Zreika v Royal

OVERVIEW DERIVED FROM THE PRINCIPAL DECISION 8 In March 2010, the Royals commenced proceedings against Mr Nathan El Ali in the Supreme Court of New South Wales seeking recovery of a debt in the sum of $925,000 plus interest (the debt proceedings) (see PD[4]). 9 On 1 October 2010, in the debt proceedings, the Royals obtained freezing orders restraining Mr Nathan El Ali from disposing of, dealing with, or diminishing the value of his assets to an unencumbered value of $925,000 (other than in paying for ordinary living expenses and in the ordinary course of his business) (the 2010 Freezing Orders). Saracen was similarly restrained with respect to its assets to an unencumbered value of $1,099,456.17. Mr Nathan El Ali was ordered to file and serve an affidavit as to his assets and liabilities within 14 days after the 2010 Freezing Orders were made (see PD[5]). 10 It was not in dispute before the primary judge that, when the 2010 Freezing Orders were made, shares in the Companies (all then held by Mr Nathan El Ali) and the real property owned by Ottoman and Saracen were covered by the 2010 Freezing Orders. When the 2010 Freezing Orders were made, Saracen was the registered proprietor of the Voyager Point property and the Potts Point property and Ottoman was the registered proprietor of the Kogarah Unit 2 property (as well as Units 1 and 3) and had entered into a contract to purchase the Taren Point property (see PD[6] and [7]). 11 At PD[8]-[11] and [13]-[16] the primary judge noted that: 8 On 19 October 2010 Mr [Nathan] El Ali transferred his shares in Isaac & Jacob and Ottoman to Mr Nazloomian (who was described in evidence as a friend of Mr [Nathan] El Ali). The transfers were for nominal consideration and were purportedly effected as security for outstanding loans from Mr Nazloomian to Mr [Nathan] El Ali and his companies, including Ottoman. Mr Nazloomian also replaced Mr [Nathan] El Ali as the sole director of both companies. The applicants' case (which was denied by Mr [Nathan] El Ali) was that Mr [Nathan] El Ali effected the transfer of the Isaac & Jacob shares in knowing breach of the freezing orders and with intent to defraud his creditors. The applicants have not sought to impugn the transfer of the Ottoman shares to Mr Nazloomian as the shares were later transferred back to Mr [Nathan] El Ali. 9 On 22 November 2010 (after the share transfers and outside the time ordered) Mr [Nathan] El Ali affirmed his affidavit of assets and liabilities. He disclosed that he was the director and shareholder of Saracen and EasyChoice (as well as other companies that are not presently relevant). He listed in his assets and liabilities the Voyager Point and Potts Point properties, as well as a property at Helensburgh ("the Helensburgh property") (also owned by Saracen), as follows: Details Extent of Interest Value Encumbrances/Liabilities [Helensburgh property] Saracen $3.6 m NAB Mortgage $1,540,000 [Voyager Point property] Saracen $4.5 m CBA Mortgage $1,384,466.62 [Potts Point property] Saracen $700,000 Nil

10 He also disclosed that until 19 October 2010 he had been a director of, and held shares in, Ottoman and Isaac & Jacob. He deposed that the reason he had resigned as director of those companies was: … due to the credit defaults which have been recorded against me personally. This prevented me from borrowing funds to purchase real estate. The transfer of the shares … was part of the overall transaction replacing me as director of the companies referred to … above [which included Ottoman and Isaac & Jacob]. 11 He deposed that Ottoman was the registered proprietor of Kogarah Units 1, 2 and 3 which he valued at $670,000 each and that Units 1 and 3 (but not Unit 2) were mortgaged, each securing the amount of $545,000. He also deposed that Ottoman had entered into two contracts for the purchase of property as follows: (a) on 23 July 2010, a contract to purchase a property at Lot 3, Stonny Batter Road, Minto ("the Minto property") for the purchase price of $3.8 million, on which a deposit of $38,000 had been paid with completion due on 30 November 2010; and (b) on 15 September 2010, a contract to purchase the Taren Point property for the purchase price of $2.025 million with a deposit paid of $50,625 and a completion date 130 days after the date of contract. … 13 On 26 November 2010, Mr Nazloomian resigned as the director of Ottoman and transferred the shares in Ottoman back to Mr [Nathan] El Ali, who was also re-appointed as sole director. 14 On 15 December 2010 (or thereabouts) Ottoman purported to appoint Mr Stojanovski as the new trustee of the Ottoman Investments Unit Trust and on 16 December 2010, Ottoman transferred the Kogarah Unit 2 property to Mr Stojanovski for $1. The transfer was said to be effected as security for an advance of $1 million from Mr Stojanovski to Ottoman to fund the balance due on the purchase of the Minto property. The applicants' case (which was denied by Mr [Nathan] El Ali) was that these transactions were effected by Mr [Nathan] El Ali in knowing breach of the freezing orders and with intent to defraud his creditors. 15 The debt proceedings were heard by Macready AsJ on 11-13 April 2011 with the judgment reserved. 16 On or around 21 April 2011 Ottoman purported to appoint Mr Zreika as the new trustee of the Ottoman Investments Unit Trust in place of Ottoman and a transfer form for the transfer of the Taren Point property from Ottoman to Mr Zreika for consideration of $1 was stamped at the Office of State Revenue ("OSR"). On 29 April 2011, the Ottoman purchase of the Taren Point property was completed. On 5 May 2011, Ottoman was registered as the owner on the title. On the same day, the transfer from Ottoman to Mr Zreika was also registered. The applicants' case (which was denied by Mr [Nathan] El Ali) was that these transactions were effected by Mr [Nathan] El Ali in knowing breach of the freezing orders and with intent to defraud his creditors. 12 On 3 June 2011, judgment was delivered in the debt proceedings in favour of the Royals for $1,099,456.74 plus costs and on 23 June 2011, orders were entered giving effect to the judgment. The 2010 Freezing Orders were continued but were due to expire on 21 July 2011. They were extended (on an ex parte application by the Royals) on 18 July 2011 "until further order" (see PD[17]-[18]). 13 The primary judge said at PD[19]: 19 On 13 August 2011 the Royals served a bankruptcy notice on Mr [Nathan] El Ali. On 22 August 2011, Mr [Nathan] El Ali resigned as the director of Ottoman and Saracen and transferred the shares in those companies for nominal consideration to his nephew, Mahmoud, who was also appointed the sole director of each company. On 7 September 2011, Mr [Nathan] El Ali also resigned as the director of EasyChoice and transferred the shares in that company to Mahmoud, who was also appointed the sole director of that company. The applicants' case (which was denied by Mr [Nathan] El Ali) was that these transfers were made by Mr [Nathan] El Ali for nominal consideration in knowledge of the judgment against him and the extension of the freezing orders, and done with the intent of defrauding Mr [Nathan] El Ali's creditors. Mr [Nathan] El Ali has denied that he knew about the extension of the orders at the time that the transfers were effected. He claimed that he did not become aware of the extension of the freezing orders until about 12 September 2011. He has also denied that the transfers were effected with the intent of defrauding his creditors, claiming that the shares in EasyChoice were transferred to Mahmoud because Mahmoud wanted to take over EasyChoice and recapitalise it, and that the shares in Saracen and Ottoman were transferred to Mahmoud because Mr [Nathan] El Ali did not consider that either Saracen or Ottoman had any value left in them. 14 The Royals filed a creditor's petition against Mr Nathan El Ali on 20 September 2011 and it was served on him on 8 October 2011. It was originally listed for hearing on 3 November 2011 but, for reasons unexplained in the evidence before the primary judge, it was not heard until 16 December 2011 (see PD[21]-[23]). Following correspondence from the Royals' solicitors concerning possible breach of the 2010 Freezing Orders, on 17 October 2011, shares in Saracen were transferred from Mr Mahmoud El Ali to Mr Nathan El Ali, but they were re-transferred to Mr Mahmoud El Ali on 1 November 2011 for consideration of $17,500. Despite demands from the Royals' solicitors around this time for the shares in EasyChoice to be transferred back to Mr Nathan El Ali from Mr Mahmoud El Ali, that did not happen (see PD[24]-[28]). 15 In the Principal Decision at PD[28]-[32], the primary judge notes that 28 … Mr [Nathan] El Ali had, on 1 November 2011, re-transferred the Saracen shares back to Mahmoud. Consideration of $17,500 was said to have been given. On 21 November 2011 Holman Webb sent another letter to Mr [Nathan] El Ali's solicitors and to Mahmoud noting that subsequent to 17 October 2011, Mr [Nathan] El Ali had again transferred the shares in Saracen to Mahmoud. The applicants' case (which was denied by Mr [Nathan] El Ali) was that the share transfer was made by Mr [Nathan] El Ali in knowledge of the judgment against him and the extension of the freezing orders and done with the intent of defrauding Mr [Nathan] El Ali's creditors. 29 On 24 November 2011, Mr [Nathan] El Ali's solicitors informed Holman Webb that the only asset of Saracen was the Potts Point property which currently had a value of $25,000, there was a caveat on the property supporting a loan of $22,500 in relation to the purchase of the property and Saracen was a "mere trustee" in respect of the Helensburgh and Voyager Point properties. They also stated that their instructions were that Mr [Nathan] El Ali had sold his shares in Saracen to Mahmoud for $17,500 which "appears to be at better than estimated market value" and that Mr [Nathan] El Ali required the funds to enable him to continue to fund his defence of the proceedings and believed that he was entitled to have sold his shares for that purpose. 30 On 8 December 2011, Mahmoud, in his capacity as the sole director of Saracen, executed a Deed of Retirement and Appointment appointing Mr Zreika in place of Saracen as trustee of the Voyager Point Unit Trust. Also on 8 December 2011, Saracen transferred the Voyager Point property to Mr Zreika for $1. The applicants' case (which was denied by Mr [Nathan] El Ali) was that these transactions were effected by Mr [Nathan] El Ali in knowing breach of the freezing orders and with intent to defraud his creditors. 31 On 16 December 2011, a sequestration order was made against the estate of Mr [Nathan] El Ali. 32 The remaining disposition that has been challenged by the applicants as a disposition with intent to defraud Mr [Nathan] El Ali's creditors occurred in November 2012 when Saracen transferred the Potts Point property to Mr Nazloomian for $30,000, purportedly in reduction of the loan amounts then outstanding to Mr Nazloomian.

Section 37A of the Conveyancing Act 16 At PD[37], and relevantly to this appeal, the primary judge set out s 37A of the Conveyancing Act as follows: (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of alienation, notice of the intent to defraud creditors.

Defences 17 The primary defences were recorded by the primary judge at PD[40]-[44] as follows: 40 The four primary defences are that: (a) there was no intent to defraud creditors; (b) the real estate (save for the Potts Point property) was not property that would have been available to Mr [Nathan] El Ali's creditors, if those properties had not been disposed of, because the properties were the trust property of the Ottoman Investments Unit Trust and the Voyager Point Unit Trust and Mr [Nathan] El Ali did not hold any beneficial estate or interest in those properties at any material time; (c) in the alternative, if those properties do constitute property divisible amongst his creditors, the properties at the time of disposition were encumbered to such an extent that there was no relevant value in those properties at the time of disposition and, accordingly, the properties and the shares in Saracen and Ottoman were worthless and there was no diminution of the property available to creditors by reason of those dispositions; (d) the shares in EasyChoice were also worthless at the time of disposition and there was no diminution of the property available to Mr [Nathan] El Ali's creditors by reason of the transfer of those shares. 41 Mr Stojanovski and Mr Nazloomian also relied on the defence under s 37A(3) of the Conveyancing Act. 42 Mr Stojanovski contended that he acquired Kogarah Unit 2 by way of security for a loan that he made to Ottoman and entered into the transaction in good faith without notice of an intention to defraud creditors. 43 Likewise Mr Nazloomian contended that he acquired the shares in Isaac & Jacob as security for loans that he made to Mr [Nathan] El Ali and/or his related companies and entered into the transaction in good faith without notice of an intention to defraud creditors. He contended also that he acquired the Potts Point property for valuable consideration and entered into the transaction in good faith without notice of an intention to defraud creditors. He also relied on the defence under s 121(4) of the Bankruptcy Act with respect to his acquisition of the shares in Isaac & Jacob, contending that he acquired the shares in Isaac & Jacob for value and did not know, or have reason to believe, at the time of the transfer that Mr [Nathan] El Ali was insolvent or about to become insolvent. 44 An alternative defence was raised on behalf of Mr Stojanovski in closing submissions in relation to the transfer of the Kogarah Unit 2 property to him and leave of the Court is required to amend the defence. As the proposed amendment was opposed it is appropriate to deal with the question of leave when considering the other defences advanced by Mr Stojanovski. 18 The primary judge made specific findings that the transfer of each of the properties had occurred at Mr Nathan El Ali's instigation and with intent to defraud his creditors within the meaning of s 37A and that the Royals, as creditors, were thereby prejudiced by reason of the divestiture of an asset belonging to a company of which Mr Nathan El Ali remained the effective controller at all relevant times and the property was put beyond the reach of Mr Nathan El Ali's creditors (at PD[219], PD[221], PD[228] and PD[231]). 19 The primary judge also rejected defences under s 37A(3) by Mr Nazloomian (at PD[230]-[231]) and by Mr Stojanovski and leave was refused for Mr Stojanovski to amend his defence (at PD[44] and PD[220]).

Credit findings 20 Having regard to the nature of the claims made by the Royals and Mr Jones and the nature of the defence mounted by the appellants, it was necessary for the primary judge to consider the creditworthiness of the witnesses and this was done in careful detail. 21 The primary judge found the evidence of Mr Nathan El Ali and Mr Nazloomian in relation to the transfer of shares in Isaac & Jacob from Mr Nathan El Ali to Mr Nazloomian and the transfer and re-transfer of shares in Ottoman from Nathan El Ali to Mr Nazloomian and back to Mr Nathan El Ali to be "not candid" and "not credible" (at PD[56]). The primary judge found Mr Nazloomian's evidence that he was put in a position to manage the trusts of which Saracen and Ottoman were said to be trustees so that he could monitor their assets and give him some security for his loans to those companies to be neither supported by evidence nor by his conduct. That conclusion was based on his lack of knowledge of the affairs of those companies including the transfer of the Voyager Point property and Taren Point property to Mr Zreika. This led to the inference that Mr Nazloomian's role was essentially to do as instructed by Mr Nathan El Ali (at PD[57]-[58]). The primary judge also found that Mr Nazloomian's "lack of candour in his evidence" impacted on his creditworthiness. This related to the fact that he did not, in his evidence in chief, explain his role in the transfer of shares in Ottoman to and from him or acknowledge that he knew of the litigation between the Royals and Mr Nathan El Ali and that he received regular updates about it or that he knew that Mr Nathan El Ali was under financial pressure from his creditors (at PD[59]). 22 The primary judge found that Mr Nathan El Ali was not candid in his evidence and "not a witness of truth" based on his failure to explain in his evidence-in-chief why he transferred shares in Isaac & Jacob and Ottoman to Mr Nazloomian, having "gone to great lengths" to explain the reasons for his resignation as a director (at PD[60]). His evidence concerning the effect of the 2010 Freezing Orders was "unconvincing and contrived" (at PD[61]). His evidence as to why he had asked Mr Nazloomian to take over Ottoman in October 2010 (that he was distracted by the litigation with the Royals) "was contradicted by his own conduct" in continuing to attend to the affairs of that company as if he was still the sole director and shareholder (at PD[62]). The primary judge did not find the timing of the share transfers to be coincidental, the 2010 Freezing Orders having been made on 1 October 2010 and the acquisition by Ottoman of the Kogarah Units (1, 2 and 3) having occurred in August 2010 (at PD[61] and [63]). His credibility was impacted by having engaged in transfers in breach of the 2010 Freezing Orders (at PD[137]). The primary judge found that, although Mr Mahmoud El Ali was the director of Saracen at the time of the transfer of the Potts Point property to Mr Nazloomian in late 2012, "it is clear on the evidence" that Nathan El Ali was "the initiator and directing mind and driving force" behind it (at PD[167]). 23 The primary judge also rejected the evidence of Mr Nathan El Ali and Mr Stojanovski in relation to why Mr Nathan El Ali caused the transfer of the Kogarah Unit 2 property from Ottoman to Mr Stojanovski for $1 and Mr Stojanovski's purported loan of $1 million to Ottoman because "both witnesses were found not to be credible" (see PD[96] and also PD[219]). The Principal Decision at [86]-[95] sets out the 10 reasons for the finding (see PD[96]). 24 The primary judge found the evidence of Mr Zreika and Mr Nathan El Ali "unsatisfactory and unconvincing" concerning the circumstances of the transfer of the Taren Point property to Mr Zreika (at PD[113]). The primary judge did not accept Mr Zreika's evidence that he had arranged funding because that evidence was "shown to be plainly incorrect in cross-examination" and Mr Stojanovski and Mr Nazloomian gave consistent evidence that it had been Mr Nathan El Ali who had arranged loans from them (at PD[114]). 25 In the primary judge's view, "Mr Zreika was shown generally to be an unreliable witness"; he was not "a person whose testimony could be relied upon"; and "[o]n his own evidence, Mr Zreika was prepared to mislead" and had been given a certificate under s 128 of the Evidence Act 1995 (Cth) in relation to a statutory declaration made in June 2012 in connection with obtaining finance from Gee Bee Airfreight Pty Ltd (Gee Bee Airfreight) for the Taren Point property (at PD[115]). Further, the evidence did not show that Mr Zreika carried out functions as a trustee of the Ottoman Investments Unit Trust and Mr Nathan El Ali's responses concerning whether or not Mr Zreika had a plan as to what would happen with the Taren Point property were "evasive and contradicted by the evidence that he [Mr Nathan El Ali] had arranged the finance" (at PD[119]). 26 The primary judge also found the evidence of Mr Mahmoud El Ali and Mr Nathan El Ali concerning the reasons for the transfer of shares in Ottoman, Saracen and EasyChoice to Mr Mahmoud El Ali to be "not credible" and "wholly unconvincing" (at PD[136]). Among other reasons for this, the primary judge rejected Mr Mahmoud El Ali's explanation for the transfer of shares in EasyChoice to him (so that he could run a credit business) as "implausible" for the reasons set out at PD[138] and found at PD[139] that carrying on that business did not explain why shares in Ottoman and Saracen would be transferred to him. 27 The primary judge made the following summary findings at PD[168]-[170]: CONCLUSIONS ON CREDIT 168 For the reasons given above I have concluded that none of the respondents was a witness of truth and I have largely not accepted the evidence of any of them. The testimony of each of them on key factual matters was contradicted on many occasions by their actual conduct which showed that their evidence-in-chief could not be accepted as credible, and I have not accepted their explanations for the transactions which are the subject of these proceedings. 169 Mr [Nathan] El Ali, in particular, was a most unsatisfactory witness who showed himself prepared to colour the truth during the course of evidence to advance his own interests. SUMMARY 170 Based on the above analysis of the evidence in relation to each of the impugned transactions, I find that Mr [Nathan] El Ali remained at all times the controlling mind and directing force of Isaac & Jacob, Ottoman, Saracen and EasyChoice, notwithstanding the changes of directorships and share dispositions. I also find that it was Mr [Nathan] El Ali who procured each of the share and property transfers and that he did so in the knowledge of the proceedings against him by the Royals and the freezing orders made against Saracen and him (with the proviso in relation to the extension of the freezing orders on 18 July 2011 which I accept he did not learn about until mid-September 2011). Having rejected the explanations of the respondents for those transactions, I find that Mr [Nathan] El Ali procured those transactions to safeguard his assets from present or future creditors by placing them with friendly third parties.

MR ZREIKA'S APPEAL 28 Mr Zreika's appeal relates to four matters: (1) Order 1(d) and Order 8 made by the primary judge on 23 September 2016 in the Orders Decision in relation to the Voyager Point property; (2) Order 1(e) and Order 11 made by the primary judge on 23 September 2016 in the Orders Decision in relation to the Taren Point property; (3) Orders made by the primary judge on 22 December 2016 in the Costs Decision in relation to the costs of the proceedings; and (4) Orders made by the primary judge on 23 March 2017 in the Deed Decision in relation to the deed of settlement and release between Mr Zreika, Mr Nazloomian and the liquidator of Saracen entered into on 2 November 2016 (the Deed). 29 In this section of our reasons, we deal with Mr Zreika's appeal in relation to the Voyager Point property and the Taren Point property. We will deal with Mr Zreika's appeal (and those of the other appellants) in relation to the costs of the proceedings and the Deed later in these reasons. 30 There were five respondents to Mr Zreika's appeal. The Royals and Mr Jones appeared and made submissions. Ottoman did not make submissions. Counsel for Ottoman appeared at the beginning of the appeal, but sought and was granted leave to withdraw. Saracen was joined at the beginning of the hearing of the appeal, but did not make submissions.

The Voyager Point property 31 The respondents commenced their proceedings against Mr Zreika on 23 August 2013. 32 Before we outline the nature of the cases of the respective parties, we mention a freezing order made by a judge of this Court (not the primary judge) in September 2013. The importance of this order will become clear. 33 In September 2013, the respondents sought a limited freezing order against Mr Zreika in relation to the proceeds of sale of the Voyager Point property. A solicitor appeared for Mr Zreika on the hearing of the application. The solicitor advised the Court that his instructions were that the proceeds of sale had been disbursed, but that he had not been able to confirm that this was the case. The judge hearing the application made a freezing order in relation to the proceeds of sale (the 2013 Freezing Order). 34 In his reasons delivered on 11 September 2013 (Royal v El Ali, in the matter of the bankrupt estate of El Ali [2013] FCA 923), the judge outlined some of the history of the proceedings as follows (at [14]-[18]): 14 In June 2013, the third applicant caused a search to be carried out with respect to the Voyager Point property. The search revealed that, on about 8 December 2011, in apparent breach of the freezing orders made by the Supreme Court, the fourth respondent transferred the Voyager Point property to the third respondent for $1.00. A further search carried out with respect to the Voyager Point property on 25 June 2013 revealed that it had been transferred to a company called Pronto Properties (NSW) Pty Ltd. The evidence currently before me indicates that the sale price was $1,700,000 and that the sale was made on 21 March 2013. The first and second applicants first became aware of this sale on 12 June 2013 when, having instructed valuers to undertake a valuation of the Voyager Point property, they were informed that the property had been sold. 15 On 23 August 2013, the applicants commenced the present proceeding. It has been commenced on the first and second applicants' initiative to recover shares in the fourth respondent so that they are placed in the third applicant's ownership as trustee in bankruptcy of the first respondent's bankrupt estate. It seems that the third applicant is without funds. He has consented to join in the proceeding on the basis that the first and second applicants indemnify him against any adverse costs order that might be made. 16 In a letter dated 10 September 2013 from the solicitors for the second, third and fourth respondents to the solicitors for the applicants, the second, third and fourth respondents contended that the Voyager Point property had been held by the fourth respondent and then by the third respondent as a trustee. The details of this trust are not disclosed in the letter. Nevertheless, I have also been informed today that, in the course of the proceedings in the Supreme Court, the Voyager Point property was referred to as an asset of a discretionary trust. 17 The applicants' case is that there is reason to suspect that the first respondent has an interest in that trust and that the assets of the trust include the proceeds of sale of the Voyager Point property. As I presently understand it, that "reason to suspect" is based on the pattern and timing of the first respondent's conduct in transferring his shares in the fourth respondent to the second respondent, and in the conduct of the fourth respondent and then the third respondent disposing of the Voyager Point property, in the face of the first respondent's impending and actual bankruptcy, and in apparent breach of the Supreme Court's freezing orders. 18 The solicitor appearing for the third respondent today has informed me that he has been instructed that the proceeds of sale of the Voyager Point property have already been disbursed. He submits that, although the relief claimed in the proceeding as commenced includes a freezing order, the third respondent has been given inadequate notice that such an order would be sought today. He submits that the third respondent is prejudiced in not being able to put evidence before the Court or to mount, as it were, an informed defence to the present interlocutory application. 35 The order made by the judge was as follows: 4. The third respondent be restrained until 5.00 pm on 18 September 2013 from removing from Australia or, in any way, transferring or disposing of, dealing with or diminishing in value the proceeds of the sale of the property known as 1 Sirius Road, Voyager Point, New South Wales, being Lot 72 in Deposited Plan 661069. 36 We turn now to summarise the cases of the respective parties as pleaded. We will refer to the respondents to the appeals as the respondents, although it needs to be borne in mind that they were the applicants in the Court below.

The pleadings 37 In the respondents' Amended Application issued on 15 August 2014 in the 2013 proceedings, they sought a declaration pursuant to s 30(1) of the Bankruptcy Act that the transfer of the Voyager Point property from Saracen to Mr Zreika on 8 December 2011 is void and/or voidable, pursuant to s 37A of the Conveyancing Act. 38 In their Amended Statement of Claim filed on 15 August 2014, the respondents alleged that the transfer of the Voyager Point property from Saracen to Mr Zreika constituted an alienation of property for the purposes of s 37A. They alleged that as at 8 December 2011, Mr Mahmoud El Ali was the sole director and shareholder of Saracen. The respondents alleged that by reason of letters from them to Mr Mahmoud El Ali dated 8 September 2011 and 10 October 2011 respectively, he knew, or could have reasonably inferred, that Mr Nathan El Ali was seeking to hinder or delay the process of making property available for division amongst Mr Nathan El Ali's creditors. The respondents alleged that Mr Mahmoud El Ali's intention in permitting Saracen to transfer the Voyager Point property was to assist Mr Nathan El Ali in defrauding creditors in that the intention was to delay, hinder or defeat the respondents' ability to satisfy the judgment debt of the Royals. The respondents alleged that the Royals were persons prejudiced, for the purposes of s 37A of the Conveyancing Act, in that they were judgment creditors of Mr Nathan El Ali and the Voyager Point property was, until 8 December 2011, the property of Saracen, the shares in which fell within s 58(1) of the Bankruptcy Act whereby they are property divisible amongst Mr Nathan El Ali's creditors. They alleged that, by reason of the shares in Saracen vesting in the trustee in bankruptcy of Mr Nathan El Ali pursuant to ss 58(1) and 116(1) of the Bankruptcy Act, the Voyager Point property once restored to Saracen would be within the control of the trustee. 39 The respondents alleged that the transfer of the Voyager Point property on 8 December 2011 was voidable within the meaning of s 37A of the Conveyancing Act. They alleged that the alienation was not in good faith by reason of the consideration for the property being in the amount of $1. That amount was less than market value in that an unrelated purchaser bidding in an open market on an ordinary commercial basis would have provided more substantial consideration for the kind of property which was the subject of the disposition. They referred to the fact that Mr Nathan El Ali affirmed an affidavit on 22 November 2010 in which he disclosed that the approximate net value of the Voyager Point property was $3 million. 40 The respondents alleged that the inference could be drawn that Mr Zreika had notice of Mr Nathan El Ali's intent to defraud creditors as at the date of the alienation of the property by reason of the purchase price being $1 in the case of a property prima facie having a net value of $3 million. They alleged that Mr Zreika knew, or had reason to suspect, some preference contrary to the Bankruptcy Act, or that the effect of the disposition would be to disadvantage creditors. In the context of their pleas against Mr Zreika, the respondents pleaded that by reason of the above matters, the defence in s 37A(3) of the Conveyancing Act was not available. In addition to these pleas, the respondents pleaded that Mr Zreika transferred ownership in the Voyager Point property to Pronto Properties (NSW) Pty Limited (Pronto Properties) on 17 May 2013. Save for this allegation about the transfer of ownership, the respondents made no allegation about the transaction between Mr Zreika and Pronto Properties. 41 On 24 April 2015, the second to fifth respondents (Mr Mahmoud El Ali, Mr Zreika, Saracen and Ottoman) filed an Amended Defence (Defence). For present purposes, it is the pleas of Mr Zreika which are important. 42 In the Defence, Mr Zreika admitted that Saracen was the registered proprietor of the Voyager Point property, but alleged that at all material times up until on or about 8 December 2011, Saracen was the registered proprietor in its capacity as trustee of the Voyager Point Unit Trust. He alleged that Mr Nathan El Ali never had an interest, whether beneficially or otherwise, in the Voyager Point property. By reason of the fact that Saracen held the Voyager Point property as trustee of the Voyager Point Unit Trust, the value of the shares in Saracen never included the value of the Voyager Point property. 43 Mr Zreika alleged that on 25 January 2013, Mr Zreika acquired the Voyager Point property from Saracen for market value consideration. He paid $800,000 to procure the discharge of the mortgage registered by the Commonwealth Bank of Australia (CBA) over the Voyager Point property. The payment of $800,000 was supported as market price by a valuation provided by a Mr Danny Sukkar of Property Logic dated 15 January 2013. 44 Mr Zreika alleged that the Voyager Point property was never held, either directly or indirectly, by Mr Nathan El Ali personally and beneficially, and was not held by Saracen beneficially. Saracen held the Voyager Point property at all material times up until 25 January 2013 as trustee of the Voyager Point Unit Trust. On or about 25 January 2013, the Voyager Point property was transferred by Saracen to Mr Zreika for market value consideration, being the amount of $800,000. Mr Zreika paid to procure the discharge of the mortgage registered by the CBA over the Voyager Point property. Mr Zreika alleged that the transfer by Saracen to him could not have been for the purpose of hindering or delaying the process of making property available for division amongst Mr Nathan El Ali's creditors because he, Mr Nathan El Ali, never had an interest, directly or indirectly, in the property. 45 Mr Zreika admitted the transfer of ownership in the Voyager Point property by him to Pronto Properties on 17 May 2013 and pleaded that the transfer was pursuant to a contract of the sale of land dated 21 March 2013. Mr Zreika did not plead any reliance by him or by Pronto Properties on s 37A(3) of the Conveyancing Act. As we have said, the primary judge delivered the Principal Decision on 5 July 2016.

The primary judge's findings and conclusions 46 As we have outlined above at [20]-[27], the primary judge described Mr Zreika's evidence on one topic as unsatisfactory and unconvincing (at PD[113]) and later said that he was shown generally to be an unreliable witness whose testimony could not be relied upon (at PD[115]). The primary judge found that none of the respondents was a witness of truth (at PD[168]). We note at this point that Mr Zreika did not challenge these conclusions on the appeal. 47 The primary judge found that the Voyager Point property was transferred from Saracen to Mr Zreika in December 2011 for $1 (at PD[143]). On 8 December 2011, a transfer of the Voyager Point property from Saracen to Mr Zreika for consideration expressed to be $1 was signed by Mr Mahmoud El Ali on behalf of Saracen and by Mr Zreika (Transfer of the Voyager Point property). In addition, a deed of appointment was executed appointing Mr Zreika as trustee of the Voyager Point Unit Trust (the 2011 Deed of Appointment). Mr Nathan El Ali lodged the documents with the Office of State Revenue (OSR) and nominal stamp duty of $50 pursuant to s 54(3) of the Duties Act 1997 (NSW) (Duties Act) was paid on the Transfer of the Voyager Point property. The Transfer of the Voyager Point property was not lodged for registration on the title of the Voyager Point property at that point. 48 The primary judge found that the transactions effected in December 2011 were at Mr Nathan El Ali's initiative and direction, even though Mr Mahmoud El Ali was the director of Saracen at the time. The primary judge said that it was clear on the evidence that despite the 2011 Deed of Appointment purporting to appoint Mr Zreika as trustee, he did not take on the role of trustee. 49 The primary judge referred (at PD[148]) to the following evidence which her Honour noted that Mr Nathan El Ali and Mr Zreika claimed was "objective, unchallenged and un-contradicted": (1) As at 8 December 2011, the Voyager Point property was subject to a mortgage in favour of the CBA securing a loan of $1,285,000 made to Saracen in May 2010; (2) The CBA loan was in default from (at least) 3 February 2011; (3) By August 2011, Saracen was indebted to the CBA for $1,490,531.22; (4) On 15 January 2013, the property was valued at $900,000; (5) In December 2012, Saracen's dispute with the CBA was settled pursuant to a deed of settlement and release (CBA Deed); (6) Under the CBA Deed, Saracen was required to pay $800,000 by 25 January 2013 to the CBA in return for which the CBA would discharge the mortgage over the property; (7) Under the CBA Deed, if Saracen did not pay $800,000 by 25 January 2013, then default judgment would be given in favour of the CBA for $1,684,131.73 and the CBA would be entitled to costs on an indemnity basis; and (8) Saracen sought to source the $800,000 before 25 January 2013. 50 The primary judge found that the Transfer of the Voyager Point property was registered on the title on or about 29 January 2013. Her Honour noted that Mr Zreika acknowledged in his affidavit that full stamp duty should have been paid on the Transfer of the Voyager Point property from Saracen to himself and he deposed that he undertook to pay the full amount of stamp duty plus interest plus penalties. The primary judge recorded the fact that despite Mr Zreika's acknowledgement and undertaking, he had still failed to do so and her Honour concluded that this was another example of his preparedness to mislead. This circumstance, her Honour said, reflected adversely on his creditworthiness generally (at PD[152]). 51 The primary judge noted that Mr Zreika's case at trial was that he paid the $800,000 due to the CBA under the CBA Deed pursuant to an arrangement he made with Mr Mahmoud El Ali on behalf of Saracen. Her Honour noted that there was evidence that on 25 January 2013, Mr Zreika entered into a loan agreement with Gee Bee Airfreight (a company from which Mr Zreika had obtained a loan in June 2012 to refinance the Taren Point property) under which the sum of $900,000 was advanced and Gee Bee Airfreight took a mortgage over the Voyager Point property. The primary judge said that Mr Nathan El Ali was also involved in obtaining the loan from Gee Bee Airfreight to pay out the CBA loan. The primary judge drew the inference that the funds obtained from Gee Bee Airfreight were used to pay out the CBA (at PD[153]). 52 The primary judge said that on 21 March 2013, Mr Zreika entered into a contract for sale between himself as vendor and Pronto Properties as purchaser for $1.7 million and that the sale was completed on 15 May 2013. The proceeds of sale were applied in part to paying out the loan owed to Gee Bee Airfreight secured over the Voyager Point property of $927,123.28 (at PD[155]). 53 The primary judge said that Pronto Properties was a company associated with Mr Peter Walker, who was a solicitor at Walker Hedges & Co. They were the solicitors acting for Gee Bee Airfreight. Mr Walker was also director of Gee Bee Airfreight at the time. The primary judge found that Mr Nathan El Ali was also involved in the deal involving Pronto Properties. Her Honour found, on the basis of Mr Zreika's evidence, that Mr Nathan El Ali was the person who was involved completely in organising and arranging the sale to Pronto Properties (at PD[156]). 54 The primary judge said that her Honour found implausible Mr Zreika's explanation as to why he was able to sell the property for $1.7 million in March 2013 when Mr Nathan El Ali had obtained a valuation of the Voyager Point property in January 2013 of $900,000. 55 The primary judge found that out of the proceeds of sale Mr Zreika used an amount of $600,000 to repay a loan outstanding to Gee Bee Airfreight which was secured by the Taren Point property (at PD[158]). The primary judge found that it was Mr Nathan El Ali who was the person making the decision concerning the payment of the amount of $600,000 to Gee Bee Airfreight. The primary judge said that there was no document in evidence that recorded Mr Zreika having lent an amount of $600,000 to the Ottoman Investments Unit Trust and that Mr Mahmoud El Ali had no idea what Mr Zreika did with the property. Her Honour accepted that Mr Mahmoud El Ali knew nothing about the sale of the Voyager Point property to Pronto Properties (at PD[160]). 56 There was a dispute about whether the primary judge actually found that an amount of $600,000 out of the proceeds of sale of the Voyager Point property was used to repay a loan from Gee Bee Airfreight in relation to the Taren Point property, or was simply recording evidence which had been given. We think that her Honour did make such a finding. For example, her Honour said (at PD[158]): 158 Curiously and telling against Mr Zreika's credibility is that he used the proceeds of sale not only to pay out the $900,000 Gee Bee Airfreight loan secured by the mortgage over the Voyager Point property but he also used $600,000 towards payment of the loan outstanding to Gee Bee Airfreight which was secured by the Taren Point property… 57 The primary judge rejected the contention that the sole intent of the December 2011 transactions was to deal with the CBA dispute and financing issue. Her Honour said that nothing at all happened for a further 12 months and, in the absence of evidence which explained why nothing happened, it was reasonable to infer that the timing of the transfer had everything to do with the impending sequestration order against Mr Nathan El Ali which was made only eight days after the transfer (i.e., on 16 December 2011). Furthermore, the evidence all pointed to Mr Nathan El Ali as the person continuing to "call the shots" in relation to the dealings with the Voyager Point property, with Mr Zreika and Mr Mahmoud El Ali simply acting at his behest and direction. The primary judge found that Mr Nathan El Ali remained in effective control of the Voyager Point Unit Trust and of the property and that he effected the transactions in December 2011, knowing at the time that the property was the subject of the 2010 Freezing Orders. 58 The primary judge rejected Mr Nathan El Ali's and Mr Zreika's explanation for the transfer of the Voyager Point property from Saracen to Mr Zreika. The primary judge found that Mr Nathan El Ali effected the transfer of the Voyager Point property from Saracen to Mr Zreika for nominal consideration with the intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act. Her Honour found that the Royals, as creditors of Mr Nathan El Ali, were prejudiced by the transfer by reason of the divestiture of an asset belonging to a company of which Mr Nathan El Ali remained the effective controller at all relevant times (at PD[228]). 59 After the primary judge delivered the Principal Decision, her Honour adjourned the proceeding to give the parties the opportunity to address the final orders necessary to give effect to the Principal Decision. 60 The parties each filed written submissions in relation to the orders sought by the respondents. 61 The respondents sought a declaration and an order that the amount of $800,000 be payable to Saracen in relation to the Voyager Point property. In their written submissions, they referred to a number of the primary judge's findings. They submitted as follows: Upon this Declaration being made, the proceeds of sale of the Voyager Point property will vest in Saracen (in liquidation), with the question then being as to the quantum of the surplus of the proceeds of sale that is to be paid to the official liquidator of Saracen, considered below. 62 As to the proceeds of sale, the respondents referred to the primary judge's findings and contended that Mr Zreika received $800,000 of the proceeds of sale of the Voyager Point property for his own benefit and, in effect, treated this money as his own. The respondents submitted that her Honour did not make a finding that Mr Zreika had paid an amount of $600,000 to Ottoman Investments Unit Trust. 63 In response, Mr Zreika contended that his maximum monetary liability was $200,000 and that the "monetary liability of Zreika with respect to Voyager Point should be $200,000". He submitted that the primary judge made a finding that the amount of $600,000 was used to discharge a loan secured by a mortgage over the Taren Point property. 64 From what we can see, the issue between the parties was not whether a personal remedy could be granted against Mr Zreika, but rather the amount of the proceeds of sale which he had received for his own benefit. The amount in issue was $600,000. 65 For reasons which are not entirely clear, by the time the matter came back before her Honour, that issue seems to have receded and in the Orders Decision, her Honour referred to the relevant orders as being unopposed (at OD[3]). 66 On 23 September 2016, the primary judge made a declaration pursuant to s 121(1) of the Bankruptcy Act and s 37A of the Conveyancing Act that the transfer of the Voyager Point property from Saracen to Mr Zreika on 11 December 2011 was void. The respondents accept that the declaration should have been made, and only made, pursuant to s 37A of the Conveyancing Act. The primary judge also made an order (paragraph 8) that Mr Zreika "account for the value of the Voyager Point property in the sum of $800,000.00 by paying the said sum to the official liquidator of Saracen".

The Further Amended Notice of Appeal and submissions 67 On 13 April 2017, Mr Zreika filed a Further Amended Notice of Appeal. As we have said, he complains of the primary judge's orders with respect to the Voyager Point property. He contends that the primary judge erred in concluding that the Transfer of the Voyager Point property was done with the intention to defraud Mr Nathan El Ali's creditors, that her Honour placed emphasis on the factual matrix of events that occurred at least 12 months after the execution of the transfer, and did not place sufficient weight on the untested and uncontradicted evidence that Saracen's loan with the creditor which was secured over the Voyager Point property was in default as at 8 December 2011. Mr Zreika contends that the primary judge ought to have found that the transfer was not executed with the intent to defraud Mr Nathan El Ali's creditors. Mr Zreika further contends that the primary judge ought to have found that given the interest which the secured creditor had with respect to the Voyager Point property as at 8 December 2011, the property was not put beyond the reach of Mr Nathan El Ali's creditors by reason of the execution of the Transfer of the Voyager Point property on 8 December 2011. He further contends that the primary judge erred in finding that the respondents were prejudiced by the execution of the Transfer of the Voyager Point property and that her Honour ought to have found that they were not prejudiced by the execution of the Transfer of the Voyager Point property because, as at 8 December 2011, the interest of the secured creditor with respect to the Voyager Point property, would have taken priority over and "trumped" any entitlement of the respondents with respect to the property. Finally, Mr Zreika contends without any further elaboration, that the primary judge erred in ordering that Mr Zreika account for the value of the Voyager Point property in the sum of $800,000 by paying the said sum to the official liquidator of Saracen. 68 Mr Zreika filed an outline of written submissions in his appeal on 16 March 2018. In those submissions, he emphasised that the onus was on the respondents at trial to clearly prove the fraud which they alleged. Mr Zreika contends that the primary judge had changed the onus from the respondents to him. An example is set out in [70]-[71] below. We can say at this point that the primary judge did not make such an error. The primary judge said in the Principal Decision (at PD[45]): CREDIT ISSUES 45 Mr [Nathan] El Ali, Mahmoud, Mr Zreika, Mr Stojanovski and Mr Nazloomian each gave evidence-in-chief by way of affidavit and the credit of all of them was put into issue by the applicants. The applicants submitted that the Court should make adverse credit findings against each of them and should largely reject their evidence concerning the reasons for the transfers. Given the serious nature of the allegations, their evidence is to be tested by reference to the principles in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and a very high level of satisfaction should be reached before making the findings urged by the applicants. 69 Mr Zreika submits that nothing happened for a further 12 months after the Transfer of the Voyager Point property was executed on 8 December 2011 and that that circumstance supports the proposition that there was no intention to defraud. The title did not move from Saracen to Mr Zreika until 29 January 2013 and, in those circumstances (so it was submitted), there cannot be a finding of an intention to defraud in the sense of "hindering and delay". Mr Zreika submits that the facts indicate that the exact opposite occurred to that which was typical of "hindrance and delay situations". 70 Next, Mr Zreika submits that there was no subtraction of assets or prejudice to Mr Nathan El Ali's creditors by the Transfer of the Voyager Point property because there was no value in the Voyager Point property outside the secured creditor. Mr Zreika relies on her Honour's "findings" in PD[148] (see [49] above). Mr Zreika points to the fact that the "closest" valuation evidence of the Voyager Point property adduced in evidence was that of a registered valuer dated 15 January 2013, and the valuation as at that date was $900,000. No evidence was adduced by the respondents as to the valuation of the Voyager Point property as at 8 December 2011. Her Honour referred to the valuation, but otherwise made no findings. Mr Zreika complains of what her Honour said in the Principal Decision at PD[157]: 157 Mr Zreika's explanation as to why he was able to sell the property for $1.7 million in March 2013, when Mr [Nathan] El Ali had obtained a valuation of the Voyager Point property in January 2013 which valued the property at $900,000, was that Mr Walker "personally wanted that property. It wasn't valued at that price; he wanted it" and "we agreed". I find that explanation implausible. 71 Mr Zreika submits that such a finding demonstrated that the primary judge caused the initial onus to rest with him when it was properly (initially) that of the respondents to demonstrate the "fraud" and/or that they were "thereby prejudiced". As we have said, we do not think that the primary judge reversed the onus. Her Honour was entitled, indeed required, to assess the explanations which were advanced. 72 Mr Zreika contends that the absence of any evidence as to the value of the Voyager Point property as at 8 December 2011 means that the respondents have not discharged their onus to demonstrate that they were "thereby prejudiced" within s 37A of the Conveyancing Act, or that they were entitled to the Voyager Point property as at 8 December 2011. Mr Zreika again makes the point that the primary judge did not analyse what might have been available to unsecured creditors as at the date of transfer. In the absence of such evidence, it could not be established that the unsecured creditors were thereby prejudiced, or that there was a fraud. 73 On 28 May 2018, Mr Zreika filed additional submissions in chief with respect to the Voyager Point property. In those additional submissions, he submits that it was beyond the power of the Court to make the order in paragraph 8 because Mr Zreika had, by the time the orders were made, already completed the sale of the Voyager Point property to Pronto Properties. Mr Zreika pointed out that Pronto Properties was not a party to the proceeding and submits that no claim was made by the respondents that it was anything other than a bona fide purchaser for value. He submits that, in those circumstances, the defence of bona fide purchaser for value inures for the benefit of not only the purchaser, but also the vendor. He refers to the decision of the High Court in Brady v Stapleton [1952] HCA 62; (1953) 88 CLR 322 (Brady v Stapleton) at 333. He submits that he does not hold the proceeds of sale on trust for Saracen because the only circumstance in which that could be the case do not apply in that an ability to "trace" the proceeds has not been established. He raises a further point that the proceedings were not brought by the liquidator of Saracen, but instead by the respondents who have no standing to seek any other order than a declaration that the relevant transfer was void. 74 On 27 April 2018, the respondents filed their submissions in Mr Zreika's appeal. 75 The respondents submit that the primary judge was entitled to examine events occurring in the 12 months following the date of transfer of the Voyager Point property from Saracen to Mr Zreika, given that the Transfer of the Voyager Point property was not registered on the title until 29 January 2013. They point to the fact that the Transfer of the Voyager Point property shows that consideration in the amount of $1 was paid. Mr Zreika's evidence was that after on selling the Voyager Point property for $1.7 million in March 2013, from the proceeds of sale, $800,000 was available from which he paid himself $200,000. He gave evidence that "all of the rest of the money" was his and he got "all that money for $1". The funds available to creditors were thereby diminished given that Saracen transferred the Voyager Point property to Mr Zreika cleared of encumbrances for $1 which was then immediately sold by Mr Zreika for $1.7 million. 76 The respondents submit that the Transfer of the Voyager Point property occurred at a critical point and in the teeth of litigation, given that the Royals had obtained a judgment for over $1 million against Mr Nathan El Ali in June 2011 in the Supreme Court of New South Wales, the sequestration orders were made against Mr Nathan El Ali on 16 December 2011, the CBA had commenced proceedings against Saracen resulting in a judgment debt of $312,289.67, the CBA had obtained specific performance against Saracen in respect of the Voyager Point property and, on 15 December 2011, Mr Nazloomian's brother commenced proceedings against Mr Nathan El Ali and Saracen. Furthermore, the Transfer of the Voyager Point property to Mr Zreika on 8 December 2011, as well as registration on the title on 29 January 2013, occurred in prima facie breach of the 2010 Freezing Orders made by the Supreme Court of New South Wales. On 8 December 2011, Mr Mahmoud El Ali purported to appoint Mr Zreika as trustee of the Voyager Point Unit Trust in place of Saracen pursuant to which duty of $50 was paid on the transfer, notwithstanding the evidence of Mr Nathan El Ali and Mr Zreika that the appointment was not intended to take effect and that Mr Zreika did not intend to take the Voyager Point property on trust. 77 The respondents rely on the fact that the primary judge rejected the explanation of Mr Nathan El Ali and Mr Zreika that the lapse of 13 months had occurred so that Mr Zreika, as the new owner of the property, could obtain refinance, given that no steps were taken to effect a refinancing of the loan. They submit that the primary judge was entitled to conclude (as her Honour did) that nothing at all happened for a further 12 months and that, in the absence of evidence which explained why nothing did happen, "it is reasonable to infer that the timing of the transfer had everything to do with the impending sequestration order against Mr Nathan El Ali which was made on 16 December 2011, only 8 days after the transfer" (at PD[161]). The respondents submit that it is well-established that the existence of the requisite intent for the purposes of s 37A of the Conveyancing Act may be inferred from objective circumstances. The requisite intent is that of Mr Nathan El Ali, given that he was found to be the "controlling mind and driving force" of the transfer of the Voyager Point property. The respondents submit that, given that Mr Zreika curiously executed a transfer over 12 months before registration on the title, her Honour was entitled to examine that 12 month period. 78 The respondents submit that the primary judge was entitled to find the requisite intent (intent to defraud creditors) given the litigation involving Mr Nathan El Ali and Saracen, the financial difficulties of both, and the fact that the Transfer of the Voyager Point property occurred for no consideration and was to a friend. The primary judge rejected the evidence of Mr Zreika, Mr Nathan El Ali and Mr Mahmoud El Ali. Her Honour found, for example, that in relation to the stamp duty paid on the Transfer of the Voyager Point property of $50 and Mr Zreika's evidence that he did not intend by using that transfer to hold the property as trustee of the Voyager Point Unit Trust and that he purchased the property from Saracen in his own right, he was "either deceitful in his action in relation to avoiding the duty payable on the transfer, knowing that he did not take the property as trustee, or he was lying to the Court about the reason for the use of that transfer" (at PD[152]). 79 With respect to the second ground raised by Mr Zreika that the primary judge erred in finding a "subtraction of assets" available to creditors or the requisite "prejudice", the respondents submit that it is well-established that any interest of the secured creditor in the Voyager Point property as at the date of transfer on 8 December 2011, or registration on 29 January 2013, is not relevant to a finding as to whether it has been alienated with the intent of putting the property beyond the reach of Mr Nathan El Ali's creditors. In support of that proposition, they refer to Ingram v Y Twelve Pty Ltd 12 [2013] NSWSC 1777 (Ingram v Y Twelve) per Stevenson J at [104]-[105] and [134]-[136]. 80 The respondents point to the fact that the primary judge had dealt with this submission by Mr Zreika (and other respondents at the trial) under the heading "The 'no value' contention" at PD[214]-[215]. Her Honour described the submission as being that, in order for the Court to infer the relevant intent because the dispositions were for nominal consideration, the Court must be satisfied that the shares and properties in fact had value at the time of disposition and that Mr Nathan El Ali knew, or must have known, that to be the case. Her Honour said that that submission was contrary to Cannane v J Cannane Pty Ltd (in liquidation) [1998] HCA 26; (1998) 192 CLR 557 (Cannane) and Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546 (Marcolongo v Chen). Her Honour said in any event, Mr Nathan El Ali, in his affidavit of assets and liabilities sworn in November 2010, valued Saracen's net equity in the Voyager Point property at around $3.1 million, valued the Potts Point property (which was not encumbered) at $700,000, and valued the Kogarah Unit 2 property, also not subject to a mortgage, at $670,000. Her Honour noted that Mr Nathan El Ali agreed in cross-examination that as at December 2010, he considered that Saracen and Ottoman held "very substantial equity" in the parcels of real estate that they owned, albeit qualifying that answer "as trustee". Her Honour concluded that the evidence showed that Mr Nathan El Ali thought at the time that those properties, and by inference the shares, did have value. 81 The respondents submit that it was to be noted that the Court made an order that pursuant to s 109(10) of the Bankruptcy Act, 100% of the net amount available for distribution to creditors after payments of the amounts required to be paid by s 109(1)(a) of the Bankruptcy Act from the bankrupt estate of Mr Nathan El Ali, be paid to the Royals in priority to all other creditors. This order was not opposed by Mr Zreika. The respondents submit that, in any event, the evidence given by Mr Zreika was that $800,000 was available to him from the proceeds of sale of the Voyager Point property. In those circumstances, Mr Nathan El Ali's creditors were clearly prejudiced by the loss of the proceeds of sale of the property, given the proceeds of this sale were payable to Saracen, a company the shares in which vested in the registered trustee by the operation of s 58 of the Bankruptcy Act. The respondents submit that the only rational explanation for the entire transaction is that Mr Zreika is a good friend of Mr Nathan El Ali and was used by him to dispose of the very valuable property and keep the proceeds of sale from any creditors of Mr Nathan El Ali during the latter's bankruptcy. The respondents submit that Mr Zreika's submission concerning the valuation closest to the date of transfer ignores the on-market sale for $1.7 million two months after the valuation. 82 On 11 June 2018, the respondents provided further written submissions to the Court dealing with Mr Zreika's additional submissions in chief dated 28 May 2018. They submit that Mr Zreika is not entitled to raise the "Brady v Stapleton defence" on the appeal. They further submit that, in any event, on the evidence which was before the primary judge, the defence cannot be made out. The respondents submit that had Mr Zreika relied on Brady v Stapleton at first instance, he would have had to plead and adduce evidence to prove that the sale to Pronto Properties was at arm's length and to a bona fide purchaser. Furthermore, Mr Zreika would have needed to show that the principles in Brady v Stapleton (a case decided under ss 46-48 of the Mercantile Acts 1867 (Qld) (Mercantile Acts)) were entirely applicable to s 37A of the Conveyancing Act. Mr Zreika adduced no evidence in support of what he now claims and pleaded no such case. Had Mr Zreika done so, then the respondents could have taken steps to meet such a pleading, including possibly joining Pronto Properties to the proceedings, and adducing evidence by way of discovery to show that Pronto Properties was not bona fide and at arm's length, including evidence that Pronto Properties at the relevant time shared a director with Gee Bee Airfreight. The respondents refer to the well-known cases dealing with a party's entitlement to raise new grounds on appeal, including Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 (Coulton v Holcombe) at 7-8; Pintarich v Deputy Commissioner of Taxation [2018] FCAFC 79 at [158] per Moshinsky and Derrington JJ. The respondents submit that the facts relating to the sale to Pronto Properties are not admitted by them and are not beyond controversy. They submit that evidence in respect of those facts and issues was not adduced or tested at trial. On the face of it, there was a common director between Pronto Properties and Gee Bee Airfreight. Mr Zreika's evidence in cross-examination at first instance was that he used $600,000 of the proceeds of the Pronto Properties sale to reduce two loans held by Gee Bee Airfreight, one over the Voyager Point property and one over another property, namely the Taren Point property. 83 The respondents submit that the point Mr Zreika now seeks to raise could have been made and raised at any point from at least the time of the hearing before Yates J in Royal v El Ali, in the matter of the bankrupt estate of El Ali [2013] FCA 923 in September 2013 when his Honour made the 2013 Freezing Order freezing the proceeds of the sale of the Voyager Point property to Pronto Properties, and at any point thereafter before the primary judge in these long running proceedings. The respondents submit that they would be prejudiced if Mr Zreika is able to raise this point and that to allow him to do so would undermine the objects of s 37M of the Federal Court of Australia Act 1976 (Cth) (the Federal Court of Australia Act). 84 The respondents make two further submissions. First, they rely on the 2013 Freezing Order made by Yates J over the proceeds of sale and they point to the absence of any reliable evidence that the proceeds of sale had been dispersed as at 23 August 2013. Secondly, they contend that "restitution ought now to be seen to be one of the available adjunct remedies where transactions have been voided pursuant to s 37A of the Conveyancing Act". 85 Mr Zreika provided additional written submissions dated 12 June 2018 to the Court at the time of the hearing of the appeal. In those submissions, he submits that Brady v Stapleton is authority for, first, the proposition that a s 37A(3) finding in favour of a bona fide purchaser for value, such as Pronto Properties, extends not just for the benefit of Pronto Properties, but also for the benefit of Mr Zreika, and secondly, that once a property has been on-sold, even by an assignee who took with knowledge of the fraudulent intent such as Mr Zreika was found to be, no personal liability can lie against the assignee by the assignor because the assignment was valid at the time it occurred, and the assignor's remedy must be to trace at common law into the identifiable proceeds of sale. He contended that the first proposition is set out at p 333 of Brady v Stapleton, and the second at p 334. 86 Mr Zreika submits that it was not necessary for him to plead the defence in s 37A(3) of the Conveyancing Act because in the Court below, the respondents (then applicants) accepted that they had the onus of proving a lack of good faith and they had pleaded the transfer of the Voyager Point property from Mr Zreika to Pronto Properties. In any event, he submits that even if he was required to plead the defence in s 37A(3) of the Conveyancing Act, that would not mean that the Court now had jurisdiction to grant the compensation order that is the subject of the appeal. That is so because it would not affect the validity of the second proposition he identified. Mr Zreika submits that if that was so, then although that might mean that there could be a declaration that Mr Zreika held certain identifiable proceeds of the sale to Pronto Properties on trust for Saracen, it would not alter the fact that if the respondents were unable to identify any such proceeds, then they were not entitled to an alternative compensation order, such as that set out in paragraph 8 of the orders made by the primary judge. The respondents bore the onus of identifying the proceeds of sale if they were ever to have obtained any relief that was of any substance. Mr Zreika submits that the respondents cannot reverse the onus by suggesting that his evidence as to dissipation before Yates J was somehow "unreliable", or by claiming that "there is insufficient evidence that the proceeds of the Pronto Properties sale was not in some derivative form and traceable". 87 Mr Zreika submits that there was an important distinction between raising a new legal issue on appeal and appealing an order on the basis that the Court's decision was wrong for want of jurisdiction. The essence of what he submits is that whilst raising a new legal issue on appeal may bring with it previously unexplored factual issues, a want of jurisdiction was already before the Court, but was not identified as an issue. Mr Zreika put the point in this way. He submits that with respect to the s 37A(3) defence, whether that should now be allowed to be raised would have to be considered in accordance with the principles in Coulton v Holcombe. That is different from the order that Mr Zreika pay Saracen $800,000. The latter matter was, according to Mr Zreika's submission, always a matter before the Court, irrespective of whether he raised it. Mr Zreika submits that it would have been a matter before the Court even if he had failed to appear at the hearing as to final orders and the respondents had sought the order ex parte. Mr Zreika also submits that the second of the two arguments only arose after the Principal Decision was handed down. It would have been open to him to have raised the point at that stage. He submits that the problem the respondents faced with the form of the final relief they required arose entirely from the fact that they could not identify the proceeds of sale and that was a problem of their own making. The respondents never attempted to identify any specific property that the proceeds from the Pronto Properties sale was transformed into before the evidence was closed and the primary judge handed down the Principal Decision. That was a failure by the respondents. Mr Zreika submits that a claim in restitution would have failed because the respondents are unable to identify any property of which it could reasonably be said that Mr Zreika holds on trust for Saracen. Mr Zreika submits that the respondents' claim for a compensation order in the amount of $800,000 made for the first time after the Principal Decision was handed down was always beyond the Court's jurisdiction and had Mr Zreika advised the Court of that fact, then the result would have been precisely the same as it is now. He submits that the point in this matter is not so much of an appellant raising a new argument for the first time, but rather of the Court applying its jurisdiction correctly irrespective of the parties' behaviour in the Court below. Mr Zreika referred to Chilton v London Corporation (1878) 7 Ch D 562; Universal Film Manufacturing Co (Australasia) Ltd v New South Wales [1927] HCA 50; (1927) 40 CLR 333 at 351 per Higgins J; and Craig v State of South Australia [1995] HCA 58; (1995) 184 CLR 163 at 177. The point Mr Zreika makes is that the Court must act on the correct view of the law and must refuse to act on incorrect admissions by the parties as to the law to be applied.

Relevant principles 88 The relevant principles in relation to the elements of s 37A of the Conveyancing Act and, in particular, the intent to defraud creditors, may be briefly stated. The High Court considered s 37A of the Conveyancing Act in Marcolongo v Chen. French CJ, Gummow, Crennan and Bell JJ referred to the history of s 37A and its predecessor, the Statute 13 Eliz. 1 c. 5. (the Elizabethan Statute). Their Honours made the point on two occasions in the course of their reasons that s 37A, like the Elizabethan Statute before it, should receive a liberal construction in effecting the purpose of suppressing fraud (at [20] and [58]). Section 37A refers to an intent to defraud creditors and means delay, hinder or [otherwise] defraud creditors as the Elizabethan Statute had provided (at [19]). Whether there is an intent to defraud creditors involves a question of fact concerning actual knowledge and is to be distinguished from the purely equitable doctrine of constructive notice or constructive knowledge (at [26]-[28]). However, it is not necessary to prove a desire to cheat or swindle those prejudiced. Furthermore, whilst it is necessary to show the existence of an intention to hinder, delay or defeat creditors, it is not necessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss (at [32]). Finally, it is not necessary that the intent to defraud creditors be the sole or predominant intention (at [57]). 89 The High Court considered the scope of s 121(1) of the Bankruptcy Act in Cannane and s 565 of the Corporations Law (the latter section picked up and applied to corporations in liquidation the provisions of s 121 of the Bankruptcy Act). At the time of Cannane, s 121(1) of the Bankruptcy Act was in the following terms: Subject to this section, a disposition of property, whether made before or after the commencement of this Act, with intent to defraud creditors, not being a disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes a bankrupt, void as against the trustee in the bankruptcy. 90 Brennon CJ and McHugh J said that the intent was an actual intention and that the intention could be an intention to defraud future creditors as well as present creditors. The intent must accompany the disposition and must relate to the effect of disposing of property "then existing" (at [10]). The intention is one which may be inferred. A subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. If property is transferred at an undervalue or is given away, that is a fact relevant to the intent to be attributed to the disposer in disposing of the property, although a disposition at an undervalue is only one fact from which, dependent on the surrounding circumstances, an inference of fraudulent intent may be drawn. 91 Brennan CJ and McHugh J referred to an approach which they described as involving an accumulation of intentions and then identified the fallacy of that approach (at [15]-[16]): 15 In the present case, John intended to subtract the Wisbeck shares from the reach of present and future creditors. Equally, it is clear that John intended that the benefit of the CCI transaction should be attached to the Wisbeck shares. The courts below have accumulated these intentions so as to find that John intended to subtract the Wisbeck shares, which would have had the benefit of the CCI transaction attached to them, from the reach of his present and future creditors. If that finding were upheld, the inference that the Wisbeck shares were subtracted from John's and JCPL's assets with the intent of defrauding their respective creditors would be easily drawn. A finding that the Wisbeck shares, at the time of disposition, would have or would be likely to have the benefit of the CCI transaction attached to them would be tantamount to a finding that they were sold by John and JCPL for an undervalue with the intent of subtracting assets having that value from the funds available to their respective creditors. 16 But there is a fallacy in the reasoning. John's intention that the benefit of the CCI transaction should be attached to the Wisbeck shares was conditional; the benefit was to be attached to the Wisbeck shares only if those shares were beneficially owned by Denise, Andrew and Richard. He never intended that, absent their ownership of the Wisbeck shares, Wisbeck should have the benefit of the CCI transaction. Far from intending that the Wisbeck shares should be subtracted from his assets with the consequence that his creditors would lose the benefit of the CCI transaction, his firm intention was that the creditors should never become entitled to the benefit of the CCI transaction. The intention of subtracting the Wisbeck shares was not to cheat the creditors of the benefit of the CCI transaction but to provide the vehicle for conveying the benefit of the CCI transaction to Denise, Andrew and Richard when the benefit of that transaction could be taken. 92 Gaudron J said that there is no intent to defraud if the person in question believed that others had no right or interest in or in relation to the property concerned and that the law accords them no opportunity or advantage with respect to that property (at [30]). There was nothing to suggest that Mr Cannane or his family company had an intention to defraud for there was nothing to suggest that they believed that their creditors had any right or interest in or in relation to the benefit of what was called the CCI transaction, or that the law accorded them any opportunity or advantage with respect to it (at [33]). 93 Gummow J said that the share transfers by Mr Cannane and his family company were not made with the intention of depriving their creditors of anything to which they were entitled. Mr Cannane intended that the transaction which resulted in the injection of value into the company whose shares were the subject of the dispositions would only take place "on the basis that neither he nor his family company remained a shareholder of the company" (at [56]).

Analysis 94 Leaving aside for present purposes the new argument based on Brady v Stapleton, Mr Zreika's submissions challenge the primary judge's finding of an intention to defraud creditors. Mr Zreika's submissions are set out in his Outline of Written Submissions which he was content to rely on. In other words, he did not address the matters in his oral submissions. 95 We have already addressed Mr Zreika's submission that the primary judge reversed the onus of proof. That submission fails. 96 The Transfer of the Voyager Point property was executed on 8 December 2011 for a consideration of $1, but was not used by Mr Zreika to secure his registration on the title until January 2013. Mr Zreika's submission that this delay was evidence that there was no intent to hinder or delay creditors must be rejected. The relevant test is hinder, delay or defraud creditors. We do not see how the delay in using the Transfer of the Voyager Point property points away from an intention to defraud creditors. 97 In our opinion, the primary judge's approach was correct. We have already referred to her Honour's adverse credit findings in relation to Mr Zreika. Her Honour also made adverse credit findings in relation to the evidence of the other appellants and of present relevance are the adverse findings in relation to the evidence of Mr Nathan El Ali (for example, at PD[56], PD[60], PD[113] and PD[168]-[169]). Those credibility findings were not directly challenged. They are an important feature which is relevant to the assessment of the submissions made on the appeal. 98 Mr Nathan El Ali and Mr Zreika put forward an explanation for the execution of the Transfer of the Voyager Point property on 8 December 2011. That explanation was that the sole intent of the transactions in December 2011 (i.e., the Transfer of the Voyager Point property and the appointment of Mr Zreika as trustee of the Voyager Point Unit Trust) was to deal with the dispute between Saracen and the CBA about the repayment of the loan by the CBA to Saracen. That explanation was rejected by the primary judge who took into account, as her Honour was entitled to do, the following matters: Mr Zreika's explanation of refinancing was contradicted by his own inaction and his failure, and that of Mr Nathan El Ali, to explain the reasons for the inaction; Mr Nathan El Ali was behind the Transfer of the Voyager Point property and the 2011 Deed of Appointment; Mr Zreika never assumed the role of trustee despite the 2011 Deed of Appointment; Mr Zreika's unsatisfactory evidence as to the reasons he used the Transfer of the Voyager Point property in January 2013; the evidence that Mr Nathan El Ali was involved in the loan from Gee Bee Airfreight to Mr Zreika secured by a mortgage over the Voyager Point property; the fact that Mr Nathan El Ali was involved completely in organising the subsequent sale of the property to Pronto Properties; the fact that Mr Zreika's explanation as to the reasons that the sale price of $1.7 million was $800,000 more than a valuation carried out two months previously was implausible; that Mr Nathan El Ali decided that $600,000 of the proceeds should be used to discharge a loan Gee Bee Airfreight had made in relation to the Taren Point property. The primary judge did not err in taking into account subsequent events in assessing Mr Zreika's explanation for the Transfer of the Voyager Point property. Her Honour was entitled to do that. Her Honour was entitled to reject the explanation and find that the timing was all to do with the impending sequestration order against Mr Nathen El Ali. Her Honour was also entitled to take into account the fact that the Voyager Point property remained under the effective control of Mr Nathan El Ali despite the Transfer of the Voyager Point property and the 2011 Deed of Appointment in rejecting the explanation advanced by Mr Nathan El Ali and Mr Zreika, and in finding that Mr Nathan El Ali had an intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act at the time of the Transfer of the Voyager Point property which involved a nominal consideration. With respect to the matters set out at PD[148] (see [49] above), we do not think that it is correct to say that the primary judge found, for example, that the property was worth $900,000 in January 2013. As far as we can see, the whole question of the relationship between the valuation and the subsequent sale price to Pronto Properties was left unexplained. The primary judge said (at PD[157]): 157 Mr Zreika's explanation as to why he was able to sell the property for $1.7 million in March 2013, when Mr [Nathan] El Ali had obtained a valuation of the Voyager Point property in January 2013 which valued the property at $900,000, was that Mr Walker "personally wanted that property. It wasn't valued at that price; he wanted it" and "we agreed". I find that explanation implausible. 99 We reject Mr Zreika's argument that there could be no inference that there was an intent to defraud or alternatively (as we understand it), of prejudice to creditors and, in particular, the Royals, because of the following: the valuation of Mr Sukkar as at 15 January 2013 of the Voyager Point property at $900,000 was unchallenged; the valuation is the nearest valuation to the date of the Transfer of the Voyager Point property on 8 December 2011 and it should be accepted; the CBA as secured creditor was owed more than $1 million as at that date; and, in the circumstances, there could be no finding of an intent to defraud unsecured creditors or any prejudice to unsecured creditors. It seems to us that the short answer to the argument is found in Mr Nathan El Ali's affidavit filed in compliance with the 2010 Freezing Orders made by the Supreme Court of New South Wales. That affidavit was sworn on 22 November 2010 and in it, Mr Nathan El Ali estimates the net value of the Voyager Point property (i.e., after discharge of the secured loan from the CBA) at $3.1 million approximately. It is in no way surprising that faced with no adequate explanation of the reason for the difference between the valuation and the sale price to Pronto Properties, her Honour would place reliance on Mr Nathan El Ali's own affidavit. It should be noted that her Honour dealt with an equivalent submission to her under the heading of "The 'No value' Contention". Her Honour described that contention in the following terms (at PD[40(c)]: 40(c) in the alternative, if those properties do constitute property divisible amongst his creditors, the properties at the time of disposition were encumbered to such an extent that there was no relevant value in those properties at the time of disposition and, accordingly, the properties and the shares in Saracen and Ottoman were worthless and there was no diminution of the property available to creditors by reason of those dispositions; 100 Her Honour dealt with the contention as follows (at PD[215]): 215 In any event, Mr [Nathan] El Ali, in his affidavit of assets and liabilities sworn in November 2010, valued Saracen's net equity in the Voyager Point property at around $3.1 million, valued the Potts Point property (which was not encumbered) at $700,000 and the Kogarah Unit 2 property, also not subject to a mortgage, at $670,000. The Taren Point property had not then been purchased. Mr [Nathan] El Ali agreed in cross-examination that as at December 2010 he considered that Saracen and Ottoman held "very substantial equity" in the parcels of real estate that they owned, albeit qualifying that answer "as trustee". This evidence shows that Mr [Nathan] El Ali thought at the time that those properties, and by inference the shares, did have value. 101 We turn now to the new argument based on Brady v Stapleton. 102 The argument is said to be based on the joint reasons of Dixon CJ and Fullagar J in Brady v Stapleton. The case involved an appeal from the Federal Court of Bankruptcy (Clyne J). Mr Coward was the bankrupt and Mr Stapleton was his trustee in bankruptcy. The appellants were third parties who had received a property from Mr Coward. The appellants did not appear and the appeal was dismissed. The cross-appeal by Mr Stapleton proceeded. Mr Stapleton claimed orders under s 46 of the Mercantile Acts (which reproduces the Elizabethan Statute) to set aside certain dispositions by the bankrupt. Clyne J found that certain dispositions to Canadian Pacific Tobacco Co Ltd were within s 46 of the Mercantile Acts. 103 The first group of orders considered by the High Court related to properties transferred by the company to bona fide purchasers for value. Mr Stapleton sought consequential orders against the company. Dixon CJ and Fullagar J noted that the claims were put in various ways. The first way in which the claims were put was that the company was the trustee of the properties and should account for the proceeds. This way of putting the claims was not pressed. Secondly, Mr Stapleton sought an order that the company pay the trustee the proceeds of the property. This claim was not put as a tracing claim, but as an action for money had and received. Dixon CJ and Fullagar J described the question as being whether, in the case of a transfer which offends the Mercantile Acts, the transferee is liable at law to pay to the defrauded creditors, the amount of the proceeds of a sale made to him by a bona fide purchaser for value before any steps have been taken to set the transfer aside. Dixon CJ and Fullagar J said that if the proceeds of sale could be identified in the company's hands, the trustee would be entitled to have the asset in the company's hands, but that it would be contrary to principle to hold that there is any personal remedy. Dixon CJ and Fullagar J said that there was clear authority to the effect that the protection given by the Elizabethan Statute to bona fide purchasers for value extended both to the immediate assignee of the fraudulent debtor and to assignees of that assignee. Their Honours said that a fraudulent assignment by a debtor is not held void where the effect of so holding would be to defeat either a purchaser for value without notice from the fraudulent debtor, or a purchaser for value without notice from an assignee of the debtor, whether that assignee was himself a purchaser for value without notice or not. Their Honours went on to say the following (at 334-335): There appears to be no authority which casts any doubt on the cases cited above. And, if the position created by the statute is that which is indicated in those cases, one can find no basis for a personal liability on the part of the company in the present case. It is only on the footing that the company sold something to which it had no title or that the sale was otherwise wrongful when made, that a personal liability on the part of the company could be based. But the company, when it sold the assets in question, sold something to which it had a title, albeit a defeasible title. The sale was not wrongful when made. If the company were selling something to which it had no title, it might well be that the trustee in bankruptcy could claim to stand in the shoes of the true owner, the bankrupt, and maintain money had and received. But this is not the position. The company had a title, though a defeasible title. The defeasance has, in the event, taken place, but it cannot relate back so as to make a sale by the company wrongful and impose a personal liability on the company. It might be thought that some support for the argument of the trustee is to be found in Re Fasey; Ex parte Trustees. In that case the debtor had transferred the whole of his assets, including the goodwill of a business carried on by him, to a company. The assignment was held to be within 13 Eliz. 1, c. 5, and it would appear from the report 10 that the order actually made was that the company should hand over to the trustees in bankruptcy the property assigned to the company "or pay them the value thereof". The report, however, contains no discussion as to the form of the order, and the effect of such an order is doubtful. The case of Re Fasey cannot be regarded as supporting the making of such an order as is sought in the present case. (Citations omitted). 104 Clyne J made declarations that certain transfers by the bankrupt to the company constituted a conveyance by the bankrupt made with intent to defraud creditors pursuant to the Mercantile Acts. Clyne J did not make a declaration that the conveyances were void and Dixon CJ and Fullagar J said that his Honour was correct in refusing to do so by reason of the intervention of bona fide purchasers for value. 105 The second group of orders raised issues concerning the mixing of trust shares with other shares and the extent to which the trust shares could be traced. Dixon CJ and Fullagar J held that equity would provide a tracing remedy in those circumstances. 106 With respect to the first group of orders, Brady v Stapleton stands for the proposition that if there is a purchaser in good faith without notice who acquires property from an assignee of the fraudulent debtor (who is not himself or herself a bona fide purchaser for value without notice), then the only remedy for the defrauded creditors against the assignee is a tracing remedy. There is no personal remedy which the defrauded creditors may seek against the assignee, even if the assignee is aware of the fraudulent debtor's intention to defraud creditors. In order to trace, the defrauded creditors must be able to identify the proceeds of sale in the assignee's hands. 107 This proposition involving as it does a purchaser in good faith without notice led to a debate before this Court as to whether Pronto Properties was a purchaser in good faith and without notice. The primary judge did not make a finding with respect to this issue and that led the parties to engage in a debate as to who bore the onus on this issue. We should say that the primary judge is not to be criticised in any way for not dealing with this issue. Neither party undertook the burden of establishing whether Pronto Properties was or was not a purchaser in good faith and without notice. 108 As we understand Mr Zreika's argument, it is that the respondents bore the onus of establishing that Pronto Properties was not a purchaser in good faith and without notice and, in the absence of having done so, Pronto Properties is taken to be such a purchaser. The matter, therefore, falls squarely within the principles laid down in Brady v Stapleton. For their part, the respondents contended that Mr Zreika bore the onus of establishing that Pronto Properties was a purchaser in good faith and without notice and that he failed to establish that fact. That means that the principles in Brady v Stapleton had no application. There are a number of authorities relevant to the issue of whether the defrauded creditors or the subsequent purchaser must prove that the subsequent purchaser acted in good faith and without notice. 109 In support of the proposition that the onus was on the party seeking to set aside the transaction, the Court was referred to PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 527-528; Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364 at 370-371 (Official Trustee in Bankruptcy v Mitchell); Wansley (trustee of the bankrupt estate of Edwards) v Edwards (1996) 68 FCR 555 at 564-565; Huynh v Helleh Holdings Pty Ltd [2001] NSWSC 1162; (2001) 10 BPR 19,333 (Huynh v Helleh Holdings) at [18] per Hamilton J (see also Michael v Thompson (1894) 20 VLR 548). 110 In support of the proposition that the onus was on the purchaser (or any other person seeking to rely on the fact) to establish that he or she acted in good faith and without notice, the Court was referred to Wentworth v Rogers [2004] NSWCA 430 (Wentworth v Rogers) at [62]-[68]; B v U [2012] NSWSC 1416 at [11]-[13] per Pembroke J (see also Glegg v Bromley [1912] 3 KB 474). 111 The onus question is a contentious one and, as the discussion by Hodgson J (with whom Santow and Hislop JJ agreed) in Wentworth v Rogers shows there is a good deal to be said on each side. 112 We do not need to decide this issue because we do not think the result in this case turns on the answer to the question of the party which bears the onus. As we will explain, even if the onus of proof was on Mr Zreika to show that Pronto Properties was a purchaser in good faith and without notice, that is not sufficient to take the case outside the principles in Brady v Stapleton. We would make the observation that whatever the answer to the question, there seems to be an air of unreality about deciding the case by reference to onus. Pronto Properties was not a party to the proceeding and neither party made an allegation (other than the allegation of a sale to it) against it. The thrust of the submissions made after her Honour had delivered the Principal Decision, but before her Honour delivered the Orders Decision, seems to have been on the proceeds of sale and whether Mr Zreika had the benefit of $800,000 of the proceeds of sale of which an amount of $600,000 was in contention. 113 In our opinion, the principles in Brady v Stapleton have a wider application than a case where it has been established that the property has come into the hands of a purchaser in good faith and without notice. We refer to the passage set out above. As that passage makes clear, Mr Zreika had a title, though a defeasible one. Even if the defeasance has taken place, it does not (cannot) relate back so as to make the sale by the assignee wrongful and impose a personal liability on the assignee. Furthermore, their Honours' reference to the effect of the order made in Re Fasey; Ex parte Trustees (1923) 2 Ch 1 as doubtful is consistent with their earlier discussion which, to our mind, provides that there is no personal remedy against the assignee from a fraudulent debtor. The only remedy (assuming the property is gone) is a proprietary one achieved through the principles of equity relating to tracing. 114 In many respects, the respondents' claims were based on the correctness of this proposition. The respondents did not join Pronto Properties and made no allegation against it. In addition, we refer also to the submissions the respondents made between the handing down of the Principal Decision and the Orders Decision. 115 Before leaving Brady v Stapleton, we should say that we have not overlooked the submissions made by the respondents relying on the reasons of Lee AJA in Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 44 WAR 1 (Westpac v Bell Group) at [711]-[744]. With respect, we do not think that any observations made by Lee AJA should dissuade us from the clear view we take as to the effect of Brady v Stapleton. Furthermore, we note that the other judges in Westpac v Bell Group did not find it necessary to address the issues addressed by Lee AJA. 116 It seems to us that, subject to one matter discussed below, the order in paragraph 8 (which was the focus of Mr Zreika's attack rather than the declaration) framed as it is as a personal remedy, cannot stand in light of Brady v Stapleton. 117 We would not necessarily view this as a matter going to jurisdiction of the Court. This Court is a superior court of record and a court of law and equity. It routinely makes orders of the type contained in paragraph 8 and has wide powers to make such orders as it considers appropriate (ss 5 and 23 of the Federal Court of Australia Act). Nevertheless, Brady v Stapleton means that the order is not one that the Court should have made in the circumstances. We do not think that acquiescence overrides this and, in any event, although not specifically on the Brady v Stapleton ground, the entitlement to the amount of $600,000 was disputed and the only acquiescence was as to a "monetary liability" of $200,000. 118 Having said this, we would readily substitute a tracing order in relation to the whole of the amount of $800,000 if that amount could be traced. However, we consider only the amount of $200,000 can be traced. We say that because we think her Honour made a finding that of the amount of $800,000, an amount of $600,000 was paid to Gee Bee Airfreight in relation to a liability over the Taren Point property. That amount can no longer be traced. 119 The amount of $200,000 stands in a different position. Mr Zreika said in evidence that he received this money and it was effectively frozen in the hands of Mr Zreika by an order of this Court. It does not lie in Mr Zreika's mouth to say that he has dispersed the money, either before or after the 2013 Freezing Order. 120 The respondents' argument that, in the alternative, they have a remedy in restitution, or might have had one had they been put on notice of the point, was not developed and we are not disposed to accept it. It would not seem to apply to the amount of $600,000. It has greater force in relation to the amount of $200,000, but it is not necessary to explore that further. 121 We will substitute for the order in paragraph 8 an order that: "The property and assets of the third respondent be charged to secure the payment of an amount of $200,000 to the official liquidator of Saracen".

The pleadings 122 In the respondents' Amended Application issued on 15 August 2014, they claim a declaration pursuant to s 30(1) of the Bankruptcy Act that the transfer of the Taren Point property from Ottoman to Mr Zreika on or about 21 April 2011 is void and/or voidable pursuant to s 37A of the Conveyancing Act. 123 In the respondents' Amended Statement of Claim dated 15 August 2014, they allege that at all material times until 21 April 2011, Ottoman was the registered proprietor of the Taren Point property. The respondents allege that on 21 April 2011 by transfer dated that date and stamped pursuant to s 54(3) of the Duties Act, Ottoman transferred the Taren Point property to Mr Zreika for a consideration of $1. The respondents allege that the transfer constituted an alienation of property for the purposes of s 37A of the Conveyancing Act and that as at the date of transfer, Mr Nathan El Ali was still the sole director and shareholder of Ottoman. The respondents allege that the intent of Mr Nathan El Ali in transferring the Taren Point property was to defraud creditors. In support of that plea, they rely on the following matters: by decision and orders dated 3 and 23 June 2011 respectively in the Supreme Court of New South Wales judgment was entered against Mr Nathan El Ali in favour of the Royals in the sum of $1,099,456.74 plus party and party costs; an affidavit affirmed by Mr Nathan El Ali dated 22 November 2010 disclosed that he personally had no assets of value and had no means of satisfying the judgment debt; the same affidavit disclosed that until 19 October 2010 and then again from 14 December 2010, Mr Nathan El Ali had been the sole shareholder in Ottoman and that company held an asset to the approximate net value of $2 million, being the Taren Point property; in an attempt to remove from the reach of his creditors, the assets held by Ottoman on 19 October 2010 and then again on 22 August 2011, Mr Nathan El Ali transferred the shares in Ottoman to Mr Mahmoud El Ali; in an attempt to remove from the reach of his creditors, the assets held by Ottoman on 21 April 2011 and while still the sole shareholder and director of Ottoman, Mr Nathan El Ali transferred the Taren Point property from Ottoman to Mr Zreika for consideration of $1 and his intent in doing this was to delay, hinder or defeat the Royals' ability to satisfy the judgment debt. The respondents allege that the Royals are persons prejudiced for the purposes of s 37A of the Conveyancing Act in that they are judgment creditors of Mr Nathan El Ali and the Taren Point property was, until its transfer on 21 April 2011, the property of Ottoman, the shares in which fall within s 58(1) of the Bankruptcy Act whereby they are property divisible among the creditors. The respondents allege that the transfer of the Taren Point property is voidable within the meaning of s 37A of the Conveyancing Act. They plead that the alienation of the Taren Point property on 21 April 2011 was not in good faith and they refer to the consideration of $1 compared with the approximate net value of the Taren Point property of $2 million. The respondents allege that Mr Zreika had notice of Mr Nathan El Ali's intent to defraud creditors as at the date of the alienation of the property on 21 April 2011. They allege that the defence in s 37A(3) of the Conveyancing Act is not available. 124 In the Defence, Mr Zreika alleges that for a brief period on 29 April 2011 the Taren Point property was held by Ottoman in its capacity as trustee of the Ottoman Investments Unit Trust and that on 29 April 2011 the property was transferred by Ottoman to Mr Zreika after which time he began holding the property in his capacity as trustee of the Ottoman Investments Unit Trust. Mr Zreika alleges that the transfer was stamped pursuant to s 54(3) of the Duties Act on 21 April 2011; the transfer which was undated was effected on 29 April 2011, but was recorded by the Land and Property Information NSW on or about 5 May 2011; the Taren Point property was held by Mr Zreika as a trustee of the Ottoman Investments Unit Trust; and Mr Zreika borrowed an amount of $2,121,305.06 to secure the acquisition of the Taren Point property to be held subject to the Ottoman Investments Unit Trust and Mr Zreika retained a security interest as a security trustee with respect to the Taren Point property. Mr Zreika denies that the transfer of the property was an alienation of property for the purposes of s 37A of the Conveyancing Act and pleads that the property was never held, either directly or indirectly, by Mr Nathan El Ali personally or beneficially; the property was never held by Ottoman beneficially; on 29 April 2011 the property was held by Ottoman as trustee of the Ottoman Investments Unit Trust and then transferred on 29 April 2011 to Mr Zreika for the purposes of changing the trustee of the Ottoman Investments Unit Trust; the transfer of the property from Ottoman to Mr Zreika on or about 29 April 2011 was effected for the purposes of changing the trustee of the Ottoman Investments Unit Trust; Mr Zreika also became a secured creditor in the sum of $2,121,305.06 of which the Taren Point property was a secured property; and as at 21 April 2011 the Taren Point property was subject to an uncompleted contract for sale of land and Ottoman's "beneficial interest" in the Taren Point property as at that date was limited to the value of the deposit that had been paid and subject to the ability of Ottoman to seek specific performance of the contract of sale of land. 125 We turn now to the primary judge's principal findings.

The primary judge's findings and conclusions 126 In the primary judge's Principal Decision, her Honour found that Mr Zreika was a business associate of Mr Nathan El Ali and that they met about 10 years ago. Her Honour found that the contract for the Taren Point property under which Westpac Banking Corporation (Westpac) as mortgagee of Mr Robert Tiricovski and Ms Slavvia Tiricovski exercising a power of sale (Westpac/Tiricovski) was vendor and Ottoman was purchaser had been entered into in September 2010 and settlement was due in February 2011. However, completion did not occur at that time. The primary judge found that correspondence about settlement passed between the solicitors for the parties between February and April 2011 and that on 8 April 2011, a notice to complete the sale of the Taren Point property was served on Ottoman requiring completion of the sale by 29 April 2011. On 21 April 2011, a transfer form for the transfer of the Taren Point property from Ottoman to Mr Zreika for a consideration of $1 was stamped at the OSR with a $50 duty (Transfer of the Taren Point property). The primary judge said it was curious that the Transfer of the Taren Point property was signed before completion of the contract to purchase entered into in September 2010 which occurred on 29 April 2011 and the 2011 Deed of Appointment appointing Mr Zreika as the trustee of the Ottoman Investments Unit Trust in place of Ottoman which appears to bear the date 28 April 2011. 127 The primary judge said that in summary, it appeared that the settlement of the Taren Point property was funded by a Bankwest loan in Mr Zreika's name which was secured by a mortgage over the property, a loan from Yasoo Drachma Pty Ltd (Yasoo) in the name of Mr Nathan El Ali, Mr Zreika, Mr Stojanovski and Ottoman secured by a mortgage over the Kogarah Unit 2 property, and the balance of the funds came from Mr Stojanovski and Mr Nazloomian. 128 As we have said above at [24], the primary judge found the evidence of both Mr Zreika and Mr Nathan El Ali unsatisfactory and unconvincing concerning the circumstances of the Transfer of the Taren Point property to Mr Zreika. On their version of events, the Transfer of the Taren Point property occurred because Ottoman was unable to secure the finance to complete the purchase of the property because of Mr Nathan El Ali's poor credit rating. The primary judge rejected that explanation. Her Honour said that it may be inferred that the Transfer of the Taren Point property was executed because the loan offer from Bankwest to Mr Zreika expired on 22 April 2011. Settlement of the Taren Point property did not take place until 29 April 2011, and the transfer to Ottoman was registered on 5 May 2011. The primary judge found that on the face of the evidence, it was clear that Mr Nathan El Ali remained the person in control directing the affairs of Ottoman and the Ottoman Investments Unit Trust. 129 In June 2012, Mr Zreika entered into a loan agreement with Gee Bee Airfreight to borrow $1.75 million in order to refinance the Taren Point property. Mr Nathan El Ali was the person who conducted the negotiations leading to the new loan arrangements with Gee Bee Airfreight. The Gee Bee Airfreight loan was, in turn, refinanced in June 2013 with the National Australia Bank and again, the person who was involved in the refinancing was Mr Nathan El Ali, not Mr Zreika. He was the person who was the controlling force behind this refinancing as well. Again, the primary judge found that Mr Nathan El Ali was the person "calling the shots". 130 The primary judge summarised her findings as follows: Mr Nathan El Ali remained the directing and controlling force of the Ottoman Investments Unit Trust, notwithstanding the appointment of Mr Zreika as trustee; Mr Nathan El Ali approached Mr Zreika to act as trustee in place of Ottoman because Mr Stojanovski had not been prepared to act as trustee; Mr Zreika was in effect, "warehousing the property" for Mr Nathan El Ali; completion of the acquisition of the Taren Point property occurred at a time when judgment in the debt proceedings was reserved and Mr Nathan El Ali was aware of the 2010 Freezing Orders against himself and Saracen; and the transfer from Ottoman to Mr Zreika was orchestrated by Mr Nathan El Ali to put that property beyond the reach of his creditors. 131 The primary judge addressed a submission that no property was alienated under the Transfer of the Taren Point property on 21 April 2011 because at the time of the transfer and its stamping, the purchase of the property by Ottoman from Westpac/Tiricovski had not been completed. The only rights that Ottoman had as at 21 April 2011 in relation to the property were "mere contractual rights" as the purchaser of an uncompleted contract, and not a proprietary interest in the property. The primary judge found that the fact that the purchase had not been completed as at the time the Transfer of the Taren Point property was executed did not mean that s 37A of the Conveyancing Act did not apply. First, her Honour said that the expansive definition of "property" in s 7 of the Conveyancing Act was sufficiently broad to include the rights of Ottoman as purchaser under an uncompleted contract for the sale of land. That definition was an inclusive one which referred to real and personal property and "any estate or interest in any property real or personal, and any debt, and any thing in action, and any other right or interest". Secondly, her Honour held that the plain intention of Mr Nathan El Ali as borne out by the course of events, was that Ottoman would complete the purchase of the Taren Point property. The effect of the Transfer of the Taren Point property, which could not be operative until Ottoman had title to the property to transfer, was to alienate that property by ultimately resulting in the registration of title in Mr Zreika's name and thereby putting that property beyond the reach of Mr Nathan El Ali's creditors. Her Honour said that given the timing of the Transfer of the Taren Point property and the absence of a credible explanation as to why the property was transferred to Mr Zreika, her Honour found that Mr Nathan El Ali made the Transfer of the Taren Point property at that time for nominal consideration with the intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act. Her Honour also found that the Royals as creditors of Mr Nathan El Ali were prejudiced by the Transfer of the Taren Point property by reason of a divestiture of an asset belonging to a company of which Mr Nathan El Ali was at the time the sole shareholder. 132 It should be noted that on or about 19 May 2016, Mr Zreika made an application in the proceeding to discharge freezing orders previously made by the primary judge and the purpose (or at least one of the purposes) was to enable him to sell the Taren Point property. On 26 May 2016, the primary judge made the following orders in the proceeding: 1. The freezing orders made against the applicant on the interlocutory application (being the third respondent in Proceedings NSD1731/2013 (the third respondent)) on 14 August 2014, and varied on 24 March 2015 (the freezing orders), be varied to enable the third respondent to tender a transfer in registrable form of the Taren Point property (folio identifier 1/847333) to Clutch1 Pty Limited (the transfer) and permit any dealing to give effect to the transfer to Clutch1 Pty Ltd provided that, simultaneously with the tender of the transfer, the third respondent provide the legal representatives of the third respondent with a bank cheque in the sum of $250,000 (the sum) to be paid by the third respondent's legal representatives into the Federal Court of Australia in Proceedings NSD1731/2013. 2. Upon completion of order 1 herein, the freezing orders be discharged. 3. The payment of the sum is in substitution of the claim to the Taren Point property, noting that the declaration sought at order 8 of the amended application filed on 15 August 2014 (the Amended Application) effectively seeks the transfer of the Taren Point property to the fifth respondent. 4. Should the court make the orders sought in Order 8 of the Amended Application, any party by his, her or its legal representatives are to give 7 business days' notice to the other parties by their legal representatives (or if unrepresented to the party and such notice may be given in such fashion as the court directs) of any application for payment out of the court of the sum. 5. The Taren Point property is permanently released from, and against all claims in the proceedings. … THE COURT NOTES THAT: … 8. Apart from the release of the Taren Point property in substitution for the sum, all other claims and entitlements of the applicants and third respondent in the proceedings remain unaffected. For the avoidance of any doubt, if the applicants are successful in relation to their claim with respect to the Taren Point property, the maximum liability of the third respondent with regard to the Taren Point property is up to an amount of the sum. 133 The Court asked counsel as to how the sum of $250,000 was calculated and was told that there was no exact science in the calculation of the sum. In any event, it effectively represents the Taren Point property and the problems which arise in relation to the Voyager Point property do not arise in relation to it.

The Further Amended Notice of Appeal 134 On 23 September 2016, the Court made a declaration that pursuant to s 121(1) of the Bankruptcy Act and s 37A of the Conveyancing Act, the Transfer of the Taren Point property was void. As with the Voyager Point property, the respondents accept that the declaration should have been restricted to a declaration pursuant to s 37A of the Conveyancing Act. The Court also made an order in paragraph 11 that the amount of $250,000 paid by Mr Zreika into Court pursuant to the orders made on 26 May 2016 in substitution of the claim to the Taren Point property be paid to the official liquidators of Ottoman. 135 In Mr Zreika's Further Amended Notice of Appeal dated 13 April 2017, he raises six grounds of appeal in relation to the Taren Point property. The first ground is lengthy, but in essence is to the effect that the primary judge erred in concluding that the Transfer of the Taren Point property constituted an alienation of the Taren Point property for the purposes of s 37A of the Conveyancing Act. Secondly, Mr Zreika contends that not only was there no alienation of the Taren Point property on 21 April 2011, but also there was no requisite intent on that date. Thirdly, Mr Zreika contends that the primary judge erred in finding that the effect of the Transfer of the Taren Point property was to put the property beyond the reach of Mr Nathan El Ali's creditors. That was an error because Ottoman had no interest in law or equity in the property as at that date. Fourthly, Mr Zreika contends that the primary judge erred in relying on the definition of "property" in s 7 of the Conveyancing Act. Her Honour should have found that the rights of Ottoman under the uncompleted contract as at 21 April 2011 was a different item of property from the Taren Point property. Fifthly, Mr Zreika contends that the finding that the Transfer of the Taren Point property was executed with the intent to defraud the creditors of Mr Nathan El Ali was erroneous. The primary judge ought to have found that the Transfer of the Taren Point property was executed because the loan offer from Bankwest to Mr Zreika expired on 22 April 2011. Finally, and this is really a consequential ground, Mr Zreika contends that the amount of $250,000 which he paid into court pursuant to the orders made on 26 May 2016, in substitution of the claim to the Taren Point property, should have been the subject of an order that it be paid to him. 136 In Mr Zreika's Outline of Submissions in the appeal and in the challenge to the order in paragraph 11, he contends that there was no alienation within s 37A of the Conveyancing Act on 21 April 2011 because Ottoman was not the registered proprietor on that date. The question of an intention to defraud relates to the property which is the subject of the alienation. The Taren Point property was not property which Ottoman could have transferred on 21 April 2011. It was not the owner of the property on that day and, furthermore, the evidence to the effect that it could not settle on the contract was uncontested. The primary judge erred in distinguishing the decision in Cannane and this case is (so it is submitted) relevantly indistinguishable from that decision. As at 21 April 2011, Ottoman did not have a right or interest in the property in the same way as the transferor did not have a right or interest in or in relation to the CCI shares in Cannane. Again, the submission is made that the Court erred in attaching the intent to defraud to property that was not then available. Mr Zreika submits that her Honour had made a similar error to that identified by Brennan CJ and McHugh J in Cannane (at [15]) and Gummow J (at [58]). 137 Mr Zreika submits that an allegation of fraud must be pleaded distinctly and with particularity and clearly proved by the party seeking to avoid a disposition of property. That requirement includes a requirement that the property itself must be clearly identified. The property identified in this case is the Taren Point property and not Ottoman's rights as a purchaser under an uncompleted contract of sale and purchase. Mr Zreika also contends that the respondents were not "thereby prejudiced by the transfer". Ottoman was not the registered proprietor of the Taren Point property as at 21 April 2011 and had only paid 5% of the purchase price, being the amount of $101,250. Mr Zreika submits that as at 21 April 2011, it is the deposit which constitutes the pool from which the "subtraction" occurs (Freeman v Pope (1870) 5 Ch App 538 at 541 per Lord Hatherley). Mr Zreika submits that even assuming the contract is "property" pursuant to s 7 of the Conveyancing Act, the Court must take into account the liabilities and obligations of Ottoman as at 21 April 2011 to complete the contract. He submits that the effect of her Honour's reasoning was to disregard the value that was required to be contributed for the purposes of completing the contract. The value which would have been available to the creditors of the bankrupt on 21 April 2011 would have been nominal, if anything. Mr Zreika submits that to find otherwise would provide the creditors with a windfall gain by disregarding the risks of liabilities of completing the contract after 21 April 2011. Mr Zreika submits that the maximum amount that would have been available for creditors as at 21 April 2011, and disregarding the risks and liabilities of completion, is $101,250, being 5% of the purchase price. 138 In the respondents' submissions on the appeal, they point to the fact that Mr Nathan El Ali in his assets and liabilities affidavit dated 22 November 2010 valued the Taren Point property at more than $2.025 million. Mr Nathan El Ali's evidence was that he caused Ottoman to make the Transfer of the Taren Point property to Mr Zreika for $1 to "remove himself from the equation" of obtaining finance to complete the purchase of the Taren Point property from Westpac/Tiricovski. The respondents point out that the settlement of the Taren Point property from Westpac/Tiricovski was funded by a Bankwest loan in Mr Zreika's name, a Yasoo loan in the names of Mr Nathan El Ali, Ottoman, Mr Stojanovski and Mr Zreika, and over a quarter of the settlement funds (approximately $533,000) came directly from Mr Nazloomian and Mr Stojanovski. The Taren Point property is named as security on the Bankwest loan despite title not having vested as at the date of the Bankwest loan in either Ottoman from Tiricovski, or Mr Zreika from Ottoman, both of which happened on 5 May 2011. The Bankwest loan in respect of which Mr Zreika was borrower and claimed he used to complete the purchase of the Taren Point property from Tiricovski had already been obtained by Mr Zreika on 23 March 2011 before the date that Mr Nathan El Ali purportedly asked Mr Zreika to "finance" settlement of the Taren Point property. In addition, the Bankwest loan bore a disclosure date of 23 March 2011 and the offer was expressed to lapse by 22 April 2011, seven days before settlement of the purchase of the Taren Point property from Tiricovski on 29 April 2011, and the day after the Transfer of the Taren Point property executed by Mr Zreika on 21 April 2011. On 28 April 2011, after the date of the Transfer of the Taren Point property on 21 April 2011, the purported appointment of Mr Zreika as trustee of the Ottoman Investments Unit Trust in place of Ottoman was executed which was said to be for the purpose of the Transfer of the Taren Point property. 139 The respondents submit that the ultimate and intended consequence of the execution of the Transfer of the Taren Point property on 21 April 2011 by Mr Zreika and Ottoman was to cause Mr Zreika to become the registered proprietor of the Taren Point property on 5 May 2011. Mr Nathan El Ali was the "controlling mind" of Ottoman given that he was the director and shareholder of Ottoman on both 21 April 2011 and 5 May 2011. The respondents submit that the later registration of the Transfer of the Taren Point property does not mean that the transfer was not an alienation of property for the purposes of s 37A of the Conveyancing Act and does not prevent the sequence of events from constituting an alienation (Agusta v Provident Capital [2012] NSWCA 26; (2012) 16 BPR 30,397 (Agusta v Provident Capital) at [20]-[22] per Barrett JA (with whom Campbell JA and Sackville AJA agreed)). The respondents submit that Ottoman held a beneficial interest in the Taren Point property as of 15 September 2010 pursuant to the uncompleted contract even if this did not amount to beneficial ownership (see Butt, P "Conveyancing and Property" (2015) 89 ALJ 359 at 360). The respondents submit that it is entirely immaterial that the Taren Point property was subject to an uncompleted contract of sale and purchase as at 21 April 2011. Furthermore, it is not the case that there was no alienation for the purposes of s 37A of the Conveyancing Act. The culmination of the transfer from Ottoman to Mr Zreika was that legal title passed to Mr Zreika on 5 May 2011 by the act of the Registrar General which was uncontested and which was the intended result. 140 The respondents submit that Cannane is distinguishable for the reasons given by the primary judge. The critical finding in Cannane was that at the time of the transfer of the CIC shares, the creditors in Cannane had no entitlement to those shares. By contrast, Ottoman had a proprietary interest in the Taren Point property under an uncompleted contract in line with well-established principles with those proprietary interests created as at 15 September 2010 when Ottoman entered into the contract of sale and purchase with respect to the Taren Point property. The respondents submit that there was a subtraction of assets available to the creditors by the Transfer of the Taren Point property as at 21 April 2011 and thereby prejudice to the Royals because the creditors had an entitlement to the interest in the Taren Point property held by Ottoman as at 21 April 2011 by reason of the operation of s 58(1)(a) of the Bankruptcy Act. The respondents submit that it is well-established that what is relevant under s 37A of the Conveyancing Act is the ultimate legal entitlement to property rights, rather than value and that that position need only result in the subtraction of assets from the property which is the proper fund for the payment of the debts (Ingram v Y Twelve at [104]-[105] and [134]-[136]; Peldan v Anderson [2006] HCA 48; (2006) 227 CLR 471 (Peldan v Anderson) at [43]-[47]; Young v Smith [2015] NSWSC 400 at [40]-[42]; Agusta v Provident Capital at [87]). 141 In Mr Zreika's submissions in reply dated 28 May 2018, he submits that the only right that Ottoman had on 21 April 2011 was the right to an order for specific performance and there is no suggestion in the evidence that this right was ever transferred to Mr Zreika. Mr Zreika submits that if the "alienation of the property" held by Ottoman on 21 April 2011 was "voided" by the operation of s 37A of the Conveyancing Act, all that could relevantly mean was that the appellant would have no right to Ottoman's right to purchase the Taren Point property from Westpac/Tiricovski. Mr Zreika submits that this is a point of real substance, not merely a pleading point. Mr Zreika again referred to Cannane and submits that the "property then existing" (at [10] per Brennan CJ and McHugh J) when the Transfer of the Taren Point property was executed, was only a purchaser's right to specific performance and Mr Nathan El Ali had no intention of transferring "that property" to Mr Zreika. The right which Mr Nathan El Ali and Mr Zreika clearly intended to be assigned to Mr Zreika was the right to the Taren Point property after Ottoman had acquired that property. However, the Transfer of the Taren Point property was conditional upon Mr Zreika providing the purchase moneys to Ottoman. Mr Zreika submits that the substantive asset in the transaction was not Ottoman's interest in the sale of land contract, which was of little or no value to Mr Nathan El Ali's creditors, but was instead the $1,992,571.16 in finance of this purchase that he provided and it is immediately apparent that this finance was never an asset of Ottoman or Mr Nathan El Ali at the time the Transfer of the Taren Point property was executed and, therefore, there could not have been any intention to alienate this asset from Mr Nathan El Ali's creditors. Mr Zreika submits that the respondents attempt to look only at the Transfer of the Taren Point property to the appellant by Ottoman whilst ignoring the fact that this property was not acquired with money of Ottoman, was the type of impermissible separation of individual steps in a commercial transaction rejected by the Court in Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; (2007) 164 FCR 83 at [74]-[75] per Lindgren J.

Analysis 142 We have identified the adverse credit findings the primary judge made with respect to Mr Zreika in our discussion of the appeal with respect to the Voyager Point property (at [54]). We will not repeat what we have already said. With respect to Mr Zreika's submission that the primary judge should have found that the Transfer of the Taren Point property of 21 April 2011 was executed on that date because the loan offer from Bankwest to Mr Zreika expired on 22 April 2011, it is true that the primary judge inferred that the 21 April 2011 Transfer of the Taren Point property was executed on that date because the loan offer from Bankwest to Mr Zreika expired on 22 April 2011 (at PD[118]), and that later in the Principal Decision, her Honour said that given the timing of the Transfer of the Taren Point property (emphasis added), and the absence of a credible explanation as to why the property was transferred to Mr Zreika, her Honour found that Mr Nathan El Ali made the Transfer of the Taren Point property at that time for nominal consideration with the intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act (at PD[226]). However, there is nothing inconsistent between these two findings. Her Honour's earlier finding was linked to the specific time of 21 April 2011 and was made in the context of providing an explanation of why the Transfer of the Taren Point property was executed at a time when Ottoman was not the registered proprietor of the property. By contrast, the reference to the timing of the Transfer of the Taren Point property in the second passage was a reference to an aspect of timing which is referred to in another passage in the Principal Decision (at PD[120]): 120 …Completion of the acquisition of the Taren Point property occurred at a time when judgment in the debt proceedings was reserved and Mr [Nathan] El Ali was aware of the freezing orders against Saracen and him. It is reasonable to infer and I find that the transfer from Ottoman to Mr Zreika was orchestrated by Mr [Nathan] El Ali to put that property also beyond the reach of his creditors. 143 In view of the primary judge's unchallenged and, we think, unassailable credit findings with respect to Mr Nathan El Ali and Mr Zreika and the obvious difficulties in the chronology of the explanations proffered by them as identified by her Honour in PD[118], it was inevitable, in our respectful opinion, that their explanations for the Transfer of the Taren Point property would be rejected. In our opinion, the timing of matters which her Honour identified in the second passage referred to above, do lead to the conclusion that Mr Nathan El Ali made the Transfer of the Taren Point property at the time he did for nominal consideration with intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act. 144 The other points raised by Mr Zreika in relation to the Taren Point property all relate, in one way or another, to the fact that on the date when the Transfer of the Taren Point property was executed, the vendor, Ottoman, was not the registered proprietor of the Taren Point property. We turn to deal with those points. 145 In our opinion, the submission that this case is governed by the conclusions in Cannane must be rejected. This case is distinguishable from Cannane. The point in Cannane was that there was no reason to say that the debtors in that case had taken steps with an intention to defraud creditors because there was nothing to suggest that they believed that their creditors had any right or interest in the CCI shares (i.e., the valuable opportunity), or that the law accorded them any opportunity or advantage with respect to them. By contrast, in this case at the time of the Transfer of the Taren Point property on 21 April 2011, Mr Nathan El Ali would have reason to believe that his creditors would have a right or interest in the Taren Point property which by reason of the contract for sale and purchase and a prior notice to complete would be (and, in fact, was) settled eight days after the Transfer of the Taren Point property (i.e., on 29 April 2011). In Cannane, there was no prior legal arrangement whereby Wisbeck would acquire the benefit of the CCI transaction and the whole point was that it was the debtors' firm intention that their creditors never became entitled to the benefit of the CCI transaction. We think that this distinction is what the primary judge had in mind when her Honour emphasised that the plain intention of Mr Nathan El Ali, as borne out by the sequence of events, was that Ottoman would complete the purchase of the Taren Point property (at PD[225]). 146 An alternative way in which Mr Zreika put the argument must also be rejected. It does not advance the argument to focus, as Mr Zreika sought to do, on the precise interest Ottoman held on 21 April 2011 and, therefore, could pass on to Mr Zreika on that day, whether it be classified as a proprietary interest or contractual rights (see Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 and, in particular, the discussion by Deane and Dawson JJ at 523-524). The point is that when the Transfer of the Taren Point property was executed on 21 April 2011, Mr Nathan El Ali intended that Ottoman would become the registered proprietor of the Taren Point property within a short period of time (which indeed occurred) and that the property was to be transferred to Mr Zreika. That intention never changed. 147 We add that, to the extent necessary, we also agree with the primary judge that the definition of "property" in s 7 of the Conveyancing Act is wide enough to include Ottoman's rights under an uncompleted contract for sale of land. 148 Finally, we reject yet a further way in which Mr Zreika seeks to put the argument. In our opinion, it is not to the point that the only monetary amount Ottoman had expended under the uncompleted contract for sale and purchase as at 21 April 2011 was 5% of the purchase price (i.e., $101,250). The property alienated was the Taren Point property, or the contractual rights to complete the contract, and questions of "value" or amount paid under the contract are irrelevant (Ingram v Y Twelve at [104]-[105] and [135]-[136] per Stevenson J; Peldan v Anderson at [43]; Young v Smith at [40]-[42] per Sackar J). 149 In our opinion, Mr Zreika's appeal, insofar as it challenges the orders with respect to the Taren Point property, must be dismissed.

MR STOJANVOSKI'S APPEAL - KOGARAH UNIT 2 PROPERTY

Introduction 150 In this section of our reasons we will address the following aspects of Mr Stojanovski's appeal which relate to orders made by the primary judge on 23 September 2016 in the 2013 proceedings, being: (1) The declaration made in Order 1(c), that the transfer of the Kogarah Unit 2 property from Ottoman to Mr Stojanovski was void under (relevantly) s 37A of the Conveyancing Act; (2) Order 9, that the amount of $100,000 paid by Mr Stojanovski into Court pursuant to orders made on 14 September 2015 in respect of the Kogarah Unit 2 property be paid to the official liquidators of Ottoman; and (3) Order 10, that Mr Stojanovski forthwith do all things reasonably necessary to cause the mortgagee of the Kogarah Unit 2 property to pay into Court the sum of $62,836.88, being the net proceeds of the sale of the Kogarah Unit 2 property. 151 It is useful to know that Mr Stojanovski sought to sell the Kogarah Unit 2 property in 2015. In order to facilitate that sale, Mr Stojanovski paid $100,000 into Court (referable to the likely amount remaining after a mortgage had been satisfied). However, the mortgagee exercised its power of sale before Mr Stojanovski could effect the sale, resulting in a surplus of $162,836. Having regard to the amount already paid into Court, this left an amount of $62,836 to be accounted for, but the mortgagee has failed to account for the surplus.

The pleadings 152 The respondents' Amended Application in the 2013 proceedings sought the declaration obtained in Order 1(c). The relevant pleadings in relation to the claims against Mr Stojanovski are at [59]-[60] and [86]-[100] of the Amended Statement of Claim. 153 The Amended Statement of Claim alleged that, until 16 December 2010, Ottoman was the registered proprietor of Unit 2. Ottoman transferred Unit 2 to Mr Stojanovski pursuant to a transfer document which was dated that date, with consideration stated to be $1 and stamped pursuant to s 54(3) of the Duties Act. That constituted an alienation of property for the purposes of s 37A of the Conveyancing Act. At the time of the transfer, Mr Nathan El Ali was the sole director and shareholder of Ottoman. His intent in transferring Unit 2 was to defraud creditors and to delay, hinder and defeat the Royals' capacity to satisfy the judgment debt of $1,099,456.74 plus party/party costs obtained by them on 3 and 23 June 2011 by removing Unit 2 from the reach of his creditors. The alienation to Mr Stojanovski was not in good faith and he had notice of Mr Nathan El Ali's intent. By an affidavit dated 22 November 2010, Mr Nathan El Ali disclosed that he personally held no assets of value and had no means of satisfying the judgment debt, that he had been, until 19 October 2010 and was again from 14 December 2010, the sole shareholder of Ottoman and Ottoman held an asset (being Unit 2) that had value of approximately $670,000. The transfer of shares in Ottoman from Mr Nathan El Ali on 19 October 2010 and again on 22 August 2011 and the transfer of Unit 2 from Ottoman to Mr Stojanovski for $1 on 16 December 2010 were attempts to remove assets held by Ottoman from the reach of Mr Nathan El Ali's creditors. The Royals were prejudiced by the transfer because the shares in Ottoman were property within the meaning of s 58(1) of the Bankruptcy Act and divisible among Ottoman's creditors. Once Unit 2 was restored to Ottoman, it would be property within the control of Mr Nathan El Ali's trustee in bankruptcy. The transfer was therefore voidable under s 37A of the Conveyancing Act. 154 The respondents pleaded in the alternative that, where Ottoman as trustee of a trust had a power of appointment and Mr Nathan El Ali exercised this power pursuant to the transfer dated 16 December 2010 (which was stamped as dutiable as a transfer consequent on the retirement of a trustee or the appointment of a new trustee), the exercise of the power of appointment constituted an alienation of property pursuant to s 37A of the Conveyancing Act. By the appointment of Mr Stojanovski as the new trustee, Mr Nathan El Ali disposed of an asset of value held by Ottoman and he did so with intent to delay, hinder or defeat the Royals' ability to satisfy the judgment. The power of appointment was, until 16 December 2010, property which vested in Mr Nathan El Ali's trustee in bankruptcy and therefore property transferable among his creditors. 155 On both bases, the respondents pleaded the inference that the alienation was not in good faith can be drawn from the transfer of Unit 2 to Mr Stojanovski for $1, a nominal value, at a time when Mr Nathan El Ali's affidavit dated 22 November 2010 disclosed that Unit 2 had a net value of $670,000 (therefore its prima facie value) leading Mr Stojanovski to know or suspect some preference contrary to the Bankruptcy Act or that the disposition would be disadvantageous to creditors. The defence under s 37A(3) of the Conveyancing Act was therefore not available. 156 Mr Stojanovski's defence pleaded (among other things) that Mr Stojanovski: (1) Admitted that Ottoman was the registered proprietor of Unit 2 until 16 December 2010 but said that it held Unit 2 as trustee of the Ottoman Investments Unit Trust. (2) Admitted that he was the named transferee in a transfer of Unit 2 which was stamped pursuant to s 54(3) of the Duties Act on 16 December 2010 and the consideration was recorded as $1. (3) Said that the transfer of Unit 2 was from Ottoman as retiring trustee of the Ottoman Investments Unit Trust to Mr Stojanovski as the new trustee, in consideration for and/or as security for Mr Stojanovski lending the sum of $1 million to Ottoman as trustee for the Ottoman Investments Unit Trust, to facilitate it purchasing property at 5 Stonny Batter Road, Minto NSW (the Minto property). (4) Said that the transfer was registered on 21 December 2010. (5) Said that he received Unit 2 "in good faith as the new trustee and without notice of any alleged intention of [Mr Nathan El Ali] to defraud creditors". (6) Said that he did not know Mr Nathan El Ali's intent and that, as far as he was aware, the transfer of Unit 2 to him was in good faith. (7) Denied that Mr Nathan El Ali possessed and/or exercised the alleged power of appointment of the trustee of the Ottoman Investments Unit Trust, and said that that power rested with the unitholders of the Trust pursuant to the trust deed. 157 At the trial, Mr Stojanovski accepted through his counsel that he did not become a trustee of the Ottoman Investments Unit Trust as the purported appointments were made without power.

The primary judge's findings and conclusions 158 The primary judge dealt with the evidence relating to the transactions between Ottoman and Mr Stojanovski at PD[65]-[96]. 159 The primary judge noted that Mr Nathan El Ali and Mr Stojanovski were business associates who first met some time in 2006. Her Honour also noted that their explanation for the transfer of Unit 2 to Mr Stojanovski was as security for the loan of $1 million to Ottoman to finance completion of the purchase of the Minto property, and the loan was said to have been made on 23 December 2010 (see PD[65]). 160 The primary judge had, by way of background, recorded previously in her reasons that: (1) The debt proceedings commenced in March 2010. (2) The contract for the purchase of the Minto property was entered into in July 2010 with completion due to occur on 30 November 2010. (3) Units 1, 2 and 3 of 4 Hogben Street, Kogarah (Units 1, 2 and 3) were acquired by Ottoman on 23 August 2010. (4) On 1 October 2010, the Royals had obtained the 2010 Freezing Orders over the assets of Mr Nathan El Ali and Saracen in the debt proceedings. It was not in dispute at trial that, when the 2010 Freezing Orders were made, shares in Ottoman (then held by Mr Nathan El Ali) and the real property owned by Ottoman were covered by those Freezing Orders. (5) On 19 October 2010, Mr Nathan El Ali transferred the shares in Ottoman to Mr Nazloomian for nominal consideration, purportedly effected as security for outstanding loans from Mr Nazloomian to Mr Nathan El Ali and his companies, including Ottoman, and Mr Nathan El Ali retired as the sole director. That transaction was not impugned in the proceedings because the shares were later transferred back to Mr Nathan El Ali. (6) On 22 November 2010, Mr Nathan El Ali affirmed an affidavit of assets and liabilities in the debt proceedings. He said that he resigned as a director of Ottoman due to credit defaults which had been recorded against his name which made it difficult for Ottoman to raise finance. He disclosed that Ottoman was the registered proprietor of Units 1, 2 and 3, which he valued at $670,000 each, and Units 1 and 3 (but not Unit 2) were mortgaged, each securing an amount of $545,000. He disclosed the contract to purchase the Minto property for $3.8 million on which a deposit of $38,000 had been paid. He also disclosed the contract to purchase the Taren Point property for $2.025 million which had been entered into on 15 September 2010 with a deposit of $50,625 and a completion date 130 days after the date of the contract. 161 The primary judge accepted that: (1) Ottoman was served with a notice to complete the purchase of the Minto property on 30 November 2010. (2) On 3 December 2010, Ottoman's solicitors advised the vendor's solicitors that Ottoman would endeavour to complete the purchase by 15 December 2010. (3) On 14 December 2010, Mr Nazloomian resigned as a director of Ottoman and Mr Nathan El Ali was re-appointed as the sole director and shareholder of Ottoman. The primary judge accepted that this was because of the financing required for Ottoman to complete the acquisition of the Minto property. 162 At PD[67]-[68], the primary judge recorded that Mr Stojanovski gave evidence that he and Mr Nathan El Ali had a conversation in early December 2010 to the effect that Mr Nathan El Ali told him that he had exchanged contracts on a property at Minto and was struggling to secure funding. Mr Nathan El Ali asked Mr Stojanovski whether he would be interested in "coming in on the purchase". Mr Stojanovski asked how much was needed and what security he would get. He said that he was told $1 million and that he would get security over three commercial properties at Kogarah and a caveat over the Minto property. Mr Stojanovski said that he agreed "so long as [he got] the caveats and security up front", and Mr Nathan El Ali said that he would "draft up a deed". The primary judge recorded that Mr Nathan El Ali gave no evidence-in-chief about this but did confirm in cross-examination that he had discussions with Mr Stojanovski about the possibility that he might advance funds towards the purchase of the Minto property. The primary judge also recorded Mr Stojanovski's evidence that at some time later, around mid-December 2010, Mr Nathan El Ali told him that he would make him the trustee of the Ottoman Investments Unit Trust and transfer Unit 2 to him as the new trustee, which would give him control of the asset, and Mr Stojanovski said "that's fine. As long as it is in my name". Again, the primary judge recorded that Mr Nathan El Ali gave no evidence-in-chief about this. 163 The following findings from PD[68]-[76] are based on documents in evidence to which the Court was taken in argument on the appeal: (1) By 15 December 2010, Mr Nathan El Ali instructed his solicitors to prepare, among other documents: a deed of appointment of new trustee appointing Mr Stojanovski as the new trustee of the Ottoman Investments Unit Trust, three "consented caveats" over Kogarah Units 1, 2 and 3 showing the interests of Mr Stojanovski and his brother as purchaser of Unit 2 from Ottoman; and a "consented caveat" over the Minto property with the interest of Mr Stojanovski and his brother as lender. (2) On 15 December 2010, the notice to complete the purchase of the Minto property was extended to 17 December 2010. (3) On 15 December 2010, Mr Nathan El Ali and Mr Stojanovski signed a transfer of Unit 2 from Ottoman to Mr Stojanovski for a consideration of $1, caveats over Units 1 and 3 which showed the interest of Mr Stojanovski as purchaser of those Units and a caveat over the Minto property. The primary judge records Mr Stojanovski's evidence that he did not obtain legal advice before signing the documents. (4) A deed of appointment, under which Ottoman purported to appoint Mr Stojanovski as trustee of the Ottoman Investments Unit Trust, was signed by Mr Nathan El Ali (on behalf of Ottoman) and Mr Stojanovski on the same day (the 15 December 2010 Deed of Appointment). Blanks in the document drafted by Mr Nathan El Ali's lawyers were completed. The primary judge explained that, significantly, the 15 December 2010 Deed of Appointment recorded that the appointment of the new trustee took place under cl 30 of the trust deed for the Ottoman Investments Unit Trust, but in fact Ottoman did not have that power under that clause, the unitholder (Isaac & Jacob) did. (5) On 16 December 2010, Mr Nathan El Ali submitted the transfer form for Unit 2 to the OSR for stamping. The transfer was stamped with $50 duty pursuant to s 54(3) of the Duties Act as a transfer made in consequence of the appointment of a new trustee. Mr Nathan El Ali agreed in cross-examination that he had pointed out cl 27 of the trust deed to the OSR but not clause 30. At PD[74], the primary judge noted that cl 27 of the trust deed for the Ottoman Investments Unit Trust provided that the trustee is "both absolutely and irrevocable (sic) prohibited from being a unitholder or otherwise directly or indirectly benefitting under the deed" save for its rights to reimbursement and remuneration. The primary judge inferred that this clause satisfied the officer at the OSR that the transfer of Unit 2 from Ottoman to Mr Stojanovski should be stamped at $50 having regard to the requirements of s 54(3) of the Duties Act that: (b) none of the trustees of the trust after appointment of a new trustee is or can become a beneficiary of the trust; and (c) the transfer is not part of a scheme for conferring an interest, in relation to the trust property, on a new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest or potential beneficial interest of any person. (6) Having been stamped, the transfer of Unit 2 was registered by the Land Titles Office on 21 December 2010. (7) Ottoman did not complete the purchase of the Minto property on 17 December 2010 and on that day the contract was terminated by the vendor. The primary judge noted Mr Nathan El Ali's evidence that negotiations continued after that date. 164 It was accepted that, on or about 17 December 2010, Ottoman (with Mr Nathan El Ali acting as director) and Mr Stojanovski entered into a deed of agreement even though that document was expressed to be dated 13 December 2010. Mr Nathan El Ali had prepared the deed of agreement. The primary judge noted Mr Stojanovski's submission that the deed of agreement contained the agreement for the provision of a loan of $1 million and for Unit 2 to be assigned to him as security holder and that entitled him to hold the property until he had been repaid. 165 The primary judge's reasons at PD[78]-[80] address the following features of the deed of agreement: (1) The deed of agreement recites that: Ottoman was the nominated purchaser of the Minto property. Mr Nathan El Ali was Ottoman's sole director. Mr Stojanovski was "an established investor with strong building experience" and he was invited to participate in "the project" by providing a cash investment of $1 million to complete the proposed purchase of the Minto property. Mr Stojanovski accepted the offer to participate and the parties agreed "to form an affiliation in accordance with the terms of the deed". (2) It records that: The purchase price of the Minto property was $3.8 million and settlement was to have been effected by 30 November 2010. A development application to subdivide the property was expected to be finalised by the end of January 2010 (presumably meant to be 2011). A market valuation completed on 2 December 2010 reflected an "as is" value of $4.13 million and a value of $4.9 million with approval for a three lot subdivision. (3) It records that: The solicitors for the vendor had terminated the contract for sale of the Minto property on 17 December 2010. (4) It also records that funding to complete the project was expected to be generated as to $3 million from Mr Nathan El Ali "and associates" secured by a first registered mortgage over the Minto property and Mr Stojanovski "and associates" would provide a "direct Cash investment" of $1 million "secured in (sic) way of transfer of ownership" of Unit 2 and caveats over Units 1 and 3 and a "consented Caveat" over the Minto property "in the event the purchase proceed (sic) to settlement". (5) Under the heading "Security" it was stated that Mr Nathan El Ali had agreed to supply Mr Stojanovski with a "written consent" for a caveat over the Minto property, "transfer ownership" of Unit 2, supply caveats over Units 1 and 3 and an executed contract for the sale of Unit 2. It was further stated that: Any net sale proceeds to the value of $1,000,000 of the [Kogarah Units] are to be disbursed to or as directed by [Mr Stojanovski]. Any amount disbursed would be [utilised] to reduce [the] value of [the] initial [investment] by [Mr Stojanovski] and associates but it would not reflect or effect (sic) the agreed profit share of 25% of net profit before tax or 25% of net amount received as a result of negotiations with the vendor. (6) Further terms were that: (a) Mr Stojanovski would lodge a withdrawal of caveat to effect a sale of Units 1 or 3 "subject to the sale being in line with market expectation of greater than $700,000 for each and every floor" Mr Stojanovski would execute a transfer of Unit 2 subject to the same qualification. (b) Mr Nathan El Ali agreed "to be held personally liable" for the initial investment by Mr Stojanovski and associates with Ottoman. (c) Should Mr Stojanovski elect to recall the loan of $1 million on 1 May 2011 or later, Mr Nathan El Ali must within 30 days provide Mr Stojanovski with $1 million "in way of Cash plus interest calculated at 10% annually". 166 At PD[81]-[82], the primary judge dealt with the evidence that another deed of appointment of new trustee for the Ottoman Investments Unit Trust was signed by Mr Nathan El Ali (on behalf of Ottoman) and Mr Stojanovski on 21 December 2010 (the 21 December 2010 Deed of Appointment). It was identical in form to the 15 December 2010 Deed of Appointment. The primary judge said that "as best could be made out on the evidence", it appeared that this document was executed along with transfer forms for the transfer of Units 1 and 3 to Mr Stojanovski, also for $1 each, and that those documents were submitted to the OSR on 23 December 2010. The reason given by Mr Nathan El Ali for the two deeds of appointment was that the 15 December 2010 Deed of Appointment related to Unit 2 and the later deed related to Units 1 and 3, but he accepted in cross-examination that neither deed referred to any particular property. Mr Stojanovski's evidence in cross-examination was to the effect that the 15 December 2010 document "was requisitioned by the LPI [Land Titles Office], and then we had to sign a new trust around the 20th - around the 23rd. So there was another trust deed signed after this date". The primary judge noted that Mr Stojanovski had made no mention of this in his evidence-in-chief and wholly unexplained was why Units 1 and 3 were to be transferred to him when this was not recorded in the deed of agreement. The primary judge found neither explanation adequate but, in any event, neither of Units 1 or 3 was, in fact, transferred to Mr Stojanovski. 167 At PD[75], the primary judge noted that, although Mr Nathan El Ali initially disagreed that he was responsible for the documents submitted to the OSR on 16 December 2010 (he said he believed he only "assisted"), when pressed he agreed that he did the work. He also agreed that by late 2010, he had considerable experience with the OSR and knew that stamp duty was levied on a transfer of property at a rate that was a percentage of the purchase price, but that a transfer made in consequence of an appointment of a trustee was chargeable only at $50. 168 At PD[83], the primary judge stated that both Mr Nathan El Ali and Mr Stojanovski claimed that Mr Stojanovski gave Mr Nathan El Ali two bank cheques for $500,000 on 23 December 2010. Mr Stojanovski's evidence was that Mr Nathan El Ali phoned him on that day and said that now that Mr Stojanovski had the security that he wanted, Mr Nathan El Ali needed the cheques urgently. In cross-examination, Mr Stojanovski said that he was aware at the time that the vendors had terminated the contract for sale of the Minto property, but he believed that Ottoman still had "two weeks" to complete the purchase and believed that there were "some negotiations going on" "to continue with [the contract]". He said that he believed that Mr Nathan El Ali was going to use the $1 million to settle on the Minto property. His evidence was that, at all times, he believed that the transfer of Unit 2 was as security for his loan to Ottoman as trustee of the Ottoman Investments Unit Trust. The respondents asked the Court to reject that evidence. 169 At PD[84], the primary judge noted the respondents' submission that the explanations given by Mr Nathan El Ali and Mr Stojanovski for the transfer of Unit 2 were "riven with self-contradiction" and their submission that they either misled the Court or the OSR about the reason for the transfer. The primary judge disagreed with Mr Stojanovski's submissions that the Court should accept that the loan transaction was the fundamental underlying basis for the transfer of the property and that the Court should accept his evidence that the property was transferred to him as security for the advance of $1 million. 170 At PD[85], the primary judge found as follows: 85 I find that Mr Stojanovski did not in fact lend the $1 million to Ottoman (or otherwise). There is evidence that two bank cheques payable to the National Australia Bank ("NAB") were drawn from funds in Mr Stojanovski's account on 23 December 2010. The applicants did not dispute that the documentary evidence demonstrates the existence of those two bank cheques and that the photocopy of them bears the handwritten annotations of Mr [Nathan] El Ali to the effect that he received them. There is, however, no evidence that the cheques were ever banked by Mr [Nathan] El Ali. One of the key issues in the proceeding is whether, as the applicants alleged, consideration of $1 only was given for a property with a net value of $670,000. Mr [Nathan] El Ali's evidence was that he banked the $1 million into the Saracen bank account on or about 23 December 2010, that the $1 million "assisted in many other ventures to pay deposits for other stuff as well", including "the deposits for Wollongong, which we lost at the time" and the $1 million was thereafter "lost". All that evidence was given in cross-examination. In examination-in-chief, Mr [Nathan] El Ali deposed merely that "on 23 December 2010, [he] received two cheques, each in the amount of $500,000 from Stojanovski". He did not depose to what he did with those cheques. I am prepared to infer from Mr [Nathan] El Ali's failure to lead evidence on this critical issue that such evidence would not have assisted him. There are, in addition, other facts from which it may reasonably be inferred that the loan was not ultimately made. 171 At PD[86]-[95], the primary judge listed nine other reasons for her finding that the loan was ultimately not made: (1) Completion of the Minto property never occurred, so there was no need for the $1 million to be advanced (PD[86]). (2) With Mr Stojanovski knowing that completion of the Minto property had not occurred and that all negotiations for it had stopped and (according to his own evidence) knowing that a notice to complete had been issued in relation to the Taren Point property and Ottoman needed more money, her Honour found it improbable that Mr Stojanovski would, in April 2011, have been willing to advance a further approximately $400,000 to Ottoman to complete the purchase of the Taren Point property when he was still owed $1 million. Nonetheless, it was "an uncontroverted fact" that Mr Stojanovski did advance approximately $400,000 to Ottoman (PD[87]). (3) It was uncontroversial that Units 1 and 3 were sold in 2014 and Mr Stojanovski withdrew the caveats to enable them to be sold. Yet, notwithstanding that the terms of the deed of agreement provide for Mr Stojanovski to be paid $1 million out of the proceeds of sale, no amount was paid to him from the sale of those Units (PD[88]). (4) The Kogarah Unit 2 property remained registered in Mr Stojanovski's name. On his evidence, the $1 million loan was to be short term (three or four months) but several years later he had still not been paid yet he took no steps to realise his security. Nor did he lodge a proof of debt in Mr Nathan El Ali's estate for the $1 million, notwithstanding that the deed of agreement provided that he personally guaranteed repayment of the loan to Mr Stojanovski (PD[89]). (5) While Kogarah Units 1 and 3 were sold, Unit 2 was not. The primary judge did not accept Mr Stojanovski's evidence that Unit 2 had been put up for sale; he admitted that he had never appointed an agent and there was no objective evidence that he had put it up for sale (PD[90]). (6) In around October 2012, Mr Stojanovski entered into a lease with ECHL Pty Ltd (ECHL), another company wholly owned by Mr Nathan El Ali and later by Mr Mahmoud El Ali. The lease was signed by Mr Mahmoud El Ali for ECHL and negotiated by Mr Nathan El Ali. It was for a period of three years (with an option to renew for a further five years) and provided for rent of $78,000 per annum in monthly instalments. In cross-examination, Mr Stojanovski agreed that no rent had been paid and he had taken no steps to enforce payment. The context in which it was executed is that Mr Stojanovski was seeking a loan from the ANZ Bank. Although Mr Stojanovski denied that the lease was executed to lead the ANZ Bank to believe that he was receiving an income from the property, that denial was rejected by the primary judge. Her Honour found that there was nothing in evidence to support a finding that Mr Stojanovski ever expected an income stream from the lease: PD[91]. (7) It was implausible that Mr Stojanovski would leave Unit 2 vacant without using it for income producing purposes since 2010 if it was the case that $1 million was outstanding to him. No explanation was offered for why no steps were taken to realise or use the property as an income stream (PD[92]). (8) It was implausible that Mr Stojanovski would agree to lend another $400,000 to Ottoman in April 2011 and agree to a registered first mortgage being taken over Unit 2 by Yasoo for around $600,000 for the purchase of the Taren Point property when the $1 million had not been repaid and (as at November 2010) Unit 2 had an approximate net value of $670,000. That is, if Mr Stojanovski was holding Unit 2 as security, it was "inconceivable" that he would allow that registered mortgage and it was "implausible" that Mr Stojanovski would have lent more funds in April 2011 when, as Mr Nathan El Ali said, he had used the $1 million for other purposes and the negotiations for the Minto property had ceased (PD[93]). (9) The claim that Mr Stojanovski was owed $1 million was "implausible" because, at trial, he was unaware that Mr Mahmoud El Ali had become and remained the director of Ottoman and it would be expected that he would make enquiries as to who was in control of the Ottoman Investments Unit Trust and take steps to secure the debt owed to him, but he did neither (PD[94]). 172 The primary judge did not accept that Mr Stojanovski ever believed that his appointment as trustee of the Ottoman Investments Unit Trust had anything to do with giving him security over Unit 2 (PD[95]): (1) Mr Nathan El Ali said that Mr Stojanovski "never took trusteeship" because all of the assets could not be transferred to him. Taking the other assets to be Units 1 and 3, the primary judge noted that there was no mention of the transfer of Units 1 and 3 in the deed of agreement and there is no mention of appointing Mr Stojanovski as trustee as part of the arrangements relating to the advancement of moneys for the Minto property. Nor was there any evidence that Mr Stojanovski performed any duties as trustee, believing himself to have been duly appointed; his evidence in cross-examination was to the contrary. (2) Mr Stojanovski gave evidence that he believed he was appointed as trustee of the Ottoman Investments Unit Trust but in cross-examination admitted that he had done nothing in managing its affairs, he said that he did not believe that he was still trustee, that he ceased to be trustee "as soon as [he] ceased to carry out any activities of the trust - of the beneficiaries of the trust" and there were no activities that needed to be carried out in December 2010. That version of events was implausible, given Mr Nathan El Ali's control over Ottoman and the Trust, and on his version of events, the change of trusteeship did not proceed because the OSR sent further documents requiring changes and additional requirements and Mr Stojanovski refused to take over mortgages in his name as Kogarah Units 1 and 3 were mortgaged. (3) Mr Nathan El Ali appeared not to regard Mr Stojanovski as ever holding the position of trustee of the Ottoman Investments Unit Trust, borne out by the fact that in April 2011, Mr Nathan El Ali had appointed Mr Zreika as its trustee in lieu of Ottoman. 173 The primary judge (at PD[96]) rejected the evidence of both Mr Stojanovski and Mr Nathan El Ali concerning why the title to Unit 2 (being the only unencumbered unit) was transferred. Their evidence did not present a plausible explanation for the transactions and "[b]oth witnesses were shown not to be credible" and their accounts were not accepted. Accordingly, her Honour found that the $1 million advance was not made, Mr Nathan El Ali remained in effective control of Unit 2 and the transfer was orchestrated by him to put that property beyond the reach of his creditors at a time when proceedings were pending against him and he was aware of the freezing orders against him and Saracen. 174 As noted above, the primary judge's conclusions on credit are set out at PD[168]-[169]. 175 The primary judge rejected a contention made on behalf of Mr Stojanovski that the transfer of Unit 2 by Ottoman (and the transfer of the Potts Point property from Saracen to Mr Nazloomian) was not an "alienation of property" within the meaning of s 37A of the Conveyancing Act because Unit 2 (and the Potts Point property) was not "property" of Mr Nathan El Ali (PD[201]-[203]). 176 Relevantly to the appeal, the primary judge made the following findings at PD[219]-[221] in relation to intent to defraud and Mr Stojanovski's application to amend his defence as follows: 219 I have rejected Mr [Nathan] El Ali's and Mr Stojanovski's explanations for the transfer of the Kogarah Unit 2 property from Ottoman to Mr Stojanovski and found that notwithstanding the disposition and purported appointment of Mr Stojanovski as the trustee of the Ottoman Investments Unit Trust, the property (and affairs of the trust) both remained under the effective control of Mr [Nathan] El Ali. The effect of that transfer was also to put that property beyond the reach of Mr [Nathan] El Ali's creditors. Given the timing of the transfer and absence of a credible explanation as to why the property was transferred to Mr Stojanovski, I find that Mr [Nathan] El Ali made the transfer at that time for nominal consideration with the intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act. I also find that the Royals, as creditors of Mr [Nathan] El Ali, were prejudiced by the transfer by reason of the divestiture of an asset belonging to a company of which Mr [Nathan] El Ali was the sole shareholder at the time. 220 Mr Stojanovski relied upon the defence under s 37A(3) of the Conveyancing Act. In view of the rejection of his evidence that the Kogarah Unit 2 property was transferred to him as security for a loan of $1 million to Ottoman and the rejection of his evidence that he advanced that sum to Ottoman, Mr Stojanovski has not made out the elements of the statutory defence. In so concluding I have taken into consideration the alternative argument put in final submissions on behalf of Mr Stojanovski following the concession by counsel for Mr Stojanovski that the Deeds of Retirement and Appointment were ineffective to appoint Mr Stojanovski as trustee of the Ottoman Investments Unit Trust. It was submitted that the evidence supported the finding that it was the intention of the parties that Mr Stojanovski hold the property, and that the property is held by him, as trustee by way of security for his loan of $1 million to Ottoman. Argument ensued as to whether the alternative claim was covered by the extant defence or whether an amendment was required. For the avoidance of doubt counsel for Mr Stojanovski sought the leave of the Court to amend the defence to add the allegation in answer to the allegation that the property was transferred to Mr Stojanovski for $1, as follows: … the transfer of [Kogarah Unit 2] was from [Ottoman]: (i) as retiring trustee for the Ottoman Investments Unit Trust to [Mr Stojanovski] as the new trustee; or alternatively (ii) to [Mr Stojanovski] as trustee for [Ottoman], either as trustee for the Ottoman Investments Unit Trust or otherwise; in consideration for and/or as security for the [Mr Stojanovski] loaning the sum of $1,000,000 to [Ottoman], as Trustee for the Ottoman Investments Unit Trust, to facilitate it purchasing property at 5 Stonny Batter Road, Minto, NSW (the "Minto Property") and 221 The proposed amendment was objected to and leave to amend should be refused on the basis that the proposed amendment in (ii) is embarrassing. Even if the amendment was allowed, it would not assist Mr Stojanovski having regard to the findings of fact made.

The Amended Notice of Appeal and submissions 177 Mr Stojanovski says that the primary judge erred in rejecting the defence that Unit 2 was transferred as security for $1 million lent by him to Ottoman, that there was no intent to defraud creditors with the meaning of s 37A of the Conveyancing Act and the transfer was otherwise entered into in good faith. In this regard, Mr Stojanovski says that her Honour erred by: (1) Finding that Mr Stojanovski did not lend $1 million to Ottoman; (2) Finding that there was no evidence that Mr Nathan El Ali had ever banked cheques totalling $1 million; (3) Finding that there was no credible explanation for why the Kogarah Unit 2 property was transferred to Mr Stojanovski; (4) Not finding that the Kogarah Unit 2 property was transferred to Mr Stojanovski as security for the $1 million loan made to Ottoman; (5) Finding that the effect of the transfer of the Kogarah Unit 2 property to Mr Stojanovski was to put Unit 2 beyond the reach of Nathan El Ali's creditors; (6) Finding that the Kogarah Unit 2 property was transferred to Mr Stojanovski with the intent to defraud Mr Nathan El Ali's creditors within the meaning of s 37A of the Conveyancing Act; (7) Rejecting Mr Stojanovski's defence under s 37A(3) of the Conveyancing Act; and (8) Rejecting the proposed amended defence of Mr Stojanovski.

Mr Stojanovski's submissions 178 In written and oral submissions made on his behalf, Mr Stojanovski said that the primary judge's "fundamental finding" was that he had not made a loan of $1 million to Ottoman (at PD[85]). If that conclusion was not properly made, then it follows that Unit 2 was transferred to Mr Stojanovski as security for the loan to Ottoman and the basis on which the primary judge dismissed Mr Stojanovski's defence under s 37A(3) falls away. 179 He submitted that her Honour's finding that, while Mr Stojanovski provided cheques for $1 million to Mr Nathan El Ali, there was no evidence that they were banked, was in error because the primary judge ignored Mr Nathan El Ali's evidence, which was also referred to at PD[85], that he "banked the $1 million into the Saracen bank account" to assist in various other ventures. 180 Mr Stojanovski did not dispute that providing bank cheques payable to the National Australia Bank to Mr Nathan El Ali was a mistake as the funds were not retained by Ottoman. Once that was done, however, he had no control over the use of those funds, only Mr Nathan El Ali had that control. As bank cheques, the funds had already been withdrawn from his account and no other steps were required to perfect the loan to Ottoman. What Mr Nathan El Ali did with the cheques is irrelevant, because once the cheques were provided to Mr Nathan El Ali, Ottoman's sole director, the loan was "complete". If Mr Nathan El Ali used the money for other purposes, that is a matter between Ottoman, Saracen and Mr Nathan El Ali. 181 Mr Stojanovski submitted that: While the primary judge made adverse findings on his credit, those findings were infected by the errors the subject of the appeal, particularly in relation to the failure to give full credit to the effect of the deed of agreement. That was a "fundamental" error in her Honour's reasoning. Although the deed of agreement was not prepared by a lawyer or with great clarity, it is nevertheless "patently clear" from the material under the heading "Security" (see [163(5)] above) that a secured loan of $1 million was to be provided and Unit 2 was to be transferred as security. 182 He says that the deed of agreement together with the provision of the cheques for $1 million to Mr Nathan El Ali (which her Honour accepted did occur) is, in the language of the High Court in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (Fox v Percy), "incontrovertible evidence" that the loan was made and Unit 2 was provided as security. The "incontrovertible facts" derived from the evidence are: (1) The deed of agreement signed on or after 17 December 2010 was not a sham, there was no assertion at trial that it was a sham nor did her Honour make any such finding. (2) The deed of agreement made provision for a $1 million loan by Mr Stojanovski to Ottoman. (3) Mr Stojanovski gave two cheques totalling $1 million to Mr Nathan El Ali on 23 December 2010. That was supported by documentary evidence. The cheques were drawn on accounts operated by Mr Stojanovski and a company controlled by him. Mr Nathan El Ali was at the time the sole director of Ottoman. Those facts were not disputed, but rather the respondents' case was that Unit 2 was not provided as security and that it was not treated as security by Mr Stojanovski. (4) There was no basis suggested for the provision of those cheques to Mr Nathan El Ali other than pursuant to the deed of agreement. Submissions made by the respondents that Mr Nathan El Ali was a director of many companies and the cheques could have been used for purposes other than Ottoman ignore the existence of the deed of agreement which records the terms of the loan. The primary judge made no finding about in what capacity the cheques were received by Mr Nathan El Ali, but in the context of all of the documents, particularly, the deed of agreement, the timing and amount of the cheques means that it must have been done for the purposes set out in the deed of agreement. Accordingly, the cheques were given to Mr Nathan El Ali in his capacity as a director of Ottoman. As bank cheques, the funds had already been withdrawn from Mr Stojanovski's account and no other steps were required to perfect the loan. (5) The deed of agreement provided for Unit 2 to be provided as security for the $1 million loan. Mr Stojanovski claimed no interest in Unit 2 other than as the holder of security for the loan. (6) The transfer of Unit 2 was for security purposes only and Mr Stojanovski held it on that basis. He accepted that Unit 2 could be redeemed by re-transfer following repayment of the loan. Accordingly, the transfer of Unit 2 to Mr Stojanovski was akin to an old system mortgage as described by Stevenson J in Obnova Concrete Pty Ltd (in liq) v Windlock Pty Ltd [2015] NSWSC 181 at [30]. While Mr Stojanovski conceded that the deeds purporting to appoint him as trustee of the Ottoman Investments Unit Trust were ineffective, "it was always contended that Mr Stojanovski was nevertheless the trustee of the Kogarah property pursuant to an old system style mortgage". There was no misleading of the Court or the OSR nor was there internal inconsistency. 183 Mr Stojanovski says that, having regard to these "incontrovertible facts", the primary judge should have found that the $1 million loan was made to Ottoman and the transfer of Unit 2 to Mr Stojanovski was made as security for that loan. 184 Mr Stojanovski says that the inference drawn at PD[85] from Mr Nathan El Ali's failure to give evidence-in-chief concerning what he did with the bank cheques, that that evidence would not have helped him, is "curious" on the basis that it was not Mr Nathan El Ali who was trying to maintain the security in Unit 2. Mr Stojanovski submitted that he was not involved in Mr Nathan El Ali's evidence, and he did not know where the funds were banked. He says that the inference is of "no moment" to the existence of the $1 million loan. 185 Mr Stojanovski submitted that the matters which the primary judge took into account and the conclusions set out at PD[86]-[93] are either wrong or irrelevant to the existence of a loan. He says that all of the matters post-date the provision of Unit 2 as security and whether a loan was entered into is to be gauged by the circumstances which existed at that time, not later. He submitted that, while the purchase of the Minto property did not proceed, at the time he gave the cheques for $1 million to Mr Nathan El Ali, Mr Stojanovski believed it could still proceed. There was a real purpose for the cheques to be provided and the loan made; the issue of finance was obviously an important matter for the vendors. There was no allegation that the cheques were provided as a charade. 186 Mr Stojanovski submitted that the Court should reject the respondents' assertion that little weight should be accorded to the deed of agreement because of Mr Stojanovski's evidence that, although the deed of agreement stated that the vendor terminated the contract for sale of the Minto property on Friday, 17 December 2010, he did not give the words their plain English meaning. As indicated in Mr Stojanovski's evidence given at the hearing, he was aware of other communications which were ongoing after 17 December 2010. At T-378, Mr Stojanovski gave evidence that, around 20 December 2010, he provided copies of cheques for $500,000 in the name of the vendor's receivers so that they would "have the feeling that the contract can still be on foot". He said that that was not in his affidavit because one of those cheques had not been signed by Westpac so that it had not left his hand. (Those cheques were cancelled and new cheques payable to the National Australia Bank were issued on 23 December 2010). 187 Mr Stojanovski relied on an exchange of emails with the lawyers for the vendors of the Minto property. An email of 11 January 2011 is not in evidence, but the email from the vendors' lawyers dated 19 January 2011 indicates that an offer for purchase of the Minto property had been made on 11 January 2011 by Ottoman but it had not been accepted and that "your client" had been advised of the terms which must be included in any offer before it could receive "serious consideration" by the vendors. On 20 January 2011, a further offer was conveyed to the vendors' lawyers. It includes the passage: In reference to funding, as previously advised on 20 December 2010, our client was (and continues to be) in a position to complete the purchase. Your client did not proceed with completion despite this earlier advice. Notwithstanding this, our client wishes to proceed with the purchase on the terms detailed within. 188 Mr Stojanovski submitted that whether or not the purchase of the Minto property proceeded to completion was not the point; the point was that the cheques were provided in return for the security. Counsel for Mr Stojanovski submitted that: (1) Once security was given, it was a matter for Mr Stojanovski whether he chose to enforce it; the failure to enforce it does not render it invalid or non-existent. (2) At PD[87], the primary judge stated that she found it improbable that Mr Stojanovski would provide $400,000 to assist in the purchase of the Taren Point property if he had, in fact, already lent $1 million. The primary judge's reasoning involves a non-sequitur because the $1 million loan had already occurred at the time the Taren Point property transaction occurred in April 2011. The evidence clearly shows that Mr Stojanovski had paid $1 million and he still provided $400,000 in April 2011. Obviously Mr Stojanovski was generous and willing to assist Mr Nathan El Ali. Further, there was evidence and a finding at PD[105] that, at least in relation to the Taren Point property, Mr Stojanovski had some interest in the Taren Point property himself because it could be subdivided and he could build a house for himself on one side and for his brother on the other side. He therefore had a personal interest as well as an interest as an investor. (3) The primary judge's reasoning at PD[88] ignores the effect of the deed of agreement. The fact that Mr Stojanovski agreed to withdraw caveats over Units 1 and 3 did not affect his security over Unit 2, and the fact that he was not paid from the proceeds of the sale of Units 1 and 3 does not undermine the deed of agreement. None of the other matters considered by the primary judge undermine the deed of agreement and the commerciality or otherwise of Mr Stojanovski's decision not to enforce the security was a matter for him, not the Court. 189 Mr Stojanovski submitted that he had never claimed that he was the owner of Unit 2, only that he held it as security for a loan. Although Mr Nathan El Ali's lawyers had provided him with a form which would have permitted the registration of a mortgage, no mortgage document was ever produced or signed. The transfer of the title to Unit 2 to Mr Stojanovski was as trustee under the ineffective deed of appointment of new trustee but also by way of security. Counsel for Mr Stojanovski conceded that all his appointment as trustee did was give Mr Stojanovski control over Unit 2 and that was, at most, practical control. While Mr Stojanovski may have been subject to direction by the beneficiaries of the trust, counsel submitted that the deed of agreement provided for what was to happen if the property was sold. He suggested that "the parties had contemplated that a direction may occur in relation to the sale of the property and if that occurred then those proceeds would be used in reduction of the loan". 190 On the issue of whether Unit 2 was transferred with intent to defraud creditors, Mr Stojanovski relied on submissions made by Mr Nazloomian in relation to the application of the defence under s 37A(3). In essence those submissions were: (1) Central to the distinction between s 122 of the Bankruptcy Act (which deals with payments to creditors which confer a priority on those creditors) and an alienation of property to which s 37A of the Conveyancing Act applies is the "requirement of dishonesty", relying on Marcolongo v Chen at [32]. (2) If valuable consideration is given, the alienation is deemed to be good unless it is proved that the alienee knew of the intent to defraud, relying on Coghlan v Alexander (1905) 5 SR NSW 441 (Coghlan v Alexander). The alienee has no obligation to enquire in such circumstances and deemed knowledge is not sufficient. Therefore, the mere fact of being on enquiry is insufficient. Actual knowledge is required. 191 Mr Stojanovski submitted that: The transfer did not put Unit 2 beyond the reach of Mr Nathan El Ali's creditors. The transfer of Unit 2 did not affect the value of the shares in Ottoman and the shares were the only asset within his creditors' reach. The respondents were therefore not prejudiced. There was no effect on Ottoman's balance sheet or the value of the shares in Ottoman held by Mr Nathan El Ali because an asset ($1 million) acquired was balanced by the liability incurred. In those circumstances, there was no intent to defraud Mr Nathan El Ali's creditors and the Royals (and any creditors of Ottoman) could not have been prejudiced. The primary judge failed to identify how the transfer of Unit 2 affected or could affect the creditors of Mr Nathan El Ali so as to be a transaction intended to defeat the interests of his creditors. Had her Honour considered that issue, the inevitable conclusion would have been that his creditors were not and could not be affected by that transfer. Even if the transfer of Unit 2 was a "straight out" alienation (that is, not by way of security), Ottoman received $1 million in exchange for an asset worth $670,000, so that Unit 2 was received in satisfaction or at least in partial satisfaction of the loan. Counsel submitted that her Honour's finding at PD[219] that there was no credible explanation for why the property was transferred for nominal consideration must be in error if the Court accepts Mr Stojanovski's contention that the loan of $1 million was in fact made. On the same basis, her Honour's rejection of Mr Stojanovski's defence under s 37A(3) of the Conveyancing Act at PD[220] must be in error. Even if the Court were to find that the transfer was prima facie in breach of s 37A of the Conveyancing Act, if the Court finds that the $1 million was advanced, the defence under s 37A(3) would nevertheless apply. 192 In relation to the primary judge's decision not to allow a proposed amendment to the defence set out at PD[221], Mr Stojanovski submitted that the basis of the proposed pleading was clearly elucidated during that hearing and in written submissions. Counsel took the Court to pp 137-139 of transcript of the proceedings before the primary judge. Counsel submitted to this Court that the primary judge was wrong to describe the amended pleading as embarrassing as there was no doubt as to what the pleading related and the amendment should have been allowed. 193 In reply to submissions made by senior counsel for the respondents, counsel for Mr Stojanovski submitted that the primary judge's findings were not dependent on matters of credit but rather the primary judge considered the evidence of various transactions and documents. He submitted that in none of the matters did the primary judge say that her Honour disbelieved Mr Stojanovski's evidence. When pressed, counsel accepted that, at PD[91], the primary judge said that her Honour did not believe Mr Stojanovski's denial that the ECHL lease was created to lead the ANZ Bank to believe that there was an income stream from Unit 2 but counsel submitted that that was the extent of it and it was a small part of her Honour's findings. 194 Counsel for Mr Stojanovski submitted that the primary judge drew conclusions from her factual findings to reach the determination that the $1 million loan was not made. Accordingly, the primary judge enjoyed no special advantage and the Full Court was in a position to form its own view of the inferences which should be drawn, relying on Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 (Warren v Coombes). Counsel submitted that, in assessing whether the $1 million loan was in fact made, the relevant facts are those before or contemporaneous with the making of the loan, including the deed of agreement, which has never been impugned as an ex post facto creation or a sham. Later matters should not be taken into account when there is a clear record of what passed in December 2010. The respondents' submission that the loan could never have been proved on those documents should be rejected. Counsel referred to Mr Nathan El Ali's evidence-in-chief that Mr Stojanovski handed the two cheques for $500,000 to him as a director of Ottoman which was unchallenged and submitted that Mr Nathan El Ali's evidence that Mr Stojanovski had requested the return of the $1 million after December 2010 was also unchallenged and it is not to the point that the money was never banked to Ottoman's account. 195 Counsel also submitted that the primary judge did not make a finding that Mr Stojanovski had avoided ad valorem stamp duty on the transfer of Unit 2, and none should be made by this Court because the evidence is that Mr Nathan El Ali was responsible for having the transfer of Unit 2 to Mr Stojanovski stamped. We have accepted that submission.

The respondents' submissions 196 The respondents noted the primary judge's findings at PD[96] and [219], in which her Honour found that the evidence of Mr Stojanovski and Mr Nathan El Ali was "not credible" and found that there was an "absence of a credible explanation" for why Mr Nathan El Ali had caused the transfer of the Kogarah Unit 2 property to Mr Stojanovski for $1. 197 They also relied on her Honour's finding at PD[168] that none of the respondents (now appellants) was a witness of truth. In particular, they noted the 10 "comprehensive" reasons given by her Honour at PD[86]-[95] for rejecting the evidence that the loan of $1 million was ever made to Ottoman. They submitted that her Honour's credit findings were based on the whole of the evidence relevant to each of the appellants, including their relationship with Mr Nathan El Ali, their conduct in relation to the transactions and the manner in which each of them gave evidence in the case. 198 In oral submissions, the respondents noted Mr Stojanovski's evidence given in cross-examination that: (1) He did not believe Mr Nathan El Ali owed him any money. When he was taken to the words of the deed of agreement "Elali, agree to be held personally liable for Otsi and associates $1,000,000 initial Cash investment with Ottoman Investments Pty Ltd", he denied that Mr Nathan El Ali was personally responsible for ensuring that he was paid $1 million. (2) He believed that Ottoman owed him the $1 million but he had not made any enquiries about who controlled it and he did not know (until told at the hearing) that Mr Mahmoud El Ali was then the director of Ottoman. He was not concerned about that because he had Unit 2 as security. (3) "We" had been trying to sell Unit 2 for three years and the intention was that he would receive his money from the sale of Unit 2. The interest was not there from prospective purchasers although Unit 2 was good value. The only marketing campaigns had been conducted by Mr Nathan El Ali; Mr Stojanovski had never signed a marketing agreement with any agent. (4) Unit 2 was occupied at the time of the hearing by accountants, Mr Nathan El Ali (then an undischarged bankrupt) and Mr Stojanovski, although much of it remained vacant. Unit 2 was said to be subject to the ECHL lease entered into in October 2012 and lease payments of $78,000 were payable under it, although there is no evidence that any payments were ever made. The lease was used as the basis of a $500,000 borrowing from the ANZ Bank. Mr Stojanovski's evidence in cross-examination was that he applied for the loan two or three weeks after the lease was entered into, the lease was given to the ANZ Bank in support of the loan and the borrowing was used for Mr Stojanovski's own purposes. (5) He had had caveats over Units 1 and 3 but they "got sold off at the time" "to lending bodies". He did not know who the director of Ottoman was at the time. He had released the caveats over Units 1 and 3 because he was "only looking at the security that [he] held at the time" over Unit 2. 199 The respondents submitted this evidence, that Mr Stojanovski was seeking to sell Unit 2 to realise his security, was in "complete contradistinction" to the evidence that he gave when he was asked how Unit 2 could be security when he was trustee of the Ottoman Investments Unit Trust. Mr Stojanovski acknowledged that he would have a duty to account to the beneficiaries if the property was sold and said that he "was representing the beneficiaries but as long as [he] held that property it belonged to the trust". 200 The respondents submitted that there was no plausible way that Mr Stojanovski could have persuaded the primary judge that he had taken Unit 2 as security for a loan he had made to Ottoman and that he was, and had been for three years, trying to sell the property to reduce the $1 million loan. What he did spoke louder than his testimony. His acts revealed that he obviously had no interest in trying to recover the money that he said that he had outlaid. On the evidence available to the primary judge, her Honour was "well justified" to conclude as she did at PD[96]: 96 In summary, I reject the evidence of both Mr Stojanovski and Mr [Nathan] El Ali as to why Mr [Nathan] El Ali transferred the title to Kogarah Unit 2 (being the only unit which was not encumbered) to Mr Stojanovski. The examination of the evidence of both Mr Stojanovski and Mr [Nathan] El Ali did not present a plausible explanation for the transactions. Both witnesses were shown not be credible and their accounts are not accepted. I find that Mr Stojanovski did not make the advance of $1 million, and find that Mr [Nathan] El Ali remained in effective control of the Kogarah Unit 2 property and the transfer was orchestrated by him to put that property beyond the reach of his creditors at a time when proceedings were pending against him and he was aware of the freezing orders against Saracen and him. 201 The respondents submitted that the Full Court should only interfere with the primary judge's findings of fact if they are demonstrated to be wrong by "incontrovertible facts or uncontested testimony", or they are "glaringly improbable" or "contrary to compelling inference" (relying on Robinson Helicopter Company Inc v McDermott [2016] HCA 22; (2016) 331 ALR 550 (Robinson Helicopter) at [43]). 202 The respondents agree that the facts relevant to Mr Stojanovski's appeal are at PD[65]-[96] and say that none of them is "glaringly improbable" in light of the following: (1) On 15 December 2010, Ottoman and Mr Stojanovski entered into the 15 December 2010 Deed of Appointment of new trustee in relation to the Ottoman Investments Unit Trust. Mr Stojanovski ultimately conceded that this was ineffective. (2) Unit 2 was transferred to Mr Stojanovski on 16 December 2010 for $1, Ottoman having acquired it four months earlier for $713,000. This was at a "critical point and in the teeth of litigation", as the Royals had commenced proceedings against Mr Nathan El Ali in March 2010, the pleadings in those proceedings had been amended in September 2010 seeking the final orders which were ultimately made and the 2010 Freezing Orders had been made by the Supreme Court of New South Wales in October 2010 against Mr Nathan El Ali and Saracen. (3) On or not before 17 December 2010, Mr Stojanovski and Mr Nathan El Ali (for Ottoman) executed the deed of agreement, reciting that Mr Stojanovski was to contribute $1 million as an investment in the purchase of the Minto property in return for the Unit 2 property as security. In cross-examination (but not in chief), Mr Stojanovski said that these steps were taken despite the termination of the contract for purchase of the Minto property. (4) Notwithstanding that he was a director of Ottoman at the time of the transfer of Unit 2 to Mr Stojanovski, Mr Nathan El Ali did not adduce any documentary evidence of banking the cheques for $1 million in Ottoman's bank account or any bank account. He only gave evidence in cross-examination that he had banked the cheques to the Saracen account on or about 23 December 2010, that he used the funds in other ventures, the deposit on the Wollongong property was lost and that the $1 million was thereafter "lost". Mr Stojanovski gave no evidence as to the source of the $1 million. It is not enough to assert that Mr Stojanovski provided the cheques to Mr Nathan El Ali and for that reason the $1 million loan was made to Ottoman. (5) The evidence of Mr Stojanovski and Mr Nathan El Ali, overall, was internally inconsistent. It was said that there was a $1 million investment in the Minto property and Unit 2 was transferred as security for it but the transfer was also said to be by way of change of trustee, albeit that the appointment of Mr Stojanovski as trustee was conceded ultimately to have been ineffective. Mr Stojanovski and Mr Nathan El Ali either wilfully misled the Court or the OSR to claim concessional duty. That internal inconsistency renders the explanations given by Mr Stojanovski and Mr Nathan El Ali implausible and it was open to the primary judge to find that the transfer occurred to defeat or delay creditors of Mr Nathan El Ali. 203 The respondents say that the primary judge did not (at PD[85]) ignore, but rather expressly referred to, the evidence given by Mr Nathan El Ali in cross-examination (but not in chief) that he had banked the cheques for $1 million into the Saracen bank account. They say that her Honour's finding that the $1 million loan was not made was supported by her findings that they were not banked and 10 other reasons. They say: (1) Importantly, her Honour found that, as the Minto property never completed, there was no need for the advancement of $1 million. While her Honour accepted that two bank cheques were made out to the National Australia Bank, there is no documentary evidence as to what Mr Nathan El Ali (as a director of Ottoman) did with them, even though there is evidence of activity in an Ottoman account from August to October 2010 (a CBA account, notably not a NAB account). The only explanation was given by Mr Nathan El Ali in cross-examination and, in the absence of him leading evidence on that critical issue, the primary judge properly drew an adverse inference that any such evidence would not have assisted Mr Nathan El Ali. Mr Stojanovski's evidence given in cross-examination demonstrates that he had no regard to what might have happened with the cheques after he says he gave them to Mr Nathan El Ali. Further, despite his evidence that he was "very concerned" for over three and a half years about recovering the $1 million, he did not pursue Ottoman for the money and he had no idea of who the director and shareholder of Ottoman was. (2) The respondents' rely on the circumstances relating to the ECHL lease discussed by her Honour at PD[91] and the fact that all of that evidence was given by Mr Stojanovski in cross-examination, not in chief. (3) The purported appointment of Mr Stojanovski as trustee was not in relation to an individual asset, but rather as trustee of the Ottoman Investments Unit Trust. Yet Mr Stojanovski's evidence showed that he had no knowledge or involvement in the affairs of the Trust, he did not know or enquire about the identity of any of the beneficiaries of the Trust, he undertook none of the obligations of a trustee, and he says that he understood he was entitled to obtain a benefit from the trust contrary to cl 27 of the trust deed. 204 Accordingly, her Honour's findings at PD[85]-[95] were not "glaringly improbable". Further there is no appealable error arising from the fact that her Honour appears to have omitted the word "documentary" in the phrase "[t]here is, however, no evidence that the cheques were ever banked by Mr El Ali" at PD[85], given it would have made no difference to her Honour's ultimate finding in that paragraph based on Mr Nathan El Ali's failure to lead evidence-in-chief concerning what happened to the cheques. This latter submission relied on Starkey on behalf of the Kokatha People v State of South Australia [2018] FCAFC 36 (Starkey) at [150] per Reeves J, White J agreeing. 205 The respondents also deny that the primary judge ignored the effect of the deed of agreement, pointing out that her Honour set out the material terms of the deed of agreement at PD[78]-[80]. At PD[88], the primary judge noted that, despite the terms of the deed, Mr Stojanovski was not repaid out of the proceeds of the sale of Units 1 and 3. They say that limited weight could be placed on the deed of agreement, given Mr Stojanovski's evidence that he did not give words in the deed of agreement their plain English meaning. Further the deed of agreement referred to Mr Stojanovski receiving "ownership" of Unit 2, rather than receiving it as trustee. Accordingly, neither of Mr Nathan El Ali nor Mr Stojanovski acted in accordance with the terms of the deed and the deed did not provide "incontrovertible evidence" that the $1 million loan was made in the face of the matters set out at PD[86]-[95], particularly in the absence of documentary evidence that the cheques were banked. 206 The respondents say that Mr Stojanovski's submission that the loan was "complete" once the cheques were handed to Mr Nathan El Ali should be rejected because Mr Nathan El Ali was a director of a number of companies and the purpose and manner in which the money was received necessarily depends on his intentions and those of Mr Stojanovski at the time. That, in turn, depends upon their evidence and credit as witnesses. If Mr Stojanovski intended to lend money to Ottoman but Mr Nathan El Ali used the funds for a wholly different purpose with a wholly different entity; that is not merely an "issue as between Ottoman, Mr El Ali and Saracen" as asserted by Mr Stojanovski. Further, it was not the case, as asserted by Mr Stojanovski in submissions, that the cheques were provided only in return for security (in the form of Unit 2). His evidence in cross-examination was that "… we provided the receivers copies of these cheques for them to - to have that feeling of that the [Minto] contract can still be on foot" (emphasis in submission). It was therefore very much to the point that the purchase of the Minto property never completed and Mr Stojanovski was aware that it had been terminated on at least 23 December 2010. 207 The respondents say that PD[87] does not involve a non-sequitur as the primary judge's reasoning related to her Honour's questioning why, in April 2011, Mr Stojanovski would advance further funds when he had not been repaid $1 million advanced in 2010; with her Honour making the finding that it was improbable that he would have done so, which was a finding open as a matter of logic. 208 The respondents submitted that, contrary to Mr Stojanovski's submissions, the primary judge did identify how the transfer of Unit 2 prejudiced Mr Nathan El Ali's creditors. At PD[219], the primary judge found that Unit 2 and the property and affairs of the Ottoman Investments Unit Trust remained under the effective control of Mr Nathan El Ali. At PD[170] and elsewhere, her Honour found that Mr Nathan El Ali remained the "controlling mind and directing force" of each of the companies, including Ottoman. At PD[229], her Honour found that he treated the assets of the companies "as his own to deal with as he saw fit". It follows from these findings, and it was expressly found at PD[219], that the transfer of Unit 2 to Mr Stojanovski had the effect of putting the property beyond the reach of Mr Nathan El Ali's creditors. On the evidence, no consideration, other than as stated on the face of the transfer form for Unit 2 ($1), was paid to Ottoman by Mr Stojanovski; the net proceeds of sale of Unit 2 was $162,836.88. Accordingly, there was necessarily a diminution of the fund available to Mr Nathan El Ali's creditors by reason of that alienation of Unit 2. 209 The respondents say the value of the Ottoman shares and Mr Stojanovski's claim that he took Unit 2 as security (an explanation rejected by the primary judge) is irrelevant because, for the purposes of s 37A of the Conveyancing Act, the alienated property does not have to be property of the bankrupt (see, for example, Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, per Brennan CJ, Gaudron and McHugh JJ at [6]-[9]). Following the reversal of the share and property transfers in accordance with declarations made by her Honour, the proceeds of sale of Unit 2 (now vested with the Ottoman liquidator) can be distributed to Mr Jones (in whom Mr Nathan El Ali's shares in Ottoman have vested) as an asset in Mr Nathan El Ali's bankruptcy. 210 In relation to the primary judge's findings at PD[220]-[221] that Mr Stojanovski failed to make out the defence under s 37A(3) of the Conveyancing Act, Mr Stojanovski's submission that the transfer lacked the requisite "dishonesty" should be rejected because the majority in Marcolongo v Chen at [32] found that it was "necessary to show [in the debtor] the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly" (emphasis in the judgment). They also say that Coghlan v Alexander is not authority for the principle that, if valuable consideration is given, the alienation is deemed to be good unless it is proved that the alienee knew of the intent to defraud. They rely on the decision of Parker J in Nguyen v Corbett [2017] NSWSC 1689 (Nguyen v Corbett) at [159]-[160]. 211 They rely on Westpac v Bell Group at [587] per Lee AJA and Drummond AJA agreeing for the proposition that knowledge of the debtor's inability to pay his debts and that the transaction prejudiced other creditors (present or future) was necessary to establish both absence of good faith and the requisite notice and that amounted to notice of an intention to hinder, delay or defeat other creditors. Further, they say it is well-established that lack of good faith can be inferred from a failure to make enquiries which might reasonably have been made, relying on Capital One Securities Pty Ltd v Soda Kids Holdings Pty Ltd [2014] VSC 168 per Ginnane J at [274] (Capital One Securities v Soda Kids), citing Official Trustee in Bankruptcy v Mitchell. 212 The respondents contend that it was for Mr Stojanovski to make out the elements necessary for reliance on s 37A(3) of the Conveyancing Act. To establish that, he must be able to show that he was a purchaser in good faith and for valuable consideration and without notice of Mr Nathan El Ali's intent to defraud his creditors (relying on Maria Bechara v Theodoros Haratsaris [2013] NSWSC 577 per Rein J at [79]). They say that it was open to the primary judge to find that Mr Stojanovski had failed to make out the elements of the defence given the factual findings that the $1 million loan was not made, Unit 2 was not provided as "security" and on the evidence of the transfer that he paid consideration of $1. Those findings and the evidence demonstrated that the transfer of Unit 2 was not made at "arm's length", it was made for nominal consideration, the necessary result was to put it beyond the reach of Mr Nathan El Ali's creditors and Mr Stojanovski had notice of Mr Nathan El Ali's intent to hinder or delay his creditors. 213 In relation to the primary judge's decision to refuse Mr Stojanovski leave to amend the defence, the respondents say her Honour was correct to do so because the proposed amendment was embarrassing and because it would not have assisted Mr Stojanovski because of her Honour's factual findings which, they say, were not "glaringly improbable".

Were the findings that Mr Stojanovski did not make a loan of $1 million to Ottoman and Unit 2 was not provided as security for that loan made in error?

Relevant principles 214 In Robinson Helicopter at [43], French CJ, Bell, Keane, Nettle and Gordon JJ found that a court of appeal conducting an appeal by way of rehearing is bound to conduct a "real review" of the evidence given at first instance and of the trial judge's reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the trial judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a trial judge's findings of fact unless they are demonstrated to be wrong by "incontrovertible facts or uncontested testimony", or they are "glaringly improbable" or "contrary to compelling inferences". 215 In Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93 (Aldi Foods v Moroccanoil Israel) at [3], Allsop CJ observed that the footnotes to Robinson Helicopter at [43] and the balance of that judgment, especially at [56] make it plain that the High Court intended no departure from long-standing principle discussed in Warren v Coombes, Fox v Percy and State Rail Authority (NSW) v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; (1999) 73 ALJR 306 by saying that "a court of appeal should not interfere with a judge's finding of fact unless they are demonstrated to be wrong by 'incontrovertible facts or uncontested testimony' or they are 'glaringly improbable' or 'contrary to compelling inferences'". The Chief Justice did not read Robinson Helicopter as saying that any finding of fact made by a trial judge can only be interfered with if the expressions referred to above and derived from Fox v Percy are satisfied, however his Honour noted the great advantages that the trial judge had in that case, including the opportunity to view two helicopters of a kind that had crashed. 216 As observed by Perram J in Aldi Foods v Moroccanoil Israel at [45]-[54] (with whom Allsop CJ agreed in substance), this Court's appellate jurisdiction involves an appeal by way of rehearing: see Branir Pty Ltd v Owston Nominees Pty Ltd (No 2) [2001] FCA 1833; (2001) 117 FCR 424 (Branir) at [20] per Drummond and Mansfield JJ, Allsop J (as his Honour then was) agreeing, and that involves the correction of error (Branir at [22]). Error is not demonstrated merely because the appellate court disagrees with the primary judge but it is demonstrated where it is shown that some aspect of the trial judge's reasoning is wrong. How the trial judge's reasoning may be shown to be wrong depends on what that reasoning is about (Branir at [24]). 217 At one extreme are errors of law. In those cases, mere disagreement on the part of the appellate court with the trial judge will justify the conclusion that an error has been made. At the other extreme are findings of fact made by a trial judge where the credibility of witnesses is involved. In the latter cases, it is accepted that the trial judge enjoys very considerable advantages over an appellate court by reason of having seen the witnesses and having been immersed in the milieu of the trial. Where this is so it is commonly said that the appellate court will not depart from the trial judge's conclusions unless they are shown to be wrong by reference to "incontrovertible facts or uncontested testimony" (Fox v Percy at [28]) or otherwise be "contrary to compelling inferences" (Fox v Percy at [29]). 218 Between these two extremes lies a grey area in which the amount of deference shown to a trial judge's conclusions is a function of the relative advantage enjoyed by the trial judge over the appellate court. That the appellate court can review in such cases is not in doubt. Speaking of the question of when an appellate court can review inferences drawn from facts already found, the High Court explained it this way in Warren v Coombes at 551: [I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it. 219 It has been subsequently explained that the last sentence means that the appellate court should not eschew review once it has perceived error: see Minister for Immigration, Local Government and Ethnic Affairs v Hamsher [1992] FCA 233; (1992) 35 FCR 359 at 369 per Beaumont and Lee JJ; Branir at [14]-[15]. 220 Furthermore, in Robinson Helicopter at [56], the High Court explicitly invoked Warren v Coombes in criticising the Court of Appeal for failing to "give the respect and weight to the judge's analysis of the issue which it deserved". Once that is understood, it is clear the quoted passage in Robinson Helicopter is concerned with findings of fact involving the credibility of witnesses. 221 We respectfully agree with these reasons of Allsop CJ and Perram J in Aldi Foods v Moroccanoil Israel.

Analysis 222 Mr Stojanovski's central contention was that the primary judge erred by failing to give full effect to the deed of agreement and the evidence that two cheques for $500,000 each were handed to Mr Nathan El Ali, the sole director of Ottoman, on 23 December 2010, and by taking into account subsequent events to find that a loan of $1 million had not been made by Mr Stojanovski to Ottoman. We do not agree and find no error in the primary judge's approach. 223 The explanation for the transfer of Unit 2 to Mr Stojanovski given by Mr Nathan El Ali and Mr Stojanovski was that it was made by way of security for a $1 million loan and due to the appointment of Mr Stojanovski as trustee of the Ottoman Investments Unit Trust. 224 It can be conceded that, if no other circumstances existed, the facts that: (1) A notice to complete had been issued by the vendor of the Minto property and, on 15 December 2010, the date for completion was extended to 17 December 2010; (2) A transfer of Unit 2 to Mr Stojanovski was executed on 15 December 2010; (3) The transfer was stamped on 16 December 2010; (4) The deed of agreement was signed on 17 December 2010 and it provided for funding for the purchase of the Minto property to be provided as to part by "Elali and associates" and for Mr Stojanovski to provide a direct cash investment of $1 million "secured in way of transfer of ownership" of Unit 2 to Mr Stojanovski together with caveats over Units 1 and 3 and the Minto property; (5) The transfer was registered by the Land Titles Office on 21 December 2010; (6) There is evidence that two amounts of $500,000 were drawn from Mr Stojanovski's accounts on 23 December 2010 and cheques for those amounts made payable to the National Australia Bank were issued on that day; (7) There is evidence that Mr Nathan El Ali acknowledged in writing that he received two cheques of that kind on that day (copies of which appear above the acknowledgment); and (8) Mr Nathan El Ali was, from 14 December 2010, the sole director and shareholder of Ottoman, would, having regard to the terms of the deed of agreement, ordinarily be strong evidence in support of a contention that Mr Stojanovski lent $1 million and Unit 2 was provided by Ottoman as security for that loan. But those facts only address some parts of the claims made by Mr Stojanovski and Mr Nathan El Ali and some of the evidence. This evidence has a context, and the primary judge was entitled to consider all of that context in determining whether or not the claims made by Mr Stojanovski and Mr Nathan El Ali were made out. 225 We will deal first with Mr Stojanovski's claim that the transfer of Unit 2 was made to him upon his appointment as trustee of the Ottoman Investments Unit Trust. On Mr Stojanovski's evidence, Mr Nathan El Ali first approached him in early December 2010 to "come in on the purchase" of the Minto property by providing $1 million and that, in about mid-December 2010, he was asked to become the trustee of the Ottoman Investments Unit Trust pursuant to which he would have Unit 2 transferred to him as new trustee. This was said to give him "total control" of that asset. Mr Nathan El Ali gave no evidence-in-chief about this. However, if, as contended by Mr Stojanovski and as suggested by the deed of agreement, "ownership" of Unit 2 was to be transferred to him by way of security, in effect, an old system mortgage, then becoming trustee of the Trust conferred no greater control of the asset and it gave rise to complications. Mr Stojanovski's evidence in cross-examination indicates that he understood (at least at that time) that appointment as trustee would have conferred on him obligations to the beneficiaries of the Trust. 226 Accordingly, the purported appointment of Mr Stojanovski as trustee of the Trust does not support the asserted basis for the transfer of Unit 2 to Mr Stojanovski as security. Rather, it undermines its credibility particularly in a context where Mr Nathan El Ali took steps to distance himself from the ownership of Ottoman and Isaac & Jacob around the same time and in the context of the litigation with the Royals and the 2010 Freezing Orders made against Mr Nathan El Ali and Saracen in early October 2010. 227 The purported appointment of Mr Stojanovski as trustee of the Ottoman Investments Unit Trust is not reflected at all in the deed of agreement and is arguably inconsistent with its terms, even though the appointment predated by two days the execution of the deed of agreement. The deed of agreement did not contemplate the transfer of Units 1 or 3 or the Minto property (upon completion) to Mr Stojanovski as trustee of the Trust but rather only contemplated that Mr Stojanovski would be given caveats over those properties by way of security. The explanations given for the re-execution of the 21 December 2010 Deed of Appointment of trustee (to support the transfer of Units 1 and 3 to Mr Stojanovski) was plainly "unsatisfactory" (see PD[81]-[82]). 228 Further, Mr Nathan El Ali admitted in cross-examination that Mr Stojanovski "never took on the trusteeship", there was no evidence that Mr Stojanovski ever performed duties as trustee or in the management of the Trust, and Mr Nathan El Ali had Mr Zreika appointed as trustee of the Trust in April 2011 in lieu of Ottoman: see PD[95]. To this might be added Mr Stojanovski's failure to seek to earn any income from Unit 2 (which would have been appropriate had he thought he was trustee) and the fact that he raised a loan from ANZ on the basis of the ECHL lease (in respect of which no rent was ever paid) which (on his testimony) he used for his own purposes. 229 The primary judge was entitled to take these matters into account in determining the credibility of Mr Nathan El Ali and Mr Stojanovski as witnesses. The unconvincing nature of their evidence about whether Mr Stojanovski was appointed to replace Ottoman as trustee of the Ottoman Investments Unit Trust supports the finding (at PD[96]) that both Mr Nathan El Ali and Mr Stojanovski were shown not to be credible witnesses and the finding (at PD[168]-[169]) that neither was a witness of truth, all findings that have not been directly challenged on appeal. The fact that it was ultimately conceded on Mr Stojanovski's behalf that the 15 December 2010 Deed of Appointment was ineffective to appoint him as trustee of the Ottoman Investments Unit Trust does not change this. It is notable that there is no challenge to her Honour's findings that none of the properties which were claimed to have been held on trust in the proceedings were so held. 230 We also do not accept that the primary judge failed to accord the deed of agreement the "full credit" that it deserved or that her Honour failed to take into account the evidence that Mr Stojanovski provided two bank cheques for $500,000 each to Mr Nathan El Ali on 23 December 2010. The primary judge noted the material terms of the deed of agreement in detail and the evidence concerning the cheques for $1 million and took into account the extent to which the conduct of the parties to the deed of agreement varied from its terms, as her Honour was entitled and required to do. 231 We will turn first to the cheques. Mr Stojanovski drew two sets of cheques, each for an aggregate amount of $1 million. This was the subject of submissions, albeit that the primary judge only referred to the second set of cheques in the Principal Decision. It was Mr Stojanovski's evidence that he had first drawn cheques in favour of the receivers of Fergus Berger Pty Ltd, the vendor of the Minto property, and copies of those cheques were provided to the receivers around about 20 December 2010 so that they would "have that feeling of that the [Minto] contract can still be on foot", but he had not been prepared to part with those cheques which "never left his hand". 232 We accept the respondents' submission that the primary judge did not overlook the evidence that two bank cheques drawn on the National Australia Bank were given to Mr Nathan El Ali on 23 December 2010 or the evidence given by Mr Nathan El Ali in cross-examination that he had banked the cheques to Saracen's account and that it was "lost" in various transactions because it is expressly referred to by the primary judge at PD[85]. We also accept the submission that her Honour's reference to there being "no evidence" of what happened to the cheques should be understood as "no documentary evidence". The fact that Mr Nathan El Ali only proffered an explanation concerning what happened to the cheques in cross-examination is something that the primary judge was entitled to take into account in relation to the credibility of the claim that the $1 million loan was made to Ottoman. 233 Counsel for Mr Stojanovski did not cite any authority for the proposition that the primary judge was not entitled to take into account events subsequent to 23 December 2010 in determining whether the $1 million loan was in fact made, but rather said that the documents in evidence were "incontrovertible evidence" of the loan being made and security being given. We do not agree. 234 Mr Stojanovski made much of the fact that there was an acknowledgment of receipt of the cheques from Mr Nathan El Ali, that he was the sole director of Ottoman at that time and the deed of agreement provided for Mr Stojanovski to make a $1 million loan to Ottoman. He says that the loan was accordingly "complete" on 23 December 2010 when Mr Nathan El Ali acknowledged receipt of the cheques and there was no allegation that the cheques were provided as a charade. There is some force to this submission. However, in the absence of documentary evidence as to what happened to the money, the primary judge was entitled to consider the 10 matters which she took into account, that those matters were inconsistent with a loan having been made, that many of those 10 matters were inconsistent with the terms of the deed of agreement and the fact that the primary judge had formed the view that the evidence of Mr Nathan El Ali and Mr Stojanovski should be accorded little credibility over all. 235 In our view, it was relevant for the primary judge to take into account: (1) The purpose of the deed of agreement and whether that purpose was fulfilled. The fact is that its ostensible purpose - funding the purchase of the Minto property - was not fulfilled because the purchase was not completed. After the contract was terminated on 17 December 2010, there was no objective need for the loan to be advanced on 23 December 2010. This is so, even if Mr Stojanovski held the belief that the transaction "could proceed" and there is documentary evidence for the fact that Mr Nathan El Ali continued to press the vendor to sell the Minto property. (2) Nothing has been drawn to our attention which satisfactorily explains why bank cheques made out to the National Australia Bank, which were effectively cash, were required on 23 December 2010 or why "an established investor with strong building experience" would simply hand over $1 million in cash equivalent to Mr Nathan El Ali as opposed to the vendor of the property. While the issue of finance was obviously an important matter for the vendors, there is no evidence that they required evidence of moneys having been paid to Mr Nathan El Ali as opposed to evidence that the money was readily available to be drawn down. (3) Mr Stojanovski had the right to call for repayment of the loan on 1 May 2011 or later under the deed of agreement. He did not do that. It is true that he had no obligation to do so, but it is the fact that he elected not to do so and he refrained from taking steps himself to sell Unit 2 which speaks against the reality of the loan having been made on 23 December 2010. (4) While he had an obligation under the deed of agreement to withdraw caveats on Units 1 and 3 if they were to be sold for over $700,000 each, he did so in 2014 (well after Mr Nathan El Ali became bankrupt in December 2011) without receiving any of the net proceeds of sale in reduction of a $1 million investment, which was expressly provided for under the deed of agreement. That is particularly inexplicable when, in April 2011, he allowed a mortgage of $600,000 to be placed on Unit 2, which had been unencumbered to that point. Given that, in 2010, Unit 2 had been purchased for $710,000, Mr Stojanovski's evidence that he was relying on Unit 2 for his security is not credible. The act of allowing a mortgage on Unit 2 is much more consistent with Mr Nathan El Ali using Unit 2 as his asset than it is the act of a mortgagee to whom $1 million is already outstanding. That is true, even if it is accepted that Mr Stojanovski wished to participate in the Taren Point property for his own reasons and did in fact lend $427,000 in connection with settling the purchase of that property in April 2011. (5) The failure to sell Unit 2 over a period of three years is inconsistent with a loan having been made, especially where, as here, the deed of agreement envisaged that the loan would be short term. The assertion in submissions to the primary judge and to this Court that efforts were made but an appropriate price could not be achieved are properly rejected for the reasons given by the primary judge. (6) At the hearing in 2016, Mr Stojanovski denied that Mr Nathan El Ali had any personal liability to him, despite the express terms of the deed of agreement. That is inconsistent with a loan having been made and then misappropriated by Mr Nathan El Ali. (7) The ECHL lease casts doubt on Mr Stojanovski's honesty, since it appears that the lease lacked substance, but he used it to raise funds from the ANZ Bank to use for his own purposes and the primary judge expressly rejected his evidence that it was not created for that purpose. (8) The time at which the events occurred in the context of Mr Nathan El Ali's litigation with the respondents, the 2010 Freezing Orders and the disposition of shares in Ottoman and Isaac & Jacob. 236 Mr Stojanovski did not directly challenge the credit findings made by her Honour in relation to either of Mr Nathan El Ali or himself. Having regard to the matters set out above, in our view, it was open to the primary judge to find that the evidence on which Mr Stojanovski and Mr Nathan El Ali relied was "not credible" and they were not witnesses of truth, that the transfer of Unit 2 to Mr Stojanovski was not made by way of security or to give effect to the appointment of Mr Stojanovski as trustee of the Ottoman Investments Unit Trust, that they did not give plausible explanations for those transactions and that a loan of $1 million was not made.

Did the primary judge err in finding that the Kogarah Unit 2 property was transferred to Mr Stojanovski with the intent to defraud creditors within the meaning of s 37A of the Conveyancing Act and the effect of the transfer was to put it beyond the reach of Mr Nathan El Ali's creditors? Did her Honour err in rejecting Mr Stojanovski's defence under s 37A(3)? 237 Having regard to the way Mr Stojanovski addressed these grounds, as we have found that we should not disturb the primary judge's finding that the $1 million loan was not made, these grounds falls away. We accept, for the reasons argued by the respondents set out at [208]-[209] above, that her Honour did not err on any of these bases.

Did the primary judge err in rejecting the proposed amended defence? 238 In our view, the primary judge did not err. It is clear that counsel for Mr Stojanovski did, during the course of the trial, seek to finesse the grounds set out in the pleadings to include a circumstance whereby Unit 2 was transferred to Mr Stojanovski as trustee for Ottoman (either as trustee of the Ottoman Investments Unit Trust or otherwise) rather than as trustee for the Ottoman Investments Unit Trust. However, given the credibility findings made by the primary judge against Mr Nathan El Ali and Mr Stojanovski and the factual finding that no $1 million loan was made, it is difficult to see how any such grounds had any reasonable prospect of success. 239 Mr Stojanovski's appeal with respect to the Kogarah Unit 2 property must be dismissed.

Introduction 240 In this section of the judgment we will address the following aspects of Mr Nazloomian's appeal which relate to orders made by the primary judge in the 2014 proceedings: (1) The declaration made in Order 1(b), that the transfer of the Potts Point property from Saracen to Mr Nazloomian was void under (relevantly) s 37A of the Conveyancing Act; (2) Order 9, that Mr Nazloomian account to the official liquidator of Saracen in regard to the value of the Potts Point property by paying the liquidator the sum of $10,000. 241 The Potts Point property is a laneway. Mr Nazloomian sold it in May 2015 for $10,000. Although Mr Jones originally sought an order for payment of $30,000 to Saracen, in making her final orders, the primary judge accepted that its true value was $10,000, in line with a valuation obtained by the purchaser in April 2015 (see OD[12]).

Pleadings 242 The relevant pleadings in relation to the claims against Mr Nazloomian are at [40]-[41] and [55]-[60] of the Statement of Claim filed in the 2014 proceedings. 243 The Statement of Claim pleaded that, on 22 November 2012, Saracen executed a transfer of the Potts Point property to Mr Nazloomian for consideration in the sum of $1 and the transfer was prima facie in breach of the 2010 Freezing Orders in force against Saracen. It went on to plead that: (1) The transfer of the Potts Point property constituted an alienation of property within the meaning of s 37A of the Conveyancing Act. (2) At the time of the transfer, Mr Mahmoud El Ali was the sole director and shareholder of Saracen and, by reason of letters from the Royals dated 8 and 12 September 2011 and 20 October 2011, he knew or ought reasonably to have inferred that Mr Nathan El Ali was seeking to defeat his creditors. That is on the basis that the letters disclosed that Mr Nathan El Ali had acted in breach of the 2010 Freezing Orders made by the Supreme Court of New South Wales by disposing of the shares in Saracen to Mr Mahmoud El Ali and they sought to have that transfer reversed for the purpose of satisfying the judgment debt obtained in the debt proceedings. After receiving the shares in Saracen for a second time on 1 November 2011, Mr Mahmoud El Ali refused to comply with the requests from the Royals that the share transfer be reversed. (3) The intent of Mr Mahmoud El Ali in permitting Saracen to transfer the Potts Point property was to assist Mr Nathan El Ali in delaying, hindering or defeating the Royals' ability to satisfy the judgment debt. (4) The Royals and Mr Jones are persons prejudiced for the purposes of s 37A of the Conveyancing Act because the Royals are judgment creditors of Mr Nathan El Ali, the Potts Point property was, until 22 November 2012, property of Saracen, the shares in which fall within s 58(1) of the Bankruptcy Act whereby they are property divisible among the creditors and the transfer was voidable against Mr Jones as his registered trustee. By reason of the shares in Saracen vesting in Mr Jones pursuant to ss 58(1) and 116(1) of the Bankruptcy Act, the Potts Point property, once restored to Saracen, would be within the control of Mr Jones and the transfer of the Potts Point property to Mr Nazloomian is voidable within the meaning of s 37A of the Conveyancing Act. 244 In his Defence, Mr Nazloomian claimed that the Potts Point property was transferred to him by Saracen whose director and shareholder was Mr Mahmoud El Ali in reduction of moneys due from Saracen. The assessed value of the property was $30,000, and that amount was deducted from the moneys due to Mr Nazloomian from Saracen. The transfer was therefore for valuable consideration. Mr Nazloomian says he received that property without notice of any intention of Mr Nathan El Ali to defraud his creditors and s 37A of the Conveyancing Act did not apply.

Mr Nazloomian's evidence-in-chief 245 In his affidavit sworn on 13 November 2014, Mr Nazloomian gave the following evidence: (1) Because of the relationship which developed between them, Mr Nathan El Ali offered opportunities whereby Mr Nazloomian would lend money to Mr Nathan El Ali with a promised rate of interest or return. If Mr Nathan El Ali was not able to return the funds, in some instances he would offer Mr Nazloomian the opportunity to purchase property, cars or other assets from him in settlement of moneys owed. In some instances, Mr Nazloomian "agreed to reduce the amount owed to me by [Mr] Nathan El Ali through the purchase of assets". (2) He was prepared to lend funds to Saracen as requested by Mr Nathan El Ali, whom he knew to be the director and shareholder of Saracen at that time. (3) He received an offer to lend him $440,000 from Westpac which he accepted on 9 December 2009. Exhibited to the affidavit was a copy of a document on Westpac letterhead offering the loan to Mr Nazloomian. It provided for Westpac to pay $439,212.00 to Mr Nazloomian or as he, his solicitor or agent directs. On 16 December 2009, Mr Nazloomian agreed to direct the proceeds of that loan to Saracen "to assist Nathan El Ali in finalising approvals" for a resort he had planned on the Helensburgh property and "otherwise to consolidate a few debts". (4) The loan was settled on 17 December 2009 and the settlement letter from Westpac dated 22 December 2009 (Settlement Letter) indicates that a net amount of $439,306.10 was paid to Saracen. A copy of the Settlement Letter on Westpac letterhead was exhibited to the affidavit. (5) The money lent was "partially repaid". Mr Nazloomian said that "as to a sum of $30,000 of the loan I received a parcel of land from Saracen for that value". (6) Saracen purchased the Potts Point property on 31 March 2009 at auction. The vendor was the City of Sydney Council. The purchase price was $25,600. A copy of the auction notice was exhibited to the affidavit. (7) Considering the moneys he had lent to the El Ali family and its trusts, in about April 2011, he registered a caveat on the titled of the Potts Point property. A copy of the caveat was exhibited to the affidavit. The caveat in evidence indicates that it was lodged in April 2011 and Mr Nazloomian claimed an interest as "purchaser under uncompleted purchase contract" dated 21 January 2010. (8) He was aware that before Mr Nathan El Ali's bankruptcy, Mr Mahmoud El Ali had become the director, secretary and shareholder of Saracen. (9) On 9 October 2012, Mr Nazloomian sent an email to Mr Mahmoud El Ali "regarding repayment of monies that [he] had lent to Saracen back in December 2009". A copy of the email was exhibited to the affidavit. The email in evidence records that it was sent to Mr Nathan El Ali's email address only and it provided as follows: Nathan/Mahmoud As evident, it was my money that was used to purchase 1A McDonald Street property, money that is still owing to me by Saracen. I expect, at best, the value of the property has remained unchanged. Also, I was advised that there are outstanding statutory levies owing on the property. As discussed, I am keen to resolve some of our transactions. As such, I am prepared to purchase 1A McDonald Street property in exchange for part of the money that I am owed directly over respective property. If you are in agreement, I ask that you prepare and complete transfer of ownership immediately. Mr Nazloomian deposed that the proposal was accepted by Mr Mahmoud El Ali and a valuation (exhibited to the affidavit) was obtained and the transfer took place in about mid-November 2012. (10) At the time of the transfer of the Potts Point property, Mr Nazloomian "reduced the monies due to [him] from Saracen by $30,000 to $410,000 plus accrued interest. No other credits have been passed or monies paid to [him] in reduction of that loan". 246 In his affidavit sworn on 21 April 2015, Mr Nazloomian gave evidence concerning a running account ledger which was not mentioned in his first affidavit. His evidence was: (1) The opportunities offered to Mr Nazloomian by Nathan El Ali included "the purchase/development of properties or the making of loans". Each payment made by Mr Nazloomian "as an investment or loan to or at the direction of Nathan was recorded in" a spreadsheet that he maintained (the Running Account Ledger). A copy of the Running Account Ledger with entries from 30 March 2000 to 31 August 2013 was exhibited to the affidavit. The format of the Running Account Ledger was obtained from his Quicken accounting system and a copy was given to Mr Nathan El Ali from time to time. (2) When payments were made to third parties, as shown in the Running Account Ledger, the description "records Nathan as it was he who guaranteed the repayment of the loan". On each occasion, Mr Nathan El Ali said words to the effect "If you can lend them the money, I will guarantee repayment of your loan". There is no document to record the guarantee, it was purely verbal. (3) An example of a proposal for Mr Nazloomian to purchase a property from Mr Nathan El Ali in reduction or satisfaction of money owed to him was "the arrangement relating to the Helensburgh property" referred to in Mr Nathan El Ali's affidavit made on 13 November 2014 at [11]. He says that he said to Mr Nazloomian: As the purchase of 58 Townson Street fell thru, how about you loan Saracen the Westpac proceeds so it could progress plans for a resort at Helensburgh? In return you can purchase the Helensburgh property with an improved value or any other property you like and the debt can be credited to the purchase price? Of course, I'll guarantee the loan. (4) Mr Nazloomian did not require the loan to be documented because he trusted Mr Nathan El Ali after dealing with him over the previous nine years in numerous investment opportunities. (5) Following payment of the money to Saracen in December 2009, Mr Nazloomian recorded the loan on the Running Account Ledger as follows: Date Description Memo Interest rate Amounts paid to Nathan Amounts received from Nathan Balance owed to me 17-Dec-09 WBC-Nathan/Saracen Deposit of Helensburgh 440,000 $1,110,687.29

(6) He said he recorded the loan as "Nathan/Saracen" because Mr Nathan El Ali guaranteed the repayment of $440,000. (7) On 29 April 2011, Mr Nazloomian provided a bank cheque to Mr Nathan El Ali for $106,000 to assist in the purchase of the Taren Point property. Mr Nathan El Ali said that he would guarantee repayment. This was recorded in the Running Account Ledger as "29-Apr-11 LTO-Nathan/Ottoman Stamp Duty $106,000". (8) Mr Nazloomian became aware of Mr Nathan El Ali's bankruptcy in discussion between Mr Nazloomian and his brother in December 2011. (9) In December 2012, the Potts Point property owned by Saracen was transferred to Mr Nazloomian. He noted that, on 9 October 2012, he sent an email to Mr Nathan El Ali concerning the transfer of the property to him "in partial satisfaction of the debt of Saracen". He said that, shortly after that email, he had a conversation with Mr Nathan El Ali to the following effect: Mr Nathan El Ali said: "Saracen owns the property in McDonald Street, Potts Point. You have a Caveat over it and Mahmoud is unhappy as he cannot pay the Council fees. You should offer to buy it for what its value is and take that off the money Saracen owes you." Mr Nazloomian said: "Okay, I will" and Mr Nathan El Ali said: "I'll speak to Mahmoud about it". (10) The valuation was obtained. Mr Nazloomian does not know why the transfer for the Potts Point property was said to be for a consideration of $1. He paid stamp duty based on a value of $30,000. "As recorded in the loan schedule", he credited $30,000 "against the loan account in October 2009". The entry in the Running Account Ledger on which Mr Nazloomian relies is as follows, for context the prior entry is included: Date Description Memo Interest rate Amounts paid to Nathan Amounts received from Nathan Balance owed to me 30-Sep-12 Interest rate 7.00% 9,051.07 $1,560,663.85 31-Oct-12 Interest rate 9-Oct-12 7.00% 9.103.87 -30,000.00 $1,539,767.72

(11) He was not aware of any freezing orders that would have prevented Saracen transferring the Potts Point property to him. He had no recollection of being told of them before 18 December 2013.

The primary judge's findings and conclusions 247 The primary judge summarised the evidence and made factual findings at PD[162]-[167] and [229]-[231] as follows: THE EVIDENCE RELATING TO THE TRANSFER OF THE POTTS POINT PROPERTY FROM SARACEN TO MR NAZLOOMIAN 162 This property was transferred by Saracen to Mr Nazloomian in November 2012 and registered in Mr Nazloomian's name in January 2013. The transfer form was signed by Mahmoud (on behalf of Saracen) and Mr Nazloomian and was for consideration expressed to be the sum of $1, though duty at ad valorem rates was in fact paid by Mr Nazloomian. The value for duty purposes was given as $30,000. The transfer was made in prima facie breach of the 2011 freezing orders which Mahmoud claimed not to know about. Whether or not Mr [Nathan] El Ali knew about the extension of the freezing orders when he transferred the shares in Saracen to Mahmoud, he certainly knew about the orders by September 2011. Either Mahmoud was not telling the truth that he knew nothing about the freezing orders or Mr [Nathan] El Ali kept that vital piece of information from Mahmoud. Either way, there was deceit by Mr [Nathan] El Ali who was plainly aware of the transfer of the Potts Point property to Mr Nazloomian. 163 Mr Nazloomian's evidence on the transfer of the Potts Point property was as follows. Mr Nazloomian kept a "running account" of his loans to Mr [Nathan] El Ali and as at October 2012 he was owed in excess of $1.5 million. This amount was said to include an amount of $440,000 that Mr Nazloomian recorded as a loan to "Nathan/Saracen" made in December 2009 for the development of the Helensburgh property. The loan was said to be for "finalising approvals for a resort." The loan was not otherwise documented. Mr Nazloomian lodged a caveat against the Potts Point property in April 2011, claiming an interest as "purchaser under uncompleted purchase contract" dated 21 January 2010. Mr Nazloomian deposed that he lodged the caveat "considering the monies he had loaned to the El Ali family and its trusts". 164 The evidence was that Mr Nazloomian, in October 2012, had a conversation with Mr [Nathan] El Ali in which Mr [Nathan] El Ali said that Mr Nazloomian should offer to buy the property for its value and set-off that amount against what Saracen owed him and that Mr Nazloomian agreed. In October 2012, a valuation of the Potts Point property was given by Property Logic (entitled "Stamp Duty Valuation") which gave an "as is" value of $30,000. Following the transfer, Mr Nazloomian set off $30,000 against the debt owed recorded in his running account. Mr Nazloomian knew at the time that Mr [Nathan] El Ali had been declared bankrupt. Mr Nazloomian also gave the full credit of $30,000 to Mr [Nathan] El Ali, not to Saracen, when he lodged a proof of debt against Mr [Nathan] El Ali's estate. 165 Although Mr Nazloomian alleged that his dealings regarding the Potts Point property were with Mr [Nathan] El Ali, Mr [Nathan] El Ali did not give evidence regarding the transfer to Mr Nazloomian. In cross-examination Mr Nazloomian gave evidence that he never discussed the Potts Point property directly with Mahmoud, although Mahmoud was the director of Saracen at the time. Mr Nazloomian agreed that "all the dealings in regard to [the Potts Point property] in the name of Saracen [were] with Mr Nathan El Ali himself" and stated that "all my dealings with all the companies, the focal point was always Nathan and still is Nathan". 166 Mahmoud denied that the discussions regarding the transfer of the Potts Point property were conducted between Mr Nazloomian and Mr [Nathan] El Ali, though he could not recall his conversation with Mr Nazloomian. His denial was unconvincing and cannot be accepted and I consider it implausible that he had any discussions with Mr Nazloomian concerning the sale of the Potts Point property given his complete lack of knowledge about the fundamental elements of the deal. 167 It is clear on the evidence that Mr [Nathan] El Ali was the initiator and directing mind and driving force behind the sale of the Potts Point property to Mr Nazloomian. … WAS THE POTTS POINT PROPERTY TRANSFERRED TO MR NAZLOOMIAN WITH INTENT TO DEFRAUD CREDITORS? 229 I have already found that Saracen remained under the control and direction of Mr [Nathan] El Ali despite the purported transfer of ownership and control to Mahmoud. It is also noteworthy, and I have found, that the consideration given by Mr Nazloomian for the property (in the sum of $30,000) was credited against the amount that Mr [Nathan] El Ali owed Mr Nazloomian, not Saracen's debt. This is another example of Mr [Nathan] El Ali treating the assets as if they were his own to deal with as he saw fit. At the time of the transfer, Mr [Nathan] El Ali was bankrupt and the effect of that transfer was also to put that property beyond the reach of Mr [Nathan] El Ali's creditors. 230 It was submitted that there was no alienation of property with intent to defraud as Mr Nazloomian paid valuable consideration for the property. However, Mr Nazloomian knew at the time that Mr [Nathan] El Ali was bankrupt. Mr Nazloomian was plainly aware and had actual knowledge of Mr El Ali's insolvency when the property was conveyed to him: cf Coghlan v Alexander (1905) 5 SR NSW 441. I do not accept that Mr Nazloomian was a purchaser in good faith. 231 I find that Mr [Nathan] El Ali made the transfer at that time with the intent to defraud his creditors within the meaning of s 37A of the Conveyancing Act. I also find that the Royals, as creditors of Mr [Nathan] El Ali, were prejudiced by the transfer by reason that the property was put beyond the reach of Mr [Nathan] El Ali's creditors and I reject Mr Nazloomian's defence under s 37A of the Conveyancing Act. 248 Relevantly to the grounds of appeal, at PD[8], the primary judge acknowledged that there was no attempt by the respondents to impugn the transfer of Ottoman shares to Mr Nazloomian on 19 October 2010 as the shares were later transferred back to Nathan El Ali. At PD[50] and [59], the primary judge found that: 50 Unsatisfactorily Mr Nazloomian left wholly unexplained why the shares in Ottoman were also transferred to him and why he assumed the role as sole director of that company. Nor did he give any evidence as to why he transferred the Ottoman shares back to Mr [Nathan] El Ali on 14 December 2010 and resigned as director of that company. The only evidence about these share transfers came from Mr [Nathan] El Ali. … 59 Also impacting on Mr Nazloomian's creditworthiness was his lack of candour in his evidence. As stated he never explained why the shares in Ottoman were also transferred to him and why he subsequently transferred them back to Mr [Nathan] El Ali. Nor did he disclose in his evidence-in-chief that, at the time he was asked by Mr [Nathan] El Ali if he would be the director and shareholder of Isaac & Jacob and Ottoman, he knew that Mr [Nathan] El Ali was being sued by the Royals, and indeed had been given regular updates by Mr [Nathan] El Ali on the legal proceedings, and also knew that Mr [Nathan] El Ali was under financial pressure from other creditors. None of this was disclosed in his two affidavits. When it was put to Mr Nazloomian that when he "took the shares [he] took them because [he] knew that Mr El Ali was under financial pressure and he needed to put the shares for his private family trust into safe hands while he dealt with those problems", Mr Nazloomian agreed. Mr Nazloomian agreed in cross-examination that he considers that [Nathan] Mr El Ali is "honour bound to do what he can for [Mr Nazloomian] in the future to repay" the money that Mr Nazloomian has loaned him and that he expects that Mr[Nathan] El Ali will ultimately repay him in full. I infer from his answer that by helping Mr [Nathan] El Ali out, Mr Nazloomian believes that ultimately he will get paid in full.

The Amended Notice of Appeal and Submissions 249 Mr Nazloomian claims that the primary judge erred in the following ways: (1) By finding that Mr Nazloomian did not give full credit of $30,000 to Saracen for the repayment of the loan from Mr Nazloomian; (2) By taking into account Mr Nazloomian's failure to give evidence in respect to the transfer of shares in Ottoman in considering Mr Nazloomian's credit, as no claim was made in respect of that transfer of those shares to him; (3) By finding that the transfer of the Potts Point property was a relevant alienation of property to defeat Mr Nathan El Ali's creditors for the purposes of s 37A of the Conveyancing Act; (4) By finding that the effect of the transfer of the Potts Point property by Saracen to Mr Nazloomian was to put that property beyond the reach of Mr Nathan El Ali's creditors; and (5) By finding that Mr Nazloomian was not a purchaser in good faith of the Potts Point property and rejecting his defence under s 37A(3) of the Conveyancing Act.

Mr Nazloomian's submissions 250 Mr Nazloomian submitted that the evidence shows that he kept a Running Account Ledger to record the moneys advanced and interest claimed in respect of loans made by him to Mr Nathan El Ali and related entities such as Saracen and Ottoman. He says that the primary judge accepted that, at the time the Potts Point property was transferred to Mr Nazloomian, he was owed in excess of $1.5 million. 251 Mr Nazloomian says that the $1.5 million debt included a loan of $440,000 which he made to Saracen in December 2009 in respect of the development of the Helensburgh property. Mr Nazloomian says that it is not disputed that Saracen acquired the Helensburgh property. Counsel took the Court to the following documents: (1) The loan offer for $440,000 made to him by Westpac which he accepted on 9 December 2009. (2) The Settlement Letter which indicates that a net amount of $439,306.10 was paid to Saracen. (3) The record in the Running Account Ledger as at 17 December 2009 describing the loan as "WBC-Nathan/Saracen", "Deposit of Helensburgh" for $440,000 resulting in a "Balance owed to me" of $1,110,687.29. 252 Mr Nazloomian also relied on the evidence of: (1) The email dated 9 October 2012 sent to Mr Nathan El Ali and Mr Mahmoud El Ali (then the director of Saracen), offering to purchase the Potts Point property from Saracen. (2) The valuation of the Potts Point property which he obtained as at 10 October 2012. The valuation was by Mr Sukkar, a registered real estate valuer from "Property Logic", it was headed "Stamp Duty Valuation" and it valued the property "as is" at $30,000. The property was described as a vacant, narrow strip of land (0.915 metres) with two street frontages, an encroaching block wall, backing on to flats and covered in trees and vegetation; it could not be developed in isolation, given the narrow width and difficult access. (3) A transfer of the Potts Point property signed as transferor by Mr Mahmoud El Ali as sole director and secretary of Saracen on 22 November 2012 and by Mr Nazloomian as transferee. The consideration was expressed to be $1 but it was stamped for $30,000. (4) The record in the Running Account Ledger as at 31 October 2012 described as "Interest Rate", "9-Oct-12", "7.00%" "9,103.87" "-30,000.00" "$1, 539,767.72", which Mr Nazloomian claims to be a set off of $30,000 against the debt owed to him by Saracen and Mr Nathan El Ali. 253 Mr Nazloomian says that it is not disputed that Saracen acquired the Helensburgh property. He submitted that the Running Account Ledger recorded the $440,000 loan provided to Saracen on 17 December 2009 as being against both Saracen and Mr Nathan El Ali. As Mr Nazloomian deposed (and maintained under cross-examination), Mr Nathan El Ali had guaranteed repayment or was jointly liable with Saracen for the loan, albeit that there is no documentary evidence of that. 254 Mr Nazloomian says that, in making her Honour's critical finding at PD[164] and [229] that he did not give credit to Saracen for $30,000, the primary judge referred to the proof of debt which he lodged in Mr Nathan El Ali's bankruptcy, but her Honour did not refer to the credit of $30,000 in the Running Account Ledger. While that entry refers to neither Saracen nor the Helensburgh property, read in the context of the other documents referred to above, it could only relate to that loan. The primary judge ignored this evidence and the finding that the $30,000 was not credited against Saracen is wrong. That critical finding was relied on by the primary judge to find that the transfer of the Potts Point property was subject to s 37A of the Conveyancing Act. If the primary judge had not erred in that way, that finding could not have been made. 255 Mr Nazloomian submitted that Mr Nathan El Ali was not a shareholder of Saracen at the time of the transfer of the Potts Point property, but even if he had been, the value of Saracen was not diminished by the transfer of the Potts Point property. The value of Saracen's assets and liabilities were reduced by the same amount. Even if the primary judge was correct to find that Mr Nazloomian only gave a credit to Mr Nathan El Ali, the asset belonged to Saracen so on any view it was necessary for Saracen to give Mr Nazloomian a credit for that amount offsetting the loan in relation to the Helensburgh property which he had made to Saracen. 256 Mr Nazloomian says that the primary judge erred in finding that the transfer was intended to defeat Mr Nathan El Ali's creditors because it occurred for full value to satisfy in part a creditor of Saracen and Mr Nathan El Ali, having regard to the objective evidence that the transfer occurred in response to Mr Nazloomian's demand made on 9 October 2012. 257 Mr Nazloomian relied on the submission recorded in relation to Mr Stojanovski (see [190] above) that: (1) It is irrelevant for the purposes of s 37A of the Conveyancing Act that the partial satisfaction of the debt may have conferred a preference on Mr Nazloomian; (2) The central issue is the requirement of dishonesty in the context of s 37A of the Conveyancing Act, relying on Marcolongo v Chen at [32]; and (3) If valuable consideration is given, the alienation is deemed to be good unless it is proved that the alienee knew of the intent to defraud and the alienee is under no obligation to enquire and actual knowledge is required, relying on Coghlan v Alexander and Huynh v Helleh Holdings. 258 Mr Nazloomian says that her Honour's reasoning at PD[230] was flawed because it was irrelevant that Mr Nazloomian knew that Mr Nathan El Ali was bankrupt. He says that that reasoning conflates s 37A(1) and s 37A(3) of the Conveyancing Act. There was no intent to defraud creditors because Mr Nazloomian gave full value for the transfer of the property and that transfer had no impact on the value of the Saracen shares, the only asset to which creditors of Mr Nathan El Ali had recourse. Further, Mr Nathan El Ali was not the shareholder of Saracen at the time. Mr Nazloomian was dealing with Saracen and there was no judgment debt against Saracen which was free to deal with its assets. The primary judge ignored these relevant matters. The primary judge should have found that Mr Nazloomian was a bona fide purchaser for full market value. There is no evidence that Mr Nazloomian knew or suspected that by Saracen paying a debt, Mr Nathan El Ali's creditors would somehow be defrauded. Nor could there be, because it was not true - Mr Nathan El Ali's creditors were not defrauded by the transfer.

Mr Jones' submissions 259 Mr Jones submitted that the primary judge's findings rely not only on her Honour's assessment of the credit of Mr Nazloomian, but also on a proper construction of the documents in evidence on which Mr Nazloomian relied. 260 In his written submissions, Mr Jones relied on [19]-[33] of the respondents' submissions in Mr Nathan El Ali's appeal relating to the primary judge's "multiple credit-based findings". Only one of those paragraphs related to Mr Nazloomian. That submission was: At [59] of the Decision, her Honour found that, 'impacting on Mr Nazloomian's creditworthiness was his lack of candour in his evidence.' Justice Davies generally found that Mr Nazloomian did not give 'candid evidence' and nor did she find his evidence 'credible'. Her Honour did not accept Mr Nazloomian's evidence in respect of him ceasing to be director of Ottoman in about November 2010, saying that it was 'not supported by the evidence and is contradicted by his own conduct', that his 'denials had no credibility', that Mr Nazloomian's role was essential to do as instructed by Mr Nathan El Ali and that Mr Nazloomian's evidence was 'evasive and unconvincing' in relation to the appointment of Mr Zreika as trustee of the Voyager Point Unit Trust. 261 Mr Jones says that the key facts are that: (1) By transfer dated 22 November 2012, Saracen transferred the Potts Point property to Mr Nazloomian for $1. The transfer was executed by Mr Mahmoud El Ali as sole director of Saracen and Mr Nazloomian's signature was witnessed by Mr Zreika. (2) The valuation obtained in October 2012 by Mr Nazloomian was for stamp duty purposes and the transfer was stamped at that value. Its market value was not established by an arm's length sale. The primary judge made no finding about what the market value of the Potts Point property was, albeit that the October 2012 valuation may have been admitted into evidence on an unrestricted basis and it therefore has some evidentiary value. It is notable that Mr Nathan El Ali had estimated its value at $700,000 in his affidavit dated 22 November 2010 made in the debt proceedings. (3) It was Mr Nazloomian's evidence that he dealt with Mr Nathan El Ali in relation to the transfer of the Potts Point property and said in cross-examination that "the focal point was always Nathan and is still Nathan". The primary judge found that Mr Nathan El Ali remained the "controlling mind and directing force" of the companies, including Saracen, that it was Mr Nathan El Ali who "procured" the transfer of the Potts Point property and that he did so in the knowledge of the 2010 Freezing Orders which were binding on Saracen (PD[162], [165] and [170]). (4) The Running Account Ledger kept by Mr Nazloomian did not make it clear whether the loans he recorded there were made to Mr Nathan El Ali, Ottoman, Saracen or any other company. The loans were not otherwise documented (PD[163]). No books or records of Saracen were ever produced in evidence. The only document produced which dealt with the issue one way or another was the Running Account Ledger. (5) Mr Jones submitted that the headings in the Running Account Ledger "Amounts paid to Nathan", "Amounts received from Nathan" and "Balance owed to me" were accurate descriptions. When it comes to the entry for 17 December 2009, the "description" is "WBC - Nathan/Saracen", the "memo" is "Deposit on Helensburgh" and the "amount paid to Nathan" is "$440,000". That clearly treats the $440,000 as a further amount paid to Mr Nathan El Ali to be used for the purpose of paying the deposit on the Helensburgh property, rather than a loan of $440,000 having been made to Saracen and guaranteed by Mr Nathan El Ali. The primary judge made no finding that a loan of $440,000 was made by Mr Nazloomian to Saracen in December 2009 and that was appropriate because there was no sufficient evidentiary basis on which to do so. (6) The Potts Point property was transferred to Mr Nazloomian as set off for a debt of $1.5 million, although Mr Nazloomian gave full credit of $30,000 to Mr Nathan El Ali, not Saracen, by lodging a proof of debt against Mr Nathan El Ali's bankrupt estate (PD[164]). The Running Account Ledger entry for the $30,000 is identified under the heading "Amounts received from Nathan". (7) In cross-examination, Mr Nazloomian gave evidence about the Running Account Ledger as follows (emphasis in submissions): So you've reduced the moneys that you say Mr El Ali owes you by each component of the payments in your spreadsheet column. Isn't that correct? --- That's correct. And one of those components is the 30,000, isn't it? --- That's correct. … Yes, and the deal, as you understood it, was this that you said that you would give him a credit on the moneys that he owed you. Do you agree with that? --- That's the conclusion. Yes. … All these amounts and all the loans were personally guaranteed by Nathan … The reason for the proof of debt as you've described it is that - that is what Nathan has guaranteed personally to me. That's what he owes me personally. If Saracen returns the funds that I've returned to them, then it will be deducted from that, same with Ottoman … 262 Mr Jones submitted that it was Mr Nazloomian's evidence overall that he treated the amounts "credited" in the Running Account Ledger as a result of the transfer of the Potts Point property to have been a credit against the amounts owed to him by Mr Nathan El Ali and not Saracen. Mr Nazloomian had no record of any "credit" in respect of Saracen and he did not keep a separate account in respect of moneys owed specifically by Saracen. It was Mr Nazloomian's evidence that it was his goal to have Mr Nathan El Ali released from bankruptcy so that Mr Nathan El Ali could "continue" in his "highly profitable ventures" to enable him to repay Mr Nazloomian, that the legal proceedings were inhibiting that and that he "wants what's best for Nathan" because "what's best for Nathan is best for [Mr Nazloomian]" and that Mr Nathan El Ali was Mr Nazloomian's investment. 263 Contrary to Mr Nazloomian's submissions, the primary judge did not "ignore" his evidence that the Running Account Ledger recorded a $440,000 loan to both Saracen and Mr Nathan El Ali on 17 December 2009; it is expressly referred to at PD[163]. Mr Jones says that the evidence given by Mr Nazloomian in cross-examination demonstrates that he treated the debt of $1.5 million as at October 2012 as a debt owed to him by Mr Nathan El Ali and not Saracen, Ottoman or any other company and demonstrates that it was for that reason that Mr Nazloomian lodged a proof of debt in Mr Nathan El Ali's bankrupt estate. At PD[164] and [229], the primary judge makes specific reference to the $30,000 being credited to Mr Nathan El Ali, not Saracen. Contrary to Mr Nazloomian's submissions, it was not his evidence that it was Saracen paying the debt. Further, it did not matter whether the transfer to Mr Nazloomian was at an undervalue, because Saracen did not "get the money" for the transfer; the benefit went to Mr Nathan El Ali. 264 At PD[165] and [229], the primary judge found that it was Mr Nathan El Ali with whom Mr Nazloomian had dealt at all times and that it was Mr Nathan El Ali who caused the transfer of the Potts Point property to Mr Nazloomian. That is consistent with Mr Nazloomian's evidence that he had discussions with Mr Nathan El Ali in relation to the Potts Point property (and not Mr Mahmoud El Ali) and it was Mr Nathan El Ali who offered the property to Mr Nazloomian. None of these findings was "glaringly improbable". There was, accordingly, a reduction in the funds available to Mr Nathan El Ali's creditors, including the Royals, who were therefore prejudiced by the transfer within the meaning of s 37A of the Conveyancing Act, as found by the primary judge at PD[229]-[231]. 265 In summary, Mr Jones says that the primary judge's analysis was consistent with the documentation, it was correct and reflected the way Mr Nazloomian had dealt with matters and it was highly plausible in light of all of the evidence about the relationship between Mr Nathan El Ali and Mr Nazloomian. In those circumstances, there is no scope for an argument that Mr Nazloomian had given consideration to Saracen and purchased the property for $30,000, which was its fair value. Saracen's assets were reduced by the value of the Potts Point property and it is not true that there was no change or alteration to the true financial position of Saracen. 266 With regard to the primary judge's findings at PD[162]-[165] and [170], Mr Nathan El Ali gave no evidence-in-chief concerning how the transfer of the Potts Point property came about. Contrary to Mr Nazloomian's submissions, Saracen was not free to deal with the Potts Point property because of the 2010 Freezing Orders and the primary judge found that the transfer was in prima facie breach of those orders (see PD[162]). The requisite "dishonesty" in the sense of an intention by Mr Nathan El Ali to delay, hinder or otherwise defeat his creditors was present and the primary judge was entitled on the evidence to make the finding at PD[231] that the transfer was made with intent to defraud Mr Nathan El Ali's creditors. That finding was not "glaringly improbable" and, in any event, there is no appeal in relation to that finding. 267 Contrary to Mr Nazloomian's submission that it was never put to him that he knew or suspected that Mr Nathan El Ali's creditors would be defrauded, the cross-examination quoted above shows that Mr Nazloomian treated the $30,000 as being credited to Mr Nathan El Ali. In addition, the evidence shows that Mr Nazloomian was aware of the debt proceedings and he accepted a suggestion made by senior counsel for Mr Jones that he harboured the shares in Isaac & Jacob to "keep them in safe hands" while Mr Nathan El Ali "dealt with these problems". In any event, the onus is on Mr Nazloomian to establish the defence under s 37A(3) of the Conveyancing Act. An absence of good faith can be shown by the transferee's knowledge of the insolvency and that the transaction prejudiced other creditors: see Westpac v Bell Group per Lee AJA at [587]-[588]. 268 Contrary to Mr Nazloomian's submissions, Mr Nazloomian was not a purchaser of the Potts Point property in good faith. Coghlan v Alexander is not authority for the proposition that, if valuable consideration is given, an alienation is deemed to be good unless it is proved that the alienee knew of the intent to defraud. At PD[229]-[230], the primary judge contrasted Coghlan v Alexander with the situation before her Honour; that is, that Mr Nazloomian had actual knowledge of Mr Nathan El Ali's insolvency at the time of the transfer of the Potts Point property and the effect of the transfer was to put the property beyond the reach of Mr Nathan El Ali's creditors thus prejudicing them which is enough to disentitle Mr Nazloomian to the defence under s 37A(3) of the Conveyancing Act. Mr Jones relied on the submissions with respect to comments by Parker J in Nguyen v Corbett and Lee AJA (Drummond AJA agreeing) in Westpac v Bell Group at [587]-[588] and the proposition that lack of good faith can be inferred from a failure to make enquiries relying on Capital One Securities v Soda Kids at [210] to [211] above in relation to Mr Stojanovski's appeal. 269 Mr Jones submitted that the findings at PD[229]-[230] are not "glaringly improbable" because: (1) Mr Nazloomian gave evidence that his brother had told him that Mr Nathan El Ali was bankrupt in December 2011. (2) Mr Nazloomian knew that Mr Nathan El Ali was in financial distress, that he owed Mr Nazloomian a substantial amount of money in October 2012 and that he was not able to repay it. (3) Mr Nazloomian knew that Saracen had been Mr Nathan El Ali's company for a number of years and he also knew that, despite the transfer of the shares in Saracen to Mr Mahmoud El Ali, it was Mr Nathan El Ali who controlled that company even though he was bankrupt. (4) Mr Nazloomian did not view the Potts Point property. (5) The transfer document on its face said that the transfer was for $1. (6) The value of the Potts Point property might have been variable - of great value to an adjoining land holder who wanted it or it was otherwise unmarketable. That would be a reason to "stockpile" it, to put it into safe hands during bankruptcy. (7) Mr Nazloomian was aware in 2010 that the Royals had commenced the debt proceedings and Mr Nathan El Ali gave him regular reports on the progress of the proceedings and told him that the Royals were putting him "under pressure". Mr Nazloomian mentioned none of this in his affidavit evidence despite knowing the Royals were the applicants in the 2013 proceedings. 270 There was no finding by the primary judge about the value of the Potts Point property, and the valuation for stamp duty purposes of $30,000 obtained by Mr Nazloomian does not demonstrate its true market value. If it had the value that Mr Nathan El Ali said it did in his affidavit made on 22 November 2010 in the debt proceedings ($700,000), then Mr Nathan El Ali's creditors would have been severely prejudiced upon a winding up of Saracen. However, it is enough to demonstrate that Mr Nathan El Ali had the intent to defraud creditors (in the required sense) and that Mr Nazloomian was not a purchaser in good faith. Demonstrating that there has been a diminution of assets available to creditors may be one way of approaching whether s 37A has been satisfied (as in Cannane) but those words are not in s 37A and no such condition should be grafted on to it. 271 In his written submissions, Mr Jones indicated an intention to seek to rely on fresh evidence. Following the hearing, Mr Jones confirmed that that application was abandoned.

Mr Nazloomian's submissions in reply 272 As claimed in his grounds of appeal, the primary judge criticised Mr Nazloomian inappropriately at PD[59] for his failure to lead evidence concerning the circumstances in which he accepted the transfer of shares in Ottoman and subsequently transferred the shares back to Mr Nathan El Ali. That transaction was not the subject of any claim and the failure to lead evidence in relation to it, therefore, was not an appropriate basis to make an adverse credit finding against Mr Nazloomian. He was also criticised by the primary judge for his failure to lead evidence concerning the transfer of shares in Isaac & Jacob to him from Mr Nathan El Ali. While that was an issue in the proceedings, the content of an affidavit is not always a decision made by a witness and it is not appropriate to draw adverse inferences based on that fact alone. More importantly, the primary judge made no adverse credit findings in relation to Mr Nazloomian's evidence in respect of the transfer of the Potts Point property. 273 The primary judge's findings in respect of the transfer of the Potts Point property were neither based on nor affected by any issue of credit or substantial issue of credit. The approach in Warren v Coombs at 551, that, in general, the appellate court is in as good a position as the trial judge to decide the proper inferences to be drawn from facts which are undisputed or which, having been disputed, are established by findings of the trial judge (cf Starkey at [18]). 274 Mr Jones' submissions that the effect of Mr Nazloomian's evidence was that he did not credit the value of the Potts Point property as to $30,000 to the Saracen debt relies on misquoting his evidence in cross-examination and takes no account of the evidence he gave in his affidavits. In his affidavits, Mr Nazloomian says he deducted the amount off both Mr Nathan El Ali's account and Saracen's account because he considered it to be a joint debt; funds were advanced to Saracen and guaranteed by Mr Nathan El Ali. He said that when he received the Potts Point property he reduced Saracen's debt by $30,000 to $410,000 plus accrued interest. He said that shortly after he sent the email dated 9 October 2012, Mr Nathan El Ali told him that Saracen owned the Potts Point property, Mr Nazloomian had a caveat over it and Mr Mahmoud El Ali was unhappy because he could not pay the council fees. He suggested that Mr Nazloomian should offer to buy it and take its value off the loan to Saracen. 275 Mr Nazloomian says that Mr Jones' submissions ignore the following evidence given in cross-examination (emphasis in submission): … Can you just turn to your second affidavit, again, to page 23? --- The 30,000. Yes. And that's - there's an entry their "minus 30,000". Do you see that? --- Yes And that's a deduction that you made off the running account you kept in regard to Mr Nathan El Ali's debt to you, isn't it? --- No. That's the Saracen. Well, I'm suggesting that it's a deduction you made off the running account you kept in regard to Mr Nathan El Ali, and that's what your document says, I suggest to you? --- That's incorrect suggestion. … Sitting in the witness box now, you realise it does not help your case to admit that you kept just one running account with Mr El Ali all these years? --- … All these amounts and all the loans were personally guaranteed by Nathan …. two occasions I had lent money to Saracen and Ottoman. Again, they were guaranteed by Nathan El Ali. The reason for the proof of debt as you've described is that - that is what Nathan had guaranteed personally to me. That's what he owes me personally. If Saracen returns the funds that I've returned to them, then it will be deducted from that, same with Ottoman. If Ottoman returns the funds that I have loaned to Ottoman, then it will be deducted from the proof of debt. You've ---? --- At the end of the day, Nathan personally guaranteed so therefore I hold him responsible if those companies can't pay or don't pay. Does that make sense? Well, now, what I'm suggesting to you is this: you've never kept an account in regard to Saracen, have you? You've never kept a separate money account set up in this format in regard to Saracen, have you? --- No. Same applies to Ottoman. … Right. So the only consideration that you gave for that land was simply to treat Mr El Ali's two-odd million dollar debt to you as reduced by $30,000; is that correct? --- Well, again, you're saying Nathan. It's a credit against Saracen. But at the end of the day, as I said, it's guaranteed by Nathan. 276 Mr Nazloomian says that Mr Jones' assertion that the primary judge did not ignore Mr Nazloomian's evidence of the $30,000 credit against Saracen is wrong: (1) Mr Jones relies on PD[163] in support of his assertion, but that paragraph of the judgment makes no reference to that evidence. (2) At PD[164], the primary judge referred to Mr Nazloomian setting off $30,000 against the running account, but without identifying that account as relating to Saracen as well as Mr Nathan El Ali. Presumably by reference to that paragraph, at PD[229], her Honour recorded that she had found that the credit was made only against Mr Nathan El Ali and not Saracen. However, it is wrong to say that the primary judge made a finding that Mr Nazloomian treated the debt as owed only by Mr Nathan El Ali. Even if that is how Mr Nazloomian acted (which is denied), the debt was still owed by Saracen, and at PD[229], the primary judge accepted that Saracen owed a debt to Mr Nazloomian. (3) It is no coincidence that the Running Account Ledger records a credit of $30,000 as being given on 9 October 2012, the same date as Mr Nazloomian's email to Mr Nathan El Ali proposing to purchase the Potts Point property in partial satisfaction of the Saracen loan. (4) Given that the primary judge made no finding rejecting Mr Nazloomian's evidence concerning the Running Account Ledger, the primary judge clearly ignored this evidence. (5) The proof of debt concerned only Mr Nathan El Ali's estate, it did not concern Saracen. The proof of debt is irrelevant to how Saracen's debt was treated by Mr Nazloomian. 277 Mr Nazloomian asserts that in assessing the primary judge's findings the following should be borne in mind: there was no dispute that Mr Nazloomian advanced Saracen $440,000, that the advance was guaranteed by Mr Nathan El Ali, that Saracen's Potts Point property was transferred to Mr Nazloomian and a consequential credit of $30,000 was made against the $440,000 loan. Mr Jones' submissions (and the primary judge's findings) suffer from the further anomalies that Saracen is entitled to a credit for the Potts Point property in reduction of its debt even if no credit was given. Even if the debt was reduced by Mr Nathan El Ali's funds, Saracen was still entitled to a credit as the primary obligation had been reduced by the payment of the guarantor. Mr Nathan El Ali would then have a right of indemnity against Saracen. These anomalies were not considered. Her Honour's findings were "glaringly improbable". 278 Mr Nazloomian's hope to secure Mr Nathan El Ali's release from bankruptcy is irrelevant to any issue in the determination of the appeal. His knowledge that Mr Nathan El Ali was bankrupt (which is admitted) is also irrelevant because there was no evidence that he had any knowledge (actual or constructive) that, as a creditor of Saracen and by taking an asset of Saracen's in partial satisfaction of a debt it owed to him, there was an attempt to defraud Mr Nathan El Ali's creditors. Further, the passages from the cross-examination of Mr Nazloomian relied on by Mr Jones do not respond to the submission that it was never put to him that he knew or suspected that Mr Nathan El Ali's creditors would be defrauded by reason of the transfer of the Potts Point property to Mr Nazloomian. 279 The Potts Point property was available to Saracen's creditors (of which Mr Nazloomian was one), but it was never property available to Mr Nathan El Ali's creditors. Mr Nathan El Ali had no interest in Saracen's property: see D'Agostino v Zandata Pty Ltd [2018] VSC 115 (D'Agostino v Zandata) at [38] per McMillan J and the cases there cited. Mr Jones has failed to identify how Mr Nathan El Ali hindered, delayed or defeated his creditors by having Saracen partially pay Mr Nazloomian its debt to him. They were not hindered as they were never entitled to receive Saracen's property. 280 Mr Nazloomian submits that Mr Jones' reliance on PD[202]-[203] to infer a finding that Mr Nazloomian colluded with Mr Nathan El Ali and the finding that the transfer of the Potts Point property was an alienation to defeat creditors rely on an underlying assumption that the Saracen shares have value and his creditors were entitled to that value ahead of Saracen's creditors. No authority was cited for that proposition and it is contrary to the proposition for which D'Agostino v Zandata at [38] is authority, that shareholders do not have an interest in the underlying assets of the company. 281 Mr Nazloomian submitted that the Potts Point property had been purchased in April 2009 by Saracen for an amount of $25,600; the documents supporting that submission appear in the appeal book. The valuation obtained by Mr Nazloomian in October 2012 was not just relied on for stamp duty purposes, it was relied on by the respondents in their case for consequential relief following the Principal Decision in their claim that Mr Nazloomian should be ordered to pay the liquidator of Saracen $30,000 (see OD at [12]). In May 2015, Mr Nazloomian sold the Potts Point property for $10,000, which reflects the order that the primary judge ultimately made. Accordingly, it is not now open to the respondents to suggest that the Potts Point property had any value exceeding $30,000. 282 In relation to the Running Account Ledger, counsel for Mr Nazloomian submitted that: (1) It was Mr Nazloomian's personal record. It did not purport to meet any form of accounting standard. (2) If what Mr Jones submits were correct - that the credit off the loan was given to Mr Nathan El Ali - then Mr Nazloomian could claim the whole amount of $440,000 from Saracen even though he has given sworn evidence that he gave the credit against the loan owed by Saracen. In light of the fact that Mr Nazloomian received property owned by Saracen, such a claim would be doomed to fail. (3) The primary judge found at PD[229] that Mr Nazloomian credited $30,000 against an amount owed by Mr Nathan El Ali "not Saracen's debt". That reference indicates that the primary judge did, in fact, accept that Saracen had a debt to Mr Nazloomian. (4) At PD[162], the primary judge's finding was that there was a prima facie breach of the 2010 Freezing Orders by Saracen by reason of the transfer of the Potts Point property to Mr Nazloomian. The 2010 Freezing Orders did not prevent Saracen from meeting its ordinary business debts, and repayment of Mr Nazloomian would fall into that category. Saracen was in the business of property development and an expense incurred in acquiring a property would fall within the concept of its ordinary business debts. Most importantly, that issue was not a matter that the primary judge relied upon for the purpose of determining whether or not the transfer was made with an intent to defeat creditors. The matter on which the primary judge relied was the credit made in respect of the $30,000 and in relation to that matter there was no prejudice to the creditors of Mr Nathan El Ali by reason of Saracen paying a debt that it owed.

Analysis 283 We have set out at [214]-[221] a summary of the principles relevant to the nature of the review to be conducted by this Court on an appeal by way of rehearing and the circumstances in which an appeal court will interfere with a trial judge's findings of fact. Having regard to those principles, we have concluded that Mr Nazloomian's appeal in relation to Orders 1(b) and 9 should be dismissed. 284 This is not a case in which Mr Nazloomian can point to "incontrovertible facts" which the primary judge failed to take into account appropriately or where the primary judge's conclusion that Mr Nazloomian gave a credit of $30,000 to Mr Nathan El Ali, not Saracen, in relation to the transfer of the Potts Point property to him is "contrary to compelling inferences". 285 Mr Nazloomian claimed to have made a loan to Saracen of $440,000, however, the claimed loan and guarantee of it by Mr Nathan El Ali was not formally documented and there is no evidence of whether or how Saracen accounted for any loan. While Mr Nazloomian was never a director or shareholder of Saracen, it was open to him to call for evidence of that loan or for parties such as Mr Nathan El Ali or Mr Mahmoud El Ali to supply such evidence as they were "friendly" parties. 286 Further, such documents as do exist are either ambiguous or contrary to the claimed transactions. 287 Firstly, the Westpac loan offer and Settlement Letter are evidence that Mr Nazloomian drew down a loan in late December 2009, the offer of which he had accepted, and $439,306.10 was paid to Saracen. Those documents are equally consistent with Mr Nazloomian having advanced money to Saracen which was either guaranteed by Mr Nathan El Ali (or for which he was jointly liable with Saracen), or with Mr Nazloomian having paid $439,306.10 to Saracen at Mr Nathan El Ali's request with the effect that the borrower was Mr Nathan El Ali, not Saracen. The latter possibility is an exact analogy with what occurred between Mr Nazloomian and Westpac. 288 Secondly, it appears to have been accepted that Mr Nazloomian kept a Running Account Ledger, although there is no express finding as to the aggregate amount lent by Mr Nazloomian. The notation in the Running Account Ledger in relation to an amount of $440,000 "paid to Nathan" on 17 December 2009 with the description "WBC-Nathan/Saracen" and the description "Deposit of Helensburgh" is evidence that a loan was made by Mr Nazloomian in an amount of $440,000 on 17 December 2009 in connection with the Helensburgh property. It is, however, not definitive of to whom the loan was made. It is a plausible explanation of these documents and, having regard to the tenor of the Running Account Ledger as a personal record kept by Mr Nazloomian, that Mr Nazloomian had drawn down a loan of $440,000 from Westpac which he had lent to Saracen to assist it to buy the Helensburgh property. It would be commercially sensible that Saracen and Mr Nathan El Ali were jointly liable or that Mr Nathan El Ali had guaranteed it, as he was the sole shareholder and director of Saracen at the time. 289 It is equally plausible, having regard to the tenor of the Running Account Ledger as a personal record kept by Mr Nazloomian, that it should be interpreted as a record of amounts which Mr Nazloomian took to have been lent to Mr Nathan El Ali, as the headings "Amounts paid to Nathan", "Amounts received from Nathan" and "Balance owed to me" would suggest. 290 The words "WBC-Nathan/Saracen" and "Deposit of Helensburgh" do not assist greatly in deciding between the two plausible alternatives, although the fact that Mr Nazloomian used the phrase "Nathan/Saracen" rather than "Saracen/Nathan" would suggest that it was a record of a loan made to Mr Nathan El Ali for the benefit of Saracen. 291 Thirdly, the entry in the Running Account Ledger with a date of 31 October 2012 on which Mr Nazloomian relies records the date "9-Oct-12" under the heading "memo", and "-30,000" under the heading of "Amounts received from Nathan" and a reduction in the running balance (after taking into account an interest payment which is recorded as accruing under the heading "Amounts paid to Nathan"). There is no reference to Saracen as borrower, to the repayment of a loan connected to the purchase of the Helensburgh property or to the transfer of the Potts Point property. Mr Nazloomian says that, in context, it must refer to the transfer of the Potts Point property because it refers under the heading "memo" to the date on which he sent an email to "Nathan/Mahmoud" suggesting that he purchase it. However, the transfer of the Potts Point property signed by Mr Mahmoud El Ali and Mr Nazloomian is dated 22 November 2012 and no valuation (for any purpose) had been obtained at 9 October 2012. Further, Mr Nazloomian's evidence in his affidavit dated 21 April 2015 would suggest that the transfer occurred in December 2012 and the 9 October 2012 email was sent before his conversation with Mr Nathan El Ali in which Mr Nathan El Ali suggested that he purchase the Potts Point property (see [246(9)] above). The content of the 9 October 2012 email (which was sent only to Mr Nathan El Ali despite the salutation to Nathan and Mahmoud) suggests that Mr Nazloomian lent money to Saracen to buy the Potts Point property, and any credit would relate to that loan, which is not the evidence given by either of Mr Nathan El Ali or Mr Nazloomian (see [245(9)] above). 292 Fourthly, the caveat referred to at PD[163] purports to be in support of an interest Mr Nazloomian had as "purchaser under uncompleted purchase contract" dated 21 January 2010, a transaction which is not otherwise mentioned in any evidence. Mr Nazloomian's explanation that he registered the caveat in April 2011 having regard to all of the moneys lent to Mr Nathan El Ali and related entities does not explain why the caveat would have been completed in the way it was. 293 Finally, the transfer signed by Mr Mahmoud El Ali and Mr Nazloomian expressed the consideration for the transfer to be $1, albeit that it was stamped on the basis that the value of the Potts Point property was $30,000. 294 We do not accept Mr Jones' submission that Mr Nazloomian's evidence in cross-examination was that he had lent the money to Mr Nathan El Ali and it is our view that his evidence in cross-examination was consistent with his evidence-in-chief that he had lent money to Saracen the repayment of which had been guaranteed by Mr Nathan El Ali. 295 Equally, we do not accept Mr Nazloomian's submission that the primary judge ignored the evidence of a $30,000 credit in the Running Account Ledger set out at [246(10)] above when her Honour made the finding at PD[229] that the consideration given by Mr Nazloomian for the Potts Point property (in the sum of $30,000) was credited against the amount owed by Mr Nathan El Ali, "not Saracen's debt". At PD[164], the primary judge expressly said that Mr Nazloomian "set off $30,000 against the debt owed recorded in his running account" and that he gave "full credit of $30,000 to Mr El Ali, not Saracen, when he lodged a proof of debt against Mr El Ali's estate". We accept that the words "not Saracen's debt" in PD[229] are slightly ambiguous. However, in our view, her Honour's words in the second sentence of PD[229] indicate that what was said at PD[164] on that topic was a finding and the words "not Saracen's debt" are a reflection of what was said at PD[164], not a finding that Saracen owed money to Mr Nazloomian. 296 Most importantly, as noted above, the explanation for the transfer of the Potts Point property relies critically on evidence given by Mr Nazloomian and Mr Nathan El Ali to be able to discern the character of the transactions in December 2009 and October to November 2012. 297 In making findings concerning the credit of the appellants, the primary judge properly noted (at PD[45]) that given the serious nature of the allegations made by the Royals and Mr Jones, the evidence of the appellants was to be tested by reference to the principles in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 and a very high level of satisfaction should be reached before making adverse findings adverse to them. 298 In relation to Mr Nazloomian and Mr Nathan El Ali, the primary judge found that they did not give candid or credible evidence in relation to the change of ownership of Isaac & Jacob and Ottoman (at PD[56]) and Mr Nazloomian's answers in cross-examination in relation to the purported change of control of Isaac & Jacob were found to be "evasive and unconvincing" (PD[58]). At PD[59], the primary judge relied on the fact that Mr Nazloomian led no evidence-in-chief concerning why the shares in Ottoman were transferred to and from him in finding that he lacked candour and Mr Nazloomian says that her Honour erred in doing that. 299 It is true that the transfer to Mr Nazloomian of shares in Ottoman in October 2010 and the re-transfer to Mr Nathan El Ali in December 2010 was not impugned in the proceedings because the shares had been re-transferred to Mr Nathan El Ali. However, in our view the primary judge's reliance on Mr Nazloomian's failure to give evidence-in-chief concerning those matters does not give rise to appealable error. The transfers of the Ottoman shares (together with the shares in Isaac & Jacob) in October and December 2010 and the re-transfer in 2010 formed part of the factual matrix disclosed in the Statement of Claim having regard to the coincidence of timing of the 2010 Freezing Orders and the transfers of shares and property transfers identified by the primary judge at PD[61]-[62]. Moreover, the primary judge did not rely on that factor alone in finding (at PD[59]) that Mr Nazloomian did not give candid evidence. The primary judge also relied on Mr Nazloomian's failure to acknowledge in his evidence-in-chief that, at the time of the transfer of the shares in both Ottoman and Isaac & Jacob to Mr Nazloomian, he was aware that Mr Nathan El Ali was under financial pressure, that he was being sued by the Royals and that Mr Nazloomian was receiving regular updates about that litigation. As the transfer of shares in Isaac & Jacob occurred at the same time as the transfer of the Ottoman shares to Mr Nazloomian, that evidence would have appropriately been given in chief in any event. We do not perceive error in the primary judge's approach. 300 Further, no challenge was made to the primary judge's other findings at PD[46]-[59] and in particular the findings that Mr Nazloomian did not, in fact, perform a role as director in Isaac & Jacob or Ottoman or use his capacity as director and shareholder of those companies to have oversight of transactions by Saracen or Ottoman which was the ostensible purpose for taking those roles. There has been no direct challenge to the primary judge's inference that Mr Nazloomian's role in those transactions was essentially to do as instructed by Mr Nathan El Ali. 301 In our view, the primary judge's task in assessing the evidence given by the appellants in relation to the transactions impugned in this case as it unfolded at trial was not an enviable one but having regard to the nature of the evidence and claims, the primary judge enjoyed an advantage over this Court in making her factual findings. Mr Nathan El Ali was thoroughly discredited and Mr Nazloomian's evidence in relation to his role in Isaac & Jacob and Ottoman were such as to fatally undermine his credibility. In those circumstances, it was unnecessary for the primary judge to make detailed credit findings in relation to the evidence concerning the transfer of the Potts Point property. The primary judge made a comprehensive conclusion that none of the appellants' explanations for the impugned transactions should be accepted at PD[168], which followed immediately after her Honour's consideration of the evidence concerning the transfer of the Potts Point property. 302 In our view, the primary judge's finding that $30,000 credit was given to Mr Nathan El Ali, not Saracen, is not "glaringly improbable" and it was open to her Honour to make having regard to the evidence of the Running Account Ledger and the proof of debt lodged by Mr Nazloomian as found at PD[164] and having regard to her Honour's unimpeachable credit findings relating to Mr Nazloomian and Mr Nathan El Ali. On that basis, it follows that Saracen did not transfer its asset for valuable consideration received by it. It was unnecessary for the primary judge to determine the exact value of the Potts Point property in making her Honour's findings at PD[229]-[231], since Mr Nazloomian asserted that it was worth $30,000, Mr Nathan El Ali had given sworn evidence that it was worth $700,000 and it was acquired by Saracen at public auction in March 2009 for $25,600. Submissions made by counsel for Mr Nazloomian that the value of the shares in Saracen was not affected by the transfer and that Mr Nazloomian was entitled to the defence under s 37A of the Conveyancing Act having regard to relevant authorities could only be accepted if evidence given by Mr Nazloomian and Mr Nathan El Ali concerning the nature and extent of loans made by Mr Nazloomian and the transfer of the Potts Point property was accepted and it was not (see PD[168]). 303 For completeness, we see no error in the primary judge's findings at PD[202] that the transfer of property by a company in which a bankrupt held shares can be an "alienation of property" within s 37A of the Conveyancing Act provided the relevant intention to defraud creditors of the debtor can be established. We agree that the meaning of s 37A of the Conveyancing Act should, having regard to its apparent purpose, be given the "widest possible application" and the alienation need not occur solely by reason of acts by the fraudulent debtor: see Hall v Poolman [2007] NSWSC 1330; (2007) 215 FLR 243 at [550], [551] and [553] per Palmer J. 304 Where there is no challenge to the primary judge's finding that the transfer of shares in Saracen to Mr Mahmoud El Ali was void and Mr Nathan El Ali was the "initiator and driving force" behind the sale of the Potts Point property to Mr Nazloomian - it is appropriate to treat Mr Nathan El Ali as the shareholder of Saracen in October 2012 for the purposes of this analysis. 305 We perceive no error in the primary judge's summation of the law relevant to "intention" to defraud under s 37A of the Conveyancing Act at PD[205]-[206], and most relevantly the following: 205 … The majority (French CJ, Gummow, Crennan and Bell JJ) [in Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3] held that: (1) the reference to "defraud" included the hindering or delaying of creditors: at [32], [56]; (2) at [34], that the High Court in Cannane, in their references to "actual intent", were "adding the word 'actual' as a periphrasis to emphasise that, while the existence of intent might be inferred from the evidence, it was to be found as a fact"; (3) s 37A did not require for its operation that the proscribed intent be the sole or even dominant intent of the debtor; (4) the relevant intent can be inferred: at [25] the majority stated that an actual intention to delay or defeat creditors, even in the absence of direct evidence of intention, may be inferred if the disposition is voluntary, or for nominal rather than for valuable consideration, where the necessary consequence of the alienation is to put the property beyond the reach of the debtor's creditors. Likewise in Cannane, Brennan CJ and McHugh J at [12] said that an intention to defraud creditors may be inferred where a disposition results in a "subtraction of assets" available for payment of creditors. See too Agusta Pty Ltd v Provident Capital Ltd (2012) 16 BPR 30,397; [2012] NSWCA 26, [86]-[87]; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515, 526; Jew v Holloway [2013] VSCA 260 at [13]-[18]; Westpac v The Bell Group (No 3) (2012) 270 FLR 1; [2012] WASCA 157, [540]; Commissioner of Taxation v Oswal (2012) 91 ATR 684; [2012] FCA 1507, [21]-[25]. 206 In ascertaining intent, the critical period to examine is the period leading up to the date of the transfer and the critical mind is that of the transferor. Where that transferor is a corporate entity, the critical mind is that of the person controlling the transferor's actions in effecting the transfer: Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3 at [64] (Heydon J). 306 Having regard to Mr Nathan El Ali's overall conduct, the primary judge's finding that one of his intentions in procuring the transfer of the Potts Point property to Mr Nazloomian was to delay or hinder the Royals as his creditors is unassailable. Mr Nazloomian gave evidence that he knew Mr Nathan El Ali was bankrupt, and we accept that that knowledge affects his claim to be a purchaser in good faith of the Potts Point property, since it was not honest conduct for him to participate in and benefit from the activities of a known bankrupt in exerting de facto control over the activities of Saracen. Further, where no credit was given to Saracen for the transfer it could not fall within the exemption to the 2010 Freezing Orders, as submitted by Mr Nazloomian's counsel. 307 The grounds of the appeal are not made out.

THE COSTS DECISION 308 In this section of our reasons, we deal with the appeals in relation to the primary judge's Costs Decision. 309 Following a separate hearing, the primary judge gave detailed and careful reasons on the appropriate costs orders to be made in light of her Honour's findings and orders in the Principal Decision and the Orders Decision. 310 Her Honour ordered in the 2013 proceedings that the respondents pay the applicants' costs fixed in the sum of $442,668, and in the 2014 proceedings ordered that the respondents pay the applicants' costs fixed in the sum of $212,166. 311 In her Honour's reasons, the primary judge explained at length why it was that her Honour made a lump sum order, for which each of the respondents is to be joint and severally liable. In doing so, the primary judge rejected the submissions made by the respondents to the contrary. Her Honour also rejected the respondents' submission that the applicants were not legally obliged to pay any legal costs to their solicitors, and that any costs order would therefore "offend the indemnity principle." 312 Her Honour's reasons for making a lump sum costs order are at CD[9]-[36]. As her Honour explained, the court has a broad discretion to award costs. But it is preferable, when it is practicable and appropriate to do so, to make a lump sum costs order, so that the issue can be finalised, and a potentially expensive and lengthy taxation of costs hearing can be avoided (at CD[10]; see also Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 (per Allsop CJ, Besanko and Middleton JJ)). 313 Her Honour made a lump sum costs order, including because: (1) the unchallenged evidence was that if the costs were to be taxed, that process would take about 18 months and cost between $80,000 to $110,000 plus GST (CD[11]); (2) the unchallenged evidence contained in reports given by expert costs consultants retained on behalf of the applicants and the respondents in both proceedings enabled the court to have sufficient confidence that the "mid-point" of the discount ranges of the rate of recovery of costs on a party/party basis that they respectively contended for was 60% (at CD[27]); (3) averaging out the competing submissions about how to apportion the total costs sum for both proceedings of $1,091,390, the appropriate apportionment was: (a) 2013 proceedings: 67.6%; (b) 2014 proceedings: 32.4%. (CD[19] and [30]). 314 Her Honour's reasons for rejecting the respondents' submission that the applicants were not legally obliged to pay any legal costs to their solicitors are at CD[37]-[52]. Those reasons set out the relevant factual matters upon which the respondents below relied and upon which they rely as appellants in these appeals, including counsels' fee agreements, together with a detailed consideration of the relevant cases. The reasons are as follows: 37 In issue is whether the applicants are legally obliged to pay any legal costs to their solicitors. If not, a costs order in their favour against the respondents would offend the indemnity principle as there are no costs for them to recover from the respondents: Mainieri & Anor v Cirillo [2014] VSCA 227; (2014) 47 VR 127 ("Mainieri v Cirillo") at [43]. The indemnity principle does not require that the costs have been paid, but it does require that there be a legal liability to pay costs: Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 ("Wentworth v Rogers") at [126]. 38 The Royals' costs agreement with their solicitors contained the following provisions: • Estimated charges … We note that our fees will only be paid in the event that the litigation results in a recovery sufficient to ensure their payment. • Payment Terms We note that we have agreed to act for you on the basis that our fees will only be payable out of any monies which we recover on your behalf. • Disbursements & Service Fee Any disbursements incurred in relation to your matters will be charged to you. Where it is necessary to retain a barrister or other expert, we will disclose to you their fee structure before, or as soon as practicable after, their engagement. I note that Chris Birch SC and Penny Thew will also be acting on a contingency basis. Disbursements paid to third parties such as experts' fees, registration and filing fees and courier charges will be charged to you at cost. … • Billing Arrangements Usually, our bills will be rendered monthly. However, as we are acting on a contingency fee basis we will not render monthly accounts. 39 The respondents submitted that these terms made the solicitors' right to be paid fees contingent on the satisfaction of the condition precedent of "a recovery sufficient to ensure their payment". It was submitted that the Royals' liability to pay costs was therefore only triggered if they recovered some amount from the respondents and, moreover, an amount that was sufficient to enable those costs to be paid, which it was submitted has not happened. Based on dictum of Basten JA in Wentworth v Rogers, it was also submitted that to the extent that the Royals' legal liability to pay costs to their solicitors would be dependent upon obtaining actual recovery of costs awarded, the application of the indemnity principle would still be breached by an order for costs because there is no extant legal obligation to be indemnified when the costs order is made. In Wentworth v Rogers, the relevant costs agreement entered into by the client with his barrister expressly provided that his obligation did "not arise upon a cost order being made in [his] favour but on costs being successfully recovered as against" the other party. Basten JA stated at [111]: This agreement creates a real difficulty in applying the indemnity principle. If the entitlement to recover costs from another party to the proceedings is dependent upon the legal liability to pay those costs to one's legal advisors, but the obligation to pay is contingent upon establishing a right to recover, the circularity is readily apparent. However, if, as in the present case, the obligation to pay depends not on a right to recover an identifiable amount of costs, but on the actual recovery of those costs, there may be no extant legal obligation to be indemnified even when a costs order is made. 40 In Wentworth v Rogers Santow JA expressed a different view. Santow JA considered that the indemnity principle would not be contravened in such a case. His Honour reasoned at [51] and [54] that: the [Legal Profession] Act now recognises conditional costs agreements of the kind where payment of the barrister's or solicitor's costs "is contingent on the successful outcome of the matter"; s186. No distinction is drawn between such a contingency expressed as a condition precedent or subsequent. I am inclined to the view that the application of the indemnity principle should not depend on that distinction either, though that is not necessary to decide. The costs agreement, to comply with the Act, must "set out the circumstances constituting the successful outcome of the matter". I consider that the indemnity principle must at least accommodate the kind of conditional costs agreement recognised by s186. Otherwise, it will operate as a powerful disincentive from using the now statutorily recognised conditional costs agreement, facilitating access to justice, if the lawyer concerned will not recover costs from the other party where successful against that other party. … The general law governing the indemnity principle with its emphasis on flexibility is, in my opinion, quite capable of accommodating conditional fee agreements of this kind. It should do so recognising the importance of such agreements in promoting access to justice which may otherwise be unaffordable. The residual undertaking to pay, though qualified, strengthens the case for conformance with the indemnity principle. It is reasonable, not just in this ferocious litigation but more generally, to recognise in a costs agreement that the unsuccessful party who is subject to a costs order may delay or defeat recovery. Hence predicating payment on successful recovery is not unreasonable. In the words of Bramwell B this gives no unjustified bonus to the successful party nor does it impose any punishment on the losing one, so as to invoke the rationale behind the indemnity principle. 41 In King v King [2012] QCA 81, Chesterman JA (with whom White JA agreed) said in obiter dicta that he preferred Basten JA's analysis. 42 In LM Investment Management Limited (Administrators Appointed) v The Members of the LM Managed Performance Fund [2014] QSC 54, Mullins J considered it unnecessary to analyse the competing views of Basten and Santow JJA in Wentworth v Rogers, concluding that as a matter of construction, the costs agreement in question in that case did not infringe the indemnity principle. Her Honour stated: The costs agreement sets up the basis for the respondents' solicitors to charge the respondents and their liability for the payment of professional costs and outlays, subject to the operation of the special condition. The special condition was in the following terms: No fees will be payable by you unless an order is made by the Supreme Court of Queensland in your favour for the payment of costs and those costs are recovered by us from other parties and any fees charged shall be limited to the amount of costs so recovered. 43 In Mainieri v Cirollo, the Victorian Court of Appeal preferred the analysis of Santow JA over that of Basten JA in Wentworth v Rogers, holding at [51]-[53]: Evidently, the weight of considered dicta favours the Basten JA view. Conscious as we are, however, of the importance of consistency among Australian intermediate courts of appeal, we agree with Santow JA that, as the Legal Profession Act now recognises conditional costs agreements of the kind where payment of costs is 'contingent on the successful outcome of the matter', and draws no distinction between such a contingency expressed as a condition precedent or subsequent, the application of the indemnity principle should not depend on that distinction. With all respect, we do not consider that either of the reasons identified by Basten JA as justifying the opposite view is persuasive. As to the first, although it may be that an obligation to pay fees which is conditional on the actual recovery of costs would not impose a sufficient obligation to warrant an order for costs in accordance with the indemnity principle, logically it does not follow that an obligation to pay costs which is conditional on obtaining a costs order ought not be regarded as sufficient. If concentration is confined to the latter situation, it would be remarkably arbitrary, and hence we think contrary to principle, if the law were that an order for costs may be made in favour of a party who, at the instant the order is made, is subject to a defeasible liability to pay costs; and yet an order for costs cannot equally be made in favour of a party who, at the instant the order is to be made, is at least contingently liable to pay costs and who, at the instant the order is made, becomes indefeasibly liable to pay them. To hold otherwise would be a triumph of form over substance. As to the second reason, although we agree with respect that an ongoing unconditional obligation is consistent with other aspects of the statutory scheme of fee regulation, so too surely is an ongoing contingent obligation of a kind for which the Act expressly provides and which, for the reasons adumbrated by Santow JA, the law regards as just and socially desirable. We add that we are fortified in that conclusion by the analysis recently undertaken by Mullins J in LM Investment Management Ltd (Administrators Appointed) v The Members of the LM Managed Performance Fund. (footnotes omitted) Section 323(1) of the Legal Profession Act (at the relevant time, now replaced by s 181(1) of the Legal Profession Uniform Law (NSW)) was relevantly identical to the provisions of the Legal Profession Act 2004 (Vic) referred to in Mainieri v Cirollo. 44 Mainieri v Cirollo is authority that the application of the indemnity principle does not depend on whether the contingency is expressed as a condition precedent or condition subsequent provided the client is contingently liable to pay legal fees "at the instant the costs order is to be made". In the present case, the Royals are contingently liable under their costs agreement with Watson Magioni to pay legal fees and disbursements to Watson Magioni for the legal services provided in relation to this litigation. The mere fact that the liability is contingent on sufficient recovery of moneys out of which to meet those costs does not mean that the indemnity rule would be contravened by an order for costs because at the time when that order is sought the contingency triggering the liability has not been satisfied. There is a contingent liability to pay fees and thus an obligation to be indemnified when a costs order is made. … 46 It was also contended for the respondents that the applicants had not demonstrated that they have an obligation to pay counsels' fees. 47 Dr Birch SC's fee agreement relevantly provided that: Subject to any further express arrangements in writing or further disclosure under Clause 9 below, I intend to charge fees at the following rates and upon the following conditions for work in regard to which I am retained. Also please note:- (i) I am not charging these fees on a contingency basis, unless special arrangements have otherwise been made by me in writing the fees will be payable whatever the outcome of the proceedings. (ii) The fees are payable within 30 days of the rendering of my memorandum whether or not any costs have been taxed or any costs paid by the other parties to the litigation, unless special arrangements have otherwise been made by me in writing. 48 In the accompanying letter Dr Birch SC stated: … I understand that your firm holds no funds on account of my fees and that the Royals are not in a financial position to fund the existing litigation. In those circumstances I agree that my fees will only be paid in the event that the litigation results in a recovery sufficient to ensure their payment. Further in light of the fact that the substantial work in the matter is being undertaken by Ms Thew and yourself, it would be my intention to seek payment of some portion of my fees only in the event that the recovery was sufficiently large that it had firstly provided a dividend to the Royals and a substantial payment to you and Ms Thew. 49 Ms Thew's costs agreement relevantly provided that: I will conduct this matter on a contingency basis. Under these terms I will only render an invoice at the conclusion of the Legal Services and only in circumstances where a successful outcome has been achieved in the Royal's favour, being satisfaction in whole or in part of the judgment debt. 50 The legal services were stated to include: Appear and advise in relation to the satisfaction of the judgment and orders in Royal v Elali [2011] NSWSC 602 including providing any relevant assistance to the registered trustee in bankruptcy appointed to the bankrupt estate of Nathan Elali. 51 The respondents similarly submitted in relation to both counsels' fees, that as there were condition precedents to the payment of those fees that had not been fulfilled, the liability to pay those fees had not been triggered and there are no costs to be indemnified by an order for costs against the respondents. That submission is also rejected for the reason that the condition for payment of those fees does not depend only upon their recovery but in the case of Dr Birch sufficient recovery of moneys out of which to meet those costs and, in the case of Ms Thew, satisfaction in whole or in part of the judgment debt in Royal v Elali [2011] NSWSC 602. In each instance, there is a contingent liability to be indemnified in respect of those fees at the time of making the costs orders. 52 Counsel for Mr Nazloomian, Mr Stojanovski and Isaac & Jacob advanced the further argument that the only moneys that the applicants can recover in these proceedings are in respect of costs because the moneys ordered to be paid to Saracen and Ottoman are not moneys that have been recovered on behalf of the applicants and it is not part of the relief sought or obtained that those moneys be paid to the applicants. Accordingly, so the argument went, the indemnity principle is not brought into play. That argument is also rejected as the issue to bring the indemnity rule into play is whether a legal liability to pay costs exists, not the remoteness of the prospect of the applicants having to pay those costs. For the reasons already given, the fact that the applicants are contingently liable to pay those costs suffices to bring the indemnity rule into play. 315 Her Honour's reasons for making the costs orders on a "joint and several" basis are at CD[53]-[55]. The parties below did not dispute the applicable legal principles, including the general principle that multiple respondents are to be made jointly and severally liable for the costs of the successful party because that party should not lose that entitlement if one of the parties against whom orders are made cannot, or will not, meet its share of the costs burden, "absent 'special circumstances'" (at CD[53] and the authorities there cited). 316 Her Honour rejected the respondents' submission that the general rule should not apply, reasoning as follows (at CD[54]-[55]): 54 … It was submitted for the respondents that a joint and several costs order should not be made because there was no common substratum of fact but, rather, a clear distinction between the factual and legal matters as between the various respondents providing a "clear reason" why costs should not be joint and several. The submission that costs should not be on a joint and several basis is rejected for the following reasons. 55 First, contrary to the respondents' submissions, although each of the transactions which the applicants sought to be impugned was separate and distinct in the sense that the relevant issue for determination was whether that particular transaction was a voidable transaction under s 37A of the Conveyancing Act 1919 (NSW) and/or s 121 of the Bankruptcy Act 1966 (Cth), there was a significant commonality of evidence, issues and in the substratum of facts concerning the impugned transfers of shares and properties, particularly given that each of the individual respondents (excluding Mr Stojanovski) were directors of one or more of the respondent companies at various times, and borne out by the fact that the evidence of the individual respondents, including Mr Stojanovski, traverse not only the particular transactions involving them, but also the other transactions the subject matter of the proceeding. It is also noteworthy that the respondents did not conduct separate and distinct defences not attributable to joint conduct of the respondents in defending the claims against them. Furthermore, the applicants were successful against all of the respondents. In the circumstances, I am not persuaded that costs should not be joint and several as between the various respondents. 317 The appellants in both appeals submitted, for reasons set out in written submissions that in substance repeated the unsuccessful arguments below, that the primary judge erred in rejecting their submissions that no lump sum order should be made, and that they should not be jointly and severally liable. Leaving aside the Mainieri v Cirillo [2014] VSCA 227; (2014) VR 127 point, which involves in part a question of law, it is, of course, long established that an award of costs is discretionary and an appeal court will not interfere with such an order unless it can be shown that an error of the type identified by a majority of the High Court (Dixon, Evatt and McTiernan JJ) in House v The King (1936) 55 CLR 499 (House v The King) at 504-505 has been made. See, by way of example, Tenser v Quigley [2016] FCAFC 178 (Tenser v Quigley) at [28]-[30] (Nicholas, Katzmann and Markovic JJ); Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; (2010) 265 ALR 112 at [113] (Jacobson, Siopis and Foster JJ). 318 Accordingly, "it must be shown that the primary judge made an error in exercising his or her discretion, either by acting on a wrong principle, taking into account extraneous or irrelevant matters, mistaking the facts or failing to take into account a material consideration. An error in the exercise of a discretion can also be inferred by an appellate court if the decision is, on the facts, plainly unjust or unreasonable" (see Tenser v Quigley at [29]). 319 No such error is even remotely made out here. On the contrary, the case for a lump sum, joint and several order was, if we may say so, an overwhelming one and it was well within the proper exercise of the primary judge's discretion to make the orders. 320 As to the indemnity point, we would, with respect, adopt the reasoning of the primary judge in its entirety. 321 In summary, we consider that the primary judge made no error of principle and that the costs orders were appropriate in light of the findings her Honour made. All of the appellants, other than Mr Zreika, have been unsuccessful in their appeals. Mr Zreika has had partial success on a point not raised before the primary judge. In those circumstances, we see no reason to interfere with the primary judge's orders as to the costs of the trial by reason of Mr Zreika's partial success on his appeal.

THE DEED DECISION 322 In this section of our reasons, we deal with the appeals by Mr Zreika and Mr Nazloomian in relation to orders made by the primary judge on 23 March 2017 in the Deed Decision.

The facts 323 It will be recalled that Orders 8 and 9 made by the primary judge on 23 September 2016 in the Orders Decision were: 8. Mr Zreika account for the value of the Voyager Point property in the sum of $800,000.00 by paying the said sum to the official liquidator of Saracen. 9. The amount of $100,000 paid by Mr Stojanovski into Court, pursuant to the Orders made on 14 September 2015, in respect of the Kogarah Unit 2 property be paid to the official liquidators of Ottoman. 324 On 2 November 2016, Mr Zreika and Mr Nazloomian entered into the Deed with the liquidator of Saracen. The Deed relevantly provided: RECITALS: A. Zreika and Saracen are party to proceedings NSD 1731 of 2013 in the Federal Court of Australia (the 2013 Proceedings). B. Saracen has the benefit of Order 8 in the 2013 Proceedings which requires that Zreika accounts for the value of 1 Sirius Road, Voyager Point, NSW, 2172 described in certificate of tile folio identifier Lot 72 in Deposited Plan 661069 in the sum of $800,000 by paying the said sum to the official liquidator of Saracen (Order 8). C. Zreika and Saracen wish to compromise and resolve Order 8. D. Nazloomian and Saracen are party to proceedings NSD 771 of 2014 in the Federal Court of Australia (the 2014 Proceedings). E. Saracen has the benefit of Order 9 in the 2014 proceedings which requires that Mr Nazloomian account to the official liquidator of Saracen Holdings Pty Ltd (In Liquidation) in regard to the value of the Potts Point property by paying to the said liquidator the sum of $10,000 (Order 9). F. Nazloomian and Saracen wish to compromise and resolve Order 9. G. No final costs orders have yet been made in the 2013 or 2014 Proceedings. The hearing in respect of costs is listed for 11 November 2016. The most likely potential outcomes are that Saracen be ordered (jointly and severally with the other respondents) to pay the applicants' costs or that the respondents other than Saracen be ordered to pay the applicants' costs. H. On 14 October 2016 Zreika lodged an appeal in respect to the 2013 Proceedings seeking, amongst other things, that Order 8 be set aside and that the respondents to the appeal including Saracen pay Zreika's costs of the 2013 Proceedings and the appeal. … OPERATIVE PROVISIONS It is agreed: 1. Zreika and Nazloomian together agree that they will pay to Saracen the sum of $70,000 in accordance with Operation Provision 9 below (Settlement Sum). 2. Saracen agrees that it will accept the Settlement Sum in full and final settlement of Order 8 subject to creditor approval of the Settlement Sum pursuant to section 477(2A) of the Corporations Act 2001. 3. Saracen agrees that it will accept the Settlement Sum in full and final settlement of Order 9 subject to creditor approval of the Settlement Sum pursuant to section 477(2A) of the Corporations Act 2001. 4. Saracen also agrees that, subject to creditor approval under section 477(2A) of the Corporations Act 2001, it will assign any rights it may have to commence proceedings against Michael Jones in his capacity as trustee in bankruptcy for Nathan Elali and Peter and Judith Royal to Nazloomian subject to creditor approval of Saracen (assignment). … 6. The operation of this Deed is not contingent upon the assignment. For the avoidance of doubt if the creditors of Saracen do not cause a resolution to be passed in favour of the assignment only, the balance of this Deed will continue to operate without further regard to the assignment. … 8. Zreika and Nazloomian acknowledge that the terms of this Deed are or may be subject to approval by the creditors of Saracen. 9. The Settlement Sum will be paid to the Trust Account of the liquidator of Saracen within seven business days after this Deed becomes binding, and may not be distributed to Saracen until the creditors meeting has resolved to approve the compromises provided for in this Deed... … 12. Upon both the receipt of the Settlement Sum by the liquidator of Saracen in accordance with Operative Provision 9, and the approval by creditors of Saracen of the compromises contained in this deed ..., each party releases and discharges the other from all actions, suits, causes of action, claims, claims for retention and demands whatsoever both at law and at equity which it now has or at any time had, or at any time may have had but for the execution of this Deed, could or might have had against the other for and in respect of the enforcement of Order 8 and Order 9 ... … 15. Zreika will discontinue the appeal against Order 8 within 7 days of the date of this Deed and neither he or Nazloomian will lodge any further appeal in relation to Order 8. … 325 On 8 November 2016, Mr Zreika's solicitors wrote to the solicitors for the Royals and Mr Jones (collectively, the respondents) telling them that Mr Zreika was withdrawing his appeal against Order 8 requiring him to pay Saracen $800,000. Presumably because, in the events that occurred, the Deed did not become effective, no one regarded the "withdrawal" of the appeal as amounting to anything. 326 On 11 November 2016 the liquidator of Saracen received a payment of $60,000. A further payment of $10,000 was made on 28 November 2016. Those moneys remain in the liquidator's trust account. 327 Although the Deed was expressed in many of its various provisions to be "subject to creditor approval", the liquidator of Saracen decided that it would be preferable for the court, not the creditors, to be asked to approve the compromise under s 477(2A) of the Corporations Act 2001 (Cth) (the Corporations Act). As the liquidator explained in his affidavit dated 9 February 2017, "[t]his would have the additional benefit of putting the issue of the validity of [the Deed] and the liquidator's power to compromise the order for payment of $800,000 squarely before the Court". 328 The liquidator of Saracen also swore that Saracen had no material assets other than the orders made in the proceedings that it be paid $800,000 by Mr Zreika and $10,000 by Mr Nazloomian. 329 The liquidator of Saracen also swore that in deciding to enter into the Deed he took into account, among other things, the following: (1) real property searches revealed that Mr Zreika was not the registered proprietor of any real estate in Australia; (2) it was unlikely that Mr Zreika would be able to pay the $800,000; (3) in light of his conduct described in the primary judge's Principal Decision, "even if Mr Zreika did have funds to pay the $800,000, it was likely that he would seek to arrange his financial affairs to make recovery from him legally difficult". 330 For those principal reasons (and inconsequential reasons which it is not necessary to detail here) the liquidator of Saracen concluded that he "formed the commercial view that it was in the company's and the creditors' interests to compromise the $800,000 payment in the manner set out in [the Deed]". 331 It became apparent by the time the application for approval came on for hearing before the primary judge that the liquidator of Saracen had overlooked, presumably because he had never checked, that Mr Zreika was in fact the sole shareholder of two companies that owned real estate. As the primary judge recorded in the Deed Decision at DD[38]: [T]here is evidence that [Mr Zreika] is the sole shareholder of two companies that … own real estate, namely a company called 37 York Road Pty Ltd and a company called Clutch 1 Pty Ltd. ASIC searches were tendered on behalf of the [respondents] evidencing Mr Zreika's shareholding in both those companies and an "owner enquiry" of real property owned by 37 York Road Pty Ltd in New South Wales was tendered which showed that the company has an interest in a series of lots in strata plan 87058. It is uncontroversial that Clutch 1 Pty Ltd now owns the Taren Point property, being one of the properties the subject of the orders made in NSD 1731 of 2013 and, specifically the fact that Clutch 1 Pty Ltd now owns the Taren Point property…

The submissions made to the primary judge 332 The primary contention upon which the respondents relied below was "that the Deed cannot have the legal effect of releasing and discharging Mr Zreika from his obligation to comply with Order 8, without the order also being set aside. Mr Zreika has not applied to set aside the order, but if such an application were to be made, the [respondents] contend that the order could not be set aside in the absence of [their] consent as the order was made in their favour: see r 39.05(f) of the [Federal Court] Rules. Furthermore, the [respondents] say they would not consent to Order 8 being set aside": (at DD[23]). (Rule 39.05(f) relevantly provides that the Court "may … set aside a judgment or order … if … (f) the party in whose favour it was made consents"). 333 Three other submissions were advanced on behalf of the respondents, which the primary judge described as follows (at DD[24]-[26]): 24 Secondly, one of the matters taken into account by the liquidator in deciding to compromise the debt was that real property searches had revealed that Mr Zreika was not the registered proprietor of any real property in Australia. The [respondents] have furnished evidence to show that Mr Zreika, nonetheless, is the sole shareholder of various companies that do own real property. 25 Thirdly, another reason given by the liquidator was his view that "even if Mr Zreika did have funds to pay the $800,000 it was likely that he would seek to arrange his financial affairs to make recovery from him legally difficult". It was submitted that the apprehension that Mr Zreika would seek to frustrate the recovery and enforcement of the liability was not a proper reason for entering into a compromise with him. 26 Fourthly, if the Deed is legally effective to release and discharge Mr Zreika from his obligation to comply with Order 8, the Deed deprives the [respondents] of the fruits of their litigation when there is some evidence to indicate a capacity to pay. 334 Mr Zreika submitted that r 39.05(f) was beside the point because he was not seeking to "vary or set aside a judgment or order" within the meaning of the Rule; that the effect of the Deed (subject to creditors' approval) was that there would be an accord and satisfaction of the judgment debt; and that the benefit of Order 8 lay with Saracen, not the respondents. Written submissions filed on behalf of Mr Zreika also contended as follows: "In the event that the [respondents] have an issue as to the terms of the Deed, then it is for them to move the court for any appropriate relief, supported by evidence … Any dispute that the [respondents] have in relation to the deed should be directed to the Liquidator, and not Mr Zreika". 335 Saracen also contended that the $800,000 that Mr Zreika was liable to pay pursuant to Order 8 did not constitute a "debt to the company" within the meaning of s 477(2A) of the Corporations Act.

The reasons of the primary judge 336 In the Deed Decision, the primary judge dismissed the liquidator's application for approval of the Deed. First, the primary judge rejected the contention that Mr Zreika's liability to pay the sum of $800,000 was not a debt to the company within the meaning of s 477(2A) of the Corporations Act. Neither Mr Zreika nor Mr Nazloomian advanced submissions on appeal challenging that finding. 337 Having earlier set out the principles governing a court's power to authorise a liquidator to compromise a debt and having noted (at DD[21]) that the primary concern of a court in exercising the power to approve provided for in s 477(2A) is whether the compromise is a proper exercise of power and for the benefit of the creditors within the overall context of the liquidation, the primary judge explained her Honour's reasons for not granting the approval as follows: 35 First I accept the submission advanced on behalf of the [respondents] that the Deed cannot have the legal effect of releasing and discharging Mr Zreika from his obligation to comply with Order 8, without also having the order set aside: Deputy Commissioner of Taxation v Leaver [2016] FCA 1028 at [7]-[11]. Unless and until set aside, there is a subsisting order that is binding on Mr Zreika, requiring him to pay $800,000 to Saracen. The Court's power to set aside an order is contained in r 39.05 of the Rules but, in the present case, it would require the [respondents'] consent… 36 The only relevant provision is r 39.05(f). It is undoubted that Order 8 was made in favour of the [respondents] in order to give them an effective remedy under s 121 of the Bankruptcy Act 1966 (Cth) and s 37A of the Conveyancing Act 1919 (NSW) in respect of the disposition of the Voyager Point property by Saracen to Mr Zreika which the Court declared void under those provisions. It is a material and substantial consideration in determining whether to grant approval of the Deed that the [respondents], in whose favour the order was made, are not parties to that deed and do not give their consent to the order being set aside to give effect to the debt compromise. As Order 8 is not capable of compromise in the absence of the [respondents'] consent for it to be set aside under r 39.05(f), the Deed, in consequence, cannot operate to effect a compromise of the amount that Mr Zreika must pay Saracen pursuant to Order 8 or release and discharge Mr Zreika in respect of the enforcement of Order 8. Similarly Order 9 of proceeding NSD 771 of 2014 against Mr Nazloomian is not capable of compromise in the absence of the [respondents'] consent for it to be set aside under r 39.05(f). As the Deed cannot achieve its purpose, court approval of the debt compromise that the liquidator reached with Mr Zreika and Mr Nazloomian should not be given under s 477(2A) of the Corporations Act. 37 I also reject the submission for Mr Zreika that the effect of the Deed, if approved by the Court, is that it will be an accord and satisfaction of the debt created by Order 8 as against the [respondents]. That cannot be so, as the [respondents], in whose favour the order was obtained, are not a party to that Deed, and have not contracted to release Mr Zreika from his obligation to pay Saracen the amount of $800,000. 38 Secondly, whilst for the purposes of this application I am prepared to accept that Mr Zreika does not own any real property in his own name, there is evidence that he is the sole shareholder of two companies that do own real estate, namely a company called 37 York Road Pty Ltd and a company called Clutch 1 Pty Ltd. ASIC searches were tendered on behalf of the Applicants evidencing Mr Zreika's shareholding in both those companies and an "owner enquiry" of real property owned by 37 York Road Pty Ltd in New South Wales was tendered which showed that the company has an interest in a series of lots in strata plan 87058. It is uncontroversial that Clutch 1 Pty Ltd now owns the Taren Point property, being one of the properties the subject of the orders made in NSD 1731 of 2013 and, specifically the fact that Clutch 1 Pty Ltd now owns the Taren Point property is the reason for Order 11 which is the subject of Mr Zreika's stay application. It appears from the liquidator's affidavit that he was not aware of these matters when he made the decision to compromise the $800,000 payment order for an amount of $70,000. These are matters that warrant further investigation by the liquidator in the interests of the creditors. 39 Further, I accept the submission for the [respondents] that the liquidator's apprehension that Mr Zreika would seek to frustrate the recovery and enforcement of the liability was not a proper reason for entering into a compromise with him. 40 In all the circumstances, good reason has been shown as to why the Court should not grant its approval under s 477(2A) of the Corporations Act.

Submissions on appeal 338 Mr Zreika submitted that the primary judge erred in finding that: (i) it was necessary to set aside Order 8; (ii) Order 8 was not capable of compromise in the absence of the respondents' consent for it to be set aside under r 39.05(f); and (iii) the Deed, in consequence, cannot operate to effect a compromise of the amount that Mr Zreika must pay Saracen pursuant to Order 8 or release and discharge Mr Zreika in respect of the enforcement of Order 8. Mr Nazloomian made submissions to similar effect about Order 9. 339 Mr Zreika and Mr Nazloomian also submitted that the authority relied upon by the primary judge for so concluding (Deputy Commissioner of Taxation v Leaver [2016] FCA 1028 (Leaver) at [7]-[11]) does not stand for the proposition that an agreement to compromise a judgment debt requires the original order to be set aside 340 It was further contended by Mr Zreika and Mr Nazloomian that the primary judge erred when her Honour found that "it is undoubted" that Orders 8 and 9 were made in favour of the respondents in order to give them an effective remedy under s 121 of the Bankruptcy Act and s 37A of the Conveyancing Act in respect of the disposition of the Voyager Point property by Saracen to Mr Zreika because (i) the Bankruptcy Act was irrelevant and, in any event, (ii) the order was made to give Saracen an effective remedy, not the respondents. 341 Mr Zreika, however, quite appropriately, conceded that Order 8 could properly be characterised as an order made for the indirect benefit of the respondents. He also, again appropriately, agreed that in the event that this court upheld his submission that the primary judge erred in holding that an agreement to compromise a judgment debt requires the original order to be set aside, then this Court should proceed to re-exercise the discretion whether to approve the deed or not. See House v The King at 505 per Dixon, Evatt and McTiernan JJ: If the judge acts upon a wrong principal [when exercising a judicial discretion], if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. 342 The respondents submitted that the primary judge's reasoning on what had been their "primary contention" below was correct, but that even if it was not, the primary judge had ample evidence and grounds upon which to refuse to approve the compromise, namely: (1) There was a plain deficiency by the liquidator of Saracen investigating the assets of Mr Zreika; (2) The fact of the matter was that Mr Zreika controlled two companies of which he was the sole shareholder that owned very valuable parcels of real estate, which had simply not been considered by the liquidator; (3) The liquidator's assertion that one of the reasons he agreed to the compromise of the debt was (as senior counsel put it) "because I'm concerned that Mr Zreika is the sort of person who might seek to avoid the payments of his debts" was not a proper basis so to agree to the compromise because "people should not be rewarded by compromises because they were people of the sort who went out of their way to try to avoid the payment of their debts". 343 Mr Zreika and Mr Nazloomian did not address the submission by the respondents that even if the primary judge was wrong in relation to their primary contention below, there were ample discretionary reasons supporting her refusal to approve the Deed in any event.

Analysis 344 The notices of appeal did not allude to the question of whether the primary judge's order refusing approval of the Deed was an interlocutory order. 345 Accordingly, after the hearing of the appeal, the parties were asked to make submissions on the point. 346 No party advanced a reason why an order refusing approval of a deed under s 477(2A) of the Corporations Act is not an interlocutory order. It obviously is, because it is discretionary and it does not finally determine the rights of the parties, because the liquidator is not precluded from making another application (cf Carr v Finance Corporation of Australia [1981] HCA 20; (1981) 147 CLR 246). 347 Leave to appeal against the primary judge's order that the liquidator's application for approval be dismissed is therefore required. It follows that it is necessary for Mr Zreika and Mr Nazloomian to show that the decision of the primary judge was attended with sufficient doubt to warrant it being reconsidered and that substantial injustice would result if leave were refused: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; (1991) 33 FCR 397. 348 The power vested in courts pursuant to s 477(2A) of the Corporations Act to decide whether or not to approve a compromise is a discretionary one. As Gleeson CJ and Gaudron and Hayne JJ explained in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [19]: 'discretion' a notion that signifies a number of different legal concepts. In general terms, it refers to a decision-making process in which no one consideration and no combination of considerations is necessarily determinative of the result. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-make is required to make a particular decision if he or she forms a particular opinion or value judgement. (Citations and internal quotations omitted). 349 The discretion conferred by s 477(2A) is at large. The "approval of the Court" is not conditioned upon a court forming a particular opinion or a particular value judgment. The relevant considerations which a court may take into account are "confined only by the subject matter and object" of the provision. As Barrett J (as his Honour then was) said in Re HIH Insurance Ltd [2004] NSWSC 5 at [15], s 477(2A) is concerned to ensure that the court exercises some oversight of the liquidator's actions and, in effect, confers or completes the necessary power only where it sees that a case for the exercise of the power in the particular circumstances has been shown. The courts' assessment must be made in light of the purposes for which liquidators' powers exist. One overriding purpose is to serve the interests of those concerns in the winding up - here to creditors … The other is to do whatever needs to be done for the proper realisation of the assets of the company or to assist its winding up … (Citations and internal quotations omitted). 350 The commercial judgment of a liquidator that a compromise of a debt is appropriate is to be afforded appropriate regard, and it is often said that the court will generally give its approval. But it will not do so if lack of good faith can be demonstrated, or if the liquidator has erred in law, or as a matter of principle, or if there are any other real or substantial grounds for doubting the reasonableness of the liquidator's commercial judgment. See In the matter of One.Tel Limited [2014] NSWSC 457; (2014) 32 ACLC 14-017 at [28]; In the Matter of 246 Arabella Investments Pty Ltd (In Liq) [2012] NSWSC 1212; Re Spedley Securities Ltd (1992) 9 ACSR 83; Re Mineral Securities (Australia) Ltd [1973] 2 NSWLR 207 at 231-2. 351 We are not persuaded that the primary judge's conclusion that it was necessary for the Royals to consent to the setting aside of Order 8 in order to effect the compromise of the obligation to pay the $800,000 contemplated by the Deed was attended with sufficient doubt to warrant the granting of leave to appeal. 352 It is true, as Mr Zreika submitted, that the decision in Leaver does not stand for the proposition that an agreement to compromise a judgment debt requires the original order to be set aside. The case has no bearing on the question. It was a case in which the issue for the judge to decide was whether the parties, by the fact of their agreement that a judgment should be set aside, were without more entitled to an order to that effect. It was held that although in many cases consent may be sufficient, the court retains a discretion not to set the judgment aside: Leaver at [10]-[11]. That is, we would have thought, an unremarkable proposition, but it has nothing to do with this case. 353 We also agree, if it matters, that s 121 of the Bankruptcy Act had no bearing on the matter (something that the respondents accepted). 354 Liquidators routinely compromise debts for good reasons. Inchoate debts are often the subject of genuine dispute. Judgment debts can be appealed, and the prospects of the success of such an appeal may be reasonable. In those, and myriad other routine circumstances, courts readily enough approve compromises of such debts, where it is in the interests of creditors to do so, in accordance with the principles referred to above. In circumstances where a judgment debt is involved, compromises are routinely entered into, subject to creditor or court approval where the debt exceeds $100,000, without the need to ask the court from which the judgment debt originated to expunge it from the record. That is because there is no need to do so. If the creditor ever sought to enforce the order, the debtor would only need to produce the agreement to which they were a party to prove that the order was no longer capable of being enforced, or could only be enforced in accordance with the terms of the agreement. There may be circumstances where a debtor has a commercial interest in wishing to have the existence of a judgment debt removed from the public record. Leaver may have been such a case. There the Deputy Commissioner had obtained judgment against Mr Leaver for over $25 million. Having paid a settlement sum, the compromise recorded that the Deputy Commissioner "agreed not to oppose Mr Leaver's application to have the judgment against him set aside": Leaver at [4]. But, as we have said, that has no relevance here. (Compare the position in the United States, where in some jurisdictions a creditor must file with the court a "satisfaction piece" when they receive satisfaction or partial satisfaction of a judgment. See, for example, in New York, NY Civil Practice Law & Rules s 5020 (2015)). 355 But in this case, neither the Royals nor Mr Jones were parties to the compromise agreement. The Deed did not even contemplate telling them about it. In such circumstances, given that the Royals were the indirect, but real, beneficiaries of Order 8 (an issue to which we return below), we are of the view that the primary judge did not err by taking into account the fact that the consent of the Royals had not been sought. 356 If we may say so, with respect, her Honour was not greatly assisted on the question whether it was necessary for the Royals to consent to the terms of the Deed by lengthy written and oral submissions from all parties, which were largely not to the point. 357 The critical question, which those submissions tended to obscure, was whether approval of the compromise contemplated by the Deed was in the best interests of the creditors. It is that central question to which the submissions of the parties ought to have been directed. 358 It is, of course, true that the Royals are not strictly speaking "creditors" of Saracen. But as Mr Zreika accepted, the Royals are the parties who stand to benefit from Order 8. They are the parties, after all, who brought the proceedings seeking a remedy to redress Mr Nathan El Ali's (unsuccessful) efforts to keep his assets out of their reach in the first place. Their interest is self-evidently of critical importance and was something that the liquidator was bound to, but did not, take into account in assessing the reasonableness of a compromise that contemplated reducing the sum in which the Royals were ultimately to share from $800,000 to $70,000. 359 In approaching the question of whether to approve the Deed or not, as we have explained, the Court's assessment must have as one overriding purpose whether it serves the interests of creditors, which, in a case such as this, must also be taken to extend to parties, like the Royals, who are the effective and only beneficiaries of the debt owed by Mr Zreika to Saracen. It would be a nonsense to suggest otherwise. 360 In circumstances where the liquidator sought to enter into a deed of compromise without reference to the Royals (or to Mr Jones), where he was mistaken about Mr Zreika's real estate interests and therefore his capacity to pay the $800,000, and where he invoked as a virtue, rather than as a vice, that Mr Zreika was the sort of person who would arrange his affairs to ensure that he could avoid paying his debts and that, it must be assumed, he would avoid paying this one, and there being no other good reason suggested for the compromise, the case for refusing approval of the compromise of the debt contemplated by the Deed was, in our view, irresistible. 361 For those reasons the decision of the primary judge to refuse the liquidator's application to approve the Deed is not attended with sufficient doubt to warrant it being reconsidered. Leave to appeal will therefore be refused.

CONCLUSIONS 362 For the reasons we have given, the appeals in NSD 1794 of 2016 (Mr Stojanovski), NSD 1793 of 2016 (Mr Nazloomian), NSD 29 of 2017 (Mr Mahmoud El Ali), NSD 1798 of 2016 and NSD 1799 of 2016 (Mr Nathan El Ali) should be dismissed and the appellant in each appeal should pay the respondents' costs in that appeal. Unless there are any other orders sought by the respondents in those appeals, those are the orders which should be made. 363 The appeal in NSD 1801 of 2016 (Mr Zreika) has been partially successful. As we have said, the order in paragraph 8 of the orders made by the primary judge on 23 September 2016 should be set aside and in lieu thereof, there should be an order as follows: The property and assets of the third respondent be charged to secure the payment of an amount of $200,000 to the official liquidator of Saracen. 364 The appellant's partial success in that appeal raises the question of the costs of that appeal and it may be necessary for the Court to entertain further short submissions on the costs of the appeal. 365 We consider the appropriate course to be as follows. The respondents in each appeal should file and serve draft minutes of order within fourteen days. As we have said, unless there is a matter of which we are presently unaware, the appropriate orders in all of the appeals, other than NSD 1801 of 2016, are as we have indicated. 366 Mr Zreika should then indicate within seven days whether he agrees to the orders proposed by the respondents in his appeal. If he does not, then the Court will put in place a regime for the determination of the disputed matters. 367 Since preparing these reasons, the Court has been advised that Mr Nazloomian was made bankrupt on 6 May 2019. His counsel brought this to the attention of the Court and he referred to s 60(2) of the Bankruptcy Act. We asked the parties for submissions on whether this circumstance affected the Court's ability to deliver reasons in all appeals, including the appeal involving Mr Nazloomian. The Official Trustee asked for a period of four weeks so that it could make an informed decision. None of the existing parties suggested that Mr Nazloomian's bankruptcy affected the Court's ability to deliver reasons. We do not think that it does. Indeed, it may well be that it does not affect our ability to make orders in his appeal (see Beneficial Insurance Co Ltd v Hamilton (1985) 73 FLR 347 (Holland J); John v Neiman Holdings Pty Ltd (1986) 84 FLR 84 (Young J); Griffiths v Civil Aviation Authority [1996] FCA 397 (Spender, Einfeld and Cooper JJ); Armour v Mason [2002] NSWSC 464 (Austin J); and Shannon v Commonwealth Bank of Australia [2013] NSWSC 596 (Campbell J)). In any event, as the Court is only delivering reasons at this stage, the matter can be debated if need be after the respondents formulate the orders they seek and before orders are made. I certify that the preceding three hundred and sixty-seven (367) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Besanko, Farrell and O'Callaghan.

SCHEDULE OF PARTIES NSD 1793 of 2016 Respondents Fourth Respondent: MAHMOUD ZREIKA Fifth Respondent PETER ROYAL Sixth Respondent JUDITH ROYAL

NSD 1794 of 2016 Respondents Fourth Respondent: OTTOMAN INVESTMENTS PTY LIMITED (IN LIQUIDATION)

NSD 1801 of 2016 Respondents Fourth Respondent: OTTOMAN INVESTMENTS PTY LIMITED (IN LIQUIDATION) Fifth Respondent SARACEN HOLDINGS PROPRIETARY LIMITED IN LIQUIDATION (ACN 126 493 552)