if that is the more probable inference to be drawn.[18]

12 Blatch v Archer established the fundamental principle that 'all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted'.[19] In H&Q Café Pty Ltd v Melbourne Café Pty Ltd, the Court of Appeal explained the inferential reasoning process available in such circumstances:

1. [T]he burden of proof will be discharged 'by adducing evidence of some fact the existence of which, in the absence of further evidence, is sufficient to justify the drawing of an inference that it is more likely than not that the event occurred or that the state [of] affairs exists'. This process of inferential reasoning is informed by the fundamental principle established in Blatch v Archer that 'all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted'.
2. In Ho v Powell, the New South Wales Court of Appeal explained the operation of the principle in Blatch v Archer where there is only limited evidence available:

[I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision ...

In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so.

1. Indeed, there may be cases where the facts required to be proven by the plaintiff are peculiarly within the knowledge of the defendant. In such a case, 'if the plaintiff provides sufficient evidence from which the matter may be inferred, the defendant then comes under an evidential burden'. In other words, 'slight evidence of that fact may suffice to prove the fact unless that evidence is explained away by the party with the knowledge of the fact'.[20]

13 An unexplained failure by a party to give evidence, call a witness or tender a document or other evidence may (not must) in appropriate circumstances support an inference that the uncalled evidence or missing material would not have assisted that party's case. This is commonly referred to as a Jones v Dunkel inference. It is an application of the principle in Blatcher v Archer. The operation of the principle was outlined in broad terms in Kuhl v Zurich Financial Services Australia Ltd, as follows:

The rule in Jones v Dunkel is that the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party's case. That is particularly so where it is the party which is the uncalled witness. The failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn.[21]

14 In Fabre v Arenales, Mahoney JA (Priestly and Sheller JJA concurring) said:

The significance to be attributed to the fact that a witness did not give evidence will in the end depend upon whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party expected to call him feared to do so. But there are circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness. He may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him. The reason why the witness is not called may have no relevant relationship to the fact in issue: it may be related to, for example, the fact that the party simply does not know what the witness will say. A party is not, under pain of a detrimental inference, required to call a witness 'blind'.[22]

Whether the principle can or should be applied depends upon whether the conditions for its operation exist. These conditions are three in number: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained. [23]

16 No inference will be drawn in relation to a particular matter unless a party was required to explain or contradict something.[24] This will be determined upon the issues arising upon the pleadings and in the course of evidence.[25] Where the requisite conditions are satisfied, an inference may be drawn that untendered evidence would not have assisted the party who failed to tender it, but not that it would have been harmful to their case.[26]

17 The proper course of logic to be employed in relation to two competing hypotheses was recently considered by Perram J in Palmanova Pty Ltd v Commonwealth of Australia.[27] His Honour said:

Where there are only two competing hypotheses that between them account for the universe of possibilities open on the evidence, a court's satisfaction that one is more likely than the other will entail that the occurrence of the fact supported by the more likely hypothesis is proved on the civil standard.[28]

[N]othing said in Palmanova is intended to depart from the realities that: (a) mechanical or arithmetic comparison of probabilities independent of belief will not justify a finding of fact; or (b) each competing hypothesis open on the evidence might range, possibly very significantly, in likelihood of occurrence. The important points made, however, are the need for care when there are a range of possibilities open, and the only way one reaches a state of reasonable satisfaction as to one being proven is to conclude its existence is more likely than all the other hypotheses available on the evidence.[29]

19 In some respects, Yimiao's case departed from the pleadings. Recently, in Dreamland Development Pty Ltd v Navadiya Group Pty Ltd, Cosgrave J set out the applicable principles when a party's case departs from the pleadings:

Whether or not parties should be held to their pleadings depends on the particular circumstances of the case and is a matter that falls within the Court's discretion. The Court is guided by the following principles:

(a) pleadings are not an end in themselves but are a means to the ultimate attainment of a just outcome. The courts do not take an 'unduly technical or restrictive approach to pleadings such that, among other things, a party is strictly bound to the literal meaning of the case it has pleaded';

(b) the question is whether the other party knew the nature of the case they had to meet - a degree of tolerance is justified so long as the circumstances are such that all parties to the action have had fair notice of what will be determined;

(c) a party should be held to its pleadings if the other party is, or might reasonably [be], prejudiced by the departure;

(d) at a minimum, the pleading should be clear about the causes of action relied upon by the plaintiff, including any claims made upon an alternative hypothesis;

(e) where the parties abandon the confines of the pleaded case and choose to litigate other issues during the trial, provided that those issues are 'fairly fought out', neither party will be allowed to 'hark back to the pleadings and treat them as governing the area of contest'. The question of whether the parties have chosen to depart from the pleadings can be inferred from the way in which the trial was conducted. Mere acquiescence by one party in a course adopted by the other will, in some cases, be sufficient to ground such an inference (for example, by failing to object to evidence that raises fresh issues). In this situation, the Court is permitted, and possibly obliged, to decide the proceeding on the further material facts and issues raised and addressed at trial; and

(f) allegations of fraud need to be specifically pleaded and properly particularised.[30]

20 Yimiao called lay and expert evidence. The defendants accepted that Yimiao's witnesses can be taken to have genuinely attempted to provide truthful evidence to assist the Court, with the exception of Mr Jian Chen and Mr Maolin Chen. It is convenient to briefly identify Yimiao's witnesses and to then address the issues of credit raised by the defendants concerning Mr Jian Chen and Mr Maolin Chen.

21 Ms Chunan Zhou (Ms Zhou) is the Chief Operating Officer of Yimiao Tech Pte Ltd (Yimiao Singapore) and the group of companies owned by Yimiao Singapore (the Yimiao Group). In her role as the Chief Operating Officer of the Yimiao Group she is responsible for the operation of all companies within the Yimiao Group including Yimiao and Yimiao Technology (HK) (Yimiao HK). Ms Zhou oversees the operation of the cryptocurrency business and the day to day operations of the mining machines owned by the Yimiao Group in various countries. This includes:

(a) ordering cryptocurrency mining machines or spare parts for those machines from the relevant manufacturers;

(b) arranging for the cryptocurrency mining machines or their parts to be delivered to the mining sites used by the Yimiao Group in various countries;

(c) leading an operational team, including technicians, to remotely monitor the cryptocurrency mining machines to ensure they operate at an optimal level and receiving reports on their operations; and

(d) arranging for the payment of costs associated with such operations.

22 Mr Songtao Feng (Mr Feng) has been the sole director of Yimiao Singapore, since 21 December 2021, and has been a director of Yimiao since 16 March 2022. He also holds a Bachelor's degree in Computing Science from Wuhan University, China, and a Master's degree of Information Systems from Nanyang Technology University, Singapore. Prior to his roles within the Yimiao Group he worked as a computing programmer for approximately 7 years in Beijing and Singapore. He also worked in private equity firms where he met Mr Xi Zeng and Ms Zhou.

23 Mr Costas Georgiou (Mr Georgiou) is a director of Connect IT Pty Ltd (Connect IT), a company engaged by Yimiao to collect equipment from the Wellington Rd site and to inspect them and review log files of the Yimiao Machines.

24 Mr Kasun Madamperuma is a technician at Connect IT. He gave evidence that he undertook a number of inspections of machines and performed certain tasks including downloading log files. He was not cross-examined.

25 Mr Zhe Meng is a warehouse manager at EWE Melbourne Pty Ltd (EWE), a company that operated a warehouse at 11A Chifley Drive, Moorabbin Airport. It is a logistics business. He gave evidence by an interpreter. He accepted that EWE is not an IT consulting business or a cryptocurrency mining business. In March 2023, Yimiao delivered some of its machines to EWE's warehouse at 11A Chifley Drive in Moorabbin. He gave evidence concerning log files downloaded from the Yimiao Machines.

26 Mr Justin Thomas is a non-executive director of Adisyn Ltd (formerly named DC Two Ltd) (DC Two). In February 2023 he was the Chief Technology Officer and Executive Director of DC Two. At that time, it had data centres that hosted cryptocurrency mining machines. It hosted Yimiao's machines at data centres located in Victoria and Western Australia from February 2023.

27 Ms Sarah Coffey (Ms Coffey) is the director of Catcher Legal Pty Ltd and one of the independent solicitors present for the execution of a search warrant on premises including 159 Wellington Rd on 21 August 2023. Her affidavits were tendered and she was not cross-examined.

28 Mr Li Zhang is a partner of Shine Cloud & Partners, a law practice in the People's Republic of China. He gave evidence concerning a company named 'Shilling Huifenghai Trading Co Ltd'. His affidavit was tendered and he was not cross‑examined.

29 Mr Steven McNew (Mr McNew) is the Senior Managing Director and Global Practice Lead, Blockchain and Digital Assets at FTI Consulting Technology LLC. I address his evidence in this judgment in relation to the matters upon which he gave evidence, including the identification of the persons who used Yimiao's machines and loss and damage claimed by Yimiao.

30 Mr Jian Chen is an operator of a cryptocurrency mining business in Melbourne who had mining machines hosted at 159 Wellington Rd from late 2021. Mr Jian Chen gave evidence by an interpreter. The defendants submitted that he was unreliable, untruthful and a self-interested witness. They submitted that he admitted that he wanted to see Mr Dajian Li punished in order to uphold the honour of China, because he was unhappy in relation to his private dealings with Mr Wengfeng (Henry) Huang (Mr Huang) and Mr Dajian Li, and that he also sought to implicate Mr Dajian Li to the greatest extent possible, and his evidence should be treated warily.

31 First, I accept that the Court should treat the evidence of Mr Jian Chen with caution given his dispute with Mr Dajian Li. But this does not mean that it should be rejected. I find that Mr Jian Chen genuinely believes that he has been seriously wronged by Mr Huang and Mr Dajian Li. Mr Jian Chen readily accepted that he is upset with both Mr Huang and Mr Dajian Li. He readily accepted and explained a number of disputes that he had with them. For example, Mr Jian Chen said that he paid Ms Fang (joint Chief Executive Officer of 3V and director of Cyber from 8 May 2022) $6,000 for an electricity meter that was not installed and that he blames Mr Dajian Li for this. He accepted that it is fair to say that by giving evidence he would like to help Yimiao and would like to impose his version of justice on Mr Dajian Li. But none of the evidence concerning his disputes was impugned in cross-examination.

32 Second, in my view, he was a truthful witness. His credibility was not affected by the cross-examination. I do not accept, as submitted by the defendants, that he sought to implicate Mr Dajian Li to the greatest extent possible. For example, he qualified his answer that he regularly saw Mr Dajian Li in the Mining Room (described below, [85] and [89]) by saying that it was less frequent than when he saw Mr Dajian Li in the office at 159 Wellington Rd. In cross-examination he said it was one day per week that he saw Mr Dajian Li in the Mining Room. This was consistent with his evidence in chief. Mr Jian Chen also answered questions directly and succinctly. He gave responsive answers on the whole and was polite.

33 Mr Maolin Chen is a former employee of Star Mining. He gave evidence by an interpreter. Mr Maolin Chen worked for Star Mining in the period April 2021 to May 2024. In April 2021, his work for Star Mining was located in Sichuan, China. He commenced work for Star Mining in Australia at 159 Wellington Rd, first visiting the site on 9 April 2022, before commencing formally on 11 April 2022. Mr Maolin Chen said that his responsibilities were maintaining the normal and regular operation of the miners at 159 Wellington Rd and also at a container next door (which I infer is 175 Wellington Rd), and also the safety and security of assets. He attended the site every weekday, including the Mining Room, and attended on the weekend if something significant happened. He worked in the Mining Room and the Back Room (described below, [85] and [90]) at 159 Wellington Rd and also from 8 May 2022 he worked at the container at 175 Wellington Rd. On 8 May 2022 there was only one container at the site. He attended the site of the container at 175 Wellington Rd every weekday between 8 May 2022 and 25 July 2022. He gave evidence that he saw Mr Dajian Li in the Back Room, Mining Room and the Containers (a second container was placed at 175 Wellington Rd, which is further addressed below). He gave evidence that he saw Mr Dajian Li directing employees in the Mining Room to undertake work, including a person named 'Vincent' and Mr Guangming Li (ie, Mr Bob Li). He said that he never saw Mr Dajian Li put a machine on a rack.

34 The defendants submitted that Mr Maolin Chen was an unreliable and untruthful witness.

35 First, they submitted that Mr Maolin Chen nodded in assent to having overstayed his visa and also denied having been asked this question the next day. He gave evidence that he arrived in Australia on 7 April 2022 on a 600 business visitor visa. He was then asked whether he had overstayed his visa. Mr Craig KC immediately objected to the question and the objection was made in the absence of Mr Maolin Chen. The defendants submitted that Mr Maolin Chen nodded in assent to this question. The Court made no observation of this and nothing is recorded in the transcript. Moreover when he was further cross-examined about this the following exchange took place with Mr Mitchell KC:

MR MITCHELL KC: Now, yesterday when I asked whether you had overstayed your visa, I believe you answered 'yes'; do you remember that?

WITNESS: - - - Ah, no such a question, and I did not overstay.

36 Mr Maolin Chen's evidence on this issue was direct and consistent. He never answered 'yes' and the Court made no observation of him nodding in assent, and there is no record of, him nodding in assent. I accept that he was incorrect that there was 'no such question' but I do not consider that he was seeking to be untruthful.

37 Second, the defendants submitted that when he was asked where his passport was he did not answer that question, instead saying there were no exit or entry stamps. I accept this but do not find the evidence to be deliberately evasive. Mr Maolin Chen was seeking to explain matters. This is clear from the whole of his evidence on this matter in which he readily admitted that his passport does not have entry and exit stamps:

MR MITCHELL KC: All right, do you have your passport with you?

WITNESS: No.

MR MITCHELL KC: If you produced your passport to the court, that would show if you left Australia in June, wouldn't it?

WITNESS: Correct, but that's, um - - -

MR MITCHELL KC: And where is your passport?

WITNESS: Um, I just want to say that, ah, there is no entry and exit stamps on my passport to Australia.

MR MITCHELL KC: There's no entry and exit stamps on your passport to Australia? Is that honest evidence, Mr Chen?

WITNESS: Ah, that's correct; has never been, ah, with the stamps, in - including this particular one.

MR MITCHELL KC: I see; so, if you brought your passport and showed it to the judge, it would have no record of you leaving Australia in June 2022? Is that correct?

WITNESS: Correct.

38 Mr Mitchell KC made no further attempt to ask him questions about the whereabouts of his passport.

Maolin Chen spent that evening with Mr Zeng after Chen had been expressly warned not to discuss his evidence with anyone except Mr Hibbard and his instructor. After their conversation was disclosed, Yimiao elected not to call Mr Zeng. Chen returned to the witness box the next day significantly more confident in his answers, but gave implausible evidence. His account of the topics of dinner conversation with Mr Zeng was improbable and should not be accepted.

40 This reflects poorly upon Mr Maolin Chen as he did not abide by a Court direction to him. But I do not accept that his evidence was improbable. First, he readily admitted to having dinner with Mr Xiaoliang Zeng of Star Mining. Second, Mr Maolin Chen was hesitant when giving evidence that they discussed going to an adult club. This evidence plainly caused him some embarrassment. He could have readily made up some other less embarrassing evidence if he wanted to be untruthful.

More pertinent was the inconsistent evidence given as to the state of the warehouse at 159 Wellington Road. When shown a photo he took in July 2022, he insisted it was taken in May 2022 and that he had deleted photos of the warehouse he took in June and July 2022. He later corrected the position when shown his own affidavit evidence to the contrary.

42 I do not accept that this makes his evidence unreliable or untruthful. The evidence concerns a photo taken more than two years prior to trial. Mr Maolin Chen initially said that it was taken in May 2022. He accepted in cross-examination that when he made an affidavit on 29 August 2022 (re-affirmed 26 September 2022) he stated that it was taken on 21 July 2022 and this was based on the date in his mobile phone. He then said that he could not say for sure when he took the photo. Mr Maolin Chen was not seeking to dispute the accuracy of his affidavit and the date of the photo being 21 July 2022, just that at the time of giving evidence he had no independent recollection of the date. This is clear from the whole of his evidence on this issue.

43 Fifth, the defendants submitted that he demonstrated a willingness to implicate Mr Dajian Li and that this was demonstrated by his unsubstantiated allegation in his evidence in chief that Mr Dajian Li stacked boxes to prevent access to the premises from which Mr Maolin Chen resiled under cross-examination. I do not accept Mr Maolin Chen demonstrated a willingness to implicate Mr Dajian Li. This is inconsistent with his other evidence in which he did not implicate Mr Dajian Li, despite being given the opportunity to do so. In evidence in chief Mr Maolin Chen said:

WITNESS: On 25 August when we went there, at that time in the warehouse Dajian Li had placed the machine of Star Mining two layers in front of Yimiao, so it was a barrier for us to the stock taking so we could not do the stock taking in the warehouse, whereas in the machine room - in relation to the barrier where the stock taking cannot be conducted and the team in fact had a conflict with a female under Dajian Li.

44 In cross-examination, the following exchange took place:

MR MITCHELL KC: So you were asked yesterday by Mr Craig at line 23 on p468 of the transcript, 'On 25 August, what did you inspect?'. You answer was, 'On 25 August when we went there, at that time in the warehouse, Dajian Li had placed the machine of Star Mining in two layers in front of Yimiao. So it was a barrier for us to the stocktaking'. And your answer continued, 'So we could not do the stocktaking in the warehouse, whereas in the machine room, in relation to the barrier where the stocktaking cannot be conducted and the team in fact had a conflict with a female under Dajian Li'?

WITNESS: Correct.

MR MITCHELL KC: Now, when you blamed Dajian Li for placing machines, you didn't see Mr Li place any machines anywhere, did you?

WITNESS: Correct.

MR MITCHELL KC: So you just wanted to blame Mr Li even though you didn't know it was him?

WITNESS: The value and warehouse, the ownership belongs to him; only him could do that, or with his instructions things can be done at that. That was at least my understanding.

MR MITCHELL KC: But you told His Honour, yesterday, that Dajian Li built that barrier; and you had no basis to say that, did you?

WITNESS: To be exact, I did not indeed say, ah, he has done that or arranged some other people to do that; but in my experience, only him could - can do that, or with his instructions things can be done like that.

MR MITCHELL KC: You gave the impression yesterday that you knew, though, didn't you?

WITNESS: I didn't see with my own eyes.

45 Mr Maolin Chen explained the basis for his belief. It did not demonstrate a willingness to implicate Mr Dajian Li.

46 Finally, the defendants submit that Yimiao did not call Mr Xiaoliang Zeng of Star Mining and that his evidence would have elucidated the surveillance measures implemented by Star Mining, including on and after 25 July 2022, as well as addressing his correspondence with Gilbert + Tobin which stated that 'Star Mining's people have not seen anyone moving the L7 Equipment from [159 Wellington Rd]'. They further submitted that Mr Xiaoliang Zeng's evidence may have contradicted the account Mr Maolin Chen gave of their conversation during the trial. I do not accept that Mr Xiaoliang Zeng was in Yimiao's camp. Mr Xiaoliang Zeng was at Star Mining and until the eve of trial Star Mining was being sued by Yimiao.

47 The defendants did not call any lay witnesses. They did not give any explanation as to why any particular person did not give evidence. It is common ground that at all relevant times:

(a) Mr Dajian Li was the sole director of 3V and controlled it;

(b) Mr McNaught managed 3V. He was also the joint Chief Executive Officer of 3V and a joint director of Cyber from its incorporation on 8 November 2021 until 8 May 2022;

(c) Ms Fang was the joint Chief Executive Officer of 3V. She was also director of Cyber from 8 May 2022, becoming sole director and controller from 2 August 2022;

(d) Mr Guangming Li (Mr Bob Li) was a 3V employee who, among other things, worked at 159 Wellington Rd;

(e) Avis Goh was 3V's warehouse manager at 159 Wellington Rd.

48 They did call evidence from a Mr Daniel Halpin, the Chief Executive Officer of Cybertrace Pty Ltd. Yimiao did not challenge the reliability of Mr Halpin as a witness but submitted that the instructions given to him by the defendants were deficient in certain respects. I address this submission later in this judgment.

49 Mr McNew provided a succinct and cogent explanation of cryptocurrency and blockchain technologies, including cryptocurrencies of Litecoin and Dogecoin:

Cryptocurrencies & Blockchain: Digital tokens live on blockchain networks. A blockchain is a ledger that records ownership and movement of certain digital assets in and between accounts, called 'addresses'. A blockchain is conceptually similar to a bank ledger, which tracks ownership and movement of money in and between accounts, or land records, which track ownership and transfer of land across owners. The digital assets tracked and moved between addresses on a blockchain are typically referred to as 'tokens.' In short, blockchains keep track of how many of each type of token created on that blockchain is in each address and allows the owner of that address to send such tokens to another address. The ledger entries are grouped into 'blocks,' each of which may contain records of several thousand transactions. These blocks, in turn, are linked together to create the entire ledger, collectively called a 'blockchain'.

Blockchain Continued: Blockchain differs from traditional ledgers in that instead of being maintained privately by a centralized party (like a bank or a land title registry), a blockchain is typically maintained publicly by a collection of computers (up to hundreds of thousands or more) owned by unrelated individuals and entities, referred to as a 'network'. In this sense, the ledger can be considered 'decentralized' or 'distributed'. Blockchain ledgers can have an immutable characteristic to them in the sense that once data has been committed in the form of a block, it is very difficult to alter. This is due to amount of computational power required to alter previous blocks.

Blockchain Variance: There are many different types of blockchains, each with its own unique features and characteristics. The most well-known blockchain is Bitcoin. Litecoin and Dogecoin are examples of separate blockchains.

Litecoin (LTC) Blockchain: was launched in 2011 by Charlie Lee and employs a Proof-of-Work (PoW) consensus mechanism to securely validate transactions sent on the network. ... One of Litecoin's distinguishing features is its fixed token supply, with new Litecoin tokens only entering circulation exclusively through mining, akin to Bitcoin's system. Litecoin was created as a faster and more efficient alternative to Bitcoin, reaching quicker transaction confirmations through its 2.5-minute block production time, compared to Bitcoin's 10-minute time. Litecoin utilizes 'halving events' every four (4) years (approximately 840,000 blocks), mirroring Bitcoins method to control inflation. These events effectively reduce the block reward for miners by half, meaning that the new supply issued for validating a group of transactions in a block is cut in half. The blend of faster transactions, limited supply of LTC, and ability to mine the tokens has made it an attractive alternative to Bitcoin.

Dogecoin (DOGE) Blockchain: Launched in 2013 by Billy Markus and Jackson Palmer. It was initially received as a playful alternative to traditional cryptocurrencies. Dogecoin also operates as a PoW consensus-based network like Bitcoin and Litecoin. Dogecoin uses the same Scrypt hashing algorithm as Litecoin with a reduced block production time of one (1) minute. Dogecoin adopted the merged mining protocol known as Auxiliary Proof of Work (AuxPoW) in July 2014. This allowed Dogecoin to benefit from Litecoin's network hashrate by utilizing AuxPoW which provides the capability for miners on the Litecoin Network to submit their mining shares to Dogecoin as well. Unlike Bitcoin and Litecoin, Dogecoin operates without a fixed supply cap, making it an inflationary cryptocurrency. Dogecoin saw mainstream attention when Elon Musk Tweeted his support for it in 2019. Since then, it has become one of the most recognizable cryptocurrencies due to its enthusiastic community and identity as a 'meme' currency with a Shiba Inu dog as its logo and mascot. Elon Musk went as far as temporarily changing the Twitter logo on 3 April 2023. Since then, it has amassed a dedicated following and remains in the top 10 by cryptocurrency market capitalization as of 3 December 2023.

50 Mr McNew also provided the following explanation of cryptocurrency mining:

Cryptocurrency Mining: Cryptocurrency mining is the process of computers ('miners') grouping or pooling transactions into a 'block' (a yet-to-be-verified transaction); the miners then compete to solve a complex cryptographic puzzle. The mining computer that solves the cryptographic puzzle first broadcasts its proof to all computers on the network. If this proof is validated via the PoW mining consensus, then the new block is added to the chain of prior blocks, creating a 'blockchain'. Bitcoin's blockchain is one of the most popular to utilize the PoW consensus but other PoW based blockchains have also risen to prominence (ie, Litecoin, Dogecoin, etc). At a high level the miners do this through the following process:

Transaction Verification: The miners (ie, computers connected to the blockchain network for the purpose of mining) listen for transactions broadcasted on the Litecoin and Dogecoin Networks. The miners collect these transactions from the memory pool (mempool) and verify them by checking the digital signatures to ensure they sender has the necessary funds to complete the transaction.

Creating a Transaction List: After verification, the miners select a group of valid transaction to include as a new candidate block. Transactions are chosen based on several criteria (higher transaction fees are prioritized) and space (ie, due to the block limit specified on each respective network).

Forming a Candidate Block: Selected transactions are then hashed individually and paired again until all the transactions are tied to a single hash known as the Merkle Root. This single hash represents all transactions in the block.

Creation of the Block Header: This is created using the previous hash of the last valid block on the blockchain network, the Merkle Root of the current candidate blocks transactions, a timestamp, the network difficulty which determines how difficult it is to solve the cryptographic puzzle, and the nonce (number used once) which is an arbitrary number that is continually adjusted by the miner.

Solving the Cryptographic Puzzle: The miner does this by processing and attempting to find the nonce value which, is combined with the rest of the block header and run through the hash function (for Litecoin, Dogecoin this is Scrypt). The result of this hash needs to be less than or equal to the network's current difficulty requirement (ie, difficulty target). This process requires the miner to perform many iterations by adjusting the nonce value, repeating the hashing sequence over and over.

Finding the Solution (ie, Solving the Block): When the miner finds a nonce that produces a valid hash, they have successfully solved the block (ie, performed the Proof-of-Work). The valid block is then broadcast to the network for verification.

Block Acceptance and Miner Reward: Other nodes on the blockchain network independently verify the new block's validity, checking the PoW, and the integrity of the transactions. Once the nodes have reached consensus the new block is added to blockchain. The miner is rewarded with newly minted cryptocurrency plus the transaction fees (ie, block reward).

...

To Summarize: The miners listen for transactions on the blockchain networks and collect them from the mempool, verifying their digital signatures to ensure the sender has the funds to conduct the transaction. They then select a group of valid transactions and prioritize them based on higher transaction fees and block space. Next, they begin to form the candidate block by hashing the transactions individually and then pairing them, ultimately creating a single hash or Merkle Root which represents all transactions in the block. After creating a single hash, they create the block header which includes the hash of the last valid block, the Merkle Root, a valid timestamp, the difficulty target and a random piece of data called a nonce. After building a block header, the miner uses trial and error to alter the nonce repeatedly until a valid hash is produced. After this valid hash is produced, it's broadcasted to the network for verification. Other nodes will independently verify the new blocks validity by checking the PoW and integrity of the transactions. Once consensus is reached, the new block is added to the blockchain. The miner then receives a reward (ie, block reward) which is the newly minted cryptocurrency on the respective networks, plus the transaction fees included in the block.

51 The cryptocurrency mining aspect of the Yimiao Group's business involves raising funds from investors, purchasing cryptocurrency mining machines and operating those machines at various mining sites to generate cryptocurrencies. Ms Zhou gave evidence that the greater the number of machines used to mine cryptocurrency, the higher the returns obtained from the mining operations.

52 First, Yimiao makes claims only against 3V concerning causes of action based upon bailment and detinue.

53 Second, Yimiao makes claims against both 3V and Mr Dajian Li concerning causes of action based upon conversion, trespass to goods, restitution, breach of constructive trust and knowing receipt of trust property.

54 Finally, Yimiao makes alternative claims against both 3V and Mr Dajian Li based upon their alleged liability as principals for Cyber concerning causes of action based upon bailment, detinue, conversion and trespass to goods.

55 At trial, Yimiao pressed each of these claims. Yimiao submitted that it was necessary for them to elect between any inconsistent remedies ultimately available to them against 3V and Mr Dajian Li, but that it was entitled to wait until the delivery of these reasons to make this election. The defendants did not dispute this. In Ikosidekas v Glenis,[31] the Court of Appeal said:

Counsel who appeared at trial ought to have made an election between the various legal bases upon which Ikosidekas had established his case. In the absence of counsel doing so, it was for the judge to raise the issue. This is because, it is established law that a successful plaintiff such as Ikosidekas is entitled up until the time judgment is pronounced and authenticated to elect between alternative remedies which have been established following a trial.[32]

56 Yimiao submitted in its oral closing submissions that it did not rely upon the causes of action alleged in paragraphs 42A to 42E of the further amended statement of claim. This is described in the further amended statement of claim as the 'proprietary claim'. Yimiao did rely upon some of the allegations made in those paragraphs insofar as those allegations were relied upon with respect to other claims, being for its claims in restitution (further amended statement of claim, [42] particulars) and also its claims of constructive trust and knowing receipt (further amended statement of claim, [42F] and [42I]).

57 It is, therefore, necessary to consider each of Yimiao's claims against the defendants, except for the 'proprietary claim' which was expressly abandoned.

58 Yimiao's claim for loss and damage was identified by a number of alternatives, but the alternatives it relied upon varied between its claims. It identified them as the First Alternative, Second Alternative and Third Alternative.

59 The First Alternative is a claim for lost opportunity to make a profit from the Yimiao Machines, based upon those Yimiao Machines not being in Yimiao's possession in various numbers and at various times in the period 25 July 2022 to 25 July 2026.

60 The Second Alternative is a claim for lost opportunity to make a profit from 795 Yimiao Machines, based upon those 795 Yimiao Machines not being in Yimiao's possession in the period 25 July 2022 to 27 February 2023 and also a claim for damage based upon the value of 803 Yimiao Machines as at 25 July 2022 never returned (although a further 34 Yimiao Machines were returned, which I address later in this judgment)

61 The Third Alternative is a claim for the value of all of the Yimiao Machines less the value of 795 Yimiao Machines.

62 Since about 2014, Ms Zhou and a Mr Xi Zeng have established multiple businesses together in the area of software developments, e-commerce and FinTech. Yimiao HK was incorporated in 2018. Yimiao HK was established by Ms Zhou and Mr Xi Zeng initially as a business specialising in the development of blockchain-based technology and software. Mr Xi Zeng is the sole director of Yimiao HK and Ms Zhou is the Chief Operating Officer of Yimiao HK.

63 In late 2021, Yimiao HK explored the possibility of expanding and establishing cryptocurrency mining businesses outside mainland China. By the end of 2021 Ms Zhou and Mr Xi Zeng invited Mr Feng to join the business. On 21 December 2021, Yimiao Singapore was incorporated. In around December 2021, Ms Zhou, Mr Xi Zeng and Mr Feng decided to expand the Yimiao Group and incorporate Yimiao Singapore and use it as the ultimate holding entity for various companies used to conduct the Yimiao Group business. Yimiao Singapore holds 100% of the total issued share capital in Yimiao and Yimiao HK. The Yimiao Group generally operates cryptocurrency machines which are connected to mining pools. The Yimiao Group has used several different mining pools, including Poolin, BTC.com and M2Pool.

64 Ms Zhou, Mr Feng and Mr Xi Zeng agreed to increase their mining of the cryptocurrency Litecoin, on the basis that Litecoin appeared to have good prospects of returning high profits to the business.

65 On 3 March 2022, Yimiao was incorporated. Mr Feng was appointed a director of Yimiao on 16 March 2022. Ms Wu Ting Fei was the other director, and secretary, of Yimiao. Mr Feng explained that Ms Fei was appointed the 'local' director as that was required by law, but she had no executive role and was just a name on a piece of paper and Mr Feng was really the only director.

66 Mr Feng gave the following evidence concerning the managerial responsibilities within the Yimiao Group:

Within the Yimiao Group, the managerial responsibilities are broadly divided as follows:

(a) I primarily manage the financial aspects of the group, and my responsibilities include raising capital from investors for acquisition of cryptocurrency mining machines and overseeing the operational costs of the Yimiao Group. I also generally oversee the operations of the Yimiao Group outside mainland China.

(b) Ms Zhou oversees the ongoing business operations within the Yimiao Group. She supervises placement of orders for purchase of cryptocurrency mining machines and making logistic arrangements for the cryptocurrency mining machines owned by the Yimiao Group to be delivered to the relevant mining sites where they could be hosted. Ms Zhou also manages an operation team who remotely monitor and support the operation of the cryptocurrency mining machines owned by the Yimiao Group.

(c) Mr Xi Zeng is the Chief Executive Officer of the Group and is mainly responsible for maintaining good relations with key stakeholders such as investors, suppliers and mining site operators.

67 Yimiao Group's business involves two main functions, namely mining cryptocurrency and trading the cryptocurrencies mined to generate profits as needed.

(a) from early 2022, the Yimiao Group also maintained crypto mining machines at a site in Ohio, USA, jointly managed by Viking Data and Asgard Data (VDC Site);

(b) since 16 July 2022, Yimiao Group has had a collection of 100 L7 Antminer units operating at a mine site located in South Carolina, USA (South Carolina Site);

(c) since 1 February 2023, Yimiao Group has also operated a collection of L7 Antminer units at a mine site located near Montreal, Quebec, Canada.

69 As part of Mr Xi Zeng and Ms Zhou conducting the business of the Yimiao Group, prior to the involvement of Mr Feng, they had hired mining site space and obtained cryptocurrency mining machine maintenance and repair services from a Mr Jibin Liu (Mr Liu) and his entities. Mr Feng was introduced to Mr Liu though Mr Xi Zeng and Ms Zhou in around December 2021 while they were expanding the Yimiao Group and establishing the international subsidiaries of the Yimiao Group.

70 Yimiao currently has no operations in Australia, has no plan to trade in Australia and its only assets are the Yimiao Machines. Ms Zhou said that Yimiao owed Yimiao Singapore 'tens of millions of dollars' but is not sure of the current number.

71 3V is the proprietor of 159 Wellington Rd and 175 Wellington Rd. 3V holds shares in Cyber, which is further addressed below.

72 It is common ground that the shareholders of 3V are:

(a) Ms Fang;

(b) Bonnie B Investments Pty Ltd, associated with Mr McNaught;

(c) Eastland Australia Pty Ltd, associated with Mr Dajian Li;

(d) South Australia Luheng Pty Ltd, associated with a Mr Dongmei Hua; and

(e) DCL Australia Pty Ltd, a company associated with a Ms Winona Lee.

73 As I have already said, it is common ground that Mr Dajian Li controls, and is the sole director of, 3V.

74 Mr Dajian Li is also the Managing Director of ViPlus Dairy Pty Ltd (ViPlus Dairy), which is part of Mr Dajian Li's group of companies.

75 3V is the trustee of the 3V Trust. I refer to Annexure B to this judgment, being the summary of unitholders in the 3V Trust. There are five unitholders.

76 On 11 January 2022, Star Mining was incorporated. Yimiao settled its claims against Star Mining on the eve of the trial. The claim against it was dismissed on 23 October 2024.

77 On 23 March 2022, Genesis was incorporated. Mr Pengfei Yuan (Mr Yuan) and a Mr Xuelong (Tim) Li (Mr Tim Li) were directors of Genesis at the time of its incorporation. It is now in liquidation.

78 In about September or October 2021, the Chinese Government banned cryptocurrency transactions in China. In about September or October 2021, Mr Dajian Li and Mr Huang discussed incorporating a special purpose vehicle to operate a cryptocurrency mining hosting business. On 8 November 2021, Cyber was incorporated as a joint venture between Mr Dajian Li and Mr Huang to operate a cryptocurrency mining business. Upon incorporation its directors were Mr McNaught and Mr Huang. Upon incorporation its shareholders were Fom Tech Pty Ltd (Fom Tech) (51 shares) and 3V (49 shares). Fom Tech was associated with Mr Huang. Cyber obtained a tax file number and an Australian business number. A draft shareholders agreement of Cyber, between 3V and Fom Tech, was prepared but there is no evidence that it was executed.

79 In about February 2022, the shareholders became 3V (2,500 shares), Fom Tech (5,100) and Cyber Intelligence Australia Pty Ltd (2,400 shares). Ms Fang was a director of Cyber Intelligence Australia Pty Ltd (Cyber Intelligence Australia). Cyber Intelligence Australia shareholders included Eastland Australia Pty Ltd (900 out of 2000 shares). Mr Dajian Li owned all of the shares in Eastland Australia Pty Ltd. There is no evidence of the other shareholders and directors of Cyber Intelligence Australia.

80 Ms Fang became a director of Cyber on 8 May 2022.

81 On 21 June 2022, 3V, represented by Mr Dajian Li, and Cyber Intelligence Australia, represented by Mr McNaught, signed a Change of Ownership Agreement whereby Fom Tech, represented by Mr Huang, agreed to sell them the remaining shareholding in Cyber.

84 It had an external administrator appointed on 24 February 2023 and went into liquidation on 29 March 2023.

85 It is convenient to refer to a map of the Wellington Rd site:

86 The Court conducted a site visit on 24 May 2024. The Court prepared a report and provided it to the parties. This included photographs. It is convenient to provide some of the photographs to identify the general layout of some features of the site. The photographs do not identify the precise situation at all the relevant times.

Ownership, lease and licences at the Wellington Rd site

Ownership of the land at the Wellington Rd site

92 It is common ground that 3V owned the land at the Wellington Rd site at all relevant times.

Lease to ViPlus Dairy (part of 159 Wellington Rd)

93 ViPlus Dairy is a tenant of part of 159 Wellington Rd, being an office and storage space.

94 On 1 August 2016, 3V, as landlord, and Acrow Formwork and Scaffolding Pty Ltd (Acrow), as tenant, entered into a lease agreement for part of 159 Wellington Rd for an initial term of 5 years (Acrow Lease). On 19 September 2019, 3V and Acrow entered into a deed of variation to the Acrow Lease, in which the term of the lease was extended until 1 July 2022 with the possibility to renew the lease for two further three-year terms.

Lease to Hardchrome Engineering (175 Wellington Rd)

95 On 1 November 2020, Hardchrome Engineering Holdings Pty Ltd (Hardchrome Engineering Holdings), as landlord, and Hardchrome Engineering Pty Ltd (Hardchrome Engineering) entered into a deed of lease for the whole of the premises at 175 Wellington Rd for a term commencing on 9 February 2021 and expiring on 30 June 2022 (Hardchrome Lease). On 21 October 2021, 3V became the registered proprietor of 175 Wellington Rd and landlord to Hardchrome Engineering under the Hardchrome Lease. In around October 2021, 3V and Hardchrome entered into a deed of variation of the Hardchrome Lease (Varied Hardchrome Lease) granting one further option for renewal of 3 months upon the expiry of the Hardchrome Lease. The Varied Hardchrome Lease records that 3V entered into the lease as trustee for the 3V Trust. Dajian Li signed a further deed of variation for the Hardchrome Lease on 11 May 2022 to grant a further option for renewal.

96 On 4 March 2022, 3V and Cyber entered into a lease of part of 159 Wellington Rd, for a term of 3 years (Cyber Lease). The Cyber Lease covers an area known as the 'Mining Room' and an office room. The Cyber Lease provides, inter alia:

2. PREMISES

2.1 The Landlord gives the Tenant the right to occupy the Premises described in Item 4 ('the Premises'), including the Landlord's Property and use of the Designated Car Spaces (if applicable) specified in Item 13.

...

11. LOCKS AND SECURITY DEVICES

11.1. The Landlord agrees to provide and maintain locks or other security devices necessary to keep the Premises reasonably secure.

...

15. UTILITIES

15.1. The Tenant agrees: -

15.1.1 to be responsible for all charges associated with the consumption of services supplied to the Premises including; electricity, telephone, gas, internet and including any deposits that may be payable thereon; and

15.1.2 to pay for the connection of all services that will be supplied in his or her name.

...

25. LANDLORD'S ACCESS

25.1. Both parties agree, unless an emergency situation dictates otherwise in which case the Landlord or Landlord's agent shall have immediate access right, the Tenant shall allow the Landlord or the Landlord's agent unfettered access to the Premises at all reasonable times on reasonable notice to the Tenant: -

25.1.1 to inspect and view the state of repair of the Premises and to carry out necessary repairs.

25.1.2 to show the Premises to prospective Tenants or purchasers after receiving notice from the Tenant of the Tenant's intention to terminate this Agreement.

25.1.3 after receiving notice from the Landlord of the Landlord's intention to sell the Premises (or the property as the case may be), for the purpose of erecting 'for sale'' signs.

25.1.4 for any other reasonable purpose the Landlord deems fit and proper.

25.1.5 The Landlord must not sell the property within the term of lease without written approval of the tenant.

...

27. TENANTS RIGHT TO PRIVACY

27.1. Provided that the Tenant is, at all times, in compliance with this Agreement, the Tenant has the right to quiet enjoyment of the Premises and the Landlord will respect the Tenant's privacy at all times.

97 It is common ground that Cyber, with 3V's permission, had access to the Back Room at all material times. There is no evidence that by an agreement made in about early 2022, 3V granted a non-exclusive licence for Cyber to store their goods in the Back Room. There is no evidence of any conversations in or about early March or April 2022 between Mr McNaught and Mr Huang that support it. There is no other evidence of the terms of any such agreement, including as to its duration or the consideration provided by Cyber. A bare licence arises when permission is given to a person to enter onto or be on the land of another.[33] As a result, I find that Cyber had a bare non-exclusive licence to store goods in the Back Room.

98 I find that Cyber was granted a licence by Hardchrome to place the Containers on the land at 175 Wellington Rd, to connect the Containers to electricity, and for mining machines to be installed and operated from them. This licence was granted on about 2 May 2022. Hardchrome had the right to exclusive possession of 175 Wellington Rd pursuant to the Hardchrome Lease. It is common ground that Hardchrome permitted the Containers to be placed on the land, to be connected to electricity, and for mining machines to be installed and operated from the Containers.

99 First, Yimiao and the defendants agree that in April 2022, 3V converted and fitted out two 40ft shipping containers to be used by Cyber to 'expand its operations'. Yimiao accepted that it was Cyber and not 3V who was to conduct the business. The only shipping containers used to operate mining machines were at 175 Wellington Rd.

100 Second, on 2 May 2022, Mr McNaught, then a director of Cyber, and Mr Dugan of Hardchrome exchanged texts in which Mr Dugan said: '[t]he site is ready when you are'. I find that the reference to the 'site' is a reference to a part of the land at 175 Wellington Rd. The reference to 'ready when you are' is a reference to when Cyber was ready to place the Containers on the land at 175 Wellington Rd. This is because it was Cyber who, as admitted by Yimiao, was to use the Containers for its business. Mr Maolin Chen commenced working in a container at 175 Wellington Rd on 8 May 2022, being when the first container was placed at 175 Wellington Rd.

101 Third, Hardchrome rendered invoices for electricity usage at 175 Wellington Rd to Cyber and not 3V. Cyber paid Hardchrome for the electricity supplied to the Containers but made its last payment on 19 July 2022.

102 Fourth, Yimiao did not address what arrangement was made to facilitate the placement of the Containers on the land at 175 Wellington Rd. There must have been an arrangement. Yimiao simply asserted that the defendants had an 'arrangement' with Hardchrome to store the Containers at 175 Wellington Rd but did not otherwise identify this arrangement. Yimiao did not submit that 3V had a sub-lease, licence or any other legal right.

103 Fifth, as a result of the consent order made 18 November 2024, Yimiao cannot rely upon the truth of the matters set out in the letter from Cyber's solicitors to the plaintiff's solicitors dated 30 August 2022.

104 Sixth, 3V relied upon an invoice from 3V to Star Mining dated 1 April 2023. It is not relevant to the Containers. The invoice refers to two quantities of 'Storage of shipping container', makes no reference to mining machines, and includes a fee for storage of 73 pallets from 1 August 2022 to 3 April 2023. It is unlikely that 3V was storing 73 pallets of equipment in the Containers.

105 Seventh, Yimiao alleged that 3V was under a contractual obligation to ensure that the Containers were suitable for the operation of cryptocurrency mining. It relied upon the draft shareholders agreement of Cyber which was not signed. First, this does not support a finding that 3V was taking a step in relation to the Containers in its business. In fact, if this shareholders agreement was executed, it supports a finding that the steps taken by 3V in relation to the Containers were steps taken as a shareholder of Cyber. In any event, there is no evidence that it was executed.

106 There are other leases of the Wellington Rd site but they are not relevant to the determination of the issues.

Early use of 159 Wellington Rd for cryptocurrency mining

107 In the period October to December 2021, Mr Jian Chen met Mr Dajian Li. Mr Jian Chen was introduced to Mr Dajian Li by Mr Huang. Mr Jian Chen gave evidence that Mr Dajian Li and Mr Huang had a joint venture named 'Cyber Intelligence'.

108 Mr Jian Chen said that prior to December 2021, in what he thought 'should be November', when he was looking at the as yet unestablished site, he had a conversation with Mr Huang in which Mr Huang said that a person named 'Mr Zhang' was 'working for the company'. I find that this 'Mr Zhang' was a reference to Mr Chiyu Zhang, a person who sent correspondence to 3V on behalf of Cyber in mid-2022.

109 Mr Jian Chen had 800 cryptocurrency mining machines (Chen Machines) delivered to 159 Wellington Rd in batches and these were stored in the Back Room. The last delivery was made in April 2022. The Chen Machines were delivered to the site on pallets, and were then forklifted to the Back Room. In cross-examination, Mr Jian Chen said that it was Mr Dajian Li who drove the forklift. Mr Jian Chen also used a trolley to move Chen Machines not on pallets that he delivered directly to the site. He said that there were other pallets there too with Bitmain boxes on them and that there were also containers of milk powder. His 'first batch' of 180 machines was located in the Back Room and his 'second batch' at 'peak time' of 400 machines was located in the Mining Room. Around 800 Chen Machines were stored at the Wellington Rd premises and at the peak time around 600 Chen Machines were in operation. He said that a person named 'Bob' drove a forklift and assisted with putting the Chen Machines into the Mining Room from the Back Room. Mr Jian Chen said that Mr Dajian Li asked Bob to do this.

110 Mr Jian Chen said that his machines were configured to mine 'small currencies' named 'DGB' and 'MONO'.

111 Mr Jian Chen initially attended the site from December 2021 to February 2022 and could do so easily. His first machine was turned on in December 2021.

112 Mr Jian Chen said that he saw Dajian Li in the Back Room in December 2021 and January 2022. Mr Jian Chen said that he saw Mr Dajian Li in the Mining Room in March 2022 or sometime thereafter.

113 It is common ground that Yimiao is and was at all material times the owner and entitled to possession of the Yimiao Machines.

114 Mr Feng gave evidence that as part of the expansion that was discussed between himself, Ms Zhou and Mr Xi Zeng in late 2021, they decided to increase the Yimiao Group's investment in mining Litecoin and Dogecoin. They needed to purchase and operate specifically designed cryptocurrency mining machines for those currencies, and chose the best model then available known as the L7 Antminer which is manufactured by Bitmain Technology Ltd (Bitmain). Mr Feng gave evidence that he understood, at that time, that the L7 Antminer machines were highly sought after and difficult to acquire from Bitmain and that only those organisations who had established business relationships with Bitmain were able to successfully order and acquire them at that time. Each L7 machine is about the size of a desk top computer and weighs approximately 13 kg without packaging and 15 kg with packaging.

115 Ms Zhou gave evidence that Bitmain still manufactures L7 machines and that it still is the best model to mine Litecoin and Dogecoin. Ms Zhou agreed that the value of L7 machines have gone down in price since July 2022 and that a second-hand L7 machine is worth significantly less than a new L7 machine. Ms Zhou also explained that the value of the machines is not stable as it depends upon the cryptocurrency market. Ms Zhou also explained that a Litecoin 'halving' event occurred in August 2023, meaning that from that time miners would receive half of the Litecoin mining rewards they had previously received for successfully solving a block. She said that the price of cryptocurrency and of miners is 'usually high' leading up to a halving event because miners can 'mine more', but she did not further explain this.

116 In late 2021 Yimiao HK placed multiple orders with Bitmain for, inter alia, 1,606 units of Bitmain L7 Antminer cryptocurrency mining machines. At this time, Bitmain only sold L7 Antminers to existing customers and restricted the number of machines that could be purchased by those customers. The Yimiao Group paid about USD20,707,314.92 for those units.

117 Between 11 March 2022 and 25 April 2022, Bitmain issued invoices to Yimiao HK for 1,606 L7 Antminers. The prices ranged between approximately USD8,000 to USD18,000 per unit depending upon the time the order was placed and if existing credits were applied. Ms Zhou explained that Bitmain gave credits to Yimiao HK as a result of promotions or if, for example, it was late in delivering a machine to Yimiao HK. Ms Zhou gave evidence that the price for a miner went up from USD10,000‍‍‍‍‍‍-‍USD12,000 to USD18,000 because the cryptocurrency price went up. Ms Zhou arranged for the payment for these machines.

118 Between 15 March 2022 and 25 April 2022, Yimiao HK issued invoices to Yimiao for 1,606 L7 Antminers. Between March 2022 and April 2022, Yimiao HK transferred the ownership of 1,606 units of L7 Antminers to Yimiao, including the Yimiao Machines.

119 Each unit of Bitmain L7 Antminer is allocated a unique serial number that can be seen from the label affixed to the original packing boxes for that unit and the label affixed to the actual machine.

120 In February 2022, Mr McNaught asked Mr Huang to provide copies of agreements between Cyber and its customers. Mr Huang advised that the agreements are verbal.

121 In March 2022, Mr McNaught and Mr Huang agreed on a form of a template hosting agreement to be used by Cyber.

122 On 19 April 2022, Mr Jerry Zhang (also known as Mr Chiyu Zhang) sent an email from an email address ending with '...@jocaustralia.com' to Mr McNaught attaching hosting management agreements between Cyber and each of Blesteam Pty Ltd, Haihua Jiang, Xiaoqing Tan and Binhua Lyu. In the email Mr Chiyu Zhang stated that 'Henry is asking for information on the remaining two clients'. The reference to Henry is a reference to Mr Huang.

Initial agreement between Yimiao and Star Mining

123 It is common ground that on 10 March 2022, Yimiao entered into an agreement with Star Mining for the provision of hosting services in respect of the Yimiao Machines at a mining site Star Mining claimed to have established at 159 Wellington Rd (First Yimiao/Star Mining Agreement). It provides, inter alia:

(a) Star Mining would provide space at a specialised mine site that it had established at the 159 Wellington Road Site, to host Yimiao's cryptocurrency mining equipment;

(b) Star Mining would ensure that sufficient electricity and internet access would be provided at the 159 Wellington Road Site to allow Yimiao to operate its cryptocurrency mining equipment at that site;

(c) Star Mining was responsible for the security of the 159 Wellington Road Site and the safety of Yimiao's cryptocurrency mining equipment;

(d) Yimiao was entitled to access and remove from the 159 Wellington Road Site its cryptocurrency mining equipment upon reasonable notice to Star Mining;

(e) Yimiao was to pay Star Mining a service fee in an amount calculated by the electricity usage of Yimiao's cryptocurrency mining equipment, being AUD0.10/kWh; and

(f) Star Mining would take due care in handling the cryptocurrency mining equipment on behalf of Yimiao, and would return the equipment as directed by Yimiao upon request within the time specified by Yimiao, or otherwise within a reasonable time.

124 Mr Feng gave evidence that he was told by Star Mining (I infer it was Mr Liu) that Star Mining rented the warehouse on the site. Mr Liu told Mr Feng that he had a secure location for the machines and that he would control the premises that the machines were being mined in.

Further background February 2022 to 4 September 2023

125 Mr Jian Chen gave evidence that sometime between February and April 2022 a person named 'Bob' told him that, for security reasons, people could not now randomly go onto the Wellington Rd site, entry had to be permitted by Mr Dajian Li and Bob would then accompany them to the site. I find it was likely to be in April 2022 as there is evidence that persons could still access the site in February and March 2022 without obtaining permission and being accompanied by 3V or Cyber.

126 On 21 February 2022, Origin Energy issued a business electricity invoice to ViPlus for $25,333.82 for electricity and other services provided at 159 Wellington Rd for January 2022.

127 In February or March 2022, Mr Jian Chen saw two shipping containers at the Wellington Rd site being made into 'mining boxes'. He said everyday there were people doing cutting, wiring and putting in racks, and that the only people he knew were 'Bob' and also Mr Dajian Li. He said Mr Dajian Li wore a yellow vest and electrician boots. Mr Jian Chen said that one of the containers was removed from Wellington Rd and then the remaining container was placed at initial site of the shipping containers at 175 Wellington Rd (see map of Wellington Rd site, above). Although Mr Jian Chen said that one container went to the initial site, he later clarified in oral examination that there were 'two because ah there's top and bottom, two levels'. I find that this second container is the one referred to by Mr Jian Chen below at [140].

128 Also in February or March 2022, Mr Jian Chen lent $200,000 to the company owned by Mr Dajian Li and Mr Huang to establish another mining site in Geelong. Mr Jian Chen gave evidence that this did not go ahead and his money was not returned. He said that if this project went ahead it would have been with Cyber. He said that the company paid him $1,000 interest every month but did not identify when this ceased. He said that he was upset with Mr Huang and Mr Dajian Li.

129 On 1 March 2022, Origin Energy issued a business electricity invoice to ViPlus for $23,444.91 for electricity and other services provided at 159 Wellington Rd for February 2022.

130 Mr Jian Chen said that he saw Mr Dajian Li in the Mining Room after it was established in March 2022. Mr Jian Chen initially said that he 'regularly' saw Mr Dajian Li in the Mining Room. He then qualified this and said that it was less frequently than when he saw Mr Dajian Li in the office which was two to three times a week. In cross-examination he said he saw him in the Mining Room once a week. Mr Jian Chen said he saw Mr Dajian Li and his employees using a forklift to put the machines on a rack. He said that the 'people underneath' Mr Dajian Li took his machines out of the boxes, put them on racks, connected them to power, configured them and connected them to the internet. Mr Jian Chen said that he himself was the main person doing the installing of his own machines. Mr Jian Chen said that Mr Dajian Li was driving a forklift when asked in cross-examination about how Mr Dajian Li assisted Mr Jian Chen with the Chen Machines.

131 It is common ground that on 10 March 2022, the same day that the First Yimiao/Star Mining Agreement was entered into, Genesis and Star Mining entered into an unsigned 'Digital Currency Miner/Equipment Hosting and Management Agreement' pursuant to which Star Mining subcontracted its obligations under the First Yimiao/Star Mining Agreement to Genesis (First Star Mining/Genesis Agreement). Genesis was not incorporated until 23 March 2022. I find that it ratified the First Star Mining/Genesis Agreement pursuant to s 131 of the Corporations Act 2001 (Cth). It provides:

(a) Genesis is the 'Operator' and Star Mining is the 'Hosting Client';

(b) Genesis is described as the 'Licensee' of 159 Wellington Rd;

(c) Genesis disclosed that 'they are negotiating an (1) MegaWatt licensing agreement for the mining site' at 159 Wellington Rd (Recital B);

(d) Star Mining shall transport 'its own miners and/or equipment' to Genesis' 'Project Site' located at 159 Wellington Rd (cl 2);

(e) Genesis shall 'receive the miners and/or equipment on arrival date, complete power supply and provide follow-up daily operation service' (cl 2);

(f) Genesis will have 'possession and control but not ownership of the relevant and necessary assets' of Star Mining (Recital E);

(g) Star Mining has the right to replace or remove the equipment at all reasonable times (Schedule at 'Ownership of Equipment').

132 Ms Zhou gave evidence that on or about 22 February 2022, she was invited to a WeChat Group which included Mr Xi Zeng of Yimiao, Mr Liu and Mr Xiaoliang Zeng of Star Mining (Yimiao/Star Mining WeChat Group). Mr Feng was invited to the Yimiao/Star Mining WeChat group on around 15 March 2022.

133 On 18 March 2022, Mr Dajian Li, Ms Fang and Mr Tim Li of Genesis had lunch. At the lunch Mr Tim Li said that he would bring Mr Feng of Yimiao and Mr Xiaoliang Zeng of Star Mining to visit the 'Cyber Clayton crypto mining site' on 25 March 2022.

134 The 1,606 units of L7 Antminer equipment were delivered by Bitmain in multiple batches to the warehouses of a logistics agent engaged by Ms Zhou on behalf of Yimiao known as 'Guangzhou Fooksum Logistics Co Ltd' (Fooksum) located in Guangzhou and Hong Kong China. By WeChat messages with representatives of Fooksum between 9 March 2022 and 25 April 2022 Ms Zhou arranged for 1,598 units of the L7 Antminer equipment (ie, the Yimiao Machines) to be delivered to 159 Wellington Rd by air freight. Ms Zhou gave evidence that she believed that the Yimiao Machines were being delivered to Star Mining. Between about March 2022 and May 2022, Yimiao delivered the Yimiao Machines to Star Mining at the site at 159 Wellington Rd. Yimiao is and was at all material times the owner and entitled to immediate possession of the Yimiao Machines bearing serial numbers as set out in annexure A to the further amended statement of claim (Yimiao Machines).

1. I was comfortable with shipping a large number of mining machines to Australia prior to a formal written agreement having been finalised as:

(a) the key commercial terms such as the electricity price, commencement date, as well as hosting location had all been agreed between Yimiao and Star Mining in the messages exchanged;

(b) Star Mining said that they would have control over the mining site. I took comfort from the fact that Jibin Liu was well known in China, had substantial experience in operating and managing large-scale mine sites in other countries and also planned to place his own machines at that site. By way of example, Jibin Liu successfully established and operated for a period of time a mining site known as 'Chang He Ba' in China which was capable of hosting 50,000 machines.

(c) the existing business relationship between Yimiao and Jibin Liu, led Yimiao to trust that Star Mining/Jibin Liu's team in Melbourne would receive the delivery of the Equipment and would safely store and connect Yimiao's Equipment; and

(d) given the delivery of the Equipment and clearing the units through customs would take some time, there was time to prepare a written agreement.

136 After Yimiao's equipment was delivered to Star Mining at 159 Wellington Rd it was kept in the Mining Room and/or the Back Room and some units were subsequently placed in two containers at 175 Wellington Rd.

137 It is common ground that between March 2022 and May 2022, without the knowledge or consent of Yimiao, Genesis took delivery of the Yimiao Machines at 159 Wellington Rd.

138 On or around 25 March 2022, Mr Feng visited 159 Wellington Rd with Mr Xiaoliang Zeng of Star Mining. Mr Yuan of Genesis also attended. Mr Yuan was introduced by Mr Xiaoliang Zeng as his driver. Mr Feng accepted that he now believes that is untrue and that Mr Yuan worked for Genesis. Mr Feng did not see Mr Dajian Li, Mr McNaught or Ms Fang. He gave evidence that during the visit Star Mining were not prevented from accessing the Back Room or the Mining Room. Mr Feng gave evidence that the purpose of this visit was to view the site and ensure that there were adequate arrangements for security and power and he made the following observations when he was there:

There was a large security gate to the 159 Wellington Road Site, which had to be entered to visit the warehouse;

There was a mining room inside a large warehouse, which had a front door and a lock; and

There were several security cameras in front of the Mining Room.

139 Mr Xiaoliang Zeng of Star Mining told Mr Feng that 159 Wellington Rd was a rental place. Mr Feng could not identify the warehouse that he was taken to on a map of the premises. Mr Feng described seeing machines that produce milk in the Back Room but could not recall whether he saw any cryptocurrency machines in the Back Room at that time. He accepted that it was possible that there were others things stored in the Back Room and that he did not pay attention to them. He gave evidence of his observations of the Mining Room as at March 2022:

(a) the racks were still under construction;

(b) there were switchboards and power points installed;

(c) there were cryptocurrency mining machines on racks which were operating. He did not count them and explained that Yimiao's equipment had not arrived at the site by this time;

(d) the fans were running.

140 Mr Jian Chen gave evidence that in April 2022 another container was placed on top of the container at 175 Wellington Rd for ventilation. This container did not have wiring or racks. In cross-examination, he accepted that this was the position in May 2022 before he travelled to China in late May or early June 2022. He did not return to the site until January 2023.

141 Mr Maolin Chen observed a second container at 175 Wellington Rd 'after 8 May' but gave evidence that it was 'not put into use before 25 July 2022'. Although Mr Maolin Chen stated that he thought the specific time was 'either beginning of July or end of June', I find that the additional container was placed at 175 Wellington Rd somewhere between 8 May and late May/early June. This is because Mr Jian Chen saw the container before he left for China in late May/early June, and because Mr Miaolin Chen caveated his evidence about the specific time being 'July or end of June' with the comment 'I can't recall exact date'.

142 Mr Jian Chen said he had a contract with the Cyber joint venture. Most of his negotiations were with Mr Huang. Mr Jian Chen said that his own partner was Mr Haihua Jiang, who was in China. The 'Hosting Management Agreement' between Mr Haihua Jiang and Cyber is dated 6 April 2022. Mr Jian Chen accepted that the agreement was not directly with Mr Dajian Li and added:

Because I was very familiar with Mr Huang Wenfeng and he was the majority shareholder. Yes. We were signing with the company not with Mr Li, personally.

143 Mr Maolin Chen gave evidence that in April 2022, there were over 180 Yimiao Machines in the Mining Room.

144 On 12 April 2022, Origin Energy issued a business electricity invoice to ViPlus for $51,812.94 for electricity and other services provided at 159 Wellington Rd for March 2022.

145 The Yimiao Machines were comprised of 3 different sub-models of L7 Antminers, namely:

(a) 1,434 units of 9050MH/s;

(b) 110 units of 9300MH/s; and

(c) 54 units of 9500MH/s.

146 Ms Zhou explained that the reference to 'MH' is a reference to mega hashes per second. The computing power of cryptocurrency mining machines is measured in the industry by a 'hash rate'. Ms Zhou also explained that, in addition, to mega hashes, there are also giga hashes and terra hashes. The model numbers for the machines is derived from their computing power.

147 Ms Zhou received lists of various serial numbers for different batches of the Yimiao Machines from both Fooksum and Bitmain and then directed the members of her operations team to consolidate the lists received from them into a list of 1,598 serial numbers. Yimiao paid fees for the air freight which were calculated and charged based upon the weight of the cargo.

148 After delivery of the equipment to 159 Wellington Rd some of the units of the equipment were connected to power, the internet and linked to the accounts that Yimiao held with the mining pool known as 'Poolin'. Ms Zhou identified 7 accounts that Yimiao held with Poolin. Ms Zhou gave evidence that these accounts were only used for operating Yimiao's Machines at the Wellington Rd site.

149 Ms Zhou instructed Mr Xiaoliang Zeng's team to connect Yimiao's Machines to the Poolin mining pool accounts as Yimiao did not have staff present on site. Star Mining was provided with the Poolin account names and that this was all it needed to connect Yimiao Machines to the Poolin accounts. A machine is connected to a Poolin account by using a laptop or computer that operates on the same intranet as the machines.

150 The Poolin mining pool allowed Yimiao, as a user of that pool, to remotely monitor the operation status of those units of the Yimiao Machines that had been connected to Yimiao's account with Poolin. This included how many Yimiao Machines were connected to the relevant account at a given point in time. Ms Zhou gave evidence that she required her team members to log into the mining dashboard daily and monitor the operating status of the Yimiao Machines to report to her daily.

151 In April 2022, Mr Huang informed Mr McNaught (then both directors of Cyber) of an agreement reached between Cyber and Genesis for the hosting of cryptocurrency mining machines at 159 Wellington Rd and provided a copy of the Hosting Management Agreement between Cyber Intelligence and Genesis (Genesis/Cyber Agreement). The Genesis/Cyber Agreement is dated 5 March 2022 but is not signed. Genesis was not incorporated until 23 March 2022. The dispute between the parties concerned whether it applied to the Yimiao Machines. Yimiao and the defendants agree that the express written terms of the Genesis/Cyber Agreement do not apply to the Yimiao Machines but the defendants submit that it was varied to include them. The written express terms of the Genesis/Cyber Agreement provides that:

(a) Genesis is the 'Principal' and Cyber is the 'Manager';

(b) Genesis agrees to engage Cyber to manage the operation of the 'machines at the agreed location in accordance with the terms and conditions of [the Genesis/Cyber Agreement]' (Recital A);

(c) if Genesis does not pay all of the invoiced charges by the invoice due date, Cyber may on five days' written notice to Genesis suspend any or all of the services until Genesis pays Cyber (cl 4(k)(ii));

(d) Genesis is solely responsible for the operation, care, maintenance and repair of the equipment (cl 6(r));

(e) Genesis may access 159 Wellington Rd and the equipment during the term upon sufficient notice and upon Cyber's approval. Cyber may refuse Genesis and any other person to access 159 Wellington Rd or the equipment if in its opinion it is unsafe to do so (cl 6(t));

(f) the Agreement may only be amended by written instrument signed by or on behalf of both parties (cl 25);

(g) 'Commencement Date' is 1 March 2022 (sch 1);

(h) 'Machine Model and Target Number' as 5,000 Antminer S19 (sch 1);

(i) 'Location' as 159 Wellington Rd (sch 1);

(j) it may only be amended by written instrument signed by or on behalf of both parties (cl 25);

(k) it does not define 'Principals Equipment'. This is an obvious drafting error.

152 The defendants submitted that the Genesis/Cyber Agreement was subject to the 'obvious variation' that the machines included the Yimiao Machines. I accept that the written Genesis/Cyber Agreement is very specific and refers to 'Antminer S19' machines; there is no written variation and the defendants did not identify when or how this variation was made. This is despite the defendants identifying it as 'obvious'. It is not pleaded. The alleged variation was identified in closing submissions and otherwise not particularised.

153 I find that it was likely varied by Genesis and Cyber by an oral agreement to apply to the Yimiao Machines. This is because there are a number of important facts that make such a variation likely, including facts admitted by Yimiao and the defendants:

(a) Yimiao and the defendants agree that in March 2022 Mr McNaught and Mr Huang (both of Cyber) agreed upon a 'form of template hosting agreement to be used by' Cyber (emphasis added);

(b) the unsigned Genesis/Cyber Agreement is dated 5 March 2022, commencing 1 March 2022 and predates the First Star Mining/Genesis Agreement, which commenced 10 March 2022. The Genesis/Cyber Agreement concerned S19 machines. At that time, Genesis had no arrangement with Star Mining in relation to the Yimiao Machines;

(c) on 10 March 2022, Yimiao and Star Mining entered into the First Yimiao/Star Mining Agreement in relation to the Yimiao Machines;

(d) on 10 March 2022, Star Mining and Genesis entered into the First Star Mining/Genesis Agreement pursuant to which Star Mining subcontracted most of its obligations under the First Yimiao/Star Mining Agreement to Genesis;

(e) it is likely that Genesis had an agreement with Cyber to host the Yimiao Machines at the Wellington Rd site. This is because Genesis could not host the Yimiao Machines at the Wellington Rd site without the agreement of Cyber, as Cyber had a lease over the Mining Room, and Genesis had already entered into the First Star Mining/Genesis Agreement. As a result, it is likely that Genesis and Cyber entered into an agreement concerning the Yimiao Machines;

(f) Yimiao and the defendants agree that Mr Huang, of Cyber, provided a copy of the Genesis/Cyber Agreement to Mr McNaught, also of Cyber, in April 2022 and informed him that agreement had been reached for 'hosting of cryptocurrency mining machines at Wellington Road' (emphasis added). The reference to 'cryptocurrency mining machines' was not limited to any particular type of mining machine;

(g) Yimiao and the defendants agree that Cyber issued invoices to Genesis under the Genesis/Cyber Agreement. The invoices do not limit the invoice to the supply of electricity to only particular machines hosted at the Wellington Rd site. I accept Yimiao's submission that the invoices do not make any specific reference to the Genesis/Cyber Agreement. But it is likely that Cyber would have issued Genesis with a single monthly invoice for all electricity for machines hosted at the Wellington Riad site. In addition, if these invoices were only limited to the supply of electricity to particular machines (ie, S19 machines) it is likely that they would have stated this. There is also no other evidence of any other separate invoices issued by Cyber to Genesis for electricity in relation to the Yimiao Machines;

(h) it is likely that Genesis and Cyber would have agreed to vary the Genesis/Cyber Agreement to include the Yimiao Machines and not made a separate and different agreement, given that in March 2022 Mr McNaught and Mr Huang (both of Cyber) agreed upon a 'form of template hosting agreement to be used by' Cyber';

(i) despite the requirement of cl 25 that any amendment be in writing, the 'weight of authority in Australia ... is that these clauses do not prevent a contract from being varied orally or by conduct'.[34] Such a clause will, however, 'provide important context in considering whether the requisite contractual intention to modify or vary a written contract, objectively ascertained, exists'.[35]

154 In April 2022, 3V converted two 40ft shipping containers to be used by Cyber to expand its operations.

155 On 8 April 2022, Mr Maolin Chen attended at 159 Wellington Rd. He attended with Mr Xiaoliang Zeng (Star Mining), Mr Tim Li (Genesis) and Mr Yuan (Genesis). He was shown around 159 Wellington Rd by Mr Dajian Li. Mr Dajian Li showed them containers at 159 Wellington Rd that were under construction to be used as 'mining boxes'.

156 Mr Maolin Chen of Star Mining gave evidence that he installed security cameras on the inside of the bottom container at 175 Wellington Rd. He did not say precisely when this occurred, but I infer that it occurred at some time after 8 May 2022, being his first day at 175 Wellington Rd. He has not kept the footage. He agreed when cross-examined that the footage would show who was going in and out of the Containers up until 25 July 2022.

157 Mr Jian Chen gave evidence that L7 Antminers were put on racks in the Mining Room around April/May. He said that he saw Mr Dajian Li and his employees driving forklifts to put the L7 machines on the racks. Mr Jian Chen gave evidence that he said to Mr Dajian Li that the L7 machines are 'very expensive' and 'very good' and that because these machines will have a high yield Mr Jian Chen would give the better position to them in the Mining Room, removing his own machines from those positions, and he was hoping for 'some compensation'. Mr Jian Chen said Mr Dajian Li said 'I will not make you disadvantaged'. Mr Jian Chen said that he vacated the upper racks as he cannot reach that high and 'they have people who drive forklifts could help them'. He said people can drive forklifts in the Mining Room. He said he only saw that once. He said that the use of the forklift was like the one in the photo at SCB4982.

158 Mr Maolin Chen gave evidence that on 11 April 2022, he started to work at 159 Wellington Rd, and was told by Star Mining 'to go to take photos every day to report to the company about the changes to the containers'. However, he gave evidence that the following incident occurred at some time between 11 April 2022 and 4 May 2022:

... one day I went there to take photos as usual and Dajian Li saw me and he asked me to stop taking photos. I said well, it was the request from the company and also part of my job to take photos. He said what the fuck, and the machines are not yours and is mine company's and it's not your thing, and if the information is disclosed then I will ask you for compensation. Then he asked me to not go back ever again and I did not reply to what he said, so I walked away over 10 metres and then he said, '[h]ave you heard me?' and I said okay, so I did report to the company and on the second day I went back to the site and he saw me. He did not drive me away, and then he instructed his employees I mentioned before to stop me taking photos.

159 On 14 April 2022, Mr Maolin Chen reported to Star Mining in China, including Mr Xiaoliang Zeng, that there were 1,339 Yimiao Machines at the site, with 187 operating in the Mining Room and 1,152 in the Back Room.

160 On 15 April 2022, a WeChat exchange occurred between Mr Dajian Li and Mr Huang as follows (emphasis added):

Henry Huang [time unavailable]:

It is often disconnected; customers are very dissatisfied.

Dajian Li [time unavailable]:

Don't let people get in there

and muck around.

Don't let people get in without us.

Henry Huang [4:58pm]:

No one goes there.

All were seen remotely.

Will need to find out the reason.

Dajian Li [5:05pm]:

Stopped again today?

Henry Huang [5:46pm]:

Yes.

Dajian Li [6:56pm]:

Boss Li, I just asked Xiao Zhang, and he confirmed that the breaker did not trip today.

Maybe what you heard about was regarding the tripped breaker yesterday.

161 The exchange refers to items being 'disconnected' or 'stopped', and a tripped breaker that had occurred the day prior. This surrounding context leads me to infer that Mr Dajian Li was referring to the Mining Room when he said '[d]on't let people get in without us'.

162 On 16 April 2022, 'TIM' sent a WeChat message to 'Boomeranger' containing a link in Bitmain's webpage in which he stated:

Bitmain has reopened the sales for L7. There aren't many units available. You can buy directly from the official website. Brother, your friends need to buy quickly.

163 Yimiao identified 'TIM' as Mr Tim Li and 'Boomeranger' as Mr Dajian Li and tendered documents on this basis (see, eg, 3FSCB0387). This was also not disputed by the defendants.

164 Ms Zhou gave evidence that between May 2022 and July 2022 the number of Yimiao Machines hosted at the mining sites in Wellington Rd and connected so they could mine as part of Yimiao's Poolin accounts ranged from 100 to 500 units. She also gave evidence that for most of that period there were approximately 300 Yimiao Machines operating and generating Litecoin and Dogecoin for Yimiao.

165 Each of the 7 Poolin accounts have a record showing the mining rewards for mining Litecoin and Dogecoin and that the records also show the hash rate (being the amount of computing power contributed each day). A positive entry in relation to the mining rewards represents a sum of coins allocated to the account by the pool (as a result of mining activity the previous day) and a negative entry represents a transfer out of the account to a wallet. Some of the entries in the Dogecoin records show transfers from Dogecoin to Litecoin. Poolin had a feature that enabled the automatic conversion of Dogecoin into Litecoin. In 2022, Yimiao received approximately 5,630.33 Litecoin and 6,601,622.03 Dogecoin from the Yimiao Machines connected at the Wellington Rd premises.

166 On 4 May 2022, Mr Maolin Chen reported to Star Mining in China that there were 1,598 Yimiao Machines at the site, with 187 operating in the Mining Room and 1,411 in the Back Room.

167 On 4 May 2022, Mr Maolin Chen 'was requested to go with 'Dongyang' (ie, Mr Yuan) and also Mr Dajian Li's employees ... to go into the warehouse to check inventory'. The reference to 'warehouse' is a reference to the Back Room. This is clear from his evidence:

For the machine room, I was checking it every day. For the warehouse, I could do that every day before 4 April. However, on 4 April and after fourth - sorry, 4 May, I could do that every day. But on the 4 May and after 4 May, I was requested to go with Dongyang and also Dajian Li's employees; three parties together to go into the warehouse to check the inventory.

168 He was told this by Vincent who he said worked for Mr Dajian Li. Mr Maolin Chen gave evidence that the process was that he had to make a request of 'Dongyang' (ie, Mr Yuan of Genesis), after which 'a date is chosen for me to go inside with them to check the inventory'. Mr Maolin Chen provided a report of this to Star Mining:

The factory here has upgraded its security, and I can no longer just go into the warehouse (the production workshop actually) to count the assets by myself. Waiting for Dongyang to coordinate the time with them and see how often the inventory can be counted. And, every time, only when the three parties, Dongyang, me, and the people from the venue, are all present can the assets be counted.

169 Mr Maolin Chen also gave evidence that Mr Bob Li 'held keys to the [Mining Room] when I wanted to gain entry and I had to ask him to open the door for me to go in'.

170 On 8 May 2022, Mr McNaught resigned as a director of Cyber, and on that same day Ms Fang was appointed as a director of Cyber. Mr Huang remained a director.

171 On 11 May 2022, Origin Energy issued a business electricity invoice to ViPlus for $117,023.38 for electricity and other services provided at 159 Wellington Rd for April 2022.

172 On 17 May 2022, Cyber issued an invoice to Genesis for electricity under the Genesis/Cyber Agreement for $60,953.77, which was paid by Genesis on 19 May 2022.

173 On 21 May 2022, Mr Huang (Cyber) informed Mr Dajian Li that they will be entering the 'site' and told him to tell Vincent about it. He also stated '[n]one can enter without your instruction'. I find that this is a reference to the Mining Room. First, Mr Huang informed Mr Dajian Li of this in the context of him also informing Mr Dajian Li that he, and possibly others would be entering the 'site' and for him to notify 'Vincent', an employee of 3V. Second, at the time, Cyber was a tenant of the Mining Room pursuant to the Cyber Lease. Third, it is unlikely that the reference to the 'site' was a reference to the whole of the Wellington Rd site, or the whole of 159 Wellington Rd, as these sites are vast and it is unlikely that Mr Daijin Li would have controlled all persons coming onto those sites. Finally, I find that the reference to '[n]o one' was likely a reference to persons who were not 3V employees. This is because Mr Huang was a director of Cyber and had no role or responsibility in limiting any access by 3V employees.

174 On or about 23 May 2022, Yimiao paid $44,603.44 to Star Mining for the services fee due and payable for the month of June.

175 Mr Feng gave evidence that on or around 30 May 2022, he visited the 159 Wellington Rd site for a second time with Mr Xiaoliang Zeng of Star Mining. Mr Yuan of Genesis also attended. He did not see Mr Dajian Li, Mr McNaught or Ms Fang. He gave evidence that during the visit Star Mining were not prevented from accessing the Back Room or the Mining Room. Mr Feng gave evidence that during this visit he saw that some of the Yimiao Machines had been installed in the Mining Room and were operating and he also saw that most of the Yimiao Machines were on pallets in the Back Room which were in their original packaging and sealed with plastic wrap.

176 Mr Feng did not count the Yimiao Machines in the Mining Room as he said it was very dirty. He said that he did a 'random check' of the Yimiao Machines in the Mining Room by looking at about five machines on the bottom rack. He said they were L7 machines and S19 machines. He said that he did not see any L7 8800M machines.

177 Mr Feng did not count the Yimiao Machines on the pallets in the warehouse (ie the Back Room). He also said that some of the boxes on the pallets were in plastic wrapping and some were not. He said he does not know how many pallets with boxes sitting on them without wrapping there were. He said he does not know the number of pallets, machines and boxes that were in the warehouse (ie Back Room). He said that he did shake some of the pallets to 'make sure it's a full box with machine'. He said he shook two or three pallets. He said he only shook the pallets that were wrapped in plastic. He said that the pallets he shook were standalone pallets and were not stacked. He said that it felt like there were machines in the boxes that he shook. He explained that it is OK to stack pallets on top of each other if they held empty boxes but not full boxes.

178 Mr Maolin Chen gave evidence that, after 25 May 2022, Star Mining had 22 L7 machines at the site which were located in the 'machine room' which is a reference to the Mining Room.

179 Mr Maolin Chen gave the following evidence concerning the state of Yimiao's machines in the three-month period he was on site:

(a) 10 had a fault in the Containers and were kept in the Containers;

(b) 10 had a fault in the Containers and the Mining Room but were kept in the Back Room.

180 On 1 June 2022, Origin Energy issued a business electricity invoice to ViPlus for $109,895.18 for electricity and other services provided at 159 Wellington Rd for May 2022.

181 On 3 June 2022, Mr McNaught sent an email to Hardchrome asking it to issue an invoice made out to Cyber for $40,737.60 (plus GST) for 'energy use' at 175 Wellington Rd. On 3 June 2022, Hardchrome issued an invoice to Cyber for $40,737.60 for power usage at 175 Wellington Rd and sent that invoice to Mr McNaught.

182 On or about 3 June 2022, Yimiao paid $59,524.50 to Star Mining as the services fee due and payable to Star Mining for the month of July.

183 On 31 May 2022, Cyber issued an invoice to Genesis under the Genesis/Cyber Agreement for $94,307.20 which was paid by Genesis on 7 June 2022.

184 In June 2022, Mr McNaught was authorised to operate Cyber's bank account.

185 It is common ground that on 8 June 2022, Yimiao and Star Mining entered into 'Digital Currency Miner/Equipment Hosting and Management Agreement' (Second Yimiao/Star Mining Agreement). It provides, inter alia:

(a) Star Mining granted Yimiao a license to place, replace and remove Yimiao's equipment at a space at the 159 Wellington Road Site, upon the provision of a written request and notice to Star Mining (cl 2.2(a));

(b) Star Mining would enable continuous and stable access to sufficient power, networking, suitable environment and other service as needed for the full capacity and optimal operation of Yimiao's equipment (cl 3.1(a));

(c) Star Mining would ensure that Yimiao's equipment had sufficient and smooth access to internet connections (cl 3.1(b), (h));

(d) Star Mining would provide power to the Licensed Space (a portion of 159 Wellington Rd, which I infer to include the Back Room and Mining Room) (cl 3.1(f));

(e) Star Mining would ensure that security procedures and security measures were used and maintained to ensure the safety and security of Yimiao's equipment, so as to avoid interruption to the Licensed Space, the services provided by Star Mining, damage to any of Yimiao's equipment, unauthorised access to or use of any of the equipment (cl 5.1);

(f) Star Mining would ensure that Yimiao's equipment was not possessed, damaged or destroyed wilfully (cl 5.2);

(g) Star Mining would compensate Yimiao for loss or damage due to Star Mining's negligence (cl 5.2);

(h) the equipment remained the sole and exclusive property of Yimiao, and Yimiao had a right of replacement and removal at all reasonable times (cl 6.2); and

(i) Star Mining would not assign or subcontract the Second Star Mining Agreement without the prior written consent of Yimiao (cl 9.1).

186 On 9 June 2022, Mr McNaught sent an email to Mr Huang:

Henry - thanks for the open discussion today. Happy to keep discussing whatever and whenever is needed.

See attached the recent invoices for May period.

Following todays discussions, I want to reiterate a couple of things:

• [Cyber] was set up as a joint company, to operate as a commercial business. It may look at further acquisitions, or being acquired in the future - so needs to operate as a proper, private commercial business.

• Shareholdings were agreed based on what each party brings, and would input to the business.

• What is standard practice is investment is undertaken on a shareholding % basis where equity is needed.

• A business will operate without paying out any profits day-day. Profits would only be paid out to shareholders as dividends once or twice a year generally, unless Directors decided more often. And the amount paid out is not usually all the profits - usually some is kept in business to fund activities.

• A business would expect to own/rent a premises, pay for day-day operations, and whatever is left after costs and tax etc, is profit.

I am in the position of managing 3V as well as a number of other businesses - I need to manage each for the benefit of shareholders.

For 3V, this is obtaining rental and recovery of outgoings.

The [Cyber] rental as I understood, was to be set at an agreed amount per machine - as per the signed lease agreement. There may have been the discussions around % of profits or other amounts as you noted today - but I don't have any record, or recall - and it is not what has been signed/agreed.

This rent is currently around $16,4k per month. This amount barely offsets the amounts it has cost 3V in reduced rental from other tenants - so from a 3V point of view, the [Cyber] business does not provide much benefit to 3V business.

I have spoken to the 3V shareholders, and ok to fix the rental at this amount ongoing, so no further increase with extra machines, however we can not decrease from this point.

Any other site you could find, and other crypto businesses all charge a rental at commercial rates. What we are charging I believe is under normal commercial rates.

I know you want a further discount on the rental rate - however can not agree to this.

If you seriously believe this can not happen - happy to discuss as a dispute under [Cyber] and see what we can do that way (shareholding/company change or whatever). I hope it doesn't come to this, as I enjoy working with you and think we have a lot more business growth and success together.

187 Mr Feng gave evidence that on or around 10 June 2022, he directed and authorised an initial payment of $110,970 from Yimiao to Star Mining as the security deposit under the Second Yimiao/Star Mining Agreement. This was payment of an invoice issued by Star Mining to Yimiao on 8 June 2022.

188 On 20 June 2022, Star Mining and Genesis entered into a 'Digital Currency Miner/Equipment Hosting and Management Agreement' (Second Star Mining/Genesis Agreement). This was done without the knowledge or consent of Yimiao.

189 On 21 June 2022, Mr Huang on behalf of Fom Tech, Mr Dajian Li on behalf of 3V and Mr McNaught on behalf of Cyber entered into a Change of Ownership Agreement for sale of shares in Cyber (Cyber Change of Ownership Agreement). The agreement provides:

Cyber Intelligence Tech Pty Ltd - Change of Ownership Agreement

On Tuesday 21 June, the shareholders and directors of Cyber Intelligence Tech Pty Ltd (CIT) met and agreed to the following:

• FOM Tech Pty Ltd, as the 51% shareholder, wishes to sell its shareholding in CIT

• The remaining shareholders are willing to purchase the shareholding in full, subject to the following:

○ The amount to be paid for the shareholding is $230,000AUD in total.

○ The amount will be paid within 6 months.

○ Upon full payment, the shares will be transferred on ASIC register

○ Upon signing of this sale agreement, FOM Tech will no longer have access or control of the bank account(s) or daily operations

○ FOM Tech will take all reasonable steps to assist in providing nominated [Cyber] person(s) access to the [Cyber] and CGC bank accounts, and any reasonable client contact information.

• The parties will keep this agreement confidential and will not discuss with third parties.

190 There is no evidence that the sum of $230,000 was paid or that Fom Tech's shares were transferred. I refer to the email sent by Mr Huang to Mr McNaught and Mr Dajian Li on 9 December 2022.

191 On 23 June 2022, Cyber and Genesis entered into a Strategic Cooperation Agreement for construction of a natural gas power plant and cryptocurrency mining sites in the Northern Territory.

192 On 30 June 2022, Cyber issued an invoice to Genesis under the Genesis/Cyber Agreement for $150,075.24 which was not paid by Genesis.

193 On 2 July 2022, Origin Energy issued a business electricity invoice to ViPlus for $120,000.45 for electricity and other services provided at 159 Wellington Rd for June 2022.

194 On 4 July 2022, Mr McNaught sent an email to Hardchrome asking it to issue an invoice for $87,333.12 for 'electricity costs' at 175 Wellington Rd.

195 On 4 July 2022, Hardchrome issued an invoice to Cyber for $87,333.12 (plus GST) for power usage at 175 Wellington Rd and sent that invoice to Mr McNaught.

196 It is common ground that by July 2022, Star Mining had told Mr Feng of Yimiao that around 512 Yimiao Machines had been 'on the shelves' (ie, on the racks).

197 On or around 8 July 2022, Mr Feng visited the 159 Wellington Rd site for a third time. Mr Feng gave evidence that he visited the site as the progress of connecting the Yimiao Machines to power had been slower than expected. He visited the site with Mr Xiaoliang Zeng of Star Mining, who was accompanied by Mr Tim Li of Genesis, who Mr Xiaoliang Zeng introduced to Mr Feng as his 'partner'. Mr Feng understood Mr Tim Li to be a local assistant of Mr Xiaoliang Zeng given he is a foreigner. They were also accompanied by an individual introduced by Mr Xiaoliang Zeng as his driver, who I infer was Mr Yuan of Genesis. Mr Feng did not see Mr Dajian Li, Mr McNaught or Ms Fang. He gave evidence that during the visit Star Mining were not prevented from accessing the Back Room or the Mining Room. Mr Feng gave evidence that this was the first time he had ever met Mr Tim Li and that during this visit:

(a) he saw that some of Yimiao's machines had been set up in the Mining Room and were operating. The Mining Room was almost full of machines. He did not count how many of the Yimiao Machines were in the Mining Room. He gave evidence that he was told around 300 Yimiao Machines were in the Mining Room;

(b) he saw that a number of Yimiao Machines were in the Back Room in their original packaging. It was messy. He said there were lots of boxes and machines and some were on pallets and some were on the floor. He did not count the pallets, boxes or machines. He said his 'impression' was that the machines were being unpacked and loaded onto the racks;

(c) he was also shown two containers which were stacked on top of one another on a nearby piece of land approximately a 5-minute walk from the Mining Room. Mr Feng gave evidence that he did not enter the Containers as the upper container was still being set up and the bottom container was locked. He said he could see from the gaps between the ventilation fans that there were machines hosted in the bottom container. This was the first time he had seen the Containers.

198 Mr Feng gave evidence that following his visit he had a discussion with Mr Xi Zeng of the Yimiao Group and that during this discussion he told Mr Xi Zeng that Yimiao should remove the Yimiao Machines from the Wellington Rd sites and replace them at other locations due to the delays in setting up and operating the machines.

199 Ms Zhou gave evidence that by about mid-July 2022, the Yimiao Machines had not yet been all connected to Poolin and that Yimiao made a decision to move those machines to the United States. Ms Zhou gave evidence that she was unhappy as the installation of the machines was too slow. Ms Zhou did not agree that the Yimiao Machines losing their value very quickly was the cause of her unhappiness.

200 Ms Zhou gave evidence that since 16 July 2022, the Yimiao Group has had 100 L7 Antminer units operating at the South Carolina Site. She also gave evidence that the Yimiao Group has generated a record which sets out the cryptocurrency mined by these units from 16 July 2022 to 7 July 2023.

201 On around 18 July 2022, Ms Zhou called Fooksum and asked them if they were able to collect the Yimiao Machines from the Wellington Rd site. Fooksum informed Ms Zhou that it could collect 200 units in the first batch. On about 20 July 2022, Ms Zhou sent a message to Mr Xiaoliang Zeng that Yimiao would like to send the Yimiao Machines that had not been connected for operation at the Wellington Rd site to the United States and that Yimiao would start such a process by first taking 200 Yimiao Machines from the Wellington Rd site. Ms Zhou gave evidence that she then exchanged messages with Mr Xiaoliang Zeng's assistant, namely Dengdeng, regarding the collection of the machines and that she subsequently called Fooksum and asked them to pick up 200 of the units from 159 Wellington Rd. Fooksum told Ms Zhou that they were able to pick up the units on Wednesday 27 July 2022. On 25 July 2022, Ms Zhou messaged Dengdeng and stated '198 units of L7, 11 pallets will be picked up around Wednesday by logistics'. Ms Zhou explained that 11 pallets fit 198 units, which is why the number to be shipped was 198 and not 200 Yimiao Machines. Ms Zhou gave evidence that she did not inform anyone else of the intention to remove 198 Yimiao Machines, other than Star Mining. Ms Zhou gave evidence that she had decided to ship them to the South Carolina Site. Ms Zhou gave evidence that she received a quote for delivery by air of between USD200-300 per machine. Ms Zhou never received an invoice as the Yimiao Machines were never collected and delivered to the South Carolina Site.

202 On 21 July 2022, Mr Maolin Chen did an inventory of the machines and observed the following:

(a) 1,033 L7 machines in the Back Room. These were not in operation. They were not plugged in or functioning. He counted the boxes in the warehouse. He did not open the boxes. He explained that the boxes were stacked on pallets and there were 18 machines on each pallet so counted the pallets. He said that they were wrapped in plastic shrink wrap. He said that the boxes have labels saying that they are L7 machines and also their computing power. He was taken to the photo at CB1949 and agreed that as at 21 July 2022 they were stacked like they are in the photo. Sometimes there would be 1 or 2 machines more or less on a pallet and he said that he could see examples of such pallets in the photo. He explained that he did not count any 'empty boxes' where the machine had been removed and put on the rack;

(b) 259 L7 machines in the Mining Room, with 22 of the L7 machines being owned by Star Mining and the remainder belonging to Yimiao. All of these machines were operating properly at the time of the stocktake;

(c) 328 L7 machines in the Containers of which 310 machines were in operation. The count of 328 included machines on the racks that were not in operation and faulty machines on the floor.

203 On 22 July 2022, Mr Maolin Chen did an inventory of the machines which recorded that 36 L7 machines had moved from the Back Room to the Mining Room, making totals as follows:

(a) 997 L7 machines in the Back Room;

(b) 295 L7 machines in the Mining Room, with 22 of the L7 machines owned by Star Mining; and

(c) 328 L7 machines in one container at 175 Wellington Rd.

204 Allowing for the 22 machines owned by Star Mining, there were 601 Yimiao Machines in the Mining Room and the Containers, and 997 Yimiao Machines in the Back Room as at 22 July 2022.

205 Mr Maolin Chen explained why only 36 L7 machines had been moved to the Mining Room:

MR MITCHELL KC: And is there a reason why only 36 machines went onto the racks in that day?

WITNESS: Because other time in the [Back Room], in the mining room, the loading of pallet are encountering some problems; so, the process has to be, ah, done to make adjustment. So, ah, the machines cannot be put - putting on the rack in large scale.

206 Mr Maolin Chen explained that he was present when the 36 Yimiao Machines were put on the racks. This equates to 2 pallets.

207 Mr Maolin Chen gave evidence that as at 25 July 2022 the top container, ie, the second container he had spotted, was not in operation.

208 Between 8 May and 25 July 2022 Mr Maolin Chen and Mr Yuan moved items of the Yimiao Machines into the bottom container at 175 Wellington Rd and that Mr Dajian Li was involved in arranging the movement of items of the Yimiao Machines into the bottom container. As at 25 July 2022 there were two containers at the 175 Wellington Rd site with no machines operating in the top container. From early August 2022, there were mining machines operating in the top container.

209 Mr Maolin Chen gave evidence that on 25 July 2022, when he went to 159 Wellington Rd to commence work as per usual, he was told by Vincent that 'the boss' had not permitted him or 'his people' to go to 159 Wellington Rd or the container next door. It is appropriate to set out his evidence of this in full:

I was working normally and on 25 July, in the morning, after 10 o'clock or around 10 o'clock, I went to 159 as per usual. And then Vincent told me that the boss had not permitted me or my people to go to 159 and also the container next door.

210 Mr Maolin Chen gave evidence that he understood the reference to 'the boss' was a reference to Mr Dajian Li and explained this as follows:

MR CRAIG: Did Vincent tell you who his boss was?

WITNESS: No. But I know he meant Dajian Li.

MR CRAIG: How did you know that he meant Dajian Li?

WITNESS: Because on the day, he didn't specifically say Dajian Li was his boss, but I always knew that he had been working for Dajian Li and that Dajian Li has been instructing him for the work and job contents and so I have a very clear judgment that the boss was Dajian Li.

211 Mr Maolin Chen gave evidence that he then spoke to 'Dongyang' (Mr Yuan) on the telephone, who indicated that he 'would make some telephone calls'. Mr Maolin Chen stated that he subsequently 'retried to go back to the site, but I was stopped'. Mr Maolin Chen gave evidence that he then conducted 'surveillance' in the evening on 25 July 2022 from Mr Tim Li's car and then in the following 2 to 3 days by 'walking around' outside the site. He gave evidence that in this period there was 'nothing special in relation to changes'. He gave evidence that 'from August', although he does not know precisely when, they made observations of the Wellington Rd site from a vehicle that they rented. He also gave evidence that he walked up close to the Containers. He said he saw that machines were operating from both containers using binoculars. He said that the top rack of the second container was visible. He said that he could see the green lights on the machines indicating 'normal operation'. I infer that his reference to the 'second container' is a reference to the top container. He said that he undertook this surveillance upon the instructions of Mr Xiaoliang Zeng and that Mr Xiaoliang Zeng knew that there were cameras on the inside of the bottom container. He said that Mr Xiaoliang Zeng did not have access to the footage but that Mr Zeng Ling Jiang did, who was the assistant to Mr Xiaoliang Zeng.

212 On 25 July 2022, Ms Zhou was advised by her team that according to the mining dashboard for the 7 Poolin accounts, all Yimiao Machines connected to those accounts (save for a small number of the units) had gone 'off-line' which meant that they were disconnected from power, internet, or at least, from Yimiao's Poolin accounts.

213 Ms Zhou gave evidence that on each day between 25 July 2022 and 3 August 2022, Yimiao received in 3 Poolin accounts a small amount of Litecoin and Dogecoin. She estimates that no more than 10 Yimiao Machines were intermittently connected to power and operated during this period.

214 On around 26 July 2022, while Mr Feng was at a Bitmain conference in America, Ms Zhou spoke with Mr Feng on the phone and told him that the Poolin dashboard showed that the Yimiao Machines were all 'off-line'. Mr Feng understood this to mean that those units were 'disconnected from internet and/or power'.

215 On 26 July 2022, Star Mining informed Yimiao that there were the following Yimiao Machines at the Wellington Rd site:

(a) 237 in 'No. 1 venue' (Mining Room);

(b) 328 in 'No. 2 venue' (Containers);

(c) 1,033 in the 'warehouse' (Back Room).

216 This information was based upon the stocktake on 21 July 2022 and not on 22 July 2022. This is readily apparent from the numbers of Yimiao Machines.

217 Yimiao knew that there were a total of 512 Yimiao Machines 'on the shelves' (ie, on the rack). Star Mining informed Yimiao that the 512 figure, as compared with the sum of Yimiao Machines in 'No. 1 venue' and 'No. 2 venue', being 565, 'may be missing the machines that had been turned off and the malfunctioning machines'. Ms Zhou said that she did not know why the machines were turned off but said that one reason may be that Star Mining was in the process of moving those machines. Ms Zhou also said that she did not make any enquiries concerning the malfunctioning machines as it is normal for machines to experience problems upon arrival at a site. Ms Zhou agreed that Yimiao was dependent upon Star Mining to install and repair machines. Ms Zhou said that, at the time, she did not instruct Star Mining to attempt repairs on any of the machines that it said were malfunctioning.

218 Mr Feng gave evidence that he and others in the Yimiao Group made urgent inquiries to Star Mining as to why this had happened. In response to one inquiry by a Mr Qing Qian of the Yimiao Group, Mr Xiaoliang Zeng of Star Mining said it was caused by internet disconnection and that he was finding people to fix it.

219 Mr Feng gave evidence that in the following days Yimiao did not receive a satisfactory explanation as to the status of the Yimiao Machines or the cause of the disconnection on 25 July 2022 and the Yimiao Machines were not reconnected to power and/or the internet save for a very small number which appeared to have had some limited operating capacity just for a few days between 25 July and 3 August 2022. Mr Feng gave evidence that he never logged into the Poolin dashboard to look at what the Yimiao Machines were doing.

220 On 27 July 2022, Ms Fang forwarded an email to Mr McNaught. The email was from 'corporate_kyc@kyc.binance.com' to Ms Fang dated 27 July 2022 and titled 'Re: Corporate Onboarding - Cyber Intelligence Tech Pty Ltd (479751782)' and stated, inter alia, as follows:

Dear Customer,

Thank you for supporting Binance!

Please be informed that your application is well received, and it is pending for below additional documents:

1. Ultimate Beneficial Owner (Mr. Li D.)Proof of address collection. (Unfortunately, the documents that you provided are older than 90 days. Please revert them via the system under the 'UBO' tab.

We accept the following address verification documents, issued in the last 90 days:

• bank statements - with transactions history - we accept digital bank statements too, kindly send us in the form of pdf file (do note that sensitive information can be covered)

• utility bills - e.g. electricity, water, fixed internet or phone bills (no mobile phone bills), waste management, etc.

• government documents - letters from government agencies, tax bills, etc.

1. Confirmation that none of the information we have previously collected changed (Ultimate Beneficial Owner, Director, Authorised Person(s)).

...

1. As per the 'Personal Property Securities Register' that you provided, please provide us the latest full signed and dated copy of the Trust Deed for '3V Trust'.

As part of our continuous efforts to improve our security for our SMSF, Trust, and Corporate account users. These updates are intended to make your experience with Binance Australia more secure.

For Binance Australia to complete these changes, we require users to nominate their preferred bank account for deposits into Binance Australia for whitelisting purposes. This is to prevent unauthorised PayID deposits into your Binance Australia account.

Your preferred bank account is the funding source that will be used when depositing to Binance Australia for your SMSF, Trust, or Corporate account.

Subject: Binance Australia Nominated Bank Account.

BSB:

Account Number:

Please note: Deposits made from accounts not whitelisted will be refunded and incur a $3 processing fee.

Please upload online and inform us once done. Thank you for your cooperation.

Sincerely,

Corporate KYC Team

Binance

...

221 Mr Feng gave evidence that on or about 28 July 2022 during a telephone conversation with Ms Zhou and Mr Xiaoliang Zeng of Star Mining, he was informed by Mr Xiaoliang Zeng that Star Mining and all of its contractors and staff had been refused entry to the Wellington Rd site. Mr Feng also gave evidence that Mr Xiaoliang Zeng told him the following matters during this telephone conversation:

(a) Genesis was a separate company that was subcontracted by Star Mining to host cryptocurrency mining machines, including the Yimiao Machines, at the Wellington Rd site;

(b) Genesis in turn had some arrangements with a company called 'Cyber Intelligence';

(c) someone had disconnected all of the Yimiao Machines; and

(d) the property on which the mining sites were set up was owned and controlled by a company producing powdered milk. He accepted that he could not recall the exact words in which this was put to him on the telephone call. He also said he could not remember Mr Xiaoliang Zeng telling him that ViPlus dairy owned and controlled the property. He also said he was not told that it was ViPlus dairy, just a company producing dairy.

222 In cross-examination, Mr Feng said he was told these matters by Mr Xiaoliang Zeng in person after arriving in Australia on 27 or 28 July, and not by a telephone call. In cross-examination, he accepted that there were a lot of conversations and he could not recall the specifics of them.

223 Mr Feng gave evidence that prior to the telephone call on or around 28 July 2022, he had no knowledge of any of the following matters:

(a) Star Mining had subcontracting arrangements for the mine sites at the Wellington Rd site in which the Yimiao Machines was hosted;

(b) Star Mining did not have control of the mine sites and could not guarantee entry or access to the mine sites or secure its power or internet supply;

(c) the mine sites were instead controlled by 3V and Mr Dajian Li and Star Mining had no contract with them. In cross-examination, he accepted that Mr Xiaoliang Zeng did not mention 3V or Mr Dajian Li during the conversation on 28 July 2022.

224 Mr Feng gave evidence that on 29 July 2022 he flew to Melbourne and met with Mr Xiaoliang Zeng. In cross-examination he agreed it was either 27 or 28 July 2022. He said that Mr Xiaoliang Zeng told him of the identity of 3V, Cyber and Genesis and that this was the first time he had heard the mention of these entities. He gave evidence that he did not attend the Wellington site and met him in his hotel.

225 Ms Zhou gave evidence that if Yimiao had been able to collect the Yimiao Machines in July 2022 she considers that Yimiao would have removed all 1,598 machines from the Wellington Rd site and would have hosted approximately 50% of its machines at the South Carolina Site and approximately 50% of its machines at the VDC Site. Ms Zhou gave evidence that Yimiao has never operated L7 machines at the VDC Site.

226 On 31 July 2022, Cyber issued an invoice to Genesis under the Genesis/Cyber Agreement for $165,082.76 which was not paid by Genesis.

227 Mr Jian Chen gave evidence that the Chen Machines stopped. They stopped after July 2022. He said he knew they stopped as they were all linked to a mining pool which showed that they were offline and not producing income. At the time the Chen Machines were in the Back Room and the Mining Room. Mr Jian Chen said that he was in China at the time the Chen Machines stopped, and he has not been back to the 159 Wellington Rd site.

228 Mr Jian Chen said that at some time after July 2022, he spoke to a person named Mr Zhang who appeared to work for Cyber. Earlier in these reasons I have found that this 'Mr Zhang' is a reference to Mr Chiyu Zhang, who had previously sent correspondence to 3V on behalf of Cyber. Mr Jian Chen gave evidence that Mr Chiyu Zhang:

agreed that ... how much money I will be compensated and also my machine will be packed up and ... also being sent back to me and these all being recorded in the WeChat correspondence.

229 Mr Jian Chen gave evidence that he does not know what happened to the Chen Machines as they have not been returned to him, and has not had any further discussions with people in relation to those machines.

230 Mr Feng gave evidence that on 1 August 2022 and 2 August 2022 he met with Mr Xiaoliang Zeng and Mr Tim Li. Mr Feng gave evidence that following his meetings with Mr Tim Li, Mr Tim Li sent him by WeChat an agreement between Genesis and Star Mining dated 20 June 2022 and 9 warehouse receipts dated 28 March, 31 March, 5 April, 11 April, 12 April and 4 May 2022 signed by Mr Yuan confirming that the Yimiao Machines had been received at the site.

231 Mr Feng gave evidence that Mr Xiaoliang Zeng told him that he had rented a car and arranged for people to sit outside 159 Wellington Rd and observe whether any of the Yimiao Machines were removed, and that Mr Xiaoliang Zeng sent him photographs from these observations. In cross-examination, he gave evidence that he asked Mr Xiaoliang Zeng to hire a surveillance car in front of the Wellington Rd site to make sure about the safety of the Yimiao Machines.

232 Mr Feng gave evidence that the surveillance of the site ceased after Mr Xiaoliang Zeng told him that two men with masks had come out of 159 Wellington Rd and smashed the windows of the rental car and that he received from Mr Xiaoliang Zeng photographs of a car which had the windscreen and side windows that were damaged. Mr Feng did not give evidence as to the identity of these persons.

233 On 1 August 2022, Cyber surrendered assets to 3V at cost including switchboards, industry fans, cables, racks, electronic cabinets and equipment, shelving. The total cost value of the equipment was almost $300,000. I find that this equipment was used for cryptocurrency mining as the description includes equipment specifically used for such mining, including racks and this was its business prior to ceasing trading. The assets were surrendered to pay invoices rendered by 3V to Cyber.

234 Ms Zhou gave evidence that she first heard of 3V, Cyber, Genesis and Mr Dajian Li in early August 2022.

235 On 2 August 2022, Origin Energy issued a business electricity tax invoice to ViPlus for $133,192.30 for electricity and other services provided at 159 Wellington Rd for July 2022.

236 It is common ground that on 3 August 2022, Mr Huang resigned as a director at Cyber. The company search states it was 2 August 2022, but this is not a material difference. From this date until the appointment of the liquidators to Cyber in March 2023, Ms Fang was Cyber's sole director. It is common ground that from 3 August 2022 to the extent that Cyber took any action (and this was much disputed) it was undertaken by Mr Dajian Li, Mr McNaught, Mr Avis Go and Ms Fang, the only difference between the parties being that Yimiao alleges that it was at least from that date. But it does not identify any earlier date.

237 On 3 August 2022, the first entry was made in the log files obtained from the Yimiao Machines (collected in late February 2023) that refers to 'F2Pool'. Mr Georgiou gave evidence of log files as follows:

Through my various work and experience, I am familiar both with the log files of cryptocurrency mining machines. By reviewing the log files of a cryptocurrency mining machine, a person may be able to ascertain details including the hardware version of the device, the number of hash boards and chips, the firmware and/or software running, the machine serial number, the date and time that the machine was run, the mining pool URLs used and log in credentials. Whether such details are present in the log files depends on how the machine has been running and or if the operator has reset the machine or cleared the data.

...

1. A log file of a L7 Antminer often runs for hundreds of pages. By way of example, copies of:

(a) 2 log files which were downloaded from the L7 Antminer that was collected in February 2023 and provided to me by G+T are attached ...

(b) 2 log files downloaded from the L7 Antminer that was collected in August 2023 are attached ...

1. From my review of these log files and my knowledge arising from my previous experience in reviewing log files, the log files reveal that those units of the Equipment had been used to mine cryptocurrency.

238 Ms Zhou gave evidence that after 3 August 2022, Yimiao did not receive any distribution of Litecoin or Dogecoin into the 7 Poolin accounts.

239 Ms Zhou said that she did not know whether the cryptocurrency received by Yimiao into the wallets from the Yimiao Machines has been converted to fiat currency. She explained that this is because other machines were connected to these wallets and although some cryptocurrency in the wallets has been converted to fiat currency she does not know whether the cryptocurrency was from the Yimiao Machines at the Wellington Rd site or from other machines.

240 Ms Zhou gave evidence that the Yimiao Group keeps the cryptocurrency for as long as possible. She said that it may be converted into fiat currency and used to pay costs, including electricity, and has also been used to pay for the legal costs of these proceedings. The Yimiao Group has spent $3 million on legal costs in this proceeding. Ms Zhou gave evidence that the Yimiao Group normally do not convert cryptocurrency except to pay costs. Ms Zhou explained that they may convert it for the 'right price' but that they do not have a business plan with fixed numbers at which they will convert the cryptocurrency, and that internal discussions would need to occur before selling. Mr Feng gave evidence that the Yimiao Group's business plan is to accumulate and hold most of the cryptocurrency it obtains until the optimal prices so as to maximise profits. Mr Feng gave evidence of a 'plan' for Dogecoin and Litecoin mined by the Yimiao Group which was to hold the majority of these and wait until the prices reached a level of at least USD150 per coin for Litecoin and USD0.1 per Dogecoin if not more.

241 Ms Zhou gave evidence that Yimiao moved its mining accounts from Poolin to BTC.com and that this was complete by about August/September 2022. Ms Zhou gave evidence that BTC.com charge a mining fee of about 2%. Ms Zhou referred to a record provided to her by BTC.com Pool which sets out the average mining reward per gigahash each day between 25 July 2022 and 14 September 2023 for Litecoin and Dogecoin. Ms Zhou also gave evidence that she received an updated record from BTC.com.

242 On 4 August 2022, Gilbert + Tobin sent a letter of demand to Mr Li, as a director of 3V, and a representative of Cyber which states in part:

1. Yimiao conducts a business of crypto currency mining in Australia and the sale of such crypto currency pursuant to its registrations.

...

1. Yimiao has an agreement with Star Mining Pty Ltd which it entered into on around March 2022. Pursuant to this agreement Star Mining provides various services used for its crypto mining business, including the establishment of a site to host the L7 Equipment and provide adequate power and internet access to allow the business to be conducted. Yimiao has not transferred title in or granted any right to another party to use or control or move its L7 Equipment.

...

6 We are instructed:

(a) The Host Site (also sometimes called the Mine Site) was established by Star Mining for our client 159-171 Wellington Road, Clayton VIC 3168. Our client now understands the Host Site at this premises was confirmed through various further agreements entered into with Genesis Mining Pty Ltd, Cyber Intelligence Tech Pty Ltd and you, 3V Development Australia Pty Ltd ...

(b) Title Searches confirm that 3V Development is the registered proprietor of the premises at 159-171 Wellington Road, Clayton VIC 3168.

(c) From around March or April 2022, Yimiao, having been advised these premises were confirmed as the Host Site, has caused its L7 Equipment to be delivered in multiple shipments to the premises at 159-171 Wellington Road, Clayton.

(d) Since that time, 3V Development has accepted from Yimiao and or its shipping agents and has housed or stored at the Host Site, 1598 units of L7 Equipment for the purpose of our client being able to perform its mining business. The L7 Equipment has at all times remained the property of Yimiao and no other party has any rights to use, open, operate or remove or change the L7 Equipment without our client's authority.

(e) Our client instructs us that of the 1598 units of L7 Equipment held at the Host Site, approximately 519 of its units have been plugged into the power source and were until last week being used by our client to operate its mining business, and the balance of 1079 units were stored in the warehouse on the Host Site....

7 We are further instructed that:

(a) Since around about

(i) 25 July 2022 Yimiao's access to the power and internet for the Host Site has been turned off which means it is no longer able to use and operate its L7 Equipment and therefore has been unable to operate its mining business; and

(ii) 3 August 2022, our client has through its log data detected that an unauthorised person or persons has disconnected our client's digital wallet, connected an alternative digital wallet to the L7 Equipment and has been using our client's L7 Equipment for their own benefit without our client's consent.

...

17 In the circumstances, Yimiao urgently demands that 3V:

(a) immediately cease from any use or operation of our client's L7 Equipment and direct that any other person ceasing to use our client's L7 Equipment on its Premises.

(b) immediately disconnect from our client's L7 Equipment any digital wallet or direct that any other person to immediately disconnect any digital wallet from our client's L7 Equipment.

(c) take all necessary steps to ensure that no person other than Yimiao or its approved agent has access to or use of the L7 Equipment.

(d) undertake in writing that it will not by itself or cause anyone to use, move, dispose of and/or deal with the Equipment in any way without Yimiao's written consent.

(e) confirm to us in writing by 4pm Friday 5 August 2022 that the steps in 17(a) to 17(d) above have been taken and the undertaking is given.

...

1. We also further demand that 3V Development agree to provide access to Mr SongTao Feng of Yimiao (and any other contractor or agent of Yimiao as our client should elect) to the Premises on Monday 8 August 2022 (at an hour to be agreed) so that he can on behalf of Yimiao.

(a) Inspect and confirm that all of its units of the L7 Equipment are present and unaltered/harmed; and

(b) collect and remove all of Yimiao's 1598 units of the L7 Equipment from the Host Site (both those that have been under operation and use and those that have been stored in the warehouse).

243 On 7 August 2022, Mr McNaught sent an email to Hardchrome stating:

We calculate the monthly bill for ourselves at $92,223 ... [p]lease raise an invoice and send through (assuming Andrew confirms that amount also OK).

244 Hardchrome then issued an invoice to Cyber for $82,223 (plus GST) for power usage at 175 Wellington Rd that was due and payable on 14 August 2022 and sent the invoice to Mr McNaught.

245 On 8 August 2022, 3V's then solicitors, KCL Law, sent a letter in response to Yimiao's letter of demand dated 4 August 2022 which states in part:

So that we may obtain instructions in relation to your letter and the demands therein, please provide the following further information and clarification in relation to your client's claims.

1. Kindly supply further details and documents evidencing or recording the alleged purchase by Yimiao and importation into Australia of 1598 units of the L7 Equipment as referred to in paragraph 4 of your letter.

2. Kindly provide a copy of the agreement between Yimiao and Star Mining Pty Ltd referred to in paragraph 5 of your letter.

3. 3V is only the registered proprietor of the site at 159-171 Wellington Road, Clayton, Victoria ('Site'). We are instructed that 3V leases the Site to Cyber Intelligence Tech Pty Ltd ('Cyber'). Cyber provides storage and hosting and crypto currency hosting facilities and services at the site to third parties having a need for such services including Genesis Mining Pty Ltd. Cyber established and operates those facilities. It is 3V's understanding that mining equipment at the Site is owned by Cyber's customer, Genesis.

3V is only a landlord and is not involved in the provision of those services. As landlord, 3V does not have possession of the Site nor of any machines at the Site.

Further, we are instructed that 3V has never had any dealings with the company referred to in your letter by the name of Star Mining Pty Ltd and further, that neither 3V Cyber has not had any dealings with either Star Mining or your client, Yimiao.

Against that background, the basis upon you claim that 3V is responsible for the L7 Equipment which Yimiao alleges was delivered to the Site is unclear. Paragraph 6(a) of your letter purports to explain the basis for that claim, but with all due respect, that subparagraph is unintelligible and meaningless.

Kindly clarify the basis upon which it is alleged that 3V is responsible for these machines. Without limitation, clarify and provide evidence for the claims made in paragraph 6(a) of your letter that the host site was 'established by Star Mining for our client' and further that the host Site 'was confirmed [sic] through various further agreements entered into with Genesis Mining Pty Ltd, Cyber Intelligence Tech Pty and you, 3V Development Australia Pty Ltd'.

...

We await the above clarifications and further information at your earliest convenience, noting again that the demands and claims as presently expressed in your letter insofar as they purport to be addressed to 3V appear to be misconceived, given that:

(a) 3V does not conduct hosting facilities at the Site, is not responsible for the provision of power and internet services at the Site, and moreover, as a landlord, is not in possession of the Site, or any chattels located thereon.

(b) Based on the contents of of [sic] your own letter, whatever arrangements Yimiao may have entered into with respect to the machines the subject of your letter appears to have been entered into with Star Mining Pty Ltd, and not 3V.

246 On 8 August 2022, Gilbert + Tobin sent a further letter to KCL Law and KCL responded on 9 August 2022. On 11 August 2022, Gilbert + Tobin sent a further letter of demand to KCL Law which provided documents to 3V and Cyber including a list of 1,598 serial numbers. On 12 August 2022, KCL sent a letter in response to the further letter of demand of Gilbert + Tobin. On 15 August 2022, Gilbert + Tobin sent a letter of demand to KCL Law enclosing documents including invoices. On 16 August 2022, KCL Law sent a letter in response to the further letter of demand of Gilbert + Tobin refusing its demand and advising that Cyber was now represented by Tony Hargreaves & Partners Lawyers. The letter also states:

(a) 3V does not know whether the 1598 units of L7 Equipment bearing the serial numbers provided in your letter dated 11 August 2022 are or ever have been at the Site and any enquiries Yimiao Australia may have with respect to such matters should be directed by it to Cyber or Star Mining and in any event not to 3V.

Further, as landlord, 3V is not in a position to inspect the machines at the Site to ascertain whether any of the machines located hereat bear the serial numbers previously advised by you;

(b) that if (which is not admitted by 3V) the units of L7 equipment bearing the relevant serial numbers are in fact located at the Site, 3V will not move, use, tamper with, dispose, damage or deal with those machines (if any) pending further written notice from your client .If 3V does propose to move any of those machines (and it has no intention of doing so and cannot do so) it will provide at least 2 business days prior written notice to Yimiao Australia care of your office.

(15) ... 3V is only the registered proprietor and landlord of the [159 Wellington Road Site] and does not and has never conducted crypto mining hosting facilities from the Site and is not and never has been in possession of any machines located at the Site (whether owned by [Yimiao] or by anyone else including Star Mining or Genesis) the threat contained in paragraph 15 of [the Gilbert + Tobin] letter to commence proceedings against 3V is misconceived and should be withdrawn.

247 Mr Feng gave evidence that he became aware in mid-August 2022 that the information provided by Mr Xiaoliang Zeng to him about the property was not entirely accurate, as Mr Feng learnt that the true owner of 159 Wellington Rd and 175 Wellington Rd was 3V.

248 On 17 August 2022, Tony Hargreaves & Partners Lawyers sent a letter to Gilbert + Tobin on behalf of Cyber refusing its demand and requesting further details of Yimiao's claims.

249 On 22 August 2022, Yimiao filed a summons seeking preservation orders. At the hearing of the summons on 23 August 2022 the Court made orders by consent which record undertakings given by Star Mining, Cyber and Genesis not to interfere with, remove from the premises, dispose of or otherwise deal with any of the 1598 units of equipment described as L7 Antminers as set out in annexure A and to allow Yimiao to inspect the machines. The order made by the Court also notes in Other Matters that:

The plaintiff, by its counsel, informed the Court that the plaintiff: (a) has not authorised use of the Yimiao Claimed Equipment by anyone other than the plaintiff, or under the agreement between the plaintiff and the first defendant; and (b) has requested that and consents to power to the Yimiao Claimed Equipment being switched off upon completion of the inspection and identification of the Yimiao Claimed Equipment.

250 On 25 August 2022, there was an inspection of the site at 159 Wellington Rd by representatives of Yimiao. Mr Feng gave evidence that he attended the inspection on 25 August 2022. Mr Feng gave evidence that the attendees also included Mr Tim Li and Mr Xiaoling Zeng and that they were met by Ms Fang. Mr Feng gave evidence that Ms Fang told them that they needed to show identification and sign in and she also gave them high visibility clothing to wear. Mr Feng gave evidence that during this inspection Mr Tim Li and Ms Fang had an argument and began to push each other and Ms Fang then said that she was hurt. Mr Feng gave evidence that the inspection ceased after the police were called. Mr Feng gave evidence that he saw stacked pallets.

251 Mr Maolin Chen gave evidence that on 25 August 2022 he also attended the Wellington Rd site. He said that in the warehouse, ie, the Back Room, there were 'two layers' of Star Mining machines in front of Yimiao's machines. He said that this 'was a barrier for us to the stock taking'. Mr Maolin Chen also gave evidence that there was no power connected to the machines in the Mining Room and the two ladders that were usually in the Mining Room were not there. He gave evidence that 'the stock taking cannot be conducted and the team in fact had a conflict with a female under Dajian Li'. In cross examination he confirmed that the 'conflict' was between Mr Tim Li and Ms Fang and that it resulted in an ambulance attending. He gave evidence that he could not remember if he continued with any inspection of the machines after the incident, but he said that the inventory check was unable to completed on that day.

252 Mr Maolin Chen gave evidence that on 25 August 2022 he noticed that 'Yimiao's boxes were empty' in the Back Room. He gave evidence that he was confident that the empty boxes were found on 25 and not 29 August 2022. He did not explain the basis for this. Mr Maolin Chen gave evidence that the machines in the Back Room were not in the 'same place' as shown in the photo at CB693 (ie being a photo taken on 21 July 2022). He gave evidence that the pallets were wrapped in plastic but there were no machines inside the boxes. Mr Maolin Chen gave evidence that this was discovered when Mr McNaught pushed a pallet and it moved. He said that he did not see a slit on the bottom of the boxes and also that he was focusing on Star Mining's machines. Mr Maolin Chen gave evidence that he did not see anyone take the machines out of Yimiao's boxes in the Back Room. He accepted that he was not with the pallets 24 hours a day 7 days a week. He said it was not possible that somebody from Genesis took the machines as every time when the goods are put into the Back Room he checks every pallet. He gave evidence as follows concerning Star Mining:

MR MITCHELL: Are you able to say to His Honour that nobody from Star Mining took the missing L7 Antminers?

WITNESS: No, I can't because Yimiao's machine was the responsibility of Star Mining to operate and also for safekeeping, and if Star Mining was losing the machine, it means Star Mining was also losing the machine.

253 Mr Maolin Chen connected his laptop to the machines on 29 August 2022. He gave evidence that he connected his laptop to four or five of Yimiao's L7 machines. He found that all of the machines had been reconfigured and that, as a result, he could not see all of the accounts which they were being operated under. He was also told by Mr McNaught that Star Mining was not permitted to touch the Yimiao Machines.

254 Mr Feng gave evidence that he also attended the inspection on 29 August 2022 and that they were met by a man, who introduced himself as Mr McNaught. Mr Feng gave evidence that Mr McNaught showed them the Mining Room and the Back Room and that the Mining Room was locked by a padlock and that Mr McNaught asked someone to open it. He did not go to the site of the Containers. Mr Feng also gave evidence that Mr McNaught called someone to drive a forklift and move machines out of the way and that during this visit Mr Feng saw that there were several hundred machines in the Mining Room. Mr Feng gave evidence that these had a red light, which he said indicated to him that there was a problem with the connection. Mr Feng said that he saw a person in the Mining Room with a laptop connected to a Yimiao Machine but that he did not know what they were doing.

255 I find that Mr Maolin Chen was confused about the date when he noticed the empty boxes. This is because Mr Feng attended the inspections on 25 August 2022 and 29 August 2022 and gave detailed evidence of the attendees which did not include Mr McNaught on 25 August 2022 but Mr McNaught did attend on 29 August 2022.

256 Mr Feng gave evidence that lawyers from Gilbert + Tobin and he took photographs of the machines on 29 August 2022, in order to check if they matches Yimiao's records. Mr Feng also gave evidence that together with Gilbert + Tobin lawyers and paralegals, he identified in a warehouse located at the rear of 159 Wellington Rd (ie, the Back Room), more than 1,000 Bitmain L7 packing boxes that were empty and that photographs of these empty boxes were taken by Gilbert + Tobin representatives during those inspections. Mr Feng said that he saw Mr McNaught pushed a pallet and it moved. Mr Feng said that it was a pallet wrapped in plastic. Mr Feng said that each pallet is quite different from the others and he did not know whether this pallet was different to the 'original one' (ie, from the pallet as it would have been delivered to the site). Mr Feng said that he did not count any machines in the Mining Room. He counted 14 machines in the Back Room that were sitting on a pallet without wrapping and as he further explained 'I just count the machines without box is 14 machines have problem'. Mr Maolin Chen gave evidence that the machines in the Back Room were not in the 'same state' as shown in the photo at CB693 (ie, being a photo taken on 21 July 2022).

257 The defendants accepted that Yimiao Machines were removed from the Back Room prior to 29 August 2022.

258 On 29 August 2022, Gilbert + Tobin sent an email to 3V and Cyber requesting that power to all equipment be disconnected and stating in part:

I am also instructed that today when our representatives attended the First Room or 'Power Room' all units (save potentially for a few units on higher shelves) including those units belonging to our client were now switched on and operating.

This is a changed position to the inspection on Thursday 25 August, when no machines were running.

259 On 30 August 2022, Cyber's solicitors, MinterEllison, sent a letter of demand to Genesis' solicitors demanding payment of the outstanding June and July invoices.

260 On 30 August 2022, Cyber asserted a security interest in the Yimiao Machines under the Personal Property Security Register pursuant to the Genesis/Cyber Agreement. It is common ground that Cyber wrongly asserted a first-ranking security interest over the Yimiao Machines and that Cyber did not have a security interest in any of the Yimiao Machines.

261 On 31 August 2022, Hardchrome issued a further invoice to Cyber for, inter alia, $69,707.64 (plus GST) for power usage for August 2022 at 175 Wellington Rd.

262 On 31 August 2022, the Court made orders which record in D of Other Matters that Cyber and Genesis undertake that they will not, including by their servants or agents, interfere with, remove from the premises, dispose of or otherwise deal with the Yimiao Machines.

263 On 1 September 2022, Origin Energy issued a business electricity invoice to ViPlus for $118,256.15 for services at 159 Wellington Rd for August 2022.

264 On 7 September 2022, there was an inspection of the Back Room and the Containers. At this inspection L7 Antminers were identified in the Containers. Mr Maolin Chen attended but was not involved in counting the machines in the Containers. Mr Maolin Chen did give evidence that by 7 September 2022 Star Mining's machines were 'fully counted' and that he was satisfied that they were all present. He gave evidence that the only machines that were missing were Yimiao Machines.

265 Mr Feng gave evidence that during the three inspections more than 800 Yimiao Machines were identified in the Mining Room and the Containers. He did not give a precise figure. The defendants ultimately accepted that 803 Yimiao Machines were removed from the Wellington Rd site sometime after they were delivered (ie, March 2022 to May 2022) and 29 August 2022 (ie, when the boxes in the Back Room were found to be empty). As a consequence, I find that approximately 803 Yimiao Machines were identified as missing at this date.

266 On 8 September 2022, Gilbert + Tobin sent an email to the parties stating in part:

Given your respective clients have not claimed any ownership in the Yimiao Equipment (as defined by the full list of serial numbers) and given they are located in containers at 175 Wellington Road, we have written to the occupier to gain consent to enter and collect this Equipment.

Please ensure that the power is disconnected forthwith.

267 On 9 September 2022, 3V's solicitors sent an email to, inter alia, Gilbert + Tobin stating:

(a) 3V makes no claim of any kind to any mining machines located in the containers ('Containers') which are situated upon Hardchrome's leased premises at 175 Wellington Road ('Hardchrome Premises');

(b) 3V is not in the possession or control of the Containers or their contents, or the Hardchrome Premises.

268 On 13 September 2022, Yimiao applied by summons for interlocutory orders for delivery up.

269 On 13 September 2022, Ms Fang sent an email to Mr Dajian Li in which she set out a link titled '_BTCTools-v1.3.3.exe'. Mr Thomas gave evidence that BTC Tools is a mining management tool that enables log files to be downloaded from cryptocurrency mining machines. The document commencing at 2FSCB7618 set out some further information relating to the functionality of BTC Tools, but shows it was downloaded on 27 October 2024 meaning its utility is limited.

270 On 30 September 2022, Hardchrome issued an invoice to Cyber for $68,122.91 (plus GST) for power usage in September 2022 at 175 Wellington Rd.

271 On 14 and 15 September 2022, the Court heard Yimiao's application for orders for delivery up. The Court made orders on 14 September 2022 that record undertakings by Star Mining, Cyber and Genesis that they will not, until the hearing and determination of this proceeding, interfere with or remove from the premises the Yimiao Machines.

272 On 1 October 2022, Origin Energy issued a business electricity invoice to ViPlus for $115,155.17 for electricity and other services provided at 159 Wellington Rd for September 2022.

273 In October 2022, the cryptocurrency mining ceased at the Containers for a period after Hardchrome noticed a lot of heat coming from its main switchboards. On 11 October 2022, an electrical engineer reported that the increased heat in the switchboards was caused by the 'computer load' coming from 'the two containers', and recommended that a detailed review needed to be undertaken to ensure the safety of the system and the persons operating it. On 20 October 2022 Mr McNaught forwarded an email from Hardchrome to Mr Dajian Li and Mr Bob Li with a report from Hardchrome on the electrical issues, and wrote 'FYI Re Hardchrome, they don't want them turned on again... until few issues sorted'. 3V was invoiced on 19 October 2022 for the investigation and reporting work carried out by Hardchrome's electrical engineer.

274 On 21 October 2022, Gilbert + Tobin sent a letter to the parties including 3V and Cyber requesting confirmation that power to all the Yimiao Machines had been disconnected.

275 On 31 October 2022, Hardchrome issued an invoice to Cyber for $70,683.43 (plus GST) for power usage at 175 Wellington Rd.

276 On 1 November 2022, Origin Energy issued a business electricity invoice to ViPlus for $136,153.24 for electricity costs and other services provided at 159 Wellington Rd for October 2022.

277 On 1 November 2022, Rosebank Trading invoiced 3V for a 'service fee' in October 2022 and attached a description of this as constituted by, inter alia, 'mining' on dates in October.

278 On 15 November 2022, the Court dismissed Yimiao's application for delivery up.

279 On 30 November 2022, Hardchrome issued an invoice to Cyber for $54,058.83 (plus GST) for power usage at 175 Wellington Rd.

280 On 1 December 2022, Rosebank Trading invoiced 3V again. There was no description of the work except that it concerned a 'service fee' for November 2022.

281 On 1 December 2022, Origin Energy issued a business electricity invoice to ViPlus for $141,541.66 for electricity and other services provided at 159 Wellington Rd for November 2022.

282 On 9 December 2022, Mr Huang sent an email from an email address ending '...@jocaustralia.com' to Mr McNaught and Mr Dajian Li attaching a copy of the Cyber Change of Ownership Agreement and providing bank details for the transaction. There is no evidence that any payment was made.

283 On 31 December 2022, Hardchrome issued an invoice to Cyber for, inter alia, $70,464.17 (plus GST) for power usage at 175 Wellington Rd.

284 On 2 January 2023, Origin Energy issued a business electricity invoice to ViPlus for $163,772.25 for electricity and other services provided at 159 Wellington Rd for December 2022.

285 On 31 January 2023, Hardchrome issued an invoice to Cyber for, inter alia, $82,473.34 (plus GST) for power usage at 175 Wellington Rd.

286 On 3 February 2023, the Court of Appeal allowed an appeal and made orders for the delivery up of Yimiao Machines bearing the serial numbers set out in the annexure to its order upon payment by Yimiao of $370,000 into court as security for undertakings given by it to the Court of Appeal. The sum of $370,000 was subsequently released by the Court of Appeal by order made 19 April 2023.

287 Since 1 February 2023, the Yimiao Group has also operated a collection of L7 Antminer units at a mine site located near Montreal, Quebec, Canada. Ms Zhou gave evidence that at first there were around 100 units operated at the site and that since mid-March 2023, the number of units increased to 300. Ms Zhou gave evidence that the Yimiao Group has generated a record which sets out the cryptocurrency mined by these units from 1 February 2023 to 6 July 2023.

288 On 13 February 2023, the last entry was made in the log files obtained from the Yimiao Machines (collected in late February 2023) that referred to 'F2Pool'.

289 On 14 February 2023, Gilbert + Tobin sent a letter to Cyber's then solicitors, Minter Ellison, concerning the arrangements for collection of the Yimiao Machines on 17 February 2023. On 16 February 2023, Ms Fang, as sole director of Cyber, wrote to Gilbert + Tobin stating in part:

Once the Court of Appeal has issued its reasons, it is our intention to review them carefully and to seek legal advice as to what, if any, further avenues of appeal may be available to us. However, until such time as those reasons have been made available to us by the Court of Appeal, we are not in a position to properly consider or position and seek advice.

On the basis of the above, we will be approaching the Court of Appeal as soon as possible, and in any event, within the next 7 days, and seeking a stay of the Orders (Stay Application). Any stay will be sought on the basis that it expires no later than 14 days after the Court of Appeal issues its reasons. This will give us sufficient time to obtain legal advice as to further avenues for appeal. In light of the above, we confirm that we will not be facilitating access to the 159-171 and 175 Wellington premises to enable your client to remove the equipment the subject of the Orders on Friday, 17 February 2023 as originally intended. In the event that your client has or will incur costs as a result of this, then we confirm that we are willing to meet those reasonable costs, upon being provided with satisfactory evidence of those cost having been incurred.

290 On 17 February 2023, the Court of Appeal granted leave for the issue of a warrant for delivery. On 21 February 2023, the Court of Appeal published its reasons in the appeal.[36]

291 On 21, 22 and 27 February 2023, Yimiao Machines were collected from the Wellington Rd site pursuant to the orders of the Court of Appeal. Mr Feng gave evidence that he attended the collection of the identified units:

(a) in the Mining Room on 21 February 2023 and the morning of 22 February 2023. He said that he climbed the ladder in the Mining Room but not all the way to the top and was not able to read any stickers on the top levels of the mining room; and

(b) in the Containers on the afternoon of 22 February 2023 and 27 February 2023. He gave evidence that he was able to see into both containers. He did not personally make sure that the top container was empty.

292 Mr Feng gave evidence that the collection was performed by about four contractors and supervised by Mr Georgiou of Connect IT, a business specialising in computer equipment installation relocation and repair. Mr Feng gave evidence that in addition, on behalf of Yimiao, he arranged a 7 metre truck operated by EWE to drive the Yimiao Machines collected from the Wellington Rd site to EWE's warehouse. Mr Feng also gave evidence that at the end of the collection of certain identified Yimiao Machines in the Mining Room on 22 February 2023 he made the following observations:

(a) Yimiao's contractors left less than 20 units of cryptocurrency mining machines including both L7 and S19 Antminers on the shelves being machines with serial numbers that did not appear on the annexures to the orders made by the Court of Appeal on 3 February 2023. Mr Feng said that these did not belong to Yimiao;

(b) the cryptocurrency mining machines that remained in the Mining Room were unplugged;

(c) none of those units had their serial numbers removed from the outer cases;

(d) the Mining Room shelving was otherwise empty.

293 Mr Feng gave further evidence that at the end of the collection of those identified units as held in the Containers on 27 February 2023, all units in the Containers were removed and the shelves in the Containers were otherwise completely empty (subject to the fact that he did not personally check the top container).

294 Mr Feng gave evidence that during this process Yimiao also took about 800 empty Bitmain boxes from the Wellington Rd site. Mr Feng accepted that the reference to 800 was an estimate. Mr Feng gave evidence that as a result of this collection a total of 795 units of the equipment were identified and retrieved. Mr Feng accepted that he did not count the machines himself. Mr Feng said that he did not see machines without a sticker at the inspections in February 2023. The defendants submitted that about 810 Yimiao Machines were collected in late February 2023.

295 Mr Georgiou also gave evidence of his attendances on site on 21, 22 and 27 February 2023. Mr Georgiou gave the following evidence:

1. The collection of the equipment in the Mining Room was completed around midday on 22 February 2023. Upon completion of the collection of L7 Antminer units at the Mining Room:

(a) the Mining Room was almost completely empty;

(b) there were approximately 10 to 12 unplugged units of a different model known as 'S 19' remaining on shelves at the Mining Room, and none of those units had their serial numbers removed;

(c) the Mining Room became almost silent which was very noticeable given that the Mining Room was very noisy when the equipment was connected to power.

1. I observed that various representatives of Yimiao were taking photographs of the Mining Room on 22 February 2023 A bundle of photographs from the Mining Room as taken on 22 February 2023 showing the state of the Mining Room on this day are attached ...
2. The collection of the equipment held in the two Containers at 175 Wellington Road Clayton broadly followed the same process above in relation to visual checking of the operational status and cataloguing and scanning serial numbers subject to the following:

(a) The two containers were stacked on top of each other. The equipment was held in shelves in the containers. Those shelves could be reached by a regular ladder. Therefore, the scissor lift was not used inside the Containers, but only on the outside of the entry to the Containers.

(b) On 22 February 2023, contractors of Connect IT firstly emptied the top container via the scissor lift.

(c) On 27 February 2023, the remaining collection was performed of the lower of the Containers without using a scissor lift.

1. I also recalls that following the collection, all cryptocurrency mining equipment that had been held in the Containers at 175 Wellington Road were removed and there were none remaining.
2. On 21, 23 and 28 February 2023, I emailed Mr Francis Qi (Francis) of G+T scanned lists of serial numbers of the machines that had been collected. Copies of those scanned lists of serial numbers and their cover emails are attached ...

296 The defendants did not challenge any of Mr Georgiou's evidence on the collection of the Yimiao Machines.

297 I find that the evidence of the collection of the Yimiao Machines establishes that 795 Yimiao Machines were collected by 27 February 2023 and that there were no Yimiao Machines in the Mining Room or the Containers.

298 Mr Feng also made a number of observations about his attendances on site in 2022 and 2023 as follows:

(a) he was required to fill a sign-in form in the front office of 159 Wellington Rd prior to being permitted to enter the premises;

(b) the Mining Room was secured by a padlock;

(c) the Mining Room was located in a large warehouse space occupied by another scaffolding business; and

(d) the Containers were secured by padlocks and were placed between the main building and a driveway of 175 Wellington Rd.

299 Mr Feng also gave evidence that since the collection of the Yimiao Machines in February 2023 Yimiao has arranged for some of the Yimiao Machines to be hosted with DC Two. Mr Feng said that he instructed DC Two to download the log files for those Yimiao Machines and that he received a number of historical log files. As all of the Yimiao Machines could not be hosted at DC Two given a limitation in capacity, some Yimiao Machines were held in a warehouse operated by EWE. Mr Feng gave evidence that he received further historical log files for the Yimiao Machines stored with EWE after instructing Mr Zhe Meng, who then arranged for EWE staff members, to download them.

300 Mr Thomas, then the Chief Technology Officer of DC Two, gave evidence that DC Two received about 500 Yimiao Machines in February 2023. He gave evidence that 200 Yimiao Machines were hosted at its premises in Werribee and 300 were hosted at their facility north of Perth. Mr Thomas said that the Yimiao Machines were ultimately sent back to Yimiao less than 12 months later. Mr Thomas said that Mr Feng told him he wanted DC Two to download the log files from the Yimiao Machines that they had 'gotten online', and gave evidence that the process for downloading log files is simple. Two technicians at DC Two downloaded the files except for a dozen or so that were downloaded by Mr Thomas personally. The log files were then provided, inter alia, to Mr Feng and Gilbert + Tobin, on 9 March, 20 March and 2 April 2023.

301 Mr Thomas gave the following evidence concerning the state of the Yimiao Machines over the time they were hosted by DC Two:

(a) around 5% were faulty at the beginning;

(b) once the Yimiao Machines began running over a period of time 'more faults began to appear' and the machines began 'failing left right and centre';

(c) 60-70% of the Yimiao Machines had a fault at some point;

(d) they were 'some of the worst miners we've ever seen';

(e) DC2 'ended up having to strip every single machine down, pull the boards out, clean them up as best we could individually to put them back together and just keep them running';

(f) the state of the Yimiao Machines was caused by them being run in an unfiltered and harsh environment;

(g) DC Two did repairs to the Yimiao Machines including swapping parts between the Yimiao Machines.

302 On 24 February 2023, Cyber appointed Mr Andrew Mattinson as administrator pursuant to director resolution.

303 In March 2023, Yimiao delivered some of the Yimiao Machines to EWE's warehouse at 11A Chifley Drive in Moorabbin. Mr Zhe Meng gave evidence that he downloaded log files from one Yimiao Machine and a colleague downloaded log files from the remaining Yimiao Machines. He said that he did not know the contents of the log files. He did not constantly observe his colleague undertake the work. He said that he did not know whether the software changed the log files. He gave evidence that Mr Feng gave him software to do this called BTC Tools. He gave evidence that the log files from 49 Yimiao Machines were sent to Mr Feng on 21 April 2023 and the log files from 99 Yimiao Machines were sent to Mr Feng on 24 April 2023. He said that none of the Yimiao Machines were broken but on the first day 15 Yimiao Machines could not be turned on 'as it stated in the email'. He gave evidence that there were two log files for each machine. He gave evidence that EWE now has very few of the Yimiao Machines in the warehouse.

304 On 1 March 2023, Hardchrome issued an invoice to Cyber for $48,885.52 (plus GST) for power usage at 175 Wellington Rd.

305 On 29 March 2023, Cyber entered into liquidation.

306 On 4 April 2023, the Court made orders by consent dismissing Cyber 's counterclaim against Yimiao, Genesis and Star Mining.

307 On 17 April 2023, Yimiao was granted leave to serve a subpoena on F2Pool Pte Ltd for documents relating to, inter alia, F2Pool accounts named 'Bjagte', 'clfmclfm68', 'Dxnb', 'Fqlx' and 'lc139798'. On 20 April 2023, F2Pool produced documents in response to the subpoena issued by Yimiao.

308 On 3 May 2023, the first entry was made in the log files obtained from the Yimiao Machines collected in late August 2023 that refers to 'F2Pool'.

309 On 5 May 2023, the last entry was made in the log files obtained from the Yimiao Machines collected in late August 2023 that refers to 'F2Pool'. The only 'F2Pool' account referred to in these log files is 'adelig'.

310 On 5 May 2023, the first entry was made in the log files obtained from the Yimiao Machines collected in late August 2023 that refers to 'ViaBTC'. These refer to the 'Qcars' and 'dahejap' pool accounts. There is no other evidence in relation to these accounts.

311 On 19 July 2023, the first entry was made in the log files obtained from the Yimiao Machines sampled in December 2023 and then collected in October 2024 that refers to 'ViaBTC'. These refer to the 'Qcars' and 'dahejap' pool accounts. There is no other evidence in relation to these accounts.

312 On 18 August 2023, Yimiao applied for ex parte search orders against 3V, Mr Dajian Li and ViPlus Diary. The Court made orders permitting searches to be undertaken at the Wellington Rd site and 67 Toora Jetty Road, Toora in the State of Victoria.

313 On 21 August 2023, the search order was executed at the Wellington Rd site and 67 Toora Jetty Road, Toora and L7 Antminers were identified and collected from the Wellington Rd site. Ms Coffey, the independent solicitor, gave evidence concerning the execution of the search orders. She gave evidence that a person named 'Bob', who I infer is Mr Bob Li, gave Mr McNaught keys and Mr Bob Li confirmed when asked by Mr McNaught that this was the only set for the Mining Room on the site. Ms Coffey took possession of 3 L7 Antminer units, being two units listed in sch A to the search order and one unit without a serial number. It is common ground that units of the Yimiao Machines were identified in the Mining Room on 21 August 2023 on execution of the search orders. On 21 August 2023, 119 L7 Antminers were identified in the Mining Room.

1. I understand that in August 2023, the further units of the Equipment returned to Yimiao (which were either seized by the independent solicitors as part of Court Orders or collected by Yimiao's contractors) were as follows:

(a) 15 units L7 Antminer that bear Yimiao's serial numbers as per the original list of Equipment prepared in 2022; and

(b) 19 units on which the stickers bearing serial numbers had been removed but which I understand are also units owned by Yimiao following further inspection and confirmation by the contractors at Connect IT.

1. These 34 units are currently held in the EWE's warehouse and are not operated by Yimiao. The 15 units referred to in paragraph 98(a) above were not sighted in the Mine Sites when the collection was undertaken in February 2023. If they had been in the Mine Sites on those dates, they would have been collected by Yimiao and its contractors. At no time prior to August 2023, did I see or learn from Yimiao's contractors or lawyers who attended the Mine Sites that any L7 Antminer had the serial number sticker removed. If any such unit was sighted, it would have been noted.

315 It is convenient to observe that in relation to the 119 L7 Antminers, in the period 21 August 2023 to 9 October 2024:

(a) 34 L7 Antminers were collected by Yimiao in late August/ September 2023;

(b) 20 L7 Antminers were inspected in December 2023 and then collected in October 2024;

(c) 9 L7 Antminers were collected in October 2024;

(d) 56 L7 Antminers were not collected.

316 I find that 34 L7 Antminers collected by Yimiao were Yimiao Machines. The defendants also accept that in the period on and from 21 August 2023 to 4 September 2023, 34 of the 119 L7 Antminers that were collected from the Mining Room were Yimiao Machines.

317 I find that 13 of the 29 L7 Antminers collected by Yimiao in October 2024 had parts from Yimiao Machines. These L7 Antminers had a serial number sticker that was affixed to the exterior that did not match the serial number of the Yimiao Machine part(s) in the machine. I refer to Annexure C to this judgment (pages 42 to 43).

318 I find that 56 L7 Antminers were not collected. In relation to these, 10 L7 Antminers were not Yimiao Machines as they were from the L7 8800 series and were not used by Yimiao at the Wellington Rd site. It cannot be inferred that all of the remaining 46 L7 Antminers were Yimiao Machines. This is accepted by Yimiao. Given the presence in the Mining Room of mining machines that were not Yimiao Machines, it cannot be inferred that all of the 46 L7 Antminers were Yimiao Machines. I find that it is likely that some of them may have had parts from Yimiao Machines, given that 13 of the 20 L7 Antminers inspected by Yimiao in December 2023 had parts from Yimiao Machines.

319 On 21 August 2023, the last entry was made in the log files obtained from the Yimiao Machines collected in late August 2023 that refers to 'ViaBTC'.

320 On 23 August 2023, there was a return of the search order before the Court. The Court made orders by consent that 3V and Mr Dajian Li deliver up 12 L7 Antminers identified in the affidavit of Mr Francis Qi of Gilbert + Tobin and any L7 Antminers at 159 Wellington Rd or any other premises owned or controlled by Mr Dajian Li or 3V that cannot be identified by a serial number. The orders also required that the independent solicitors deliver up to Yimiao three L7 Antminers removed from 159 Wellington Rd.

321 On 24 August 2023, Yimiao's representatives and contractors attended 159 Wellington Rd and collected 19 L7 Antminers which did not have serial numbers. Mr Feng attended the Mining Room together with Mr Georgiou of Connect IT, Ms McCudden and Mr Fang of Gilbert + Tobin, and contractors from EWE between 4pm and 5pm on 24 August 2023. Mr Feng was involved in identifying and locating any L7 Antminer machines that were held in the Mining Room and that had the serial numbers removed from the outer cases. Mr Feng said that he did not see machines without a sticker at the inspections in February 2023.

322 Mr Georgiou also gave evidence of his attendance on site on 24 August 2023. Mr Georgiou gave the following evidence:

1. I attended the Mining Room at 3:30pm on 24 August 2023. I met with two representatives from G+T, including Ms Christiana McCudden. I was again introduced to Mr Feng, the owner of Yimiao who was also there. There were others present with Mr Feng that I did not recognise but which I was later advised were from EWE the logistics company. Also present was a man that I understood was a representative of the site owner and who had the keys to allow them through the gate on the site driveway and into the Mining Room. I now understand this person was Mr Jonathan McNaught.
2. I observed that the Mining Room appeared to be back in operation, as I could hear the loud sound coming from it as soon as he entered the warehouse. When I entered the Mining Room, I observed that the room was reasonably full, and that the machines were up on most of the shelves and running. I estimate that the room was at 60-70% capacity.
3. I checked the equipment in the room against a list of serial numbers given to him by Christiana from G+T ...
4. I recalled that I had limited time during that attendance, so I reviewed the Mining Room by climbing the ladder that was leaning against the shelves. I reviewed what was possible and removed a number of machines that I could see were L7 Antminers and which were machines without serial numbers.

323 On 28 August 2023, Yimiao representatives and contractors attended 159 Wellington Rd and collected 11 L7 Antminers pursuant to the 23 August 2023 orders. Mr Georgiou gave the following evidence:

1. I returned to the Mining Room on 28 August 2023 together with Francis and Christiana from G+T and EWE Melbourne. Mr McNaught was also present together with another man. Mr McNaught opened the Mining Room. I again entered the Mining Room and using the ladder I checked all shelves and removed any L7Antimner units that bore a sticker with a serial number that matched the details on a list provided to him by Francis ... I also searched for any further L7 Antminers for which the serial number sticker had been removed. The machines were then loaded onto a pallet, photographed, checked by both parties, and taken to a warehouse in Moorabbin.

324 It is common ground that Yimiao collected 1 Yimiao Machine on 4 September 2023, being part of the 34 Yimiao Machines collected in August/September 2023.

3V moved Yimiao Machines back into the Mining Room

325 I find that 3V moved some of the Yimiao Machines, that were not present at the Wellington Rd site during the collections in late February 2023, back into the Mining Room in the period between February 2023 and August 2023.

326 First, during this period 3V had control and unfettered access to the Mining Room. I address this later in these reasons (judgment, [349]-[369]).

327 Second, I find that the Shiling Lease did not exist and, in any event, did not relate to the Mining Room. The statements by Mr Dajian Li and by Mr McNaught that it did are lies.

328 Mr Dajian Li made an affidavit on 15 September 2023 on behalf of the defendants as to the existence of the Shiling Lease, after Yimiao Machines had been discovered in the Mining Room on 21 August 2023 on the execution of the search warrant. In his affidavit, Mr Dajian Li states that '[s]ince February 2023, 3V entered into one lease agreement for the Mining Room with Shiling Huifenghai Trading Company'. Inconsistent with this, the affidavit then states '[t]he lease was entered into in March 2023 for a term of one year'. Mr McNaught also subsequently stated that he believed that Shiling only accessed the Mining Room to install their cryptocurrency mining machines at the end of March 2023. I refer to the following circumstances:

(a) Yimiao Machines had been discovered in the Mining Room on 21 August 2023 on the execution of the search warrant. These Yimiao Machines were not in the Mining Room, Back Room or the Containers in February 2023;

(b) the defendants informed the Court on 23 August 2023 that there was no tenant of the Mining Room;

(c) the defendants' solicitors informed Yimiao's solicitors on 24 August 2023 that it is instructed that there are 'tenants' of the Mining Room, but did not provide any name;

(d) on 1 September 2023, the Court ordered the defendants to file and serve an affidavit identifying any lease or licence arrangements which had been entered into since February 2023 in respect of the Mining Room;

(e) Mr Dajian Li then deposed to the existence of the Shiling Lease in an affidavit made 15 September 2023.

329 Apart from the Shiling Lease itself, which was not produced until 3 October 2023, there are no contemporaneous documents referring to it or evidencing it. The Shiling Lease itself states the date of commencement as 21 March 2023.

330 The insurance broker of the Wellington Rd site confirmed with 'Sally' of ViPlus Dairy the current tenants of 159 Wellington Rd on 3 November 2023 (during the term of the purported Shiling Lease). This did not include Shiling despite it having apparently been a tenant of the Mining Room for more than seven months and paying $25,000 per month plus electricity costs.

331 The Shiling Lease does not refer to the Mining Room. It does not even refer to 159 Wellington Rd. The rent payable under the Shiling Lease is stated to be $25,000 per month plus electricity usage of 13 cents per kw per hour. As a result, the rent payable by Shiling under the Shiling Lease depended upon the amount of electricity used by Shiling. This was wholly within the knowledge of 3V and not in the knowledge of Shiling. But 3V never sent any invoices to Shiling for the amount payable under the Shiling Lease, setting out the cost of the electricity.

332 There is no record of 3V receiving any payments from Shiling.

333 3V's Westpac bank statements record a number of payments from a number of persons but none of those payments are recorded as rent. The payments are recorded as 'temporary loans' in 3V's ledger.

334 Mr McNaught made an affidavit on 8 April 2024 that Shiling had continued to lease the Mining Room on a month-to-month basis from 22 March 2024 (the reference to '2023' in paragraph 14 of his affidavit is an obvious typographical error) and to pay rent. But, as established by the evidence of Mr Li Zhang, Shiling was deregistered no later than 29 January 2024.

335 Mr McNaught and Ms Fang (both former directors of Cyber) and Mr Dajian Li, Mr Bob Li and Avis Goh did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated whether Shiling was a tenant. It may be inferred that their evidence would not have supported the defendants' case.

336 Third, even if I am incorrect and the Shiling Lease existed and did relate to the Mining Room, then it does not support any inference that it was Shiling that brought the Yimiao Machines into the Mining Room that were identified in the Mining Room on 21 August 2023 on execution of the search orders. These Yimiao Machines were not present at the Wellington Rd site in February 2023. As a result, given that the Shiling Lease purportedly commenced on 21 March 2023, it was not Shiling that misappropriated those Yimiao Machines and then brought them back into the Mining Room during the term of the Shiling Lease. The defendants never submitted that Shiling brought the Yimiao Machines into the Mining Room that were identified in the Mining Room on 21 August 2023. In addition, the Shiling Lease is not a lease of the whole Mining Room. It is a lease of '400 set machine seat'. The Shiling Lease does not refer to the whole Mining Room. It does not give exclusive possession of the Mining Room to Shiling.

337 Fourth, Star Mining had been excluded from the Wellington Rd site since 25 July 2022.

338 Fifth, there is no evidence that Genesis attended the Wellington Rd site after 25 July 2022.

339 Sixth, Cyber had ceased to trade in July 2022 and was placed into administration on 24 February 2023.

Further background to the commencement of the trial in October 2024

340 Mr Kasun Madamperuma, a technician at Connect IT, gave evidence that he undertook a number of inspections of machines and performed certain tasks including downloading log files. He was not cross-examined. He gave evidence:

(a) on 6 September 2023, he was instructed by Mr Georgiou, also of Connect IT, to attend a warehouse at 11A Chifley Drive Moorabbin Airport and did so. He gave evidence that he sighted 19 L7 Antminer units which had the sticker with the serial numbers removed from their outer cases. He also identified one L7 Antminer unit which appeared to have had the sticker with the serial number removed from the front of the case, but saw that the sticker had been re-affixed to the right-hand side of that unit. For each unit he downloaded and saved to his laptop the log file for that unit and inspected each units control board and hash boards and recorded their numbers and provided this information to Yimiao's solicitors;

(b) on 12 September 2023, he was instructed by Mr Georgiou to attend the Moorabbin warehouse to download log files for the unit numbered 'NS-20' and the 14 units that bear serial numbers on the outer case and did so.

341 On 27 November 2023, the first entry was made in the log files obtained from the Yimiao Machines sampled on 20 December 2023 and then collected in October 2024 that refers to 'ViaBTC'. These refer to the 'Qcars' and 'dahejap' pool accounts. There is no evidence in relation to these accounts.

342 On 20 December 2023, pursuant to the orders of the Court made 1 December 2023, Yimiao, 3V and Mr Dajian Li selected a sample of 20 L7 Antminers to be inspected by Connect IT at 159 Wellington Rd. On 20 December 2023, Mr Kasun Madamperuma was instructed by Mr Georgiou to attend the 159 Wellington Rd site with him on 20 December 2023 to conduct the inspection of a sample of 20 L7 Antminers. In conducting this inspection on each unit, which were already off the shelves and sitting on the floor of the Mining Room, they undertook a number of tasks which included recording serial numbers of the units, extracting logfiles and recording each hash board serial number. I find that 13 of 20 of these had a part from a Yimiao Machines. I refer to Annexure C. They did not take them at this stage.

343 On 30 January 2024, Connect IT sent an email to the Court and the parties attaching the Connect IT L7 Antminer Inspection Report which contained the hash-board serial numbers obtained from the inspected L7 Antminers.

344 On 27 February 2024, Gilbert + Tobin sent a letter to Bitmain requesting information relating to the hash-board serial numbers obtained by Connect IT. On 1 March 2024, Bitmain sent an email to Gilbert + Tobin attaching a spreadsheet of information requested.

345 On 24 May 2024, a site view took place at the Wellington Rd site attended by me and my associates, as well as counsel and solicitors for Yimiao and 3V and Mr Dajian Li. The Court prepared a report of this site view.

346 Mr Georgiou gave evidence that he conducted a further inspection in October 2024 of 29 L7 Antminers at the EWE Warehouse. I infer that these had been obtained from the Wellington Rd site. I refer to the evidence of Mr Georgiou (FSCB 926-930, especially at [9]). The evidence does not establish these were Yimiao Machines. The serial numbers affixed to the L7 Antminers do not match the serial number of any of the Yimiao Machines. Yimiao described these as being 'L7 Antminers' and not as Yimiao Machines in its further and better particular filed 26 November 2024. I agree.

347 On 23 October 2024, the Court dismissed the claim against Star Mining by consent of Yimiao and Star Mining. It was not opposed by 3V or Mr Dajian Li. Ms Zhou said that she was told that Mr Xi Zeng, the Chief Executive Officer of the Yimiao Group, made the decision. Ms Zhou, when pressed in cross-examination about the circumstances of the dismissal, said she was not surprised that the claim was dismissed as Mr Xi Zeng said that Star Mining had no money. Ms Zhou said that she does not know whether any enquiries were made by Yimiao to investigate whether Star Mining's bank account (identified in the Second Yimiao/Star Mining Agreement) has any money in it. Mr Feng, in cross-examination, said that Yimiao is not pressing a claim against Star Mining as it does not have any money. He also said he did not know whether any investigation has been conducted to see whether Yimiao's machines had been taken to Star Mining's Sydney premises. Mr Feng said that there is no agreement with Star Mining, Mr Liu or any other company of Mr Liu, just that the proceeding is dismissed.

Access to the Mining Room, Back Room and Containers

349 I find that persons seeking to attend the Wellington Rd site and access the Mining Room had to make arrangements with 3V to do so. On 25 July 2022, Star Mining was excluded from the Wellington Rd site, including the Mining Room.

350 First, the Mining Room was a walled room within the warehouse at 159 Wellington Rd. It had a main door for access and a lock.

351 Second, the defendants admit that 3V was responsible for installing additional locks and a security swipe card (or similar system) and security cameras to 159 Wellington Rd.

352 Third, Mr Bob Li, a 3V employee, held keys to the Mining Room and access to the Mining Room had to be arranged with him. There is also evidence that, when Mr Georgiou visited the Wellington Rd site on 24 August 2023, a person he now understands to be Mr McNaught 'had keys to allow them through the gate on the site driveway and into the Mining Room'. This was at a time when he managed 3V and was joint Chief Executive Officer of 3V. He was not a director of Cyber at this time.

353 Fourth, I find that, by no later than 21 May 2022, persons seeking to access the Mining Room could only do so if this was approved by Mr Dajian Li. This is because on 21 May 2022, Mr Huang (then a director of Cyber) informed Mr Dajian Li that: '[n]o one can enter without your instruction.' I have already found that this was a reference to the Mining Room. The defendants did not dispute this evidence but submitted that it was not evidence of exclusion.

354 Fifth, the existence of the Cyber Lease does not negate a finding that if Cyber, or its customers, sought to access the Mining Room they had to, in fact, make arrangements with 3V to do so. I accept that Cyber had an exclusive right to possession and quiet enjoyment under the Cyber Lease. I also accept that Cyber and its customers had an implied right of way across the land at 159 Wellington Rd to access the Mining Room.

355 As I have already mentioned, Mr Bob Li, an employee of 3V, had keys to the Mining Room and provided access. Mr McNaught was also in possession of keys to open the Mining Room on 24 August 2023.

356 There is no evidence to support the defendants' pleaded case that Cyber held the keys to the Mining Room as it purchased a lock with four keys and that two of these were held by Mr Huang and one by Ms Fang. There is also no evidence to support the defendants' pleaded case that Avis Goh held a set of additional keys which was for back up purposes in case Cyber or its directors were not available to open the Mining Room for a Cyber customer. I also observe that on 21 May 2022, Mr Huang (Cyber) informed Mr Dajian Li that they will be entering the site and told him to tell Vincent about it. This is consistent with Cyber requiring 3V to provide it with access to the Mining Room.

357 There is no evidence to support the defendants' pleaded case that Cyber's customers could arrange access to the Mining Room with Mr Huang (Cyber) and that either he or a worker would supervise access.

358 As a result, it cannot, in these circumstances, be inferred that Cyber, in effect, asserted and sought to enforce its rights under the Cyber Lease at any time to access the Mining Room. It had to make arrangements with 3V to do so.

359 Sixth, pursuant to cl 6(t) of the Genesis/Cyber Agreement, Genesis was only entitled to access the Mining Room by providing sufficient prior notice to Cyber and obtaining Cyber's prior approval. There is no evidence that Genesis had a key to the Mining Room. In addition, as I have already said, Cyber did not have a key to the Mining Room. Mr Bob Li held a key to the Mining Room. Mr McNaught also held a key to the Mining Room, at least as at 24 August 2023.

360 Seventh, during Mr Feng's visits to the Wellington Rd site on 25 March 2022, 30 May 2022 and 8 July 2022 with representatives of Star Ming and Genesis they accessed the Mining Room. Mr Feng gave evidence that the door to the Mining Room had a lock. He gave evidence that he did not see Mr Dajian Li, Ms Fang or Mr McNaught. This evidence is consistent with the evidence of Mr Maolin Chen that Mr Bob Li held the keys to the Mining Room and access to the Mining Room had to be arranged with him. In addition, with respect to the attendance on 25 March 2022, Mr Tim Li (of Genesis) informed Mr Dajian Li and Ms Fang that he would be attending at the Wellington Rd site together with Mr Feng and Mr Xiaoliang Zeng. I infer that for each of Mr Feng's visits an arrangement was made with 3V and they attended and unlocked the Mining Room.

361 Eighth, I find that on 25 July 2022, Star Mining was excluded by 3V from accessing the Wellington Rd site, including the Mining Room, at any time. This is because on that day, Mr Maolin Chen was told by Vincent that 'the boss' (ie, Mr Dajian Li) had not permitted Mr Maolin Chen or 'his people' (ie, Star Mining) to go to 159 Wellington Rd or the container next door.

362 Finally, Mr McNaught and Ms Fang (both former directors of Cyber and joint chief executive officers of 3V) and Mr Dajian Li, Mr Bob Li and Avis Goh did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated whether persons wishing to attend the Wellington Rd site to access the Mining Room had to make arrangements with 3V to do so. It may be inferred that their evidence would not have supported the defendants' case.

363 I also find that 3V had unfettered access to the Mining Room from when it was established.

364 First, I have already found that persons seeking to attend the Wellington Rd site and access the Mining Room had to make arrangements with 3V to do so. This included Cyber.

365 Second, Mr Dajian Li, Mr Bob Li and Vincent attended the Mining Room. There is no evidence that they gave any notice to Cyber before entering the Mining Room. Cyber did not have any employees. There is no evidence that Mr Dajian Li, Mr Bob Li or Vincent gave notice to any director of Cyber before entering the Mining Room.

366 Third, the existence of the Cyber Lease does not negate a finding that 3V had unfettered access to the Mining Room. Cyber had an exclusive right to possession and quiet enjoyment under the Cyber Lease. However, 3V and its agent had a right to access the Mining Room at all reasonable times on reasonable notice in certain circumstances under the Cyber Lease. I have already found that:

(a) persons seeking to attend the Wellington Rd site and access the Mining Room had to make arrangements with 3V to do so. This included Cyber;

(b) there is no evidence that Mr Dajian Li, Mr Bob Li or Vincent gave any notice to Cyber before entering the Mining Room.

367 As a result, it cannot, in these circumstances, be inferred that Cyber, in effect, asserted and sought to enforce its rights under the Cyber Lease at any time to prevent 3V having unfettered access to the Mining Room.

368 Fourth, I find that Mr Dajian Li and other 3V employees had access to the Mining Room when the Acrow Gate was closed. Mr Dajian Li had the pin number for the Acrow Gate. The Acrow Gate is a gate outside the warehouses at 159 Wellington Rd that when closed prevents entrance to the warehouses containing the Mining Room and Back Room. It was closed at about 9pm one evening but there is no other evidence of when it was open or closed. Mr Dajian Li shared the pin number for the Acrow Gate with Mr Huang and Mr McNaught on 19 November 2021. There is no evidence that the pin number was then changed. When the Acrow Gate was closed persons could not access the Mining Room, or the Back Room, unless they had the pin number to open the Acrow Gate and additionally had access to the Mining Room or the Back Room. I infer it is likely that Mr Bob Li had access to the pin number for the Acrow Gate, given: he had the keys to the Mining Room; the below email; he also provided access to the Back Room; and that Mr Dajian Li shared the pin number with persons who did not even work for 3V, including Mr Huang. Mr McNaught also sent an email to Bob Li and Vincent on 2 October 2022 (when Mr McNaught was no longer a director of Cyber and was still joint Chief Executive Officer of 3V), forwarding correspondence from Acrow in which they asked Mr McNaught to 'please let everyone knows that they cannot access the warehouse at any time without advising us or at least come to the office and sign in please'. In forwarding the email, Mr McNaught states the following:

Bob - see below, assume you or Vincent were in over weekend?

Need to make sure follow correct access procedures - both Hardchrome and Acrow. If going there during times they are open - make sure sign in.

If out of hours - understand.

369 Finally, Mr Dajian Li and Mr Bob Li did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated whether 3V had unfettered access to the Mining Room. It may be inferred that their evidence would not have supported the defendants' case.

370 I find that persons wishing to attend the Wellington Rd site to access the Back Room had to make arrangements with 3V to do so from no later than 4 May 2022. On 25 July 2022, Star Mining was excluded from the Wellington Rd site, including the Back Room.

371 First, the Back Room is an area located within a warehouse at 159 Wellington Rd.

372 Second, the defendants admit that 3V was responsible for installing additional locks and a security swipe card (or similar system) and security cameras to 159 Wellington Rd.

373 Third, I find that at some time prior to April 2022, Mr Jian Chen (an owner of mining machines) accessed the Back Room without making arrangements with 3V to do so. But I find that from about April 2022, Mr Jian Chen was only able to access the Back Room by:

(a) requesting access from Mr Dajian Li; and

(b) accessing the Back Room together with Mr Bob Li, warehouse manager of 3V.

374 The defendants did not dispute this evidence but submitted that it was not evidence of exclusion from the Back Room. I accept that Mr Jian Chen was not excluded from the Back Room. But he could not access the Back Room without permission and accompaniment from about April 2022.

375 Fourth, I have already said that it is common ground that Cyber, with 3V's permission, has had access to the Back Room and found that this constituted a bare non-exclusive licence.

376 Fifth, there is no evidence to support the defendants' case that 3V's tenants could access the Back Room by requesting Avis Goh to open a roller door to gain entry to the Back Room and that Avis Goh would open the roller door and that, if the person was one of 3V's tenants, Avis Goh did not monitor or supervise such persons once they entered the Back Room.

377 Sixth, I find that prior to 4 May 2022, Mr Maolin Chen accessed the Back Room without making arrangements with 3V to do so. But I find that from 4 May 2022, Mr Maolin Chen was only able to access the Back Room by:

(a) requesting access from Mr Yuan (Genesis), who would then contact 3V and then inform Mr Maolin Chen of the date of access;[37]

(b) accessing the Back Room together with Mr Yuan and employees of 3V.[38]

378 I find it likely that it was Mr Dajian Li who was the person at 3V who decided whether to grant Mr Maolin Chen access. This is because he was the person who decided whether Mr Jian Chen could access the Back Room from April 2022.

379 Again, I accept that Mr Maolin Chen was not excluded from the Back Room. But he could not access the Back Room without permission.

380 Seventh, during Mr Feng's visits to the Wellington Rd site on 25 March 2022, 30 May 2022 and 8 July 2022 with representatives of Star Ming and Genesis they accessed the Back Room. He gave evidence that he did not see Mr Dajian Li, Ms Fang or Mr McNaught.[39] This evidence is consistent with the evidence of Mr Jian Chen and Mr Maolin Chen that I set out immediately above. I also find that for each of Mr Feng's visits on 30 May 2022 and 8 July 2022 an arrangement was likely made with 3V.

381 Eighth, I find that on 25 July 2022, Star Mining was excluded by 3V from accessing the Wellington Rd site, including the Back Room, at any time.

382 Ninth, there is no evidence whether any persons accessed other parts of the warehouse apart from the Back Room.

383 Finally, Mr McNaught and Ms Fang (both former directors of Cyber and joint chief executive officers of 3V) and Mr Dajian Li, Mr Bob Li and Avis Goh did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated whether some persons wishing to attend the Wellington Rd site to access the Back Room had to make arrangements with 3V to do so. It may be inferred that their evidence would not have supported the defendants' case.

384 Additionally, I also find that Mr Dajian Li had access to the Back Room when the Acrow Gate was closed. But this access was not exclusive. There were other 3V employees who had such access. I refer to my reasons above concerning access to the Mining Room when the Acrow Gate was closed which also relate to access to the Back Room.

385 On 25 July 2022, Star Mining was excluded from the Wellington Rd site, including the Containers.

386 First, I find that Avis Goh, the warehouse manager of 3V, had keys to the Containers from the time the Containers were installed at 175 Wellington Rd and locks were placed on them. The defendants admit that Avis Goh was located with a copy of the keys on or about 1 September 2022. The defendants admit that Avis Goh was an employee of 3V and its warehouse manager. But there is no evidence to support the defendants' case that insofar as Avis Goh had keys that was for back up purposes.

387 Second, there is no evidence to support the defendants' case that Genesis purchased and installed the locks to the Containers, held a set of keys to the locks when they were first installed to the Containers, and that a set of keys may have been held by Mr Yuan (Genesis) between 23 March 2022 and 28 July 2022.

388 The matters set out in the correspondence from 3V's solicitor to Yimiao's solicitors dated 9 September 2022 in which they stated that Cyber has the keys to the Containers if they need to be unlocked is inadmissible (see the Court's order made 18 November 2022). The defendants relied upon Mr Feng's (Yimiao) visits to the Wellington Rd site. But Mr Feng only visited the Containers once, on around 8 July 2022, together with Mr Xiaoliang Zeng (Star Mining), Mr Tim Li (Genesis) and Mr Yuan (Genesis). At that time the Containers were locked and remained so. This evidence, in fact, supports an inference that Star Mining and Genesis did not have keys to the Containers.

389 Third, I find that on 25 July 2022, Star Mining was excluded by 3V from accessing the Wellington site, including the Containers, at any time.

390 Fourth, McNaught and Ms Fang (both former directors of Cyber) and Mr Dajian Li did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated whether Cyber had keys to the Containers. It may be inferred that their evidence would not have supported the defendants' case that Genesis and/or Cyber had access to the Containers, including keys to access them.

391 I do not accept that Mr Dajian Li controlled access to other areas of 159 Wellington Rd. The only evidence relied upon by Yimiao concerns the provision of the code to the Acrow gate by Mr Dajian Li after hours (ie, about 9pm). The Acrow gate is a large gate that prevents access to the warehouse area of the land. There is no evidence that the Acrow gate was closed during business hours. The land at 159 Wellington Rd is a very large area of land with a number of warehouses and buildings. It is unlikely that Mr Dajian Li controlled access to other areas of 159 Wellington Rd.

392 There were cameras monitoring the entrance to the Mining Room. I find these were installed by 3V as they were installed in its warehouse. Mr Feng gave evidence that on or around 25 March 2022 he observed several security cameras in front of the Mining Room.

393 There were cameras in the bottom container. These were installed by Star Mining.

394 Yimiao also relied upon the report of the Court's visit to the Wellington Rd site concerning the location of other cameras, but that was, in any event, in 2024 and it cannot be inferred that these cameras were present in 2022.

Mr Dajian Li's physical work in in the Mining Room

395 Mr Dajian Li oversaw some work in the Mining Room including work involving forklifts and working at heights. This is because:

(a) Mr Dajian Li directed, inter alia, Mr Bob Li and Vincent on occasion in making changes to the positions of the machines and in putting machines on racks and removing them from racks.

(b) on 23 March 2022, during a WeChat exchange involving Vincent, Mr Huang and Mr Dajian Li, Mr Huang stated that Mr Jian Chen had just called and was arranging for someone to come and continue the installation of his machines; Mr Huang warned about the risk of using a ladder and then Mr Dajian Li said that '[f]orklifts can enter. If you need it, let me know in advance.';

(c) on 7 May 2022, during a WeChat exchange involving Mr Tim Li and Mr Dajian Li, in the context of moving machine to the Containers, Mr Dajian Li stated: 'I'll have him collect the keys and remove the forklift key.' The relevance of removing the forklift key is not apparent from the WeChat exchange;

(d) Mr Daijin Li used a forklift to put machines on the racks in the Mining Room in about April or May 2022.

396 But the evidence does not establish that Mr Dajian Li oversaw all work that involved forklifts or working at heights. The evidence also does not establish that Mr Dajian Li was responsible for overseeing such work. First, the contemporaneous documents I have referred to above do not support such a finding. Second, the fact that Mr Dajian Li oversaw some work involving forklifts does not mean that it may be inferred that he oversaw all work involving forklifts. Finally, there is evidence that forklifts were used when Mr Dajian Li was not present. Mr Jian Chen gave detailed evidence that Mr Bob Li used a forklift to move his machines from the Back Room to the Mining Room. He gave evidence that some other persons were present but did not identify Mr Dajian Li. Mr Dajian Li was present when Mr Jian Chen's machines were being relocated within the Mining Room but there is no evidence he was present when they were moved by forklift from the Back Room to the Mining Room.

397 There is no evidence that Mr Dajian Li gave directions to Avis Goh in respect of installation of mining machines at 159 Wellington Rd.

398 There is no evidence that Mr Dajian Li gave directions in respect of the installation of all cryptocurrency mining machines at 159 Wellington Rd. This is not pleaded and is not supported by the evidence.

399 There is evidence that Mr Dajian Li was involved in some decision making in relation to the placement of the machines on the racks. For example, I have already found that in about April/May 2022, Mr Dajian Li spoke with Mr Jian Chen about the placement of his mining machines in the Mining Room.[40]

Connection and payment of electricity at the Wellington Rd site

400 The cost of electricity incurred with respect to the whole of 159 Wellington Rd did not significantly decrease after 25 July 2022 until about February 2023. I refer to Tab 6 of Yimiao's Aide Memoire (Annexure D).

401 Mr Dajian Li procured power to be supplied to 159 Wellington Rd. ViPlus paid the invoices and 3V assumed a liability to reimburse the amounts paid by ViPlus. Mr Dajian Li, as a director of 3V and of Vi Plus Dairy, procured these arrangements. The defendants admit that 3V was responsible for the connection of electricity to the 159 Wellington Rd Site and ViPlus had no involvement and that Mr Dajian Li acted in his capacity as a director of 3V at all times.

402 It is common ground that the Cyber Lease provided that Cyber was responsible for all charges associated with the consumption of electricity supplied to the Mining Room. Cyber also did pay 3V for some electricity provided to the Mining Room prior to 25 July 2022.

403 I find that after 25 July 2022, Cyber did not pay 3V for electricity to the Mining Room. This is because:

(a) Cyber accepted that its bank statements do not evidence any payment by Cyber to 3V of an electricity invoice after 20 May 2022. It did not pay the 3V invoices for electricity from May 2022 onwards;

(b) the defendants submitted that they do not dispute that Cyber failed to make payment from its bank account of the bulk of the Cyber invoices.

404 I find that 3V maintained the electricity to the Mining Room even after Cyber had failed to pay for the costs of electricity. The defendants admit that 3V maintained the electricity to the Wellington Rd site between August 2022 and February 2023. This is also consistent with the fact that Cyber ceased to trade in July 2022. There is no evidence to support the defendants' case that 3V maintained the electricity supply to the Wellington Rd site, including the Mining Room, for the purposes of maintaining and preserving the integrity of the Yimiao Machines in accordance with the orders made by the Court on 31 August 2022. Critically, the amount invoiced by 3V to Cyber did not decrease after 25 July 2022. The electricity costs in June 2022 were $114,472.45 (CB1897). The electricity costs for August 2022 were $112,728.15.

405 I also find that the invoices issued by 3V to Cyber after 25 July 2022 for electricity costs were not issued contemporaneously and were backdated. As a result, I find that 3V did not pass on the electricity liability it incurred after 25 July 2022 to Cyber.

406 First, invoices dated 1 October 2022 (for July to September), 1 November 2022 (for October), 1 December 2022 (for November) and 31 December 2022 (for December) have consecutive invoice numbers (CB2697, CB2696, CB2698, CB2724, CB2741 and CB2809). I find that they must have created at the same time. This is in contrast to the invoices dated prior to 25 July 2022, the majority of which do not have consecutive numbers (CB1525, CB1526, CB1645, CB1725, CB1812 and CB1897).

407 Second, the invoice dated 31 December 2022 has an invoice number of 783 whereas invoice dated 1 December 2022 (in relation to other matters) has an invoice number of 784.

408 Third, the invoices issued by 3V to Cyber for July to December 2022 were entered into 3V's general ledger on 1 February 2023.

409 Fourth, the defendants submitted that the treatment of the Cyber invoices are recorded, in part, in Cyber's general ledger. The relevant extract of Cyber's general ledger is attached to an email from Ms Weng of ViPlus (ie, 'Sally') to Mr McNaught, however this email is dated 20 February 2023.

410 Fifth, the defendants submitted that the submission that the Cyber invoices dated after 25 July 2022 are, in effect, a sham is inconsistent with the contemporaneous documents. But they did not identify any documents apart from the documents I have already addressed (ie, the Cyber general ledger).

411 Sixth, as at 2 March 2023, Ms Fang, in her capacity as a director of Cyber, stated that Cyber did not owe any money for electricity in the form titled 'Report on Company Activities and Property'.

412 Finally, Mr Dajian Li did not give evidence. His evidence would have elucidated whether 3V paid for the electricity supplied to the Mining Room after 25 July 2022 and whether the invoices were backdated. It may be inferred that his evidence would not have supported the defendants' case.

413 The cost of electricity incurred with respect to the Containers at 175 Wellington Rd did not significantly decrease after 25 July 2022. I refer to Tab 6 of Yimiao's Aide Memoire (Annexure D).

414 Cyber paid Hardchrome for the electricity supplied to the Containers but made its last payment on 19 July 2022. 3V then paid Hardchrome for the electricity supplied to the Containers. Importantly the defendants admit that:

(a) it was 3V who maintained the electricity supply at the Containers between about August 2022 and February 2023;

(b) 3V was responsible for, and managed, the payment of electricity supplied to the Containers.

415 First, Hardchrome rendered invoices to Cyber for electricity supplied to the Containers in the months of May 2022 to February 2023. Cyber was liable to pay each of these invoices.

416 Second, the last payment made by Cyber to Hardchrome for electricity was on 19 July 2022.

417 Third, 3V then paid Hardchrome for electricity supplied to the Containers after June 2022. This included 3V making direct transfers to Hardchrome and also setting off amounts owed to 3V by Hardchrome against the cost of electricity owed by Cyber to Hardchrome.

418 Fourth, Cyber's liability to pay electricity supplied to the Containers from July 2022 onwards is recorded in Cyber's general ledger as a 'Loan from 3V' (see 2FSCB A6316-‍6318).

419 Fifth, there is no evidence that 3V issued any invoices to Cyber for electricity supplied to the Containers. The invoices that were purportedly issued by 3V to Cyber concerned electricity supplied to the Mining Room under the Cyber Lease and not the Containers.

420 Finally, as I have already said, there is no evidence to support the defendants' case that 3V maintained the electricity supply to the Wellington Rd site, including the Containers, between about August 2022 and February 2023 for the purposes of maintaining and preserving the integrity of the Yimiao Machines in accordance with the orders made by the Court on 31 August 2022.

421 Yimiao claims that 3V is liable to it in bailment. No claim in bailment is made against Mr Dajian Li.

422 A bailment arises where possession of a chattel is transferred from one person, the bailor, into the possession of another person, the bailee, upon a promise, express or implied, that the chattel will be re-delivered to the bailor or dealt with in a stipulated way.[41] The bailee must also have some degree of actual or imputable knowledge of the existence of the chattel before a bailment can arise.[42] The relationship of bailment derives from an assumption of responsibility for the goods by the bailee. In Mallonland Pty Ltd v Advanta Seeds Pty Ltd, Edelman J said in obiter:

Like a contractual duty, an assumption of responsibility has long been recognised as arising from an expressed undertaking or an undertaking implied from conduct or office. But, unlike modern contractual duties, an assumption of responsibility can arise without any consideration. For instance, in actions against gratuitous bailees (and not merely contractual bailees) for a failure to return goods, the courts recognised an assumed duty of the bailee which, 'like the action against the surgeon or the carpenter', was based 'on an undertaking (an assumpsit)' and was, in effect, an action 'for failure to perform a promise to return'.[43]

423 The parties did not refer the Court to any authority in which a person who took possession of goods by an intentional act or dealing that is inconsistent with, or repugnant to, or an infringement of, the rights of an owner of the goods, was found to be a bailee. Most of the decisions concerning such a wrongful possession of goods concern, not surprisingly, claims in conversion, detinue and trespass to goods.

424 In Mazullah Khan v McNamara the defendant, a police constable, arrested the plaintiff on a charge of assault, and seized four camels that were in the plaintiff's possession.[44] The charge of assault was withdrawn and substituted with a charge of robbery of the camels. The robbery charge was dismissed, and the plaintiff demanded the return of the camels, but one of the camels had died and could not be returned. The cause of action relied upon by the plaintiff is not expressly identified. It is described, however, as an action to recover the value of a camel which had been wrongfully taken from the plaintiff and not returned. This does not describe an action for breach of bailment. It describes an action in conversion. The defendants' defence was that there was a gratuitous bailment. McMillan J (with whom Rooth J agreed) of the Full Court of Western Australia rejected the defendants' defence and said:

He was never holding the camels as a gratuitous bailee at the request of the plaintiff, but was holding them all the time against the plaintiff in order that the matter should be disposed of. The result, therefore, is that the defendant had taken possession of the camels without any authority. He was doing a wrongful act. Unfortunately one of the camels was lost, and ultimately found dead. The position of the plaintiff seems to me to be clear. Having been wrongfully deprived of his property, he is entitled to the value of it at the date of the wrongful act.[45]

425 McMillan J also did not expressly identify the cause of action. But it is clear that it was not an action for breach of bailment. This is because McMillan J expressly rejected a gratuitous bailment and did not identify any other bailment. There was clearly no bailment for reward. In addition, the finding that the defendant was holding the camels 'against the plaintiff' is inconsistent with a bailment. The learned authors of Palmer on Bailment, however, refer to this decision and state:

McMillan J held on the facts that the constable never held the camels as gratuitous bailee of the plaintiff but took and retained custody of his own initiative in the belief that they might belong to a third person. He therefore awarded the plaintiff the value of the camel at the date of the seizure. The grounds of judgment appear to have been that a 'bailee' who acquires possession by a wrongful act is liable for any damage or depreciation suffered by the chattel while it continues in his possession. The court acknowledged that the position would have been different if the defendant, having originally taken possession by a wrongful act, had continued to hold the camels at the request of the plaintiff; in such a case he would have been a gratuitous bailee.[46]

426 For the reasons I have given, I disagree with the learned authors that the grounds of judgment appear to have been based upon a bailment.

427 The learned authors of Palmer on Bailment also propose the 'fairest solution' as to the role of bailment in circumstances of wrongful possession of goods, while acknowledging the potential overlap with a claim in conversion:

The fairest solution seems to be as follows: that a person who knows his possession is wrongful should be responsible for all losses resulting from that possession, irrespective of his subsequent fault; that a person who intends to take possession of another's goods but does not know the possession is wrongful should owe the duties of a bailee for reward, in that he must generally be assumed to have seized the goods for a purpose beneficial to himself; that a person who intends to take possession, but under an innocent and reasonable mistake that the goods are his own or those of somebody who has authorised him to take possession, should not be liable as a bailee at all; and that a person in the third category who later discovers the true ownership should be liable as a gratuitous bailee. Liability for conversion would, of course, exist independently of these considerations, for it does not depend upon an intention to convert; moreover, it can scarcely be said that someone who by his own act takes possession of goods should be considered an involuntary bailee. In most cases of wrongful dispossession this remedy might be sufficient to protect the rights of the party dispossessed without recourse to the principles of bailment at all.[47]

428 Whether it is the 'fairest solution' is not relevant to whether a bailment does, in fact, arise.

429 The learned authors also state that a thief is a bailee as they are knowingly and voluntarily in possession of goods that belong to another.[48] But the person in possession (ie, the thief and putative bailee) must obtain possession upon a promise that the chattel will be re-delivered to the bailor or dealt with in a stipulated way.[49] That is, there must be an assumption of responsibility for the chattel. With respect, the learned authors' approach overlooks this critical element of a bailment.

430 Another relevant authority, referred to in Palmer on Bailment, is the decision of the Manitoba Court of Appeal in Kowal v Ellis.[50] The plaintiff found and then took possession of a $450 pump lying unattached on the defendants' land. It seems the defendant recovered the pump, and asserted that, as a landowner, he had a superior right to possession of the pump, despite not being its owner. The Court of Appeal held that the plaintiff was a 'bailee by finding', and that the defendant had no better right to possession. O'Sullivan J said:

I start from the premise that a finder of a chattel who takes it into his possession becomes a bailee by finding (provided, of course, that a finder does not intend to deprive the true owner of his right to it).[51]

431 The learned authors of Palmer on Bailment disagree with the approach in Kowal v Ellis, and say:

It is occasionally suggested that a person who assumes possession of goods with a dishonest and criminal intention of misappropriating them is not a bailee: see, eg, Kowal v Ellis (1977) 76 DLR (3d) 546 at 547 per O'Sullivan JA. But there seems no reason, given the voluntary nature of such possession, why the owner should not be entitled to treat the possessor as a bailee for the purposes of enforcing a duty of care against him (as opposed, say, to suing in conversion) if he so chooses: cf Finlayson v Taylor, The Times, 14 April 1983; Burns v Roffey (Unreported, Sir Douglas Frank QC, 16 March 1982) in both of which an occupier who wrongfully excluded the chattel owner from access to goods on the occupier's premises was treated as a bailee of the goods.[52]

432 With respect, this is not correct. There must be a reason for the putative bailee's duties to arise, rather than no reason for them not to.

433 In the present case, it is also common ground that Yimiao has had an immediate right to possession at all material times. In Penfolds Wines Pty Ltd v Elliott (Penfolds Wines), Dixon J (as he then was) considered the rights of an owner with an immediate right to possession of goods who is dispossessed by a stranger.[53] His Honour referred to the learned authors of Possession in the Common Law as follows:

It is, perhaps, desirable to set out a little of Mr Justice Wright's text: - 'In some cases,' he says, 'an owner of a thing who has never yet acquired the possession of it; or an owner who has parted with the possession, is nevertheless, in virtue of his right to possession, entitled to sue or prosecute a stranger who takes the thing; and it is of much practical and theoretical importance to discover in what cases a mere right to possession suffices for this purpose, and on what ground. There are expressions in some cases and in text books ... to the effect that a person with a right to possession of a thing, though without possession, can always maintain trespass, as (except where the right is suspended, eg in a bailment for a term - Gordon v Harper) he certainly can trover or detinue, against a stranger who takes the thing: and if this is correct the gist of the action of trespass must be the wrong to the right to possession. But it is difficult to see how there can be a forcible and immediate injury vi et armis to a mere legal right; and there are some parts of the law of trespass and theft which are inexplicable on such a view [...]'[54]

434 The learned authors of Possession in the Common Law do not identify an action in bailment. Similarly, in Penfolds Wines, Williams J also said:

It is pointed out in Salmond on Torts, 10th ed (1945), pp 279, 280, by WTS Stallybrass, that there are three distinct methods in which one man may deprive another of his property. 1, by wrongly taking it; 2, by wrongly detaining it; and 3, by wrongly disposing of it and that corresponding to these three modes of wrongful deprivation there were three distinct forms of action provided by the law : - 1, trespass de bonis asportatis, for wrongful taking; 2, detinue, for wrongful detention; and 3, trover, for wrongful conversion (that is to say disposal).[55]

435 Again, there is no reference to an action in bailment.

436 In a 1966 article titled 'The Essence of a Bailment: Contract, Agreement or Possession?', Alice Erh-Soon Tay, then of Lincoln's Inn, said:

The possession of the bailee is and must be distinguished from the possession of the owner and that of the thief by the fact that the bailee as bailee makes no accompanying claim to or assertion of dominium, but accepts a continuing interest of a previous owner or possessor.

...

The primary duty of a man who takes into his possession the chattel of another without challenging the other's title is the same whether he be a hirer, a finder or an 'involuntary' bailee: he has a duty to safeguard and redeliver. It is for this reason that the term 'bailment' is most conveniently used not to cover delivery upon agreement, but to refer to that general situation in which a man has duties arising from his temporary possession of another's chattel.[56]

437 In my view, having regard to the matters I have addressed, if a person takes possession of goods by an intentional act or dealing that is inconsistent with, or repugnant to, or an infringement of, the rights of the owner of the goods, that person is not a bailee. No relationship of bailment arises. It cannot be inferred that there is an implied promise that the goods will be re-delivered to the owner or dealt with in a stipulated way.[57] This is because the person's act of dealing with the goods is inconsistent with such a promise. There is no assumption of responsibility for the goods. The person may have converted the owner's goods. But the goods are not bailed.

438 In this case, Yimiao did not rely upon any sub-bailment, but it is common ground that Star Mining and Genesis were bailees at all relevant times. This was Yimiao's case and it was admitted by the defendants. In those circumstances, it is convenient to briefly state the law on sub-bailment. In Premier Group Pty Ltd v Followmont Transport Pty Ltd, the Queensland Court of Appeal said:

1. In this case where there are four parties and none of the bailments have determined, each of the superior bailors have concurrently the rights of a bailor against the fourth person, who in this case is the appellant. The respondent became a bailor of the goods as well as remaining a bailee to the owners. Its bailee, Express, in turn bailed the goods to the appellant. It was conceded that the appellant knew about the respondent's being a superior bailor to itself. There was therefore a chain of bailments. The Pioneer Container puts it beyond doubt that a sub-bailee of goods is liable as bailee to the owner of goods even though there is no contractual relationship between them, where the sub-bailee knows or is taken to know of the owner. In this case the sub-bailee had actual knowledge of the existence of the bailor who was not the owner. As Diplock LJ put it in Morris v CW Martin & Sons Ltd, it brings into existence 'the relationship of bailor and bailee by sub-bailment'. It is because of this that the owner can prove the bailment upon which he relies when he proceeds directly against the sub-bailee.
2. In this case the owners of the goods are the bailors of the goods to the respondent, Premier, the respondent is the bailor of the goods to Express, who is the bailee to Premier and sub-bailee to the owner. Express, in bailing the goods to the appellant Followmont, is bailor to Followmont who is a bailee to Express, a sub-bailee to the respondent Premier and sub-sub-bailee to the owners. The ultimate bailee, the appellant in this case, is in a bailment relationship with each of the bailors of the goods, the owners, Premier and Express.[58]

439 In this case, there was much dispute as to whether 3V had possession of the Yimiao Machines. In Hocking v Director-General of the National Archives of Australia, Edelman J said:

[F]or a property right to arise by bailment the bailee 'must have both the intention and the practical means to exercise independent control over the item that would exclude the bailor's own possession and control'.[59]

440 In Strange Investments (WA) Pty Ltd v Coretrack Ltd, Pritchard J said:

Possession of a chattel is evidence of ownership of that chattel - so much so that possession of a chattel is regarded as generating a rebuttable presumption of ownership. Consequently, it is generally accepted that possession is the most important of the incidents of ownership of a chattel. The law of possession 'is ancient and fairly complicated', and the meaning of possession varies in different areas of the law. In the case of tangible chattels, possession (which is sometimes called actual or de facto possession) usually requires physical possession of the good, plus the intention to possess that good (that is, to exclude others from the exercise of control over it). However, a person who does not actually have physical possession of a good may nevertheless be held to be in possession of the good if he or she has control over that good, together with the requisite intention. This is sometimes referred to as legal possession or constructive possession. Alternatively, a party may not have actual possession but may have a right to immediately acquire physical possession, which is referred to as a right to possession.[60]

441 Given that the Yimiao Machines were on land owned by 3V and also leased to Cyber (Mining Room) and Hardchrome (Containers), and Cyber had a licence to use the Containers, the parties addressed possession of land, and whether a landlord may be in possession of chattels on the leased land.

442 In Bayport Industries Pty Ltd v Watson, Ashley J said:

The law is clear enough. A number of the basic principles were summarised by Slade J in Powell v McFarlane. Thus, pertinently:

It will be convenient to begin by restating a few basic principles relating to the concept of possession under English law:

(1) In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land, as being the person with the prima facie right to possession. The law will thus, without reluctance, ascribe possession either to the paper owner or to persons who can establish a title as claiming through the paper owner.

(2) If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (animus possidendi).

(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession ... The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed... It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession... Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.

(4) The animus possidendi, which is also necessary to constitute possession,... involves the intention, in one's own name and on one's own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow... the courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisition animus possidendi and consequently as not having dispossessed the owner.[61]

443 A lease creates an interest in land and the legal right to exclusive possession against all others, including the landlord.[62] A reservation to a landlord of a limited right of entry, for example to repair, is not inconsistent with a grant of exclusive possession.[63]

444 The learned authors of Palmer on Bailment state:

Most bailments are created or discharged upon premises occupied by the bailee and this fact, whilst not an essential feature of bailment, is clearly a strong pointer to change in the bailor's possession. However, the mere leaving or depositing of chattels upon land occupied by another, even with his knowledge or at his invitation, does not necessarily make the occupier a bailee. The law has repeatedly drawn a distinction between bailments and licenses; the former requiring a transfer of possession and a voluntary acceptance of the common law duty of safekeeping, the latter amounting to no more than a grant of permission to the user of a chattel to leave it upon the licensor's land on the understanding that neither possession shall be transferred nor responsibility for guarding the chattel accepted.

...

One of the most succinct (and sonorous) statements of the overall distinction is that given by Sherburne J in the Vermont case of Zweeres v Thibault in 1942:

Where personal property is left upon another's premises under circumstances from which either relation might possibly be predicated, the test is whether or not the person leaving the property has made such a delivery as to amount to relinquishment, for the duration of the relation, of his exclusive possession, control and dominion over the property, so that the person upon whose premises it is left can exclude, within the limits of the agreement, the possession of all others. If he has, the general rule is that the transaction is a bailment. On the other hand, if there is not such delivery and relinquishment of exclusive possession, and his control and dominion over the goods is dependent in no degree upon the co-operation of the owner of the premises, and his access thereto is in nowise subject to the latter's control, it is generally held that he is a tenant or lessee of the space upon where the goods were kept . . . . In a doubtful case consideration should be given to the manifested intention of the parties whether the care of personal property or only the rental of a place to put it was contemplated.[64]

445 The learned authors of Palmer on Bailment also state:

The continued or intermittent presence of the owner of goods will clearly militate strongly against any transfer of possession, at least where those goods are left on an area specifically assigned to his use. A different result may obtain where he is away for a long period and the goods are effectively under the occupier's continuous control. Such a case was Blount v War Office, where the defendants, who had requisitioned a house, allowed the plaintiff to store property in one of the rooms, which was locked for the purpose. They were held to be bailees of the goods and liable when some of them were stolen.[65]

446 The defendants submitted that Yimiao's claims proceed on the misconception that control of access to the Wellington Rd properties is relevant to determining possession of the Yimiao Machines. They referred to three authorities in support of this proposition.

447 First, in Wilmers and Gladwin Pty Ltd v WAL Building Supplies WAL occupied part of a large warehouse pursuant to a sub-lease.[66] Space in the warehouse had been marked off into several storage bays, but without any physical partitions. Some of the storage bays contained WAL's goods, and WAL allowed various other persons to store their goods in the space sub-leased by WAL. Wilmers rented two storage bays from WAL and stored bales of cardboard in them. Access to the warehouse was through a single locked door to which WAL held the key, meaning Wilmers had to arrange with WAL to put goods into its allotted bays. When access was requested, WAL's employee would unlock the main door and then assist Wilmers with taking goods into their storage bay. When the rental arrangement was terminated, Wilmers discovered that some of its goods were missing, and sued WAL on the basis that it was a bailee. The trial judge found that WAL had not taken possession of the goods and thus was not a bailee. The goods were stored in open but specified bays in the warehouse, and Wilmers had repeatedly exercised its rights under the agreement to enter, use and occupy those bays. While Wilmers had to arrange with WAL to exercise their right of access to the storage bays, their access was not limited in a way that suggested Wilmers had forfeited control of the goods. The Full Court of New South Wales unanimously dismissed Wilmers' appeal, and in obiter said '[i]f, of course, in strict law the relationship of lessor and lessee had been created in regard to these two bays in which the goods were stored, no question of the defendants' liability could arise'.[67] But this was said with regard to the circumstances of that case. Wilmers rented its storage bays under an informal oral agreement, had in fact accessed and used those storage bays, and the degree of WAL's control over access to the bays was not sufficient to give it possession of the goods.

448 Second, in Makower, McBeath & Co Pty Ltd v Dalgety & Co Ltd, the plaintiff was the owner and consignee of 25 cases of silk, and the defendant, a wharfinger, received the cases upon their arrival by sea, and an agent of the defendant stored them in a locked cage that was owned by the port operator.[68] The defendant was able to unlock one of the locks on the cage, but the other lock could only be opened using a key that was held by a customs officer. In effect, both the defendant and the customs officer had to coordinate for the defendant to access the goods in the cage. One of the cases of silk was apparently stolen before the plaintiff could collect it, and the plaintiff sued the defendant for breach of bailment and detinue. McArthur J found that the defendant had possession of the plaintiff's goods for the entire period that they were stored inside the locked cage, and was a bailee in respect of them.[69] This was so even though a third party, the port operator, had possession of the land comprising the cage, and even though a customs officer held one of the keys that were necessary to access it. The customs officer's control of access to the cage restricted the defendants' ability to freely access the cases of silk, but this control was limited, and for the purpose of ensuring the payment of customs duties rather than for the customs officer to take the silk for his own purposes. It was the defendant who had possession of the goods, because they had the practical means (a key) to access and take away the goods (subject only to the payment of customs duties) and the intent to keep those goods safe until the plaintiff came to collect them. The limited control held by the customs officer did not deprive the defendant of its possession of the goods, and thus the defendant was a bailee.

449 Third, in Tinsley v Dudley the plaintiff visited a pub and left his motorbike in a covered outdoor yard on the property.[70] The yard 'was one to which access could readily be had from the street by anyone' and the publican's invitation for patrons to leave vehicles in that place was a mere invitation rather than an undertaking to keep the vehicles safe.[71] Dudley's lack of control over access to the yard was not an irrelevant factor in determining who had possession of the bike, instead it was a significant factor in the finding that Dudley had not taken possession of it once it was placed in the yard.[72]

450 In short, these three authorities do not support the defendants' submission. The degree of control over access to the place that goods are stored is a relevant factor in determining whether that person has possession of those goods.

How many Yimiao Machines were present at the Wellington Rd site as at 25 July 2022?

451 It is important to determine the number of Yimiao Machines at the Wellington Rd site as at 25 July 2022 and their location within that site. This is because this was the primary date upon which Yimiao submitted the bailment was said to arise. In addition, for reasons I am about to give, 3V did not have possession of the Yimiao Machines on the earlier dates relied upon (ie, April 2022 and 4 May 2022).

452 I find that there were 1,598 Yimiao Machines at the Wellington Rd site as at 25 July 2022.

453 First, the defendants ultimately accepted that the 803 Yimiao Machines were removed from the Wellington Rd site sometime after they were delivered (ie, March 2022 to May 2022) and 29 August 2022 (ie, when the boxes in the Back Room were found to be empty).

454 Second, Mr Maolin Chen of Star Mining recorded as at 22 July 2022 that there were 1,598 Yimiao Machines at the Wellington Rd site. He recorded that 997 Yimiao Machines were in the Back Room.

455 Third, the defendants submitted that Mr Maolin Chen only counted pallets (18 boxes each) in the Back Room on 22 July 2022 and not the boxes themselves. But Mr Maolin Chen gave evidence that he could see the boxes on the pallets so counted the boxes by pallet if the pallets 'are the same' (ie, a full pallet). In addition, I have already said that, on 22 July 2022 Mr Maolin Chen was present when 2 pallets of boxes (ie, 36 Yimiao Machines) were unpacked from the Back Room and put on racks in the Containers. In the event that the missing Yimiao Machines had been removed from their boxes in the Back Room by this time it is likely that Mr Maolin Chen would have noticed this when the 2 pallets of boxes were unpacked. In addition, the presence of two pallets of Yimiao Machines in the Back Room is further evidence that supports an inference that the remaining boxes on the pallets in the Back Room had not been emptied by this time.

456 Fourth, it is unlikely that any of the 997 Yimiao Machines that were in the Back Room on 22 July 2022 were removed from the Back Room prior to 25 July 2022. This is because this would have involved a significant undertaking that would have been observed by, at the very least, the defendants and Star Mining. Each Yimiao Machine weighs about 15kg. To remove 997 Yimiao Machines would have involved the use of a truck and probably a forklift. 3V had possession of the Back Room. It controlled after-hours access. Its employees were at the Back Room.

457 Fifth, it is unlikely that any Yimiao Machines were removed from the Mining Room or Containers prior to 25 July 2022 as there is no evidence that any Yimiao Machines were disconnected prior to 25 July 2022. It is common ground that the Yimiao Machines were first disconnected on 25 July 2022.

458 Sixth, I do not accept the defendants' submission that the existence of Star Mining surveillance on and after 25 July 2022 means that it is likely that the missing Yimiao Machines were removed prior to 25 July 2022. The defendants relied upon a letter from Yimiao's solicitors to Star Mining's solicitors dated 8 August 2022. They submitted that the Court may infer that the statements of Mr Xiaoliang Zeng to Yimiao recorded in the letter are correct. I do not accept this submission. I refer to my order made on 18 November 2024. Correspondence from solicitors is not admissible to prove the truth of the statements made in that correspondence. Even if this letter is admissible as to the truth of the statements made by Mr Xiaoliang Zeng, he stated that he believed that the Yimiao Machines remained at 159 Wellington Rd. Second, the surveillance was only for a relatively short period.

459 Seventh, the defendants submitted that there was 'nefarious activity by Star Mining before July 2022'. In their written closing submission, the defendants submitted:

(a) in mid-July 2022, Yimiao was unhappy and told Star Mining, but no one else, that it intended to move the Antminers elsewhere - see paragraph 10 above;

(b) Star Mining did not keep the security footage that would have shown what went in and out of the Containers up to 25 July 2025 - see paragraph 76;

(c) Yimiao did not investigate Star Mining or look into whether the Antminers had been transported to Star Mining's Sydney premises - see paragraph 107;

(d) only Yimiao's machines went missing, Star Mining had over 2,000 of its own mining machines on the Wellington Road premises and they were all present and accounted for;

(e) Maolin Chen did not in fact count each of the Antminers during his stocktake on 21 July 2022 - during cross examination, he first conceded that he had only counted boxes, and when pressed and taken to photographs, he then resiled from that position and admitted he had in fact only counted pallets.

(a) it was never put to Mr Maolin Chen that Star Mining took the missing Yimiao Machines or that his statement of the inventory as at 22 July 2022 was false and a fabrication. Mr Maolin Chen was responsible for maintaining the normal and regular operation of the miners, including the Yimiao Machines, at the Wellington Rd site and also the safety and security of assets. He attended the site every weekday and on weekends as needed. It is unlikely that anyone from Star Mining could have removed the Yimiao Machines without him knowing about it;

(b) the defendants accept that the Yimiao Machines were delivered between March and May 2022. But on and from 4 May 2022, Star Mining could not access the Back Room without permission and was then supervised and by this time 3V had also upgraded its security. This further makes it unlikely that it was Star Mining who removed the Yimiao Machines from the Back Room after this date. As observed by Mr Huang to Mr Dajian Li on 21 May 2022 concerning the Mining Room, '[n]o one can enter without your instruction'. This is important as Mr Feng gave evidence that on or around 30 May 2022, he visited the 159 Wellington Rd site for a second time with Mr Xiaoliang Zeng of Star Mining. At this inspection he shook some of the pallets to 'make sure it's a full box with machine'. He said he shook two or three pallets. He said he only shook the pallets that were wrapped in plastic. He said that the pallets he shook were standalone pallets and were not stacked. He said that it felt like there were machines in the boxes that he shook. I find that the Yimiao Machines were still present in the Back Room and none had been removed from the Back Room by this date. Star Mining's access from 4 May 2022 to the Back Room was very restricted;

(c) the removal of Yimiao Machines would have involved a significant logistical exercise and there is no evidence that it took place. It would have involved the use of equipment at the Wellington Rd site, including forklifts. It would have involved trucks accessing the Wellington Rd site and being loaded with the Yimiao Machines;

(d) if some of the Yimiao Machines were taken from the Mining Room or Containers prior to 25 July 2022 then they would have to be disconnected. But they were not disconnected until 25 July 2022. I accept that Star Mining had security footage for the Containers up to 25 July 2022, but the Yimiao Machines in the lower container were not disconnected before 25 July 2022;

(e) it is inconsistent with some of the missing Yimiao Machines being taken back to 159 Wellington Rd and discovered in August/September 2023. The defendants accept that 119 L7 Antminers were discovered at the Wellington Rd site and some of these were Yimiao Machines and also contained parts from Yimiao Machines. It is more likely that the person who removed the Yimiao Machines also moved some of the Yimiao Machines back to the Wellington Rd site. This could not have been Star Mining as it had been excluded from the Wellington Rd site since 25 July 2022;

(f) I accept that the Star Mining machines did not go missing. But this does not support an inference that it was Star Mining who removed the Yimiao Machines;

(g) I accept that Yimiao did not investigate whether the Yimiao Machines were at the premises of Star Mining. But this is in circumstances in which Yimiao was provided with an inventory as at 22 July 2022 and then 3V excluded Star Mining from the Wellington Rd site only a few days later;

(h) it is unlikely that if Star Mining removed the Yimiao Machines prior to 25 July 2022 that it then would have, as it did, maintained surveillance at the Wellington Rd site on and from 25 July 2022 for a period.

461 It is common ground that Yimiao has had a right to immediate possession of the Yimiao Machines at all material times. It subsequently obtained possession of some of the Yimiao Machines, being those that were returned to it in late February 2023 and in August/September 2023.

462 It is common ground that Star Mining took delivery of the Yimiao Machines when Yimiao delivered the Yimiao Machines to Star Mining at 159 Wellington Rd, and at that time it obtained possession and also became a bailee of the Yimiao Machines. As submitted by the defendants:

[B]etween March and May 2022, Yimiao delivered the [Yimiao Machines] to Star Mining at 159 Wellington Road and Genesis took delivery.

463 It is common ground that: Genesis also took delivery of the Yimiao Machines from Star Mining at 159 Wellington Rd; it obtained possession and also became a bailee of the Yimiao Machines. Pursuant to the First Star Mining/Genesis Agreement, Genesis expressly obtained 'possession and control' but not ownership when the Yimiao Machines (see Recital E and cl 2). As a result, as at 25 July 2022, Star Mining did not have actual possession of the Yimiao Machines. Genesis had actual possession.

464 The defendants submitted that Genesis was in possession through August 2022 and rely upon the contents of a letter from Cyber's solicitors dated 17 August 2022. But pursuant to the order made 18 November 2024 that correspondence is not admissible to prove the truth of its contents. In addition, it is unlikely that Genesis was in possession given that it was in substantial default in paying Cyber under the Genesis/Cyber Agreement.

465 On 25 July 2022, 3V intended to possess the Yimiao Machines and took actual control of the Yimiao Machines. This is because 3V commenced disconnecting some of the Yimiao Machines (preparatory to using them itself). It also excluded Star Mining (Yimiao's representative) from the Wellington Rd site on 25 July 2022.

466 First, I find that 3V commenced disconnecting the Yimiao Machines (prior to using them itself) on 25 July 2022. This is supported by the following matters:

(a) the Yimiao Machines were disconnected from the 'Poolin' mining pool;

(b) the Yimiao Machines were disconnected on and from the 25 July 2022, being the date upon which 3V directed Mr Maolin Chen and his people not to attend the Wellington Rd site;

(c) the Yimiao Machines were gradually disconnected from the 'Poolin' mining pool over a short period of time. This is inconsistent with an innocent explanation such as a power outage;

(d) on 25 July 2022, the Yimiao Machines were located at the Wellington Rd site. Vincent, an employee of 3V, was present at the site on that day, and there is no evidence that any persons not associated with 3V accessed the Yimiao Machines on that day so as to be able to disconnect them;

(e) some of the Yimiao Machines were then subsequently configured within a week to the F2Pool mining pool which was then used by 3V to mine cryptocurrency. I address this further later in these reasons;

(f) Cyber had ceased trading;

(g) 3V had control of access to the Mining Room, Back Room and Containers.

467 Second, the defendants accepted that Star Mining was excluded on 25 July 2022. This occurred when Vincent informed Mr Maolin Chen that Mr Dajian Li would not allow Star Mining access to the Wellington Rd site.

468 Third, the context in which these events occurred make it likely that 3V intended to possess and take control the Yimiao Machines, and did take actual control of the Yimiao Machines. 3V was not, as repeatedly submitted by the defendants, 'merely the registered proprietor and landlord' of the Wellington Rd site. 3V sought to downplay its role and interest in cryptocurrency mining at the Wellington Rd site. But it had a very significant role and interest in these matters:

(a) 3V was a shareholder in Cyber;

(b) Cyber was incorporated as a joint venture between Mr Dajian Li (3V) and Mr Huang (Fom Tech) to operate a cryptocurrency mining business;

(c) from 21 June 2022 Mr Huang, as the sole director of Fom Tech, no longer had control of the daily operations of Cyber;

(d) it is common ground that that 3V undertook significant site works at the Wellington Rd site to install a power supply, ventilation fans and a racking system for holding mining equipment as contemplated by the unexecuted Cyber Shareholders Agreement. 3V rendered invoices to Cyber for those works. The defendants accepted that 3V was involved in fitting out the Mining Room and Containers to be used by Cyber in its operations;

(e) Cyber was obliged to pay, inter alia, 3V outgoings, including electricity, under the Cyber Lease. Genesis was obliged to pay Cyber, including for electricity, under the Genesis/Cyber Agreement;

(f) 3V had a significant interest in the profitability of Cyber as a shareholder and landlord;

(g) 3V had unfettered access to the Mining Room and Containers;

(h) 3V imposed restrictions on persons accessing the Mining Room and Containers, including Cyber;

(i) 3V had the only key to the Mining Room and the Containers;

(j) Cyber had no employees and the persons acting on its behalf were employees of 3V.

469 Fourth, in early June 2022, there was a significant dispute between 3V and Cyber that is set out in a letter from Mr McNaught to Mr Huang dated 9 June 2022. Cyber had sought to obtain a discount on the rent it paid under the Cyber Lease and 3V refused. This is at a time when Mr Huang was still in control of the daily operations of Cyber. Mr McNaught emphasised to Mr Huang on the letter the importance of 3V obtaining rent and outgoings from Cyber. The defendants accepted that this was a 'dispute' and that it was not resolved and resulted in the shareholders of Cyber agreeing to buy out Mr Huang and for him to cease to have control of the company's daily operations. From 21 June 2022 Mr Huang, as the sole director of Fom Tech, no longer had control of the daily operations of Cyber. As a result, I find that it was not Mr Huang who disconnected some of the Yimiao Machines on 25 July 2022. Further, the defendants allege that Mr Dajian Li, Mr McNaught, Avis Goh and Ms Fang conducted the business of Cyber, but only did so from 3 August 2022 (defences, [24E]).

470 Fifth, by no later than 25 July 2022, 3V faced a very dire situation:

(a) Genesis had failed to pay Cyber the amount of $150,075.24 under the Genesis/Cyber Agreement for electricity costs for June 2022. The invoice is dated 30 June 2022 and was payable on 5 July 2022 (see cl 4 of the Genesis/Cyber Agreement). As accepted by the defendants, 'Cyber could not remit those funds to 3V for electricity charges for which Cyber was liable under the Cyber Lease'; and

(b) Cyber had also failed to pay 3V's invoices for electricity use for the Mining Room for May 2022 ($104,227.68) and June 2022 ($114,472.45). It is also common ground that Cyber had also ceased to trade in July 2022;

(c) Cyber had ceased trading.

471 The defaults of Genesis and Cyber were a very serious matter for 3V. Unless it took action, the cryptocurrency mining machines at the Wellington Rd site, including the Yimiao Machines, would continue to operate and consume electricity, significant costs would continue to be incurred by 3V. As I have said, for example, 3V had a liability to reimburse the electricity costs paid by ViPlus incurred at 159 Wellington Rd. 3V would continue not to be paid to cover those costs by Cyber.

472 Sixth, disconnecting some of the Yimiao Machines on 25 July 2022 was a significant exercise of control over them. It is wholly inconsistent with the Genesis/Cyber Agreement. The defendants accept that power to the Yimiao Machines was shut off (also described as 'cut-off') as a consequence of Genesis being in default of its payment obligations to Cyber. Cyber was obliged to give Genesis 5 days written notice before suspending its services. There is no evidence that any such notice was given. 3V 'cut‑off' the electricity to the Yimiao Machines. It had no right to do so. 3V also knew the terms of the Genesis/Cyber Agreement. Mr McNaught was involved in the making of that agreement, and at the time of making that agreement was the joint Chief Executive Officer of 3V and a director of Cyber.

473 Seventh, on and from 25 July 2022, 3V maintained the electricity supply to the Wellington Rd site. 3V did not the send any invoices to Cyber under the Cyber Lease for electricity costs for July 2022 and subsequent months. This is because Cyber had ceased trading.

474 Eighth, each of Mr Dajian Li, Mr McNaught, Ms Fang and Mr Bob Li did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated who exercised control over the Yimiao Machines. It may be inferred that their evidence would not have supported the defendants' case.

475 Ninth, the defendants submitted that the fact that Star Mining and Genesis had possession of the Yimiao Machines means that 3V did not have possession. I do not accept this submission. This is because, as submitted by the defendants, only one person may have possession of chattel at any one time. 3V took possession of the Yimiao Machines, and Genesis ceased to have possession of them, on 25 July 2022.

476 Tenth, the defendants submitted that Genesis, Cyber and Yimiao were not excluded. 3V took the action to exclude Star Mining to facilitate it taking possession of the Yimiao Machines. Star Mining was Yimiao's representative. It was not necessary for 3V to exclude Genesis as it had no right to access the Wellington Rd site without approval of Cyber under the Genesis/Cyber Agreement. It was not necessary for 3V to exclude Cyber as it had no employees and Ms Fang was the sole director of Cyber and the joint Chief Executive Officer of 3V. It was not necessary to exclude Yimiao as it was not regularly attending the Wellington Rd site. Star Mining was its representative.

477 Eleventh, for completeness, I do not accept Yimiao's submissions that 3V was in possession of the Mining Room from the time it was established. This is because:

(a) 3V granted Cyber exclusive possession of the Mining Room pursuant to the Cyber Lease. The Cyber Lease was not a sham;

(b) it was Cyber who conducted the business of mining at the Containers while it was trading;

(c) there is no evidence that 3V ever refused Cyber access to the Mining Room;

(d) given the circumstances above, it is insufficient for the purposes of possession of the Mining Room that:

(i) 3V had unfettered access to the Mining Room;

(ii) 3V imposed restrictions on persons accessing the Mining Room, including Cyber;

(iii) 3V had the only key to the Mining Room;

(iv) Cyber had no employees and the persons acting on its behalf were employees of 3V.

478 Twelfth, I also do not accept Yimiao's submissions that 3V was in possession of the Containers from the time they were established. This is because:

(a) Hardchrome granted a licence to Cyber to place the Containers on 175 Wellington Rd and to use them to mine cryptocurrency;

(b) it is common ground that it was Cyber that conducted the business of mining at the Containers while it was trading;

(c) there is no evidence that 3V ever refused Cyber access to the Containers;

(d) given the circumstances above, it is insufficient for the purposes of possession of the Containers that:

(i) 3V had unfettered access to the Containers;

(ii) 3V imposed restrictions on persons accessing the Containers, including Cyber and Hardchrome;

(iii) 3V had the only key to the Containers;

(iv) Cyber had no employees and the persons acting on its behalf were employees of 3V.

479 Thirteenth, whether 3V was in possession of the Mining Room and Containers as at 25 July 2022 or some other times is not directly irrelevant. It was always in possession of the Back Room. 3V was in possession of the Yimiao Machines by taking the step of disconnecting the Yimiao Machines (preparatory to using them themselves) and ensuring that Star Mining (Yimiao's representative) was excluded from the Wellington Rd site and could not disturb this possession of the Yimiao Machines. 3V had control of access to the Mining Room, Back Room and Containers and had unfettered access to those areas. In addition, although Cyber was the lessee under the Cyber Lease and the licensee under the Hardchrome Licence it ceased trading in July 2022. Cyber never had possession of the Yimiao Machines.

480 Fourteenth, I do not accept Yimiao's submission that 3V was in possession of the Yimiao Machines from April 2022. The only significance of this date identified by Yimiao is that it was the date upon which Mr Jian Chen was told by Mr Bob Li that for security reasons, people could not randomly go into the site, entry had to be permitted by Mr Dajian Li and Mr Bob Li would then accompany them to the site. But this does not constitute the taking of possession of the Yimiao Machines by 3V. It is a limited restriction placed upon a person attending the Mining Room. It is not an exclusion. In addition, this date is irrelevant to the issue of a bailment as Yimiao does not even submit that Mr Dajian Li knew of the existence of the Yimiao Machines by this time.

481 Finally, I also do not accept Yimiao's submission that 3V was in possession of the Yimiao Machines from 4 May 2022. The only significance of this date identified by Yimiao is that it is the date upon which Mr Maolin Chen was told that he had to make an appointment to inspect the Back Room to count the machines and had to be accompanied by Mr Yuan (Genesis) and persons from the 'venue' (ie, 3V). I accept that it is likely that the instruction was provided by Mr Dajian Li to Vincent who told Mr Maolin Chen. But this did not constitute the taking of possession of the Yimiao Machines by 3V. It was a limited restriction placed upon a person attending the Back Room. It was not an exclusion.

482 Cyber was never in possession of the Yimiao Machines.

483 First, I do not accept the defendants' submission that Yimiao's case is that Cyber was in possession and a bailee of the Yimiao Machines at all relevant times. Yimiao's case that Cyber was in possession and a bailee of the Yimiao Machines is an alternative case.

484 Second, the Genesis/Cyber Agreement specifically provides that Genesis retains possession.

485 Third, it is common ground that Cyber never obtained a security interest in the Yimiao Machines. It is also common ground that it wrongfully claimed such an interest.

486 Fourth, Cyber did not take the steps on 25 July 2022 that I have identified.

487 Fifth, Cyber was bound by the Genesis/Cyber Agreement. Upon a default in payment by Genesis, on 5 days written notice to Genesis, Cyber was entitled to suspend any or all of the services until Genesis pays Cyber. It is common ground that the electricity was 'cut‑off' to Yimiao Machines commencing on 25 July 2022. There is no evidence that Cyber provided any notice to Genesis that it intended to take this step. This is further support that it was not Cyber who had possession of the Yimiao Machines.

488 Sixth, Cyber had ceased to trade in July 2022. The defendants accepted that in the period July 2022 through to February 2023 there is no evidence that Cyber had a paying customer.

489 Seventh, Cyber surrendered some cryptocurrency mining assets to 3V on 1 August 2022. The assets were surrendered to pay invoices rendered by 3V to Cyber.

490 Eighth, Mr McNaught, on behalf of ViPlus Dairy, sent an email to a supplier to ViPlus Dairy on 27 July 2022 in which he stated that 'we had a business partner who was supposed to be paying these [ie invoices] and has 'left the building' (not on great terms)' and then subsequently sent a further email to the supplier on 25 January 2023 stating that '[t]hat business is no more.' I find that this is a reference to Cyber and not Mr Huang himself. This is because it was Cyber who had an obligation to pay the invoices and was 'supposed to be paying these' and not Mr Huang personally and the reference to '[t]hat business is no more' is clearly a reference to Cyber.

491 Ninth, the defendants submissions concerning Cyber's possession are materially inconsistent. The defendants submitted that:

(a) Cyber was in possession of the Yimiao Machines at all material times;

(b) Genesis had possession through August 2022 and then Cyber obtained possession of the Yimiao Machines on about 13 September 2022 when it terminated the Genesis/Cyber Agreement.

492 Tenth, Cyber did not obtain possession of the Yimiao Machines when it purportedly terminated the Genesis/Cyber Agreement. This is because it is also common ground that the missing Yimiao Machines were removed sometime prior to in inspection of the Wellington Rd site on 29 August 2022. This is prior to the termination of the Genesis/Cyber Agreement. The defendants made no attempt to explain how Cyber could obtain possession of Yimiao Machines that had already been removed from the Wellington Rd site. There is also no evidence that it actually took possession of any of the remaining Yimiao Machines.

493 Finally, each of Mr Dajian Li, Mr McNaught, Ms Fang and Mr Bob Li did not give evidence. They would be expected to be called to give evidence by the defendants and their evidence would have elucidated who exercised control over the Yimiao Machines. It may be inferred that their evidence would not have supported the defendants' case.

Did 3V know or should 3V ought to have known that the Yimiao Machines were present at the Welington Rd site?

494 I find that, from no later than 7 May 2022, 3V knew of the existence of the Yimiao Machines at the Wellington Rd site.

495 First, the defendants accept that Mr Dajian Li's knowledge is attributed to 3V.

496 Second, the defendants accept that 3V and Mr Dajian Li knew that there were cryptocurrency mining machines in the Mining Room and the Containers.

497 Third, I find that Mr Dajian Li was involved in monitoring the machines at 159 Wellington Rd in the Mining Room on and prior to 25 July 2022. The precise extent of the monitoring is unknown. There is evidence that Mr Dajian Li had some involvement in monitoring mining machines in the Mining Room:

(a) on 24 December 2021, Mr Dajian Li sent a message to Mr Huang noting that '[t]here are not tripped breakers, but ten machines have red light on. Is the network disconnected?' I find that it is likely that Mr Dajian Li was monitoring the mining machines otherwise he would not have made this observation. This was before the Yimiao Machines were delivered to 159 Wellington Rd;

(b) I have already found that Mr Dajian Li directed Mr Bob Li on occasion in making changes to the positions of the machines and in putting machines on racks and removing them from racks. Vincent also was involved in these activities but Mr Maolin Chen did not give evidence that Mr Dajian Li directed him;

(c) Mr Dajian Li did not give evidence. His evidence would have elucidated whether he was involved in monitoring the machines at 159 Wellington Rd in the Mining Room. It may be inferred that his evidence would not have supported the defendants' case.

498 Fourth, the defendants knew that Yimiao owned the Yimiao Machines and the quantity of the Yimiao Machines exceeded 1,000 L7 Antminers. On 7 May 2022, Mr Tim Li exchanged messages with Mr Dajian Li concerning the relocation of some machines. This included a message in which Mr Tim Li told Mr Dajian Li:

Brother, put yourself in their shoes. They have more than 1,000 machines here. It doesn't make sense to take down the running machines, move them to the new mining box, and then retest them. This logic doesn't work and will cause problems.

499 I infer that the reference to 'more than 1,000 machines here' is a reference to the Yimiao Machines. First, Mr Tim Li is from Genesis and he was referring to someone other than Genesis as having the 1,000 mining machines. Second, Mr Tim Li was not referring to Star Mining as they had over 2,000 machines at the Wellington Rd site. Third, some of the Yimiao Machines were subsequently placed in the 'new mining box' (ie a container at 175 Wellington Rd). Fourth, I also infer that the reference to 'their shoes' and '[t]hey have' is a reference to Yimiao. This is because the context of the message is the impact of moving the mining machines to a container at 175 Wellington Rd and that impact would be on Yimiao and not Genesis or Star Mining. In addition, Mr Dajian Li assisted in about April/May 2022 in installing some of the Yimiao Machines on racks in the Mining Room.

500 Fifth, since at least 4 May 2022, persons identified as 'Dajian Li's employees' participated in each inventory by Mr Maolin Chen of the mining machines in the Back Room. This included the Yimiao Machines.

501 Sixth, the defendants knew that the Yimiao Machines were valuable. They are L7 Antminers. Mr Dajian Li took steps to investigate the purchase of L7 Antminers by no later than 16 April 2022. Mr Tim Li informed Mr Dajian Li in a WeChat message on 16 April 2022: 'Bitmain has reopened the sales for L7. There aren't many units available. You can buy directly from the official website. Brother, your friends need to buy quickly'. Mr Jian Chen also told Mr Dajian Li in about April/May 2022 that the L7 Antminers, being some of the Yimiao Machines, in the Mining Room were 'very expensive'.

502 Finally, there is no evidence that Mr Dajian Li first became aware of the quantity and value of the Yimiao Machines, and Yimiao's ownership of the Yimiao Machines, when he received correspondence from Yimiao's solicitors on 4 August 2022. Mr Dajian Li did not give evidence. He could have readily given evidence that he did not know such matters. This supports an inference that his uncalled evidence would not have supported the defendants' case on this issue. Given the Court's order on 18 November 2024, the defendants are also not entitled to rely upon the truth of the contents of the correspondence from 3V to Yimiao's solicitors dated 8 August 2022 concerning the defendants' knowledge.

503 Yimiao ultimately relied upon an alleged bailment with 3V as bailee arising on and from April 2022, alternatively 4 May 2022 and, finally, alternatively 25 July 2022. It submitted that 3V was the bailee of all of the Yimiao Machines. Despite nominating the alternative dates, Yimiao submitted:

And, so, in our respectful submission there are three points in time at which we invite Your Honour to ask and answer the question of bailment. Ultimately, of course, the critical question is; as at 25 July, was 3V the bailee because it's on and from 25 July that the breach of bailment occurs.

(emphasis added)

504 I have already said that Star Mining was a bailee. The bailor is not identified in the further amended statement of claim. I find that Yimiao was the bailor and Star Mining was the bailee. This is clear from the pleading as Star Mining obtained possession from Yimiao.

505 I have already found that Genesis was a bailee. Again, the bailor is not identified in the further amended statement of claim. I find that Star Mining was the bailor and Genesis was the bailee. This is clear from the pleading as Genesis obtained possession from Star Mining and not Yimiao.

506 Genesis was a bailee under a sub-bailment. I accept that the term 'sub-bailment' is not used, but it is implicit in the plea. The critical plea is paragraph 16 of the further amended statement of claim:

1. By reason of the matters pleaded in paragraphs 6 to 7 and 14 to 15 above, at all material times Genesis was a bailee of the Equipment, and under a duty as bailee to take reasonable care of the Equipment and to redeliver the Equipment on demand to Yimiao in the same order and condition as when Genesis initially took possession of it.

507 3V did not become a bailee on and from April 2022. Yimiao only relies upon 3V being aware of the presence, nature and value of the Yimiao Machines on and from 4 May 2022. 3V did not have, as at April 2022, some degree of actual or imputable knowledge of the existence of the Yimiao Machines.[73] Yimiao did not rely upon any such knowledge at that time. I have also already found that 3V did not have possession of the Yimiao Machines at this time.

508 3V did not become a bailee on and from 4 May 2022. I have found that 3V did not have possession of the Yimiao Machines at this time.

509 3V also did not become a bailee on and from 25 July 2022. 3V took possession of the Yimiao Machines by an intentional act that was inconsistent with, repugnant to and an infringement of the rights of Yimiao as owner of the goods with an immediate right of possession. No relationship of bailment arose. It cannot be inferred that there was an implied promise that the Yimiao Machines would be re-delivered to Yimiao or dealt with in a stipulated way.[74] There was no assumption of responsibility for the Yimiao Machines.

510 First, 3V knew the Yimiao Machines were owned by Yimiao and that they were stored at the Wellington Rd site by Yimiao for the purposes of mining cryptocurrency. 3V then voluntarily took possession of the Yimiao Machines without any legal right to do so. For 3V to take possession in these circumstances was inconsistent with the assumption of responsibility that is necessary to give rise to a bailment. No relationship of bailment, therefore, arose.

511 Second, Yimiao relies upon the conduct of 3V on 25 July 2022 both as the creation and breach of the bailment. Yimiao submitted that the bailment arose on 25 July 2022 and was also breached on and from 25 July 2022. As submitted by Yimiao:

Ultimately, of course, the critical question is; as at 25 July, was 3V the bailee because it's on and from 25 July that the breach of bailment occurs.

512 It identified the following conduct as constituting a breach of the alleged bailment:

No evidence was ever led by 3V Development and Dajian Li that 3V discharged its duties as bailee. Nor could there be any argument based upon the evidence. Their conduct (which is set out in issue #41 is consistent with the deliberate interference with Yimiao's Equipment, and a deliberate refusal to return Yimiao's Equipment on demand). At the very minimum, 3V Development and its director Dajian Li failed to take reasonable care of the Equipment.

513 Yimiao described this conduct further as follows:

The uncontradicted evidence was that from at least 25 July 2022, Yimiao was wrongly deprived of all of its Equipment:

(a) On 25 July 2022, all of Yimiao's operating machines were disconnected from 'Poolin' (the mining pool which Yimiao used at the time). It may be inferred that the machines were deliberately disconnected - the manner of disconnection (which occurred over a period of time) and the fact that they were never reconnected to Poolin is inconsistent with a power outage or network issue).

(b) On 25 July 2022, Star Mining was excluded from the premises by 'Vincent', an employee or contractor of 3V Development, who took instructions directly from Dajian Li. Vincent (together with Bob Li) conducted work at the Mining Room on behalf of 3V Development.

(c) After 25 July 2022, units of Equipment were moved to the top Container from the Back Room. The only entity that controlled both premises on 25 July 2022 was 3V Development.

(d) Between about 22 July 2022 and 25 August 2022, Yimiao's Missing Machines were removed from boxes in the Back Room and were taken offsite by Dajian Li and 3V Development.

514 The very acts relied upon as giving rise to the bailment are also relied upon as constituting its breach, in addition to other breaches. This is, with respect, non‑sensical. In addition, it is further support that 3V's taking of possession of the Yimiao Machines was inconsistent with, repugnant to and an infringement of the rights of Yimiao as owner of the goods with an immediate right of possession.

515 Finally, if I am incorrect about these matters, I will consider whether 3V was nonetheless a bailee to Yimiao. Yimiao relied upon a bailment between it, as bailor, and 3V as bailee. This is the case that was pleaded and argued. The critical plea is paragraph 26 of the further amended statement of claim:

1. By reason of the matters pleaded in paragraphs 6 to 7 and 22 to 25 above, at all material times 3V Development was a bailee of the Equipment, and under a duty as bailee to take reasonable care of the Equipment and to redeliver the Equipment on demand to Yimiao in the same order and condition as when 3V Development took possession of it.

516 The bailor is not identified. But, Yimiao did not rely upon its plea that Genesis was a bailee in its pleaded claim of bailment against 3V. It also submitted that the issue of whether Star Mining or Genesis were bailees was not relevant to any cause of action. As a result, Yimiao sought to address the issue of bailment by in effect, not addressing the important relationships that were created between Yimiao, Star Mining and Genesis prior to 25 July 2022. It disavowed any sub-bailment and conducted its case upon a direct relationship of bailment between it and 3V.

517 As at 25 July 2022, Genesis was in possession of the Yimiao Machines immediately prior to them being taken by 3V. Genesis' bailment was not terminated by 3V taking possession of the Yimiao Machines. Genesis had possessory title to the Yimiao Machines as against 3V, and could have maintained an action against 3V as sub‑bailee when they were removed from its possession.

518 In the circumstances, I would have found that 3V was a sub-bailee to Genesis. This is contrary to the case run by Yimiao, which disavowed a sub-bailment. As a result, in any event, I would have dismissed the pleaded claim against 3V for breach of bailment.

519 Cyber was never a bailee of the Yimiao Machines.

520 First, the defendants submitted that Cyber did not obtain possession of the Yimiao Machines pursuant to the Genesis/Cyber Agreement. They submitted that the Genesis/Cyber Agreement 'is only a hosting agreement [which] didn't actually provide possession of those machines going into the custody [...] of Cyber.'

521 Second, Yimiao and the defendants accept that prior to 25 July 2022, Genesis was in possession of the Yimiao Machines and the bailee to Yimiao. The defendants accept that Genesis was initially in possession and was a bailee of all of the Yimiao Machines.

522 Third, I do not accept the defendants' submission that Yimiao's pleaded case is that Cyber was a bailee to Yimiao of the Yimiao Machines and that, as a result, it is bound by that on its claim against 3V. This is because Yimiao's claim that Cyber was a bailee to Yimiao of the Yimiao Machines is an alternative claim. It relies upon allegations that are also expressed to be 'Further or alternatively' (see further amended statement of claim, [17] and [18]). This was ultimately accepted by the defendants and they abandoned this submission.

523 Fourth, I do not accept the defendants' submissions that Cyber became a bailee on 13 September 2022. 3V relied upon Cyber having obtained possession under cl 6(v) of the Genesis/Cyber Agreement as supporting its submission that it became bailee at that time. Clause 6(v) provides:

Principals default (including termination), the Principal agrees that the full title and interest in the Principals Equipment (including any cryptocurrency or other benefit derived from the Principals Equipment) will be transferred to the Manager upon termination if the amount owing by the Principal to the Manager under this Agreement is higher than the available balance of the Security Deposit. The value in the Principals Equipment will be deemed as a genuine pre-estimate of the Managers loss and damages suffered from the Principals default. The Manager will be entitled to use, possess, change mining address, sell and otherwise deal with the Principals Equipment in its absolute right.

524 I have already found that the Genesis/Cyber Agreement applied to the Yimiao Machines. First, the 803 missing Yimiao Machines were removed by 29 August 2022. Second, Genesis did not own the Yimiao Machines. By 13 September 2022, Genesis had also been disposessed of them as bailee by 3V, having been dispossessed on 25 July 2022. I have also found that Cyber never, actually, took possession.

525 Finally, the defendants did not identify any other date upon which Cyber became a bailee of any of the Yimiao Machines.

If 3V was a bailee of any of the Yimiao Machines, did 3V breach its duty as bailee?

526 If I am incorrect and 3V was a bailee to Yimiao, I will consider whether 3V breached its duty as bailee.

527 If 3V was a bailee, it owed a duty to redeliver the Yimiao Machines to Yimiao (the owner) on demand and to take reasonable care of them.

528 Proof of breach of bailment is usually non-delivery or delivery in a damaged condition.[75] The onus lies on a bailee to prove that it has discharged its duties, despite the loss of, or damage to the goods. In Rolfe v Investec Bank (Aust) Ltd, the Court of Appeal said:

Despite some divergence among Australian authorities as to which party bears the onus of proving negligence in relation to a gratuitous bailment, we think the better view to be, as it is in England, that the onus is on the bailee to show that the goods have been lost without negligence on the bailee's part.[76]

529 Yimiao's claim was entirely focused on the alleged breach of bailment against 3V in paragraph 44 of the further amended statement of claim concerning a failure to redeliver the Yimiao Machines on demand to Yimiao. Yimiao made no attempt to address the alleged breaches of bailment against 3V in paragraph 43 of the further amended statement of claim concerning a failure to take reasonable care of the Yimiao Machines.

530 Yimiao made unequivocal demands upon 3V for the delivery up of the Yimiao Machines by letters from its solicitors to 3V dated 4 August 2022. I address this later in this judgment ([620]). 3V did not deliver up the Yimiao Machines.

531 The defendants did not allege or submit that 3V's failure to deliver up the Yimiao Machines was without any negligence on its part. As a result, if I am incorrect and 3V was a bailee to Yimiao, 3V failed to discharge its burden of proof, and 3V's failure to redeliver the Yimiao Machines after Yimiao's demand on 4 August 2022 was a breach of bailment.

If 3V breached its duties as a bailee, what is the amount of loss and damage (if any) that Yimiao has suffered as a result?

532 If I am incorrect and 3V was a bailee to Yimiao, it is appropriate to consider the amount of loss and damage (if any) that Yimiao has suffered as a result of the breach of bailment.

533 Damages for breach of bailment should be assessed on the basis that they should, so far as money can do, put the injured party in the position that it would have been in but for the wrongdoing.[77] Where what is lost or damaged is personal property, then the assessment of damages must take account of the value of the property at the time of the wrong.[78]

534 In a case of non-delivery, some or all of the goods may be returned to the plaintiff before judgment. The plaintiff is to that extent restored to the position it would have been in but for the breach of bailment. At the same time, allowance must be made for any diminution in the value of the returned goods that has occurred in the time that they were misappropriated, at least to the extent this devaluation is the direct consequence of the breach of bailment. Thus, in such a case, it is generally appropriate to reduce the award of damages by reference to the value of any returned goods at the time they were returned.

535 A plaintiff may also recover damages for any consequential losses that were caused by the breach of bailment.[79] The defendants did not submit that the loss claimed by Yimiao was too remote, so it is unnecessary to determine what principles apply in regard to remoteness upon a claim for breach of bailment.

536 The applicable law on the proof of damage is well established. In JLW (Vic) Pty Ltd v Tsiloglou Brooking J said that 'a plaintiff cannot recover substantial as opposed to nominal damages unless the plaintiff proves both the fact and the amount of damage.'[80] Brooking J also said that if a plaintiff proves the fact of the loss but does not call the necessary evidence as to its amount then the plaintiff cannot be awarded substantial damages.[81]

537 In Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd, the Court of Appeal said:

1. In claims for damages, the plaintiff must prove both the fact of loss and the amount of that loss before he or she can recover substantial damages. If a plaintiff fails to prove either of those elements, he or she may recover nominal damages only where the claim is in contract, or the action fails altogether, where it lies in tort.
2. However, it is well established that a mere difficulty in quantifying damages does not necessarily defeat the plaintiff's entitlement to a remedy against the wrongdoer. In appropriate circumstances, where some sort of actual loss has been established, the court must estimate the damages as best it can. Addressing a claim for damages for breach of contract, Street CJ in Howe v Teefy said:

The question in every case is: has there been any assessable loss resulting from the breach of contract complained of? There may be cases where it would be impossible to say that any assessable loss had resulted from a breach of contract, but, short of that, if a plaintiff has been deprived of something which has a monetary value, a jury is not relieved from the duty of assessing the loss merely because the calculation is a difficult one or because the circumstances do not admit of the damages being assessed with certainty.

1. However, there is a distinction to be drawn between a situation that does not permit damages to be assessed with certainty, and one in which the plaintiff has simply failed to produce evidence that was otherwise reasonably available. The plaintiff is entitled to have the court do the best it can in the former case, but not in the latter. Where a party is able to produce evidence about loss and damage, they must do so with as much certainty and particularity as is reasonable in the circumstances. This principle is long established.

71. Put succinctly, Devlin J said in Biggin & Co Ltd v Permanite Ltd:

where precise evidence is obtainable, the court naturally expects to have it, [but] where it is not, the court must do the best it can.

1. Along with other statements to the same effect, this principle was addressed and applied by Brooking J in JLW (Vic) Pty Ltd v Tsiloglou ('JLW'):

A plaintiff cannot recover substantial as opposed to nominal damages unless he proves both the fact and the amount of damage. If he proves the fact of the loss but does not call the necessary evidence as to its amount he cannot be awarded substantial damages: he must put the tribunal in the position of being able to quantify in money the damage he has suffered. So juries in personal injuries cases are often directed that the plaintiff must prove to their satisfaction what he has suffered and will suffer and what is fair and reasonable compensation in respect of that. It is often said that the amount of the damage must be proved with certainty, but this only means as much 'certainty' as is reasonable in the circumstances. Where precise evidence is obtainable, the court naturally expects to have it; where it is not, the court must do the best it can.

1. Although, in the passage cited above, his Honour was speaking of the application of these principles in respect of breach of contract, on the issue of the certainty of proof of loss and damage, the same principles should apply equally in tort. Brooking J continued his analysis in JLW of the situations in which it was appropriate to insist on precise evidence and those in which estimation is permissible as follows:

There is no rigid dividing line between cases in which guesswork is permissible in assessing damages and cases in which it is not. The borderline between guesswork and rational assessment is itself indistinct, as is the line between evidence that is 'precise' (the Permanite Case dictum) and evidence that is not. In Enzed Holdings Ltd v Wynthea Pty Ltd, (to which Tadgell J has drawn my attention) the Full Federal Court thought the case to be one in which precise evidence of the loss was not obtainable, so that if the trial judge found that the plaintiffs had suffered some loss he must do his best to quantify the loss even if 'a degree of speculation and guesswork' was involved.

Where the action is for damages for breach of contract and the plaintiff fails to prove any actual loss he may fall back on an award of nominal damages. (The plaintiff fails to prove actual loss for this purpose if he shows that he has suffered loss but fails to furnish material from which its amount may be arrived at.)

1. In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd ('Placer'), Hayne J - with Gleeson CJ, McHugh and Kirby JJ agreeing - also addressed the same distinction:

Placer undoubtedly bore the burden of proving not only that it had suffered damage as a result of Thiess Contractors' breach of contract, but also the amount of the loss it had sustained. It goes without saying that it had to prove these matters on the balance of probabilities and with as much precision as the subject matter reasonably permitted.

It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind. This case did not invite attention to such questions. Placer sought to calculate its damages precisely.

1. To summarise, it is useful to refer to what was said by Chernov JA, with whom Buchanan JA agreed, in Longden v Kenalda Nominees Pty Ltd:

Thus, it is for the plaintiff to prove both the fact of loss arising from the defendant's breach and the amount of the loss. Moreover, the plaintiff is required to establish both matters with as much certainty and particularity as is reasonable in the circumstances. Consequently, where a plaintiff could have produced evidence of loss but has simply failed to do so, it ordinarily means that it has failed to prove its case on damages (so that, where the claim is based on breach of contract, the plaintiff would only recover nominal damages). There are, of course, situations where a plaintiff cannot adduce precise evidence of the amount of loss, in which case the court will do its best in that regard and will estimate the damages and, where appropriate, will engage in a certain amount of guesswork.[82]

538 Yimiao relied upon Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd in which the Full Court of the Federal Court said:

If a court finds that damage has occurred it must do its best to quantify the loss, even if some degree of speculation and guess work is involved; Enzed Holdings Limited v Wynthea Pty Limited [1984] FCA 373; (1984) 57 ALR 167 at 183 (Sheppard, Morling & Wilcox JJ). But, as their Honours emphasised, this principle applies only where a court finds that loss or damage has occurred; it is not enough merely to show wrongful conduct by a defendant. See also the observations of Mason CJ and Dawson J in The Commonwealth v Amann Aviation Pty Limited [1991] HCA 54; (1991) 174 CLR 64 at 83. [83]

539 But this statement was made in circumstances in which it was found that Aristocrat had failed to prove important assumptions in its calculation of damages and only awarded nominal damages. The Court did not speculate and guess the value of the damages. Chief Justice Black and Jacobson J (with whom Rares J agreed) said:

1. The gravamen of Aristocrat's claim for substantial damages was that the chartered accountant's report provided a clear 'ready reckoner' for the computation of the value of its lost sales. Senior Counsel submitted that the report 'stripped out' the intellectual property value of the units referred to by the Financial Controller, ie the initial game kits and the conversion kits.
2. The difficulty with this approach is that it rests upon assumptions that were not established. There was nothing to suggest that initial game kits were sold independently of the sale of new machines. Indeed, it would appear that they are part of each new machine. Thus, the position in respect of initial game kits is no different from the argument rejected by the primary judge. His Honour found, correctly in our view, that it could not be assumed, and was not established, that each sale by Vidtech was at the expense of a new Aristocrat machine.
3. His Honour found that there was no evidence of the price or volume of sales of conversion kits made to overseas customers. Moreover, during the hearing of the appeal, counsel for Mr and Mrs Parry pointed out that evidence had also been given at trial, during cross-examination, that Aristocrat itself sold second-hand machines. No evidence of their price or the volume of sales of second-hand machines by Aristocrat was led, and those figures were excluded from the information that the accountant used to estimate Aristocrat's loss. In our view, the accountant's 'intellectual property value' does not fill this evidentiary hole in Aristocrat's case.
4. In short, the suggested intellectual property value of each 'unit' cannot provide a basis for a finding that Aristocrat lost a sale of each item of intellectual property for each sale of an infringing copy made by Vidtech.
5. That is not to say that Aristocrat could not have discharged the onus of proving its loss. As Vidtech and Mr and Mrs Parry were found to be wrongdoers damages should be liberally assessed, in the sense that inferences will be more readily drawn against them, but the object remains to compensate Aristocrat, not to punish the respondents; Bailey at 110-111; General Tire and Rubber Co v Firestone Tyre and Rubber Co Limited [1976] RPC 197 at 212 (Lord Wilberforce).

...

1. In Placer ... at [37]-[38] Hayne J pointed to the stricter approach taken by the courts in assessing damages where a plaintiff has not adduced evidence that was apparently available to prove the loss. Rares J has set out the relevant passages from Placer at [101] of his reasons for judgment. We agree with Rares J that it was open to Aristocrat to prove the volume and prices of sales in overseas markets. We also agree that it was artificial to suggest that Aristocrat lost the value of a sale for each of the 400 infringing sales by Vidtech.
2. Nevertheless, it may have been open to Aristocrat to contend that it lost some proportion of the sales made by Vidtech which would otherwise have been made by Aristocrat or a relevant member of the Aristocrat Group. This approach was adopted by Emmett J in Sony Computer Entertainment Aust Pty Limited v Stirling [2001] FCA 1852 at [8]. His Honour did so notwithstanding that the respondent in that case sold counterfeit games for $15 whereas the sale price for the genuine article was $45-$50.
3. But the difficulty in adopting that approach here is that it was not adopted by Aristocrat. Its case was founded solely on the proposition that it lost the value of 400 sales and that proposition cannot be sustained.
4. It follows in our view that only nominal damages should be awarded. Such an award can be made, even though Aristocrat has not proved loss, because damages are not the gist of the action. The cause of action for infringement is conferred by s 115(1). Damages are merely one form of relief that the Court may order under s 115(2).[84]

540 A defendant's wrongdoing may make an accurate evaluation of the plaintiff's loss difficult. In Cessnock City Council v 123 259 932 Pty Ltd, a majority of the High Court said:

1. The precise description of this principle of facilitation of proof by a plaintiff has varied in the cases, although the substance of the principle is generally the same. In some Australian judgments the principle has been described as giving rise to a defendant's 'evidentiary onus' (although that expression can be used to mean different things). In some Australian judgments the principle has been described as giving rise to a 'prima facie inference' or prima facie case for the plaintiff. In other Australian judgments, including the decisions of the primary judge and the Court of Appeal in this case, the principle has been referred to as a 'presumption'. The reference to 'presumption', which is used in a variety of different senses in law, is best avoided in this context because it has been associated with a different rationale for the facilitation of proof by an assumption of fact, namely that in the ordinary course of commercial dealings a party will expect at least to recoup their expenses. As explained below, that proposed rationale for the principle should not be accepted.
2. Whatever the description of the principle, its essence is that it facilitates the discharge of the plaintiff's legal onus of proof of loss in circumstances where the defendant's wrongdoing has resulted in uncertainty regarding the quantum of loss. This facilitation principle operates where uncertainty arises from the defendant's breach and is capable of coexisting with other principles concerning facilitation of proof that might assist either the plaintiff or the defendant, such as the principle in Blatch v Archer that 'all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted'.

(1) The law of torts

1. The facilitation principle was most famously stated in the context of a tort in Armory v Delamirie. In that case, the defendant wrongfully deprived the plaintiff of the plaintiff's possessory title to a jewel which had been set in a socket in a ring. Since the defendant refused to produce the jewel, it was impossible for the plaintiff to prove the value of the jewel. Evidence was given of the value of the best jewels that would fit in the socket. Pratt CJ directed the jury that in the absence of production of the jewel the jury should 'presume the strongest' against the defendant and award the plaintiff the market value of the best jewels.
2. Two centuries later, the facilitation principle for assessment of damages in the law of torts was explained by the Supreme Court of the United States in Story Parchment Co v Paterson Parchment Paper Co as applying '[w]here the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty[;] it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for [their] acts'. As so explained, the facilitation principle is not confined to circumstances where it is impossible to assess damages, or to intentional acts of a defendant, but has been applied in particular categories of case where the wrongdoing of the defendant has resulted in uncertainty that has made the assessment more difficult. In those particular categories of case, the risk of uncertainty that results from the acts of the wrongdoer should be thrown on the wrongdoer rather than the injured party.
3. In other contexts, in this Court the facilitation principle has been described as one which permits inferences to be drawn in favour of a plaintiff where the wrongdoing of the other party 'made quantification difficult'. Naturally, however, the greater the difficulty in proof that results from the defendant's wrongdoing, the stronger the inference the court will be prepared to draw against the wrongdoer.[85]

541 Similarly, in Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd, the Full Court of the Federal Court said:

The facilitation principle allows for assumptions favourable to a plaintiff to be made, for example that the jury should award the plaintiff the market value of the best jewel that would fit in the setting where the defendant refused to produce the jewel actually retained for valuation, as occurred in Armory itself. However, and as the plurality summarised the position in Cessnock, a plaintiff is given a '"fair wind" but not a "free ride"' and the 'strength of the wind' varies depending on the extent of the uncertainty resulting from the defendant's breach: Cessnock at [139]. In JLW (Vic) Pty Ltd v Tsiloglou [1994] VicRp 16; [1994] 1 VR 237 (JLW), Brooking J surveyed the authorities (at 241-246). What Brooking J's analysis exposes is that, as we have already observed, the evidence required of a plaintiff (in this Court, an applicant) is responsive to the circumstances concerning the evidence that could be adduced, and the impact of the defendant's wrongdoing on the capacity of the plaintiff to establish quantum. In JLW, Brooking J also referred to the need to have regard to whether the damages sought are of a kind that is left to the opinion of the Court, acting at large (eg in the assessment of damages for pain and suffering in personal injuries cases) or are of a kind that are capable of quantification, such as property valuation or, one might add, inflation to a share price.[86]

542 Yimiao ultimately sought damages pursuant to the Third Alternative, alternatively, pursuant to the Second Alternative. By particulars filed 26 November 2024 (after the close of the evidence) it originally sought damages upon the First Alternative, alternatively the Second Alternative, alternatively the Third Alternative.

543 Yimiao submitted that the Court should only consider the Second Alternative if it considers the Third Alternative is not an appropriate measure of damage. It made similar submissions with respect to its other claims in which it also sought that damages be assessed on various alternatives. Yimiao submitted:

Your Honour, ultimately they put on the basis there if Your Honour is against us on those alternatives as being the appropriate and just measure of damage to put my client in the position they would've been but for the breach, that's when Your Honour gets to the next alternative.

544 The guiding principle is that Yimiao should be restored to the position it would have been but for the breach of bailment. The ordinary means for the Court to do so is to give compensation for the value of the goods permanently detained in breach of bailment. But this is subject to the overriding requirement that an award of damages in tort must be fair and reasonable as between the plaintiff and the defendant.[87]

545 A plaintiff is not entitled to an 'untrammelled election' between alternative bases for assessment of damages.[88] If the plaintiff's chosen basis for assessment is inherently uncertain or unreliable, or appears to yield a disproportionate award when compared to a more traditional or reliable basis for assessment, then the Court is entitled to find that the plaintiff's basis for assessment is inappropriate.[89]

546 On the other hand, a plaintiff is entitled to conduct their case as they choose. If the plaintiff's preferred basis for assessment is an appropriate measure of damage, it is this basis that must be assessed.

547 The Third Alternative is a proper basis for an assessment of Yimiao's damages for breach of bailment. Yimiao claims upon the Third Alternative:

(a) the full replacement value of the 1,598 Yimiao Machines as at 25 July 2022; less

(b) the full replacement value of the Yimiao Machines that were returned to it.

548 The Third Alternative represents the ordinary measure of damages for a breach of bailment. It fulfils the compensatory principle because, if 3V was a bailee, its breach of bailment arose from detention of all the Yimiao Machines, and a replacement value is first ascribed to each of those machines. This is appropriate.

549 It is appropriate for an amount to be subtracted from the full value of the Yimiao Machines given that some Yimiao Machines were returned to Yimiao's possession before judgment.

550 As I have already said the Third Alternative is based upon the full replacement value of the 1,598 Yimiao Machines as at 25 July 2022 less the value of the returned Yimiao Machines.

Replacement value of the 1,598 Yimiao Machines as at 25 July 2022

(a) a replacement cost of an L7 Antminer as at 25 July 2022 at $19,310.88 based upon the evidence of Mr McNew; alternatively

(b) the average purchase price of a Yimiao Machines at $17,479.48.

9. My Analysis and Findings - Question 8 (a-c)

9.1. Question(s)

9.1.1. What is the replacement value of a new L7 Antminer Machine as at:

a. 25 July 2022;

b. 28 February 2023; and

c. At the date of your report?

9.2. Response to Question 8 (a-c)

9.2.1. As Figure 12 will show, based on sales data provided by Luxor Technologies, a reputable mining equipment dealer, the retail price is as follows:

a. Dates and Price in (AUD)

• $19,310.88 AUD on July 25, 2022

• $12,472.70 AUD on Feb 28, 2023

• $6,314.38 AUD on Dec 3, 2023

Now do you have any expertise or training in valuing mining rigs?---Um I don't, not in valuing a rig. In other words, taking a rig and applying a current day present value to it or a present value to it. Um but in terms of where to source them, how to source them, what represents a good quality rig, what represents a poor quality rig um working out best purchase prices for rigs. In fact on Core Scientific that was part of the ask as well is look at the business plan, understanding that some rigs were going to be phased out due to end of life and others had to be purchased, how would we purchase them. So from that context I've done it quite a lot. But the question is could I look at a rig and say what is that worth today other than working with reputable vendors to um place an after market price on it, no.

Yes and so you've predominantly dealt with Luxor as - - -?---No I probably worked with 50 different companies and I've landed on Luxor because my years of experience have told me that you can't trust what you see. Um I've ordered new equipment that's arrived refurbished. I've ordered new equipment that's arrived old and used. Um so over the years I've learned how to spot and work with viable partners that are reputable and do good work.

And do you know, if you're importing mining rigs into the United States are there any taxes or duties that apply?---I don't know.

And the pricing that you obtained from Luxor that was for brand new machines wasn't it?---Correct.

And you weren't involved in the enquiry, it was Li Sun who undertook the enquiry and was that the only enquiry that was made, just to Luxor, or were there enquiries made to other vendors?---That was the only enquiry.

Right. And you don't think it would have been wise to source a number of prices if you're aiming to establish what the value of that machine was?---I don't. I've worked with them so many years now I've ruled out so many partners that aren't competent, aren't capable, I totally trust them based on a decade of experience ordering and working with them. I totally trust them based on a decade of experience ordering and working with them.

What about BITMAIN, going to the manufacturer?---Ah, I find them to actually be slightly more expensive, and I find them to be harder to obtain.

So if you, on the occasion when you received either a refurbished or a used rig to you that rig had less value than a new one?---It had less value because it wasn't built in a high quality fashion.

Yes?---Correct.

And so is there a market for second-hand mining equipment?---Sure.

And when you're buying a second-hand machine it will sell at a discount to a new machine no doubt?---Of course it would have less capacity.

And even if you're, well, putting aside the question of capacity, so when you say capacity are you talking about use life or are you talking about computing power?---Both.

All right. So we're talking, let's talk about identical machines. We're talking about L7 Antminers. New one off the shelf purchased from BITMAIN or from Luxor or wherever you get it from, compare that to a second-hand one, what are the factors that are going to need to be considered to work out the price differential between the two?---I'd imagine it would be all the normal um suspects, right. It would be how long has it been operating, what's its lifespan. What's remaining in its lifespan. It would be all of those sorts of factors.

Yes?---Has it been maintained correctly.

Yes. What about its location. So in different countries around the world might that affect the ability to either buy or sell it?---From a demand and a supply perspective perhaps.

Which might affect the price as well?---Sure. There was a time when there was a huge backlog that affected the price, certainly.

555 The defendants did not dispute that 25 July 2022 is the relevant date to determine the replacement cost of the 1,598 Yimiao Machines.

556 But the defendants submitted that the appropriate measure of loss is the value of an L7 Antminer that was second-hand purchased several months prior to 25 July 2022 with the likelihood that about 10% were faulting and there is no evidence of such a value. The defendants submitted that Yimiao was not entitled to 'new for old' replacement of the Yimiao Machines.

557 They further submitted that even the Yimiao Machines that were unused as at 25 July 2022 'would have had diminished value, as they were second-hand and several months post-purchase'. In oral closing submissions, they submitted:

[T]alking about the missing machines, there's 800 odd machines that were purchased in the first half of 2022. They were put on a plane, they were shipped to Australia, they were left on pallets in a warehouse, some of the boxes got damages, some of them may or may not have been used. We don't know. And those machines went missing. They certainly weren't brand new from the manufacturer.

558 Yimiao submitted that the defendants' submissions that the 'missing machines' were second-hand and not new is flawed. It submitted that:

(a) the Yimiao Machines were delivered to 159 Wellington Rd in brand new condition;

(b) as at 22 July 2022, 601 Yimiao Machines had been unboxed and used and 997 Yimiao Machines were in brand new condition.

559 In my view, Yimiao is entitled to the replacement value of the 1,598 Yimiao Machines as at 25 July 2022 based upon 997 being brand new and 601 being second‑hand.

560 I find that 997 Yimiao Machines were in brand new condition as at 25 July 2022.

561 First, these machines were unused as at 25 July 2022. Mr Maolin Chen gave evidence that, on 22 July 2022, there were 997 Yimiao Machines in the Back Room that were still in their boxes on pallets and were not operating. In addition, Mr Feng gave evidence that on two occasions, being 30 May 2022 and on or around 8 July 2022, he observed that the Yimiao Machines in the Back Room were in their original packaging. Mr Maolin Chen also was frequently present at the Wellington Rd site, and reported on the number of machines in the Back Room between 29 April 2022 and 22 July 2022. He did not identify less than 1,000 L7 Antminers in the Back Room until 22 July 2022. In these circumstances it is very unlikely that the 997 Yimiao Machines in the Back Room as at 22 July 2022 had been used. Further, as I have said, it is unlikely that any of the 997 Yimiao Machines were removed from the Back Room between 22 July 2022 and 25 July 2022.

562 Second, I do not accept the defendants' submission that even unused Yimiao Machines would have had diminished value. It is common ground that the Yimiao Machines were shipped from China to the Wellington Rd site, but there is no evidence that the machines themselves suffered damage in transit. The defendants could have adduced evidence of any damage in the unused Yimiao Machines as 3V was in possession of them from 25 July 2022, but they did not. I also accept that the Yimiao Machines were purchased several months prior to 25 July 2022 and were stored on pallets in the Back Room. But the defendants did not explain how this would have an effect on the value of the Yimiao Machines, nor was there any evidence to that effect.

563 I accept Mr McNew's evidence that the replacement value as at 25 July 2022 was $19,310.88. This is the appropriate replacement value. None of Mr McNew's evidence on replacement value was disturbed by cross-examination. His approach to valuing L7 Antminers was informed by his expertise in sourcing and replacing cryptocurrency assets, and his enquiries about historical prices for brand new L7 Antminers with the most reliable supplier out of the 50 he has worked with. The reliability of Mr McNew's evidence of the replacement value of the Yimiao Machines is supported by the actual prices paid by Yimiao to purchase the machines in early 2022.

564 It is common ground that the other 601 Yimiao Machines had been unboxed and were being used. These would have had a lesser value than a brand new machine as at 25 July 2022.

565 Mr McNew gave evidence that there is a market for used mining equipment but that it has a lesser value than new mining equipment. I accept his evidence. Yimiao also did not dispute this.

566 But there is no evidence of the value of the 601 Yimiao Machines that had been unboxed and used. The value of these machines may depend upon a number of factors none of which have been taken into account in determining their value:

(a) the length of time they have been operating;

(b) their lifespan;

(c) whether they have been maintained correctly.

567 Yimiao could have readily called evidence of the value of the used Yimiao Machines but did not do so.

568 As a result, the Court is not in a position to assess the value of the used second-hand 601 Yimiao Machines. Damages can only be assessed upon the value of the 997 new and unused Yimiao Machines.

569 Adopting Mr McNew's evidence, the Yimiao Machines were worth $19,252,947.36, being 997 Yimiao Machines at a value of $19,310.88 each.

570 This aspect of the Third Alternative is based upon the return of 795 Yimiao Machines being returned on 27 February 2023. But it submitted that only 688 Yimiao Machines have a possible value. Yimiao submitted that only these 688 Yimiao Machines were operable at the time they were collected by Yimiao. It relied upon there being only log files for those 688 Yimiao Machines and also the evidence of Mr Thomas.

571 But Yimiao did not take into account that 34 Yimiao Machines were returned in August 2023. This was not explained. Yimiao accepted that it collected 34 Yimiao Machines. Yimiao took into account the return of these 34 Yimiao Machines in its calculation of damages under the First Alternative.

572 The Third Alternative estimates the value of the 795 Yimiao Machines as:

(a) $0, given the condition of the Yimiao Machines returned to Yimiao;

(b) alternatively, $4,290,608.80, being 50% of a replacement cost of an L7 Antminer as at 28 February 2023 based upon the evidence of Mr McNew of the replacement cost of an L7 Antminer as at 28 February 2023 and also based upon only 688 of 795 having such a value;

(c) alternatively, $8,581,217.60, being the replacement cost of an L7 Antminer as at 28 February 2023 based upon the evidence of Mr McNew and also based upon 688 of 795 having such a value.

573 The defendants did not dispute that a deduction should be made based upon the value of the returned Yimiao Machines.

(a) there is no evidence that only 688 of the returned Yimiao Machines had a possible value;

(b) there is no evidence of the value of the returned Yimiao Machines.

575 I find that only 688 of the returned Yimiao Machines in February 2023 had a possible value.

576 The number of 688 Yimiao Machines is based upon those machines whose log files are set out in the Section 50 Summary. The Section 50 Summary contains log files for 688 Yimiao Machines.

577 Mr Thomas gave evidence that he downloaded the log files for the Yimiao Machines he could get online. He said he could not get some online that would not start or had failing power supplies.

578 But Yimiao's claim that the value of returned Yimiao Machines is $0 or 50% of the full replacement value of a new L7 Antminer is not supported by any evidence.

579 First, Yimiao submitted that the value of the 795 Yimiao Machines is $0, alternatively 50%, of the full replacement value of a new L7 Antminer based upon the evidence of Mr Thomas and Ms Zhou. But their evidence does not support such a finding. This is because:

(a) Mr Thomas gave evidence that the returned Yimiao Machines were the 'worst miners we've ever seen' and that they stripped every machine down and cleaned them. But also gave evidence that this kept them running and only about 60/70% had a fault 'at some point'. His evidence was that they were running and some had a fault at some point;

(b) Ms Zhou agreed that second-hand L7 Antminers are worth significantly less but otherwise did not give evidence as to their value;

(c) further, Mr McNew accepted that there is a market for second-hand cryptocurrency machines. He also accepted that many factors would assess value, including how long it has been operating, how it has been maintained and where it is located.

580 Without any explanation, Yimiao also relied upon the same evidence (ie, the evidence of Mr Thomas and Ms Zhou) to submit that the value is $0 or alternatively 50%.

581 It cannot be concluded from this evidence that the value of the 795 Yimiao Machines in February 2023 is $0, alternatively 50%, of the full replacement value of a new L7 Antminer.

582 Second, Yimiao could have readily called evidence of the value of the 688 Yimiao Machines to account for defects or damage to those machines, but did not do so. Yimiao had possession of these machines from late February 2023.

583 Third, the Court is not in a position to assess the value of the used second-hand machines.

584 Fourth, the defendants submitted that no objection could be taken to a deduction of 100% of the full replacement value of a new L7 Antminer even though it is not accurate. I agree. This is obviously favourable to the defendants. As a result, in my view, it is appropriate to adopt Mr McNew's evidence of the full replacement value of an L7 Antminer as at 28 February 2023, and to deduct the full value of 688 Yimiao Machines that were returned to Yimiao and operable, being the sum of $8,581,217.60.

585 Finally, as I have already said, Yimiao's claim for loss and damage failed to take into account that 34 Yimiao Machines were also returned in August/September 2023. 33 Yimiao Machines were returned in late August 2023 and 1 Yimiao Machine was returned on 4 September 2023. There is no evidence of the value of these 34 second‑hand Yimiao Machines. Mr McNew did not give evidence concerning the full replacement value of an L7 Antminer in August or September 2023. But there is evidence of the full replacement value at various times (ie 25 July 2022 ($19,310.88), 28 February 2023 ($12,472.70) and 3 December 2023 ($6,314.38). I have already referred to the defendants' submission that no objection could be taken to a deduction of 100% of the full replacement value of a new L7 Antminer in the context of the 795 Yimiao Machines returned in February 2023. This applies also to the 34 Yimiao Machines. Again, this is obviously favourable to the defendants. In the period 28 February 2023 to 3 December 2023 the full replacement value decreased by $6,158.32 over a period of just over 9 months, being about $684 per month. Doing the best I can upon the evidence before me, I find that the full replacement value of a Yimiao Machine as at 30 August 2023 (being an appropriate date to value the 34 Yimiao Machines) was $8,368.70, being $12,472.70 minus $4,104 (being 6 months x $684). As a result, it is appropriate to also deduct the full replacement value of 34 Yimiao Machines as at 30 August 2023 that were returned to Yimiao and operable, being the sum of $284,535.80. In the event that I am incorrect that a new replacement Yimiao Machine cost $8,368.70 as at 30 August 2023, I would have used the full replacement cost at 28 February 2023.

586 As a result, upon the Third Alternative, I would have found that Yimiao had established damages in the sum of $10,387,193.96, being $19,252,947.36 minus $8,581,217.60 and also minus $284,535.80.

587 If I am incorrect and the appropriate measure of damages is the Second Alternative, then I make the following observations.

588 It has two components. First, a component based upon the loss of an opportunity to make profits from returned Yimiao Machines. Second, a component based upon the value of the missing Yimiao Machines. The Second Alternative is based upon Yimiao's loss of an opportunity to make a profit from 795 Yimiao Machines between 25 July 2022 and 27 February 2023, being those Yimiao Machines returned on 27 February 2023, plus the full replacement value of 803 missing Yimiao Machines as at 25 July 2022.

Loss of profit that would have been made by the returned Yimiao Machines between 25 July 2022 and 27 February 2023

589 Yimiao submitted that it claimed $6,140,524 and identified that this was based upon this amount in a schedule prepared by Mr McNew (7FSCB95). In summary, this is based upon, inter alia, 795 Yimiao Machines operating on and from 25 July 2022 to 28 February 2023; an electricity price of AUD$0.10/kWh; an updated sales price and a rig up time of 87.5%and other assumptions made by Mr McNew including concerning the quantum and value of cryptocurrency.

590 Again, it is erroneously based upon only 795 Yimiao Machines being returned. In fact, 34 Yimiao Machines were also returned in late August and early September 2023, but an adjustment may be readily made for these, in any calculation of value.

591 This claim is based upon the same approaches and scenarios for the First Alternative, but for a limited number of machines and for a more limited period of time. As a result, I refer to the following matters I address later in these reasons concerning the approaches and scenarios for the First Alternative that are relevant also to the Second Alternative:

(a) Yimiao should be permitted to make the claim for loss of opportunity;

(b) Yimiao has established that it has lost a commercial opportunity of some value;

(c) Yimiao has failed to establish the value of the opportunity given the matters I address in relation to the First Alternative that also apply to the Second Alternative, being matters concerning the location of the future operation of the Yimiao Machines; the commencement of the operation of the Yimiao Machines at the USA sites; the cost of repairs and maintenance; other costs of the Yimiao Machines at the USA sites and the amount of cryptocurrency mined.

592 As a result, Yimiao has failed to establish the value of its lost opportunity concerning profit that would have been made by the Yimiao Machines between 25 July 2022 and 27 February 2023.

593 The full replacement value of the 803 Yimiao Machines is based upon:

(a) a replacement cost of an L7 Antminer as at 25 July 2022 at $19,310.88 based upon the evidence of Mr McNew; alternatively

(b) the average purchase price of a Yimiao Machine at $17,479.48.

594 The number of missing Yimiao Machines as at 25 July 2022 that have never been returned is 769 and not 803. This is because 34 Yimiao Machines were also returned in August/September 2023. It is common ground that these were Yimiao Machines. There is no evidence that they were not operable.

595 I have also already set out Mr McNew's evidence as to the replacement value as at 25 July 2022.

596 The defendants did not dispute the replacement value of a new L7 Antminer as at 25 July 2022 (although they did object to the admissibility of Mr McNew's evidence on this, which objection was not accepted).

597 But the defendants submitted that the appropriate measure of loss is the value of an L7 Antminer that was second-hand purchased several months prior to 25 July 2022, due to the likelihood that something like 10% of the missing Yimiao Machines were faulting and there is no evidence of such a value. They submitted that Yimiao was not entitled to 'new for old' replacement of the Yimiao Machines.

598 In response, Yimiao submitted that the missing Yimiao Machines were new and unused machines as at 25 July 2022.

599 I find that the 769 missing Yimiao Machines were new and unused machines as at 25 July 2022 and were taken from the Back Room. This is because:

(i) 601 Yimiao Machines had been unboxed and used;

(ii) 997 Yimiao Machines were in boxes and in brand new condition in the Back Room;

(b) by 29 August 2022, the boxes of the Yimiao Machines in the Back Room were empty. The Yimiao Machines that were in brand new condition had been removed from the Back Room. I otherwise refer to my earlier reasons ([561]-[562]).

600 For reasons I have already given, I accept Mr McNew's evidence of the replacement value of an L7 Antminer as at 25 July 2022. The 769 Yimiao Machines were worth $14,850,066.72, being 769 machines at a value of $19,310.88 each.

601 As a result, if I am incorrect and the proper measure of loss is the Second Alternative then I would have assessed the quantum as being $14,850,066.72, being the value of 769 Yimiao Machines as at 25 July 2022.

602 Exemplary damages are available where the Court is satisfied that the defendant has undertaken 'conscious wrongdoing in contumelious disregard of another's rights'.[90] The 'heartland for exemplary damages is undoubtedly the intentional torts'.[91] Exemplary damages are an 'exceptional remedy, rarely awarded and reserved for the most reprehensible examples of civil wrongdoing'.[92] Their purpose is to 'punish the wrongdoer and deter others from like conduct' while expressing the Court's disapproval of the conduct.[93] In Bishop of Roman Catholic Diocese of Wagga Wagga v TJ, the Court of Appeal emphasised:

[E]xemplary damages should only be awarded if, but only if, the sum awarded as compensation is insufficient to punish the defendant for their outrageous conduct, to mark the court's disapproval of such conduct and to deter the defendant from repeating it.[94]

603 I will refuse Yimiao's claim for exemplary damages.

604 Yimiao has failed to give fair notice of its claim for exemplary damages to the defendants.

A claim for exemplary damages shall be specifically pleaded together with the facts on which the party pleading relies.[95]

606 An adequate plea of the relevant facts is essential. This is because the focus of exemplary damages is upon a defendants' conduct and a defendant is entitled to know upon what basis a plaintiff seeks exemplary damages.

607 Yimiao addressed exemplary damages in its prayer for relief in the following terms:

1. Damages including exemplary damages for conversion, trespass to goods and detinue.

608 Bailment is not identified as a basis for exemplary damages. Yimiao did not plead the facts on which it relied for its claim of exemplary damages. Despite the pleading concerning five defendants it also made no attempt to identify any particular conduct of any of them.

609 Yimiao did not open the case by making any reference to its claim for exemplary damages. Yimiao provided detailed particulars of its loss and damage, after the close of the evidence, on 26 November 2024. No particulars of exemplary damages were provided.

610 Yimiao then submitted in its closing submission:

1. In this case, the conduct of 3V Development and Dajian Li was flagrant, deliberate, persistent, highly opportunistic and conducted with contumelious disregard for the plaintiff's rights: It included:

(a) a deliberate interference with Yimiao's rights (including after the commencement of this proceeding);

(b) refusal to comply with multiple Court orders;

(c) numerous lies and other similar conduct; and deliberately running a knowingly false defence (and misleading both the Court and Yimiao).

1. 3V Development and Dajian Li's conduct was outrageous and enabled them to earn a significant profit, at Yimiao's expense.
2. In the circumstances, exemplary damages should be awarded. $500,000 is the amount is warranted given the extent of the disregard for the Plaintiff's rights.

611 In support of the submission that the defendants told numerous lies and engaged in other similar conduct Yimiao relied upon its closing submissions at Part D1. This is titled 'The Significance of Lies, Concealment and Falsification of Evidence'. This sets out an extensive number of factual matters and submissions concerning the defendants' conduct, constituted by 6 pages of submissions with extensive referencing. None of this was identified as a basis for exemplary damages in the pleading or opening.

612 Yimiao did not provide any explanation to the Court or the defendants for its non‑compliance with r 13.07(3) and its failure to give fair notice of its claim for exemplary damages, including the facts on which it relies. Yimiao had the obligation to provide these particulars. The defendants did not have the obligation to request them. In the circumstances, there is no reason for it not to have provided these to the defendants earlier and updated them if necessary.

613 As a result of Yimiao's failure to give fair notice to the defendants, the defendants did not know the case they had to meet at the trial concerning exemplary damages. It is unfair to have expected them to speculate or guess. Yimiao did not confine its claim for exemplary damages to matters that were the gist of the conduct of the defendants in the torts, but relied upon an extensive number of additional matters, including their conduct in this proceeding. No fair notice has been given.

614 In these circumstances, I would not have awarded Yimiao exemplary damages upon the claim for breach of bailment.

615 Yimiao claims that 3V is liable to it in detinue. It makes no claim in detinue against Mr Dajian Li.

616 The tort of detinue is established where the plaintiff has made a demand for the return of goods at a time when he or she had a right to the immediate possession of them and the defendant has wrongfully refused to comply with that demand.[96] The plaintiff's right to immediate possession may be derived from a proprietary or possessory interest in the goods at the time of the demand.[97] The plaintiff's demand must do no more than require the defendant to permit the plaintiff to collect the goods.[98] In the absence of a positive refusal by the defendant, a refusal is made out if a demand is ignored or a reasonable time has passed.[99]

617 The defendants admit that Yimiao had a right to immediate possession of the Yimiao Machines at all relevant times. Yimiao's right was derived from its ownership of the Yimiao Machines.

Did Yimiao make a demand of 3V for the return of Yimiao Machines and, if so, did 3V wrongfully refuse to comply with it?

618 Yimiao made a demand upon 3V for the return of the Yimiao Machines by a letter from its solicitors dated 4 August 2022. Yimiao demanded that 3V permit it to collect and remove the Yimiao Machines from the Wellington Rd site.

619 3V wrongfully refused to comply with that demand. It did so on 8 August 2022, when it falsely stated that it was not in possession of the Yimiao Machines and did not comply with the demand. If I am incorrect and it did not wrongfully refuse to comply with the demand on 8 August 2022, then it did so on 9 September 2022.

620 First, 3V was in possession of the Yimiao Machines when Yimiao made the demand on 4 August 2022:

(a) I refer to the matters I have addressed concerning 3V's possession of the Yimiao Machines as at 25 July 2022;

(b) it is likely that the Yimiao Machines remained at the Wellington Rd site as at 4 August 2022. This is because: 3V had significant control over the Wellington Rd site, including the Mining Room, Containers and Back Room; Star Mining had maintained surveillance outside the Wellington Rd site from 25 July 2022 to at least early August 2022; and there is no evidence that the Yimiao Machines had been removed by 4 August 2022;

(c) in any event, if some of the Yimiao Machines were removed from the Wellington Rd site after 25 July 2022 it is likely that this would have been undertaken by 3V and it would have retained possession. This is because, as I have already said, it was in possession of the Yimiao Machines on and from 25 July 2022 and it controlled access to the locations where they were stored at the Wellington Rd site. No-one else could have removed them. It was also disconnecting the Yimiao Machines on 25 July 2022 and taking steps to connect them to the F2Pool mining pool. I address the F2Pool mining pool later in these reasons;

(d) Mr Dajian Li did not give evidence. He would be expected to be called to give evidence by the defendants and his evidence would have elucidated whether the Yimiao Machines were in possession of 3V on and after 4 August 2022. It may be inferred that his evidence would not have supported the defendants' case.

621 Second, 3V was in possession of the Yimiao Machines, but told Yimiao that it was not. I refer to the letters from 3V's solicitors to Yimiao's solicitors dated 8 August 2022. It repeated this. I refer to the letters from 3V's solicitors to Yimiao's solicitors dated 9 August 2022, 12 August 2022 and 16 August 2022. This position was repeated by 3V's counsel at the first hearing in this proceeding on 23 August 2022.

622 Third, I have already found that 3V knew the Yimiao Machines were owned by Yimiao and that they were stored at the Wellington Rd site by Yimiao for the purposes of mining cryptocurrency. I have also found that 3V voluntarily took possession of the Yimiao Machines without any legal right to do so on 25 July 2022.

623 Fourth, 3V never informed Yimiao that it could collect the Yimiao Machines. 3V asserted that as it, 3V, was not in possession of the Yimiao Machines, any collection of them would have to be arranged with others. I refer to the letter from 3V's solicitors to Yimiao's solicitors dated 9 September 2022 (SCB2124).

624 Fifth, 3V did not inform Yimiao that 'it did not stand in Yimiao's way' as submitted by the defendants in reliance upon a statement recorded in Other Matters of an order of the Court made 23 August 2022. That statement records that 3V would not in any way interfere with or prevent an inspection at 159 Wellington Rd. This did not concern the collection of the Yimiao Machines.

625 Sixth, the fact that Cyber actively resisted the return of the Yimiao Machines is not relevant to whether 3V refused to comply with the demands of 3V. 3V was in possession. Cyber was not in possession.

626 Seventh, the fact that Yimiao did not seek interlocutory relief against 3V for delivery up of the Yimiao Machines is not relevant. Yimiao's decision to seek relief against certain persons upon the information available to it as at August 2022 has no bearing on whether a demand was made on 3V and whether 3V refused to comply with that demand. It is also understandable that Yimiao did not seek relief against 3V given its repeated assertion that it was not in possession of the Yimiao Machines.

627 Finally, 3V made enquiries of Yimiao's title to the Yimiao Machines It sought such information, Yimiao provided it and 3V then raised no further issue about Yimiao's title in the letter from its solicitors to Yimiao's solicitors dated 9 September 2022. However, I have found that by no later than 7 May 2022 3V knew the Yimiao Machines were owned by Yimiao.

If 3V is liable in detinue, what is the amount of loss and damage (if any) that Yimiao has suffered as a result?

628 The fundamental principle of damages in tort, including in detinue, is compensation for loss caused.[100] The normal measure of damages in detinue is the value of the detained goods at the time of judgment, together with damages for detention of the goods.[101] Consequential losses are recoverable in detinue where the loss flows from the unlawful detention of the goods and the loss is not too remote.[102]

Damages for loss of a commercial opportunity of some value

629 Yimiao sought damages in detinue based upon the loss of a commercial opportunity of some value (ie the First Alternative) but also made alternative claims (ie Second and Third Alternatives). The First Alternative does not include a claim for the value of the detained goods. Ultimately, Yimiao did not seek any order for the delivery up of the Yimiao Machines.

630 As stated by the majority of the High Court in Sellars v Adelaide Petroleum NL (Sellars):

[T]he general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.[103]

631 In Masters Home Improvement Pty Ltd v North East Solution Pty Ltd the Court of Appeal said:

In considering damages for loss of a commercial opportunity, the court asks first whether there was a commercial opportunity of some value (which is more than speculative or negligible); that is, was there a chance? Secondly, the court looks to whether that opportunity has been lost; that is, would the plaintiff have pursued the opportunity? The third step is to consider what amount should be awarded having regard to the prospects of success if the opportunity had been pursued. In taking this third step, the courts' task is to apply a discount which reflects the prospects of success. This is sometimes referred to as a Sellars discount.[104]

632 In MA & J Tripodi Pty Ltd v Swan Hill Chemicals Pty Ltd [No 2], Judge Cosgrave (as he then was) considered a claim for damages based upon the loss of a commercial opportunity.[105] His Honour found that the plaintiff had suffered a loss of opportunity of some value.[106] His Honour then carefully examined the evidence concerning the value of that opportunity and concluded that the assessment of loss was a 'speculative exercise'.[107] His Honour found that the plaintiff had not discharged its onus to prove the loss it suffered and said:

1. In light of my findings above, in my opinion, the plaintiff has not discharged its onus to prove the loss it has suffered. As such, and subject to a limited qualification, I am unable to calculate and determine what damages should be awarded to the plaintiff.
2. This is not an instance where the plaintiff has been prevented by the subject matter, or nature of its claim, from being able to provide evidence to prove its loss. If that were the case, the court could not refuse to calculate damages. Rather, this is an instance where the plaintiff has simply failed to provide the court with sufficient evidence to prove its loss, leaving the court to merely speculate or guess as to the amount of damages that should be awarded.
3. This case bears similarities to the Victorian Court of Appeal's decision in Longden v Kenalda Nominees Pty Ltd.
4. In that case, the plaintiff had entered into a contract with the defendant for the lease of premises for the purposes of setting up and running a retail furniture business. The defendant broke the contract, and the premises were never made available to the plaintiff. The Court of Appeal had to determine whether the plaintiff had established that it suffered loss, in circumstances where its loss required a determination of the value of conducting a business which never commenced.
5. At the trial, the plaintiff had sought to prove its loss by leading evidence of the profitability of another store, located in Nunawading which was part of the Carol's Country Collections chain of stores ('the Nunawading store'). The trial judge had rejected that evidence for various reasons. Because of this, there was nothing before the court to substantiate or determine the amount of the loss caused by the defendant's breach.
6. The court agreed with the trial judge's assessment that there was insufficient evidence before the court to determine the value of the lost opportunity. Thus, although there was a breach, damages could not be awarded. Although on the balance of probabilities the opportunity had some value, Chernov JA explained:

... it is for the plaintiff to prove both the fact of loss arising from the defendant's breach and the amount of the loss. Moreover, the plaintiff is required to establish both matters with as much certainty and particularity as is reasonable in the circumstances. Consequently, where a plaintiff could have produced evidence of loss but has simply failed to do so, it ordinarily means that it has failed to prove its case on damages (so that, where the claim is based on breach of contract, the plaintiff would only recover nominal damages). There are, of course, situations where a plaintiff cannot adduce precise evidence of the amount of loss, in which case the court will do its best in that regard and will estimate the damages and, where appropriate, will engage in a certain amount of guesswork (references omitted).

403 Buchanan JA also noted that:

It was also necessary for the appellant to establish a means of estimating the amount of the profit. The appellant was required to prove the loss of profit with as much precision as the subject matter reasonably allowed. It was necessary for her to lay a foundation for an estimate of the lost profit which was not mere guesswork, for this was not a case where precise evidence of what had been lost could not be adduced.[108]

633 On appeal in MA & J Tripodi Pty Ltd v Swan Hill Chemicals Pty Ltd, the Court of Appeal said:

1. Where, as in the present case, a plaintiff seeks damages for loss of opportunity in respect of a proposed business venture, it must be borne in mind that what is relevant - and must be the subject of evidence - is not only that there was an opportunity to consummate the venture that was lost due to the defendant's conduct, but also that there was a prospect of a profit being made from the venture. Accordingly, a plaintiff who adduces compelling evidence that a business venture would have been consummated but for the defendant's conduct will not be entitled to damages if he or she does not adduce any evidence at all about the potential for that venture to make a profit. Put simply, the law does not provide for damages for loss of opportunity to consummate a loss-making business venture.
2. In the case of a proposed business venture involving the sale of a product, the key components that will determine whether the venture will be profitable are the costs of producing the product, its price per unit and the volume of sales. Self-evidently, even a venture involving sales at a high price and in large volumes will not be profitable if the sales revenue is insufficient to recover production costs.

...

1. However, in order for Tripodi to be entitled to damages for loss of opportunity, it had to adduce evidence to enable the judge to assess the value of that opportunity. In accordance with Sellars, Tripodi did not need to adduce evidence establishing the value on the balance of probabilities. Rather, evidence of what the value might be - in the sense of possibilities rather than probabilities - would have sufficed.

2. For the reasons set out earlier, in order to establish a possible value of the loss of opportunity to enter into a supply contract with Woolworths in relation to borlotti beans, it was necessary for Tripodi to adduce evidence as to production costs, sales volumes and price per unit. That is because, in the absence of such evidence, the judge would be left to speculate whether such a supply contract would have been profitable, if the opportunity had been realised. The judge rejected Tripodi's claim for loss of opportunity damages because it failed to adduce any reliable evidence about production costs, sales volumes and price per unit.

...

1. We reject Tripodi's submission that the judge misapplied the principles for determining damages for loss of opportunity. The judge correctly set out the principles derived from Sellars and how those principles are to be applied to a proposed business venture involving the sale of a product. He correctly referred to the distinction between cases where a plaintiff is unable to adduce evidence quantifying an opportunity and cases in which a plaintiff is able to adduce such evidence but fails to do so. In the latter case, it is not for the court to use guesswork to determine the issue of damages. The judge did not misinterpret or misapply Placer, Longden or any other authority.[109]

634 As I have said, Yimiao seeks damages pursuant to the First Alternative, alternatively, pursuant to the Second Alternative, alternatively pursuant to the Third Alternative. It submitted that the Second Alternative and the Third Alternative would need to be adjusted to take into account the value of the Yimiao Machines at the time of judgment.

Summary Identification of the basis of the First Alternative

635 Yimiao submitted that it claimed $26,263,487.49 pursuant to the First Alternative and identified that this was based upon this amount set out in a schedule prepared by Mr McNew (7FSCB94). Yimiao substantially relied upon the evidence of Mr McNew as providing a reliable basis for the assessment of loss and damage.

636 The claim made by Yimiao in the sum of $26,263,487.49 represents only one outcome of the various scenarios and approaches that form part of the First Alternative. In summary, the gist of the claim made by Yimiao in the sum of $26,263,487.49 is based upon the following scenarios and approaches:

(a) Yimiao was deprived of the Yimiao Machines in the period 25 July 2022 to 25 July 2026, as follows 1,598 Yimiao Machines in the period 25 July 2022 to 27 February 2023, then 803 Yimiao Machines from 28 February to 30 August 2023, and then 769 Yimiao Machines from 31 August 2023 to 25 July 2026;

(b) Yimiao would have used these Yimiao Machines in the period 25 July 2022 to 25 July 2026 at the VDC Site and the South Carolina Site;

(c) the Yimiao Machines would have had an up time (also a rig up time) of 87.5%;

(d) Yimiao would have obtained cryptocurrency from the use of the Yimiao Machines;

(e) the cryptocurrency mined from the Yimiao Machines would have had particular values;

(f) Yimiao would have sold the cryptocurrency obtained from the use of the Yimiao Machines. Yimiao would have sold them only if they reached a certain fixed price, defined as the 'Updated Sales Price';

(g) Yimiao would have incurred costs in mining the cryptocurrency, including electricity costs in the amount of AUD$0.10/kWh;

(h) Yimiao's lost profit is calculated by taking the total sale price of the cryptocurrency less the costs.

First Alternative is an appropriate measure of loss

637 I have already set out the applicable principles that apply in determining whether a particular measure of damages is appropriate.

638 In my view, damages based upon a lost commercial opportunity of some value as identified in the First Alternative is an appropriate measure of Yimiao's loss in detinue. This is because Yimiao submits that, but for the detinue, it would have transported the Yimiao Machines to two sites in the USA and operated the machines for the term of their useful life. This was an opportunity that would have exhausted the useful value of the Yimiao Machines for the purpose of exploiting the commercial opportunity to make a profit by mining and selling cryptocurrency.

Should Yimiao be permitted to make this claim for lost opportunity?

639 Yimiao pleaded that it has lost the 'profits that Yimiao would have made from the Equipment', and 'the opportunity to make further profits from trading the cryptocurrency produced through the Equipment' (further amended statement of claim, [41]). Yimiao served reports of Mr McNew prior to the trial and also at the trial. Mr McNew's reports concerned, among other things, an assessment and calculation of the lost profits from the use of the Yimiao Machines based upon the First Alternative.

E. Loss and Damage

1. The quantum of Yimiao's loss and damage will depend upon the Court's findings on each cause of action. It is convenient to address this by reference to two categories.

E.1 The Identified Machines

1. The Identified Units were collected by Yimiao by 27 February 2023. The prima facie measure of the loss suffered by Yimiao is the amount of the loss of profits that Yimiao would have made from the Identified Equipment for the period that it was deprived of its use (25 July 2022 to 27 February 2023). That is a matter on which Mr McNew will give evidence.

E.2 The Missing Machines

1. In respect of the Missing Machines, save for those collected in August and September 2023, the Missing Machines have yet to be returned by 3V and Dajian Li. Ordinarily, the measure of loss for converted goods is the full value of the machines at the time they were taken (ie, 25 July 2022). That is presently estimated at $19,310.88 AUD per unit, or approximately $15.5 million for the Missing Machines (less any deduction to the extent any of the recovered Missing Machines have value).

641 Yimiao provided further and better particulars that refer to the loss of an opportunity to obtain profits from the operation of units of the Yimiao Machines. The particulars were provided after the close of the evidence.

642 In its written closing submission, Yimiao submitted:

1. There is no genuine dispute that Yimiao's business is to mine cryptocurrency via its Equipment.
2. It follows that, but for 3V Development and Dajian Li's unlawful conduct, Yimiao would continue to operate all 1,598 units of the Equipment. It would have done so, either:

(a) at 159 Wellington Road and 175 Wellington Road pursuant to its agreement with Star Mining; or alternatively

(b) at Yimiao's site in South Carolina in the United States (SC Site) and other professionally maintained sites.

1. Yimiao's business strategy is also to 'accumulate and hold the cryptocurrencies it obtains until the optimal prices so as to maximise profits' ...

643 In its oral closing submissions, Yimiao submitted:

The starting point Your Honour, is we have Ms Zhou giving evidence that they would be moved to America. Not challenged in cross-examination. We then know that whilst machines were being moved to America, some would be operational for a period.

And so, Your Honour might determine that but for the wrongful conduct, the machines might have moved to America and been in operation at a conservative time thereafter and discount ...

[B]ut for this conduct, we would have commenced operating these machines [ie 1,598 Yimiao Machines] in America. And Your Honour's got Ms Zhou's evidence at paragraph 50 that they would have been operated in South Carolina and Ohio.

645 In oral closing submissions in reply, it identified the opportunity as 'the opportunity to earn profit by the operation of the machine[s] over a four year period', beginning on 25 July 2022. It submitted that 100% of that opportunity was to operate 1,598 Yimiao Machines over that period.

646 The defendants submitted that Yimiao's claims concerning the use of the Yimiao Machines related to 'a loss of certain identified profits rather than a loss of opportunity to make profits'. They submitted that, in this respect, Yimiao's loss of opportunity claim was a 'new claim' that was 'introduced after the close of the evidence', and that claim should be struck out to the extent that it is pleaded by Yimiao in its particulars filed 26 November 2024. They submitted that, as a result, principles governing a claim for loss of opportunity have no application, and Yimiao must prove, on the balance of probabilities, that it would have made certain profits but for 3V and Mr Dajian Li's conduct.

647 In my view, Yimiao's claim for lost profits was always a claim of lost opportunity. This is because it was a claim based upon the loss of the opportunity to use those Yimiao Machines. I accept this claim substantially evolved, including over the trial, from a claim based upon 795 Yimiao Machines for the period 25 July 2022 to 27 February 2023 to a claim based upon the number of missing Yimiao Machines in the period 25 July 2022 to 25 July 2026. But the defendants had fair notice of this claim. Mr McNew's first report (dated 23 December 2023) addressed a number of scenarios and approaches that form part of the First Alternative. But I accept that Mr McNew does not refer to or identify that the Yimiao Machines were to be operated at any place other than at the Wellington Rd site. The defendants did not obtain any expert report in relation to these matters. Mr McNew's second report on this issue (23 October 2024) and third report on this issue (5 November 2024) contained further opinions and calculations based upon further assumptions with respect to the First Alternative, including a different electricity price. But again Mr McNew does not refer to or identify that the Yimiao Machines were to be operated at any place other than at the Wellington Rd site.

Has Yimiao established that it lost a commercial opportunity that had some value?

648 In my view, Yimiao has established that it lost a commercial opportunity of some value. The opportunity was to use the Yimiao Machines to mine cryptocurrency at the USA sites at a profit.

649 First, Yimiao was in the business of mining cryptocurrency.

650 Second, prior to 25 July 2022, Yimiao was mining cryptocurrency using some of the Yimiao Machines.

651 Third, by mid-July 2022 and prior to 25 July 2022, Yimiao had made a decision to move all of the Yimiao Machines to the USA sites to mine cryptocurrency. On 25 July 2022, it had taken steps to initially have 198 Yimiao Machines collected from the Wellington Rd site. Ms Zhou also gave evidence:

If Yimiao had been able to collect its machines in July 2022, I consider that Yimiao would have removed all 1,598 machines from Wellington Road Site and would have hosted approximately 50% of its machines at the South Carolina site, and approximately 50% of its machines with VDC Site.

652 Fourth, I have found that Yimiao was deprived of the Yimiao Machines by the defendants. This is because:

(a) in the period 25 July 2022 to 22 February 2023 it was deprived of 1,598 Yimiao Machines. It is common ground that Yimiao then collected 795 Yimiao Machines in the period 22 to 27 February 2023;

(b) Yimiao then collected 34 Yimiao Machines in the period 21 August 2023 to 4 September 2023;

(c) Yimiao collected 29 L7 Antminers on 4 October 2024 but they were not Yimiao Machines.

What is the value of the opportunity Yimiao has lost upon the First Alternative?

653 In my view, the value of the opportunity that Yimiao lost cannot be ascertained by reference to the degree of possibilities and probabilities. There is insufficient evidence of what the value of that opportunity might have been. Yimiao did not adduce important evidence of value, despite being able to do so. In addition, important evidence of Mr McNew is not cogent and is unreliable. As a result, there are substantial and important gaps in the evidence concerning value. In these circumstances, it is not for the Court to use uninformed guesswork to determine the issue of damages.

654 Yimiao submitted that the Court 'start[s] with the claim of [$26,263,487.49]' (being the amount calculated by Mr McNew on the First Alternative) and then should discount it by reference to the probability of all the Yimiao Machines operating as at 25 July 2022. I do not accept this submission.

655 The Court does not start with $26,263,487.49. The value of the opportunity, in the sense of what it might be, had to be established by Yimiao taking into account the probabilities and possibilities. It has failed to do this.

656 The 'Sellars discount' to be applied should not only take into account the number of Yimiao Machines operating at the USA sites on 25 July 2022, but all of the risks concerning the opportunity. The commencement of the operation of the Yimiao Machines and the number in operation are only some of the factors in that assessment of risk.

Location of the future operation of the Yimiao Machines

657 There is no reliable evidence as to whether any Yimiao Machines may have continued to be operated at the Wellington Rd site before being disconnected and then transported to the USA site.

658 I find that Yimiao would have collected all of the Yimiao Machines by the end of July 2022 and transported them to the USA sites. The parties accepted that Yimiao would have collected all of the Yimiao Machines and transported them to the USA sites.

659 It is possible that Yimiao may have operated some of the Yimiao Machines at the Wellington Rd site in the period on and from 25 July 2022 to 31 July 2022. But the Court cannot determine the possible number of Yimiao Machines that may have operated. This would involve speculation and guesswork that could have been addressed by Yimiao. Yimiao submitted that 'We then know that whilst machines were being moved to America, some would be operational [ie at the Wellington Rd site] for a period.' It made no further submission to assist the Court in identifying the number of machines that would have been operational at the Wellington Rd site or the duration. It called no evidence in support.

660 Ms Zhou gave evidence that all of the Yimiao Machines would have been collected in July 2022. This was not challenged.

661 Yimiao had to take steps to disconnect the Yimiao Machines and pack them for transport and make arrangements with a transport company to collect them. Given that Yimiao had already decided to relocate the Yimiao Machines it is unlikely that it would have delayed in doing so. But there is no evidence as to this process.

Commencement of the operation of Yimiao Machines at the USA sites

662 There is no reliable evidence as to when the Yimiao Machines at the USA sites might have commenced operating.

663 Mr McNew's calculation is based upon an assumption that he was instructed to make that Yimiao would have commenced using 1,598 Yimiao Machines on 25 July 2022.

So these 1,598 machines in South Carolina or Ohio, what Your Honour might do, understanding the expectation of the appellate courts, is undertake by a process of an estimation how long it would take to get the machines to America. Your Honour knows on the evidence that by reference to the orders that were lodged with BITMAIN and the delivery of the machines to Australia, it wasn't a sizeable time period. Assume against us three months

...

but it's not for Yimiao, respectfully Your Honour, to prove absolutely when it would've had the machines up and going or to prove exactly what would've happened, recognising we are in a universe where we don't actually know with precision what would've happened by reference to the fact that we have been wrongfully deprived of these machines.

...

And so the point I'm engaging with Your Honour on and accepting is Your Honour might say well, I'm not going to accept they would've all started operating in America from 26 July. I might accept that the 512 that were in situ and operating were operating from 25 July and a proportion were moved to America ...

665 First, there was no possibility that Yimiao would have commenced using any of the 1,598 Yimiao Machines at the USA sites on and from 25 July 2022. Yimiao accepted this. As at 25 July 2022, all of the Yimiao Machines were at the Wellington Rd site. It is common ground that by mid-July 2022, only 512 Yimiao Machines had been installed at the Wellington Rd site.

666 Second, I have already found that all of the Yimiao Machines would have been collected by 31 July 2022.

667 Third, there is no evidence how long it may have taken for the Yimiao Machines to then be transported from the Wellington Rd site to the USA sites. This is a matter that could readily have been addressed by Yimiao in its evidence. Instead in closing submissions it sought to rely upon times between the placement of the original purchase of the Yimiao Machines and their arrival at the Wellington Rd site in early 2022. This is not a reliable basis upon which to determine a possible time for their transport from the Wellington Rd site to the USA sites.

668 Fourth, there is no reliable evidence of how long it may have taken for 1,598 Yimiao Machines to be unloaded, placed on racks and then connected at the USA sites. This is a matter that could readily have been addressed by Yimiao in its evidence. It already had cryptocurrency machines at the USA sites. There is no evidence of the nature and extent of the facilities at the USA sites.

669 I accept that there is reliable evidence of the uptime rates of the Yimiao Machines.

670 Yimiao relies upon an uptime of 87.5%. This is the percentage that is used to calculated the damages relied upon by Yimiao in the sum of $26,263,487.49 (see CB7FSCB94).

• The amount of time a mining rig or a mining pool is operational and actively mining.
• It is typically expressed as a percentage, representing the proportion of time the system is functioning properly over a given period.

672 Mr McNew's calculations in his reports are variously based upon an average uptime of the Yimiao Machines at 87.5% and also alternatively 95%.

673 In his first report he identified a number of publications and then stated:

• From the equity research reports gathered, the operational uptimes for mining facilities range between 80% and 95%.
• I used an average of the range, 87.5%, to estimate the uptime of what Yimiao would have had if they deployed their rigs to other facilities in the industry.
• 87.5% is the very minimum any participant would expect from a functioning data center participating in cryptocurrency mining pools.

[M]y expectation is closer to 98 ah 99 per cent, but I wanted to be conservative, objective, take a true look at it, so I pulled three expert reports or analyst reports which gave the range of 80-95 and I simply picked the - the mid of that.

675 He also explained the uptime rate represents 'the amount of time that the rigs are operating successfully'. He said that it may not be operating successfully due to the machine itself being faulty and not operating. In addition, the minimum uptime in the agreement concerning the South Carolin site is 90% (referred to as an 'online rate').

676 I do not accept the defendants' submission that Mr McNew did not make any allowance for delays for repairs. As I have said, this is included in his uptime rate.

677 Mr McNew explained that an uptime rate of 95% is a reasonable time for professional uptime based upon his experience with other professional mining operations and companies and that it is a high end which reflects professional operations.

678 I accept Mr McNew's evidence of an uptime rate of 87.5%. It is reliable. The defendants did not submit that an uptime rate of 87.5% is unreliable.

679 There is no reliable evidence of the cost of repairs and maintenance of the Yimiao Machines. Mr McNew's calculation does not take into account the possible costs of repairing the Yimiao Machines.

680 Yimiao submitted that 'expenses' were otherwise captured by the service fee in the Second Star Mining Agreement. But repair fees are not included (see cl 4.2).

681 Ms Zhou gave evidence that prior to 25 July 2022, about 20 of the Yimiao Machines had faults and were not operating. Prior to 25 July 2022, 512 of the Yimiao Machines were operating.

682 The agreements at the USA sites provide for the operator (ie the company in the Yimiao Group) to repair them. There is no evidence as to what steps companies in the Yimiao Group took to repair cryptocurrency machines and whether that involved them repairing them onsite or sending them offsite.

683 There is no reliable evidence concerning the possible cost of repairs of the Yimiao Machines over a period of 4 years. There is no evidence of:

(a) the nature and extent of possible repairs of the Yimiao Machines;

(b) the cost of repairs.

684 These matters could have been readily addressed by evidence as to each of these matters.

Return of Yimiao Machines to Yimiao during the relevant period

686 Mr McNew was instructed to assume that Yimiao was deprived of a particular number of Yimiao Machines for particular periods. I set out the assumptions he was to make and my comments of them:

(a) assumption that 1,598 Yimiao Machines were missing for the period 25 July 2022 to 27 February 2023. I agree. This is because 795 Yimiao Machines were collected by Yimiao by 27 February 2023;

(b) assumption that 803 Yimiao Machines were missing for the period 28 February 2023 to 30 August 2023. I substantially agree, but note that 34 Yimiao Machines were returned in the period 21 August 2023 to 4 September 2023;

(c) assumption that 769 Yimiao Machines were missing for the period from 4 September 2023. I agree. I have already found that in early October 2024, 29 L7 Antminers were also collected by Yimiao but there is no evidence that they were Yimiao Machines.

687 Mr McNew's calculation is based upon an assumption that he was instructed to make concerning the return of Yimiao Machines. Mr McNew then calculated the lost profit only taking into account the number of Yimiao Machines that had not been returned. This assumption is based upon the evidence of the return of Yimiao Machines and I accept it.

Ceasing using the Yimiao Machines at the USA sites

688 I accept the assumptions concerning the end date of the use of the Yimiao Machines.

689 Mr McNew gave evidence that Yimiao would have ceased using all of the Yimiao Machines by 26 July 2026. This was based upon his unchallenged evidence that they would have had a lifespan of 4 years.

690 As some Yimiao Machines were already in use prior to 25 July 2022, Mr McNew made a deduction for the lifespan of those Yimiao Machines. He was asked to assume that 500 Yimiao Machines were connected on 1 May 2022. Even though this is less than the 512 Yimiao Machines I have found were operating prior to 25 July 2022, the assumption that each of these machines were operating from 1 May 2022 is conservative and I accept it.

Transport costs of the Yimiao Machines to the USA sites

691 There is no reliable evidence of the cost to transport the Yimiao Machines to the USA sites.

692 Mr McNew's calculation does not take into account the cost to transport the Yimiao Machines to the USA sites.

693 Yimiao submitted that it is not appropriate to take into account, in the counterfactual, the transport costs as any such costs were only incurred as a result of the defendants' conduct. I do not accept this submission. Upon the counterfactual, Yimiao lost the opportunity to use the Yimiao Machines to mine for cryptocurrency at the USA sites. I have already found that prior to any wrongful conduct it had decided to relocate and transport the Yimiao Machines to the USA sites. As a result, the cost of transporting the Yimiao Machines to the USA sites is a cost that would have been incurred in any event and it must be taken into account.

694 Yimiao would have incurred transport costs in transporting the Yimiao Machines to the USA sites. Ms Zhou's evidence was that in July 2022 she was given an oral estimate of between $200-$300 per machine when she sought a quote from her 'logistic partner' for the shipping of 198 machines to South Carolina.[110] Ms Zhou gave evidence that no invoice was issued for the transport of the 198 machines because 'we didn't pick up the machine so there was no invoice, of course'. I infer this refers to Yimiao being unable to access the site after 25 July 2022. This provides a reasonable explanation for the absence of documentary evidence to corroborate Ms Zhou's recollection of the oral quote for transport of the machines. But it is hearsay and I give it little weight.

695 Given Yimiao's established mining operations at the USA sites, and its access to a 'logistic partner', it was reasonable for more precise and reliable evidence to have been given of the transport costs from Australia to the USA sites. Yimiao failed to do so.

696 There is reliable evidence of the cost of electricity at the USA sites.

697 Mr McNew's headline figure of AUD26,457,429.47 relies upon the costs of electricity at the Wellington Rd site, being the cost of AUD.10/kWh and not upon the cost at the USA sites. The cost of AUD0.10/kWh is set out in the Second Yimiao/Star Mining agreement.