On Sky Enterprise (HK) Ltd v Lanco International Holdings Ltd; On Sky Enterprise (HK) Ltd v Leung

1. [1]

   These proceedings arise out of two commercial loan transactions which took place in Hong Kong, one in 2008 and the other in 2009. The plaintiff, which was the lender, obtained judgment against the borrower and its sureties in proceedings in Hong Kong in 2016. Partial recovery was obtained from the sale of properties in Hong Kong belonging to the sureties, but the amount outstanding is still more than $20 million. In the present proceedings, the lender seeks to enforce the judgment against assets which formerly belonged to some of the sureties in Australia.

2. [2]

   It has been necessary in the judgment to refer to sums of money in various different currencies. The “$” symbol is used to refer to Australian Dollars. Other currencies referred to in the judgment are United States Dollars (USD), Canadian Dollars (CAD) and Hong Kong Dollars (HKD).

3. [3]

   There are two sets of proceedings before the Court, which have been heard together. In what follows, I refer to proceedings 2019/182525 and 2020/276708 as the “2019 proceedings” and “2020 proceedings”, respectively.

4. [4]

   The plaintiff in both proceedings, On Sky Enterprise (HK) Limited (“OSE”), is a company incorporated in Hong Kong. Its sole director is Mr Alan Pang Chi Chu. Mr Chu was born in Hong Kong in 1938 but now lives in Canada. His nephew, Mr George Chu, is a barrister in Hong Kong, who helps him with business matters there.

5. [5]

   The active defendants in the proceedings are members of a Hong Kong-Australian family and a company controlled by them. The family surname is Shiu. For convenience and without disrespect I will refer to the members of the family by their given names.

6. [6]

   The family patriarch was Shiu Yuk Tong (“Yuk Tong”). He trained and worked until his fifties as a doctor. Later in life, he became involved in property investment in both Hong Kong and in Australia. Yuk Tong married Leung Woon Fong, known in English as Rachel Leung and after her marriage as Rachel Shiu, (“Rachel”), in 1973. She was working as a nurse and continued to do so thereafter, first in Hong Kong and later in Australia.

7. [7]

   Yuk Tong and Rachel established a family home in Hong Kong in the 1970s. In the early 1990s, they established a second family home in Sydney. From time to time thereafter they and their children would live principally at one or other of these homes, but regularly visit the other, sometimes for months at a time.

8. [8]

   Together Yuk Tong and Rachel had three children. The eldest was a daughter, Shiu Joe Yin (“Joe Yin”). They then had two sons, Shiu Joe Keung (“Joe Keung”) and Shiu Joe Wing (“Joe Wing”). Joe Keung died in a car accident in May 1997, before the loan transactions which gave rise to these proceedings. Both Joe Yin and Joe Wing are unmarried and are still living at home.

9. [9]

   The Shiu family company which is an active defendant in the proceedings is named Golden Horse Australia Pty Limited. It is the second Shiu family company to bear the Golden Horse name; the earlier one was deregistered in 2008. For this reason, I will refer to the current Golden Horse company as “GH2”.

10. [10]

    GH2 acts as trustee for a discretionary family trust. When it was incorporated in 2010 Rachel was its sole shareholder. In 2019 she transferred her ownership of the company to Joe Yin. Rachel and Joe Yin are the directors.

11. [11]

    The story of the commercial loan litigation which gave rise to these proceedings begins in 2006. At that time, Yuk Tong was living in Hong Kong and working as a businessman and property investor. As well as the homes in Hong Kong and Sydney, the family owned investment properties in both cities. Rachel was living and working in Sydney. Joe Yin was living with Rachel in Sydney and Joe Wing was living with Yuk Tong in Hong Kong.

12. [12]

    In 2006 Yuk Tong decided to invest in a Chinese development venture being conducted through a Hong Kong company named Lanco International Holdings Limited (“Lanco”). The majority shareholder was Chan Loong Fai, known in English as John Chan. Mr Chan was also a director of the company. Yuk Tong and Joe Wing became co-shareholders and co-directors of the company. The remaining shareholder was Ng Chi Wo, known in English as Jacky Ng. He too was a director of the company.

13. [13]

    In 2008-2009 Lanco borrowed USD 4.8 million and CAD 2 million from OSE to fund the Chinese venture. Both Yuk Tong and Joe Wing were required to be sureties for the loans. So too were Lanco’s other directors and shareholders, Mr Chan and Mr Ng.

14. [14]

    Lanco defaulted in April 2009 and OSE commenced proceedings in Hong Kong against Lanco and the sureties in 2010. Yuk Tong and Joe Wing defended the claims made against them by OSE in the proceedings, but were unsuccessful. In 2016 OSE obtained judgment against them for outstanding principal and interest, together with costs. Ultimately the judgment debts totalled CAD 24.9 million and HKD 17.5 million, plus interest.

15. [15]

    Under the 2016 judgment, OSE also obtained orders for enforcement of third party mortgages given by Yuk Tong and two Shiu family companies in Hong Kong, Busbridge Company Limited (“Busbridge”) and Hale Lion Limited (“Hale Lion”). The mortgages covered the Shius’ Hong Kong family home and two investment properties there. All three properties were sold, and the proceeds applied towards the Hong Kong judgment debts, in 2017.

16. [16]

    At the time Lanco defaulted on the OSE loans in 2009, the family owned three properties in Sydney. There was a property at Hercules Street, Chatswood, which was used as the family’s Sydney home (and in which Rachel and Joe Yin were living). The Chatswood property was registered in the name of Rachel but was encumbered with a mortgage which secured debts owed to a lender.

17. [17]

    The second and third properties were commercial ones held as investments. One was at Harris Street Ultimo. This property was registered in the name of Joe Wing. It was unencumbered. The other was on the Pacific Highway at Lindfield. This property was registered in the name of Yuk Tong. It had originally been acquired with mortgage finance but by 2009 the loan had been refinanced on the Chatswood property.

18. [18]

    In late 2009, Yuk Tong transferred the Lindfield property to Rachel. There was no monetary consideration paid by Rachel, but the transfer took place pursuant to a formal agreement (styled “Financial Agreement”) between her and Yuk Tong which purported to be a binding financial agreement for the purposes of the Family Law Act 1975 (“FLA”).

19. [19]

    The Agreement was expressed to be consequent upon Rachel’s separation from Yuk Tong and in anticipation of their divorce. Eventually, they did divorce, although this did not happen until 2017. In these proceedings it is contended on behalf of OSE that the purported separation and divorce were not genuine.

20. [20]

    Two years after the transfer of the Lindfield property, the Ultimo property was sold. The sale was effected by Rachel as attorney for Joe Wing, the registered proprietor. The net proceeds ($2.4 million) were appropriated by Rachel to herself; most of them were, soon afterwards, paid over to GH2.

21. [21]

    Substantial sums were then used by Rachel and GH2 on property transactions for the benefit of members of the family. The mortgage on the Chatswood property was discharged, to the benefit of Rachel as registered proprietor. Four residential units were acquired, apparently as investments, at Kirribilli, Hunters Hill, Willoughby and Lane Cove. Joe Yin is the registered proprietor of the Kirribilli unit. Rachel is the registered proprietor of the Hunters Hill unit. GH2 is the registered proprietor of the Willoughby and Lane Cove units.

22. [22]

    In 2015, Yuk Tong returned to Sydney where he lived for the rest of his life, apart from a final visit to Hong Kong for several months in 2017. Joe Wing likewise returned to Sydney in 2017 following OSE’s attachment of the family’s Hong Kong home. As already noted, in 2017, Yuk Tong and Rachel divorced. They both continued, however, to live (putting aside Yuk Tong’s visit to Hong Kong) in the Sydney family home at Chatswood.

23. [23]

    In March 2019, Yuk Tong died. He appears to have been intestate. On the face of it, his estate contains little of value. No application has been made for letters of administration. It is common ground that pursuant to Probate and Administration Act 1898, s 61, his assets and liabilities vested, and remain vested, in the New South Wales Trustee and Guardian (“NSW Trustee”).

Procedural history

1. [24]

   The 2019 proceedings were commenced by summons on 12 June of that year, in the Common Law Division of this Court. OSE sought registration of the Hong Kong judgments as judgments of this Court for enforcement purposes. The application was made under s 6(2) of the Foreign Judgments Act 1991.

2. [25]

   The summons named seven parties as defendants: Lanco (first defendant); Yuk Tong (third defendant); Joe Wing (fourth defendant); Mr Chan and Ms Ng (second and fifth defendants); and Busbridge and Hale Lion (sixth and seventh defendants). It seems no steps were taken to serve Lanco or the other Hong Kong domiciled parties. They have not participated in the proceedings.

3. [26]

   As already noted, Yuk Tong had died about three months before the proceedings were commenced. The NSW Trustee was not substituted for him and has not participated either. It seems that the only defendant who was served was Joe Wing.

4. [27]

   Joe Wing did not appear to contest OSE’s application. On 21 June, OSE obtained orders registering a judgment in its favour for $33.4 million.

5. [28]

   Little if any further action appears to have been taken by OSE for more than a year. Then, in September 2020, OSE successfully applied to amend the registered judgment, which had been recorded (apparently incorrectly) in Australian Dollars. The registration order was varied, with effect from June 2019, so as to register judgments for CAD 20.6 million and HKD 12.5 million. Again, Joe Wing, who had still not entered an appearance in the proceedings, did not contest these orders.

6. [29]

   In the same month, OSE commenced the 2020 proceedings. The proceedings were commenced in this Division of the Court by statement of claim naming Rachel as the defendant. OSE’s principal claim was that the transfer of the Lindfield property to Rachel had been intended to defraud Yuk Tong’s creditors, and was thus void (Conveyancing Act 1919 (“CA”), s 37A).

7. [30]

   Also in September 2020, a further application by way of notice of motion was filed for OSE in the 2019 proceedings. The motion sought to add claims to the proceedings for enforcement of the judgment, as registered, against the Chatswood property and the other four properties which had been acquired following the sale of the Ultimo property in 2011. Among other things the motion sought to join Rachel, Joe Yin and GH2, the registered proprietors of the properties, as the eighth, ninth and tenth defendants in the proceedings.

8. [31]

   The motion did not immediately proceed to hearing. OSE’s legal advisors did, however, press on with other enforcement action in the 2019 proceedings against Joe Wing. An appearance was eventually entered for him in December 2020. In March 2021, OSE obtained an examination order against him and subpoenas for the production of documents by various banks and financial services firms. Originally the examination was scheduled for April, but it was later adjourned to the end of July.

9. [32]

   On 11 June, OSE obtained an ex parte garnishee order against Rachel in the 2019 proceedings in the sum of $276,000. The order was obtained on the basis of an allegation that Rachel was indebted to Joe Wing in that sum. The alleged debt represented monies used in 2012 to discharge the mortgage over the Chatswood property, which monies had allegedly been derived from the proceeds of the sale of the Ultimo property.

10. [33]

    Rachel objected to the order. An affidavit was filed from her in support of her objection (at that point she was not yet a defendant in the proceedings). She denied that she was indebted to Joe Wing as alleged. The order remained on the file but it seems that its enforcement was effectively put on hold until the dispute about Rachel’s liability was resolved.

11. [34]

    OSE also continued to pursue the 2020 proceedings. By an amended pleading filed in April 2021, two further defendants were joined to the proceedings: the NSW Trustee, as representative of Yuk Tong’s estate, and a company named Jinkyu Choi Pty Limited. That company holds a lease over part of the Lindfield property.

12. [35]

    In June 2021, a cross-claim was filed for Rachel in the 2020 proceedings. The cross-claim sought a ‘negative declaration’ to the effect that Rachel acquired the Lindfield property without notice of any intent Yuk Tong may have had to defraud creditors. Relief was also sought under the FLA concerning the Financial Agreement between Rachel and Yuk Tong. A declaration was sought that the Agreement was valid and binding, or, alternatively, orders were sought, in the exercise of FLA jurisdiction, to preserve or adjust the rights given to Rachel under the Agreement.

13. [36]

    Then, on 27 July, three days before Joe Wing’s examination was due to occur in the 2019 proceedings, he filed for bankruptcy. Christopher John Palmer and Liam Thomas Bailey (“the Bankruptcy Trustees”) were appointed to his estate. The result was to stay any further enforcement proceedings against Joe Wing. The stay also seems to have had the practical effect of putting OSE’s amendment application, and the garnishee notice proceedings against Rachel, on hold.

14. [37]

    The stay in the 2019 proceedings did not, of course, affect the progress of the 2020 proceedings. As between OSE and Rachel, a timetable for the usual interlocutory steps was set and affidavits were filed from Rachel, Joe Wing and Joe Yin in August 2021. Eventually the trial was fixed for hearing before Slattery J in October 2022. Neither the NSW Trustee nor Jinkyu Choi took any active steps in the proceedings.

15. [38]

    Following the appointment of the Bankruptcy Trustees in July 2021, the 2019 proceedings remained stayed for nine months. Then, in late April 2022, OSE obtained leave from the Federal Circuit and Family Court of Australia (Judge Manousaridis) pursuant to s 58(3) of the Bankruptcy Act 1966 to continue the 2019 proceedings against Joe Wing and his property. Undertakings were given restricting the enforcement of any orders against Joe Wing’s bankrupt estate without leave from the Court.

16. [39]

    The lifting of the stay allowed the 2019 proceedings to continue, but the Bankruptcy Trustees took no active role in them. Nor was any application made to join the NSW Trustee as the repository of Yuk Tong’s estate. The proceedings effectively became a contest between OSE, on the one hand, and the three prospective additional defendants, Rachel, Joe Yin and GH2 (to whom I will refer as the “Shiu Parties”), on the other.

17. [40]

    OSE’s amendment application in the 2019 proceedings eventually came before Garling J for hearing in October 2022, seven days before the trial in the 2020 proceedings was to begin before Slattery J. Garling J made orders, as sought, which joined Rachel, Joe Yin and GH2 as the eighth, ninth and tenth defendants, and provided for the claims against them to continue by way of pleadings. His Honour also considered that the proceedings should be transferred to this Division to enable them to be heard together with the 2020 proceedings.

18. [41]

    Following the transfer order made by Garling J, Slattery J agreed that the 2019 and 2020 proceedings should be heard together in this Division. He made orders accordingly. But there was no time to prepare the 2019 proceedings for trial and the hearing date was therefore vacated.

19. [42]

    The two proceedings were eventually moved to the Expedition List and a hearing date allocated in October 2023. The evidence occupied four days, and a fifth day was fixed for closing submissions. Written submissions were prepared by counsel for the parties. But the oral delivery of closing submissions did not proceed.

20. [43]

    An issue had arisen during the hearing about whether OSE had standing to pursue accounting and tracing claims against Rachel, GH2 and Joe Yin for the proceeds of the sale of the Ultimo property. It was suggested that any such claims belonged to Joe Wing as owner of the Ultimo property. In that event, entitlement to pursue them would, or at least might, have passed to the Bankruptcy Trustees.

21. [44]

    While not necessarily acknowledging that a formal assignment from the Trustees was necessary, counsel for OSE mentioned at various points during the first four days of the hearing that one might be obtained. This had not occurred when the evidence closed at the end of the fourth day and the hearing was adjourned for a week to allow the parties to present closing submissions.

22. [45]

    On the resumed hearing (the fifth day) counsel for OSE indicated that an assignment was expected but had not been obtained. Counsel sought an adjournment of the hearing. Initially the adjournment was opposed but eventually counsel for the Shiu Parties consented.

23. [46]

    In the end, the adjournment lasted for 12 months. A deed of assignment from the Bankruptcy Trustees to OSE (“Assignment Deed”) was executed. Formal notice of the assignment was given to the Shiu Parties and supplementary evidence was prepared and served. The hearing resumed in October last year. Some further affidavits were read and some further documents tendered, but there was no further cross-examination. Supplementary written submissions were prepared, and counsel then presented their closing submissions, which occupied four days.

Claims for determination

1. [47]

   The claims by OSE in the two proceedings arise out of three appropriations of property within the Shiu family, by which assets belonging to Yuk Tong and Joe Wing were transferred to Rachel and GH2. OSE contends that each of these transactions was an attempt to place the relevant asset beyond the reach of creditors generally, and OSE in particular. The claims can be summarised as follows.

2. [48]

   The first transaction which is challenged is the transfer of the Lindfield property from Yuk Tong to Rachel in 2009. This is the subject of the 2020 proceedings. As already noted, the principal allegation is that the transaction is void under CA s 37A(1).

3. [49]

   So far as relief is concerned, OSE claims that, upon avoidance of the transfer, it became entitled, under the terms of Yuk Tong’s guarantee of Lanco’s liabilities, to security over the Lindfield property. Alternatively, orders are sought charging the property with the debt owed and providing for its sale. An account is also claimed for the income received by the property since the proceedings began.

4. [50]

   There is also a further claim for an account on a wider basis, going back to 2009. That claim is made in the 2019 proceedings.

5. [51]

   Rachel denies that OSE has established any entitlement to the relief claimed against her. In addition, she advances various affirmative defences. One of these defences is that the Lindfield property was subject to a pre-existing resulting trust in her favour. This is reflected in her cross-claim in the 2020 proceedings (see [35] above). The parties agreed that the other relief sought in that cross-claim, which concerns the Financial Agreement and depends upon FLA jurisdiction, is to be held over for later determination if it arises.

6. [52]

   The second challenged transaction is the appropriation by Rachel of the proceeds of sale of the Ultimo property. OSE contends that this was both a breach of fiduciary duty on Rachel’s part and an alienation of property which is void under s 37A(1). OSE seeks to have Rachel account for the monies appropriated by her. And within the account, OSE seeks to trace the sum appropriated by Rachel by following it into the hands of GH2 and Joe Yin. These claims all form part of the subject matter of the 2019 proceedings, pursuant to the amendments made in 2022 (see [40] above).

7. [53]

   As already noted, it is alleged on behalf of OSE that Joe Yin’s Kirribilli property and, at least in part, the other investment properties purchased in 2012 and 2021 derive from the traceable proceeds of the Ultimo monies initially appropriated by Rachel. As will be seen, the allegations concerning tracing into the Kirribilli property were fully debated before me. But counsel for OSE eventually accepted that a final decision on the tracing issues concerning the other properties should be dealt with in subsequent accounting proceedings.

8. [54]

   To the extent that the account results in recovery of any of the Shiu family properties, OSE again claims, as creditor of Joe Wing, to be entitled to security over those properties. Otherwise, it seeks to have a constructive trust in its favour declared over them. OSE also contends that Rachel’s personal liability to re-pay the amounts appropriated by her supports the garnishee order issued in 2019 (see [32] above), and the enforcement of that order should proceed.

9. [55]

   Again, the Shiu Parties deny that OSE has established an entitlement to any of the relief claimed. Again, they also advance various affirmative defences. One of those defences involves an assertion that the Ultimo property, and thus its proceeds, was subject to a pre-existing constructive trust in Rachel’s favour, and this was a major factual issue at trial.

10. [56]

    The third disposition of property is relatively minor. It involved payments from a bank account in the name of Yuk Tong to GH2 totalling $65,000. The payments took place in June and July 2012. Again, the allegation is that the payments were alienations of property which fell afoul of CA s37A(1). OSE seeks to have GH2 account for these monies. The claim is advanced in the 2019 proceedings, but any account would overlap with the account against Rachel and GH2 arising out of the appropriation of the proceeds of the Ultimo property and would need to be dealt with at the same time. The claim is disputed by GH2.

Summary and analysis of evidence

1. [57]

   Both Yuk Tong and Rachel were born and brought up in Hong Kong. Yuk Tong was born in October 1928. Rachel was twenty years younger, being born in December 1948. They met in 1972 in London where Yuk Tong was working as a doctor and Rachel as a registered nurse.

2. [58]

   Yuk Tong (then aged 44) and Rachel (then aged 24) married on 1 January 1973 in London. Later that year they moved to Dublin for work. Joe Yin was born in Dublin in August 1973 and Joe Kueng was born there in February 1975.

3. [59]

   In 1975 or 1976 the family moved to Australia. Rachel took up permanent residency, but Yuk Tong did not. Joe Wing was born in Katoomba in June 1976.

4. [60]

   Later in 1976 the family moved again, this time to Hong Kong. In December 1976 Yuk Tong and Rachel purchased an apartment in MacDonnell Road, in the Mid-levels area, which they used as their family home. The property was acquired by them as joint tenants. Yuk Tong arranged the loan finance and seems to have been responsible for the repayments.

5. [61]

   By 1977, Yuk Tong was working as a doctor for an aviation engineering company. Rachel was occupied full-time as a housewife. This lasted until 1984 when Yuk Tong (who was then 55) suffered a heart attack and retired from work (or at least from full-time work). Rachel went back to work as a registered nurse, part time, at the Red Cross blood transfusion service in Hong Kong.

6. [62]

   In early 1988, Joe Yin (then aged 14) was sent to boarding school in Sydney. She was placed with a guardian who lived at Lawson in the Blue Mountains. Late in 1989, Yuk Tong moved to Sydney to look after her. He worked part-time as a locum, living at Harris Street in Pyrmont, in inner Sydney. Rachel remained in Hong Kong, living at MacDonnell Road, looking after Joe Keung and Joe Wing, and working with the Red Cross.

7. [63]

   The property at Hercules Street, Chatswood, was purchased in July 1990 for $280,000. The purchase was effected in Rachel’s name, subject to a mortgage in favour of Advance Bank Australia. As I explain in more detail later in the judgment, the purchase was apparently financed with a loan from the Bank to Yuk Tong, with the mortgage being a third-party security provided by Rachel as guarantor. The evidence does not reveal how much was borrowed by Yuk Tong or how the remaining purchase costs were paid.

8. [64]

   The Chatswood property was bought with the intention of constructing a new house on it for the family. The construction work took until 1994 and in the meantime Yuk Tong and Joe Yin continued to use the Pyrmont property as their Sydney home.

9. [65]

   Early in 1991, Joe Keung (then aged 15) and Joe Wing (then aged 14) also moved to Sydney to attend school, where they lived at Pyrmont with Yuk Tong and Joe Yin. Rachel continued to work for the Red Cross in Hong Kong, making occasional visits to Sydney, where she would stay at Pyrmont with the other members of the family. These visits were generally a few times a year for periods of a few weeks at a time.

10. [66]

    In about July 1992, during her final year of school, Joe Yin was diagnosed with brain cancer. She underwent surgery, which was successful in dealing with the cancer, but she had a long period of convalescence. She never completed her schooling.

11. [67]

    In late 1993, Yuk Tong arranged to buy the Ultimo property as an investment. It was a mixed residential and commercial property, with a shop on the ground floor and living quarters above. It was somewhat run-down.

12. [68]

    The vehicle for the purchase was the first Golden Horse company (“GH1”). The company was incorporated on the instructions of Yuk Tong in November 1993. According to Rachel, Yuk Tong had been born in the Year of the Horse under the Chinese zodiac, and chose the name because he thought it would be an auspicious one.

13. [69]

    GH1’s issued share capital was 100 $1 shares. Each of the children received 29 shares. Yuk Tong held the remaining 13. The directors were Yuk Tong, Joe Yin and Joe Keung (at this point Joe Wing was still only 17). It seems however that the operations of the company were effectively controlled by Yuk Tong. Rachel was not a shareholder or director.

14. [70]

    The purchase of the Ultimo property was completed in December 1993. The purchase price was $487,000. The purchase was financed with a mortgage loan of $200,000 to GH1 which was guaranteed by Yuk Tong.

15. [71]

    According to Joe Yin (although Joe Wing did not recall it), Yuk Tong and the children moved out of the Pyrmont property and lived briefly at the Ultimo property after its purchase, while construction works were completed at Chatswood. Thereafter they moved into the new house at Chatswood, which became the Shiu family home in Sydney. The Ultimo property appears to have been left vacant.

16. [72]

    Joe Keung repeated one of his school years, with the result that both he and Joe Wing finished school at the same time, namely at the end of 1994. After school, Joe Keung began a university degree. Joe Wing undertook some TAFE courses but did not graduate.

17. [73]

    In about April 1995, Yuk Tong left Australia. According to Joe Yin, this followed a visit from a representative of the Department of Immigration who advised Yuk Tong that his visa did not permit him to remain in Australia and that he must leave. Yuk Tong returned to Hong Kong and lived with Rachel at the MacDonnell Road apartment. For the next two years, the three children were left living by themselves in the Chatswood house in Sydney, with occasional visits from Rachel.

18. [74]

    In November 1995 the mortgage over the Chatswood property in favour of Advance Bank (see [63] above) was discharged. This left the property unencumbered in Rachel’s name.

19. [75]

    In September and October 1996, Yuk Tong purchased, as investments, two floors of a building in the Wanchai area of Hong Kong. One floor was purchased through Busbridge and the other through Hale Lion (see [15] above). The companies had been incorporated earlier in the year, presumably on the instructions of Yuk Tong. The shares in the companies were held as 50% each by Yuk Tong and Joe Wing; they were also the directors. At the time Joe Wing was living in Sydney and his involvement with the companies appears to have been purely nominal.

20. [76]

    In May 1997, Joe Keung died in a car accident on his way to university. He was only twenty-two. The surviving members of the family were, as one would expect, profoundly affected by his untimely death. Rachel came to Sydney and stayed for about three and a half months. Yuk Tong also visited for most of this period.

21. [77]

    It seems that Joe Keung died intestate. His assets included the 29 shares in GH1. Following his death, an annual return was lodged with the Australian Securities and Investments Commission which recorded the distribution of his shares to the other shareholders. The result was to leave Yuk Tong with 34 shares, and Joe Yin and Joe Wing with 33 shares each, in GH1. It seems that this distribution represented Yuk Tong’s wishes rather than the parties’ entitlements on intestacy. Whether it was valid does not need to be determined.

22. [78]

    In September 1997 Rachel returned to Hong Kong and resumed her work with the Red Cross there, but continued her occasional visits to Sydney, generally once or twice a year. Yuk Tong also returned to Hong Kong, but thereafter he too made occasional visits to Sydney, generally once or twice a year, staying for periods of up to several months. Joe Yin and Joe Wing continued to live at the Chatswood property.

23. [79]

    In May 1998, the Ultimo property was transferred from GH1 to Joe Wing. The mortgage over the property was discharged shortly before the transfer. The transfer price was specified as $515,000, but it seems that no cash payment was ever made. The transaction was effected through a Sydney firm of solicitors, Gillis Delaney Brown (“GDB”), acting on instructions from Yuk Tong, who was visiting Sydney at the time. I set out the evidence about it in more detail in a separate section of the judgment, below.

24. [80]

    It is not clear what, if any, other assets remained in GH1 following the transfer of the Ultimo property to Joe Wing. GH1 was eventually wound up by members’ voluntary resolution and deregistered in 2008.

25. [81]

    At about the same time as the Ultimo property was transferred to Joe Wing, Yuk Tong purchased the Lindfield property in his own name. The property consisted of a two-storey corner building on the Pacific Highway, with shop fronts on the ground floor and offices above, and was leased to multiple tenants. It was purchased apparently as an investment.

26. [82]

    Yuk Tong entered into a contract to buy the Lindfield property at auction in March 1998 (while he was in Sydney dealing with the transfer of the Ultimo property to Joe Wing). The price was $1.11 million. GHB acted for him on the purchase, which was completed at the end of June.

27. [83]

    As I describe in more detail later in this part of the judgment, the purchase was funded by a loan from the Australia and New Zealand Banking Group of $990,000. The loan was secured by a mortgage from Yuk Tong over the Lindfield property itself and a mortgage from Rachel over the Chatswood property.

28. [84]

    In late 1998, Rachel, who was then 50 years of age, gave up her work with the Red Cross in Hong Kong. After a period of about four months, she moved back to Australia in April 1999. In about September of that year, she took up work as a pathology collection nurse.

29. [85]

    Rachel has lived in Sydney, at the Chatswood house, ever since. But she continued to visit Hong Kong, staying with Yuk Tong at the MacDonnell Road apartment when she did so. These visits generally took place once or twice a year, for several weeks at a time. For his part, Yuk Tong continued to live in Hong Kong, with regular visits to Sydney as before.

30. [86]

    In May 2001, Yuk Tong made another investment property purchase in the Wanchai area of Hong Kong. This purchase was part of a building not far from the building which had been the subject of the 1996 purchases. It was made in Yuk Tong’s name.

31. [87]

    In September 2004, the mortgages granted to ANZ by Yuk Tong over the Lindfield property and by Rachel over the Chatswood property were discharged. Rachel’s mortgage over the Chatswood property was replaced by a mortgage in favour of National Australia Bank (“NAB”). The Lindfield property was left unencumbered. As I explain later, the ANZ debt was refinanced and replaced by a fresh loan from NAB. How much had been outstanding to ANZ is not revealed by the evidence. The new NAB loan was for $760,000.

32. [88]

    Meanwhile, the Ultimo property appears to have remained vacant until 2002, when it was leased for a twelve-month period. The property was leased again in June 2005, for a three-year term with a three-year option.

33. [89]

    In late 2005, Joe Wing moved to Hong Kong. It seems that the idea was for him to learn about the real estate business by working with Mr Chan (see [12] above). Joe Wing lived at the MacDonnell Road apartment with Yuk Tong and visited Mr Chan’s office for several days a week, but according to his evidence he learned little during this time.

34. [90]

    The Shiu family’s involvement with Lanco which ultimately resulted in these proceedings began in March 2006 when Yuk Tong decided to acquire a 25% shareholding in Lanco from an existing investor. Yuk Tong was introduced to the venture by Mr Chan. Lanco had been incorporated three months beforehand, in December 2005. Mr Chan held 70% of the shares. Mr Ng (see [12] above) held the other 5%.

35. [91]

    The Shius’ 25% shareholding was acquired in the names of Yuk Tong and Joe Wing (as to 12.5% each). Yuk Tong and Joe Wing became directors of Lanco. As already mentioned, the other directors were Mr Chan and Ms Ng.

36. [92]

    Lanco had been incorporated for the purchase of developing an aluminium refinery in the Guangxi special autonomous region of China. According to evidence given by Yuk Tong at the trial of the Hong Kong proceedings, he made extensive loans to Lanco from June 2006 onwards. By April 2008 the amount he had lent was HKD 16.57 million ($2.34 million at the then exchange rate). This however does not appear to have been enough.

37. [93]

    The first loan agreement which was the subject of these proceedings was entered into in July 2008. It provided for a loan from OSE to Lanco of USD 4.8 million (then $5.46 million). The loan was repayable after five years, with an interest rate of 16.5% per annum. Lanco’s obligations were guaranteed by each of the directors (that is: Mr Chan, Yuk Tong, Joe Wing and Ms Ng). Third party mortgages were also given by Busbridge, Hale Lion, and Yuk Tong over the three Wanchai investment properties.

38. [94]

    Again, the loan appears to have been insufficient. Six months later, in January 2009, Yuk Tong negotiated a second loan from OSE. I now outline the key events; what happened is described in more detail later.

39. [95]

    The principal amount of the new loan was to be CAD 2 million (then $2.41 million), repayable after two years with an interest rate of 18%. Further guarantees and third-party securities were to be provided by the sureties. In addition, Yuk Tong was to provide a third-party mortgage over the MacDonnell Road property. By this time the purchase loan on the property had been paid off, and it stood unencumbered in the joint names of Yuk Tong and Rachel.

40. [96]

    To facilitate the grant of third-party security in support of the loan from OSE, in January 2009 Yuk Tong obtained Rachel’s agreement to assign her share of the MacDonnell Road property to him. The value agreed between them for her share was HKD 11 million (then $2.08 million). Of this, it was agreed that Rachel would receive HKD 2 million (then $380,000) upfront. The remaining HKD 9 million (then $1.70 million) was the subject of a post-dated cheque from Yuk Tong which was payable on 30 March.

41. [97]

    In March or thereabouts, Rachel and other members of her family were prevailed upon to make further loans of their own to Lanco. The total amount advanced by Rachel’s family was HKD 5.5 million. Of this, HKD 1 million (then $190,000) was lent by Rachel herself. On payment of the loan monies Rachel received a post-dated cheque, including the agreed interest, payable on 30 April.

42. [98]

    The second loan from OSE and the additional loans from Rachel’s family proved insufficient. According to Rachel, she was told by Yuk Tong shortly before his post-dated cheque fell due it could not be honoured. At around the same time she was told by Mr Chan that the post-dated cheque for her loan to Lanco would not be honoured either.

43. [99]

    Lanco defaulted on interest payments due under both the first and second OSE loans in mid-April. A formal notice of demand for payment followed from OSE’s solicitors in August, which was copied to Lanco’s sureties.

44. [100]

    In November 2009, Rachel and Yuk Tong executed the Financial Agreement (see [18] above). The Agreement recited that the parties had separated in March 2009 and provided for Yuk Tong to surrender the whole of his interest in the Lindfield property, and any interest he might have in the Chatswood property to Rachel, leaving the satisfaction of the debt associated with those properties (which by then had been reduced to about $400,000) to her. In return Rachel surrendered any claim she otherwise had to Yuk Tong’s other assets.

45. [101]

    Pursuant to the Agreement, the Lindfield property was transferred from Yuk Tong to Rachel. The Chatswood property was of course already in her name. The transfer of the Lindfield property was completed a few days after the Agreement was signed. Again, I describe the relevant events in more detail in a separate section of the judgment below.

46. [102]

    Also in November 2009, OSE made formal demand on Lanco’s third party mortgagors. In March 2010, formal demand was made for repayment of Lanco’s whole indebtedness. As had been permitted by a supplementary agreement with respect to the first loan, the demand for repayment of that loan was made in Canadian dollars even though the amount originally advanced had been in US dollars.

47. [103]

    In April 2010, debt recovery proceedings were commenced in the name of OSE in the Hong Kong High Court of Justice. Judgment was sought against Lanco as the principal debtor and against Mr Chan, Yuk Tong, Joe Wing and Ms Ng as sureties. In the following month, separate proceedings were commenced in the name of OSE to enforce the third-party securities over the Wanchai investment properties and the MacDonnell Road apartment against Busbridge, Hale Lion and Yuk Tong. The proceedings were later consolidated by agreement.

48. [104]

    As already noted, GH1 had been deregistered in 2008. In July 2010, GH2 was incorporated. At the same time a discretionary family trust was established of which GH2 was the trustee. The beneficiaries of the trust were identified as Joe Wing and Joe Yin, and included any spouses, children, or parents of theirs. As a result, Yuk Tong and Rachel were also beneficiaries.

49. [105]

    In December 2011 the Ultimo property was sold. By this time the lease which had been granted in 2005 had expired. The sale price was $2.38 million.

50. [106]

    The sale was effected by Rachel using a general power of attorney which had previously been granted to her by Joe Wing. Mr Edmund Teng, solicitor, acted for Joe Wing as vendor, apparently on Rachel’s instructions. Mr Teng had previously acted on the grant of the 2005 lease.

51. [107]

    Rachel did not account to Joe Wing for the sale proceeds. Instead, she placed most of them on term deposit. On maturity, those monies ($2.16 million) were deposited into a bank account of GH2 as trustee for the Family Trust. Other monies ($235,000) were paid directly into one of Rachel’s bank accounts.

52. [108]

    The loan secured on the family home at Chatswood (then $276,000) was paid off in February 2012. In April 2012 the purchase of the Kirribilli unit (contract price $583,000) was completed. This was followed by the purchases of the Hunters Hill unit (contract price $640,000) and the Willoughby unit (contract price $580,000) in November 2012. Again, the evidence concerning the distribution of the proceeds and the details of the purchases is set out in more detail in a separate section of the judgment below.

53. [109]

    Meanwhile, the proceedings brought by OSE worked their way through the Hong Kong court system. Neither Lanco nor Ms Ng entered any appearance and default judgment was given against them. Mr Chan did file a defence, and affidavit evidence, denying liability. But he did not appear at the trial.

54. [110]

    The Shiu family parties (Yuk Tong, Joe Wing, Busbridge and Hale Lion) were thus the only defendants to contest liability at trial. Essentially their defence was that misrepresentations had been made to them by Mr Chan, and by the solicitor who had advised Yuk Tong, for which they alleged OSE was responsible.

55. [111]

    In February 2015, Yuk Tong returned to Sydney, where he stayed for almost two years with Rachel and Joe Yin at the Chatswood house. By this time, he was 86 years of age. His health was in decline, and he had several stays in hospital.

56. [112]

    The trial of OSE’s proceedings against the Shiu family parties began in the Hong Kong High Court of Justice before Ng J at the end of October 2015. Yuk Tong gave his evidence by video link from Sydney. The evidence lasted for nine days. There was a tenth day, during which submissions were presented, in December. Ng J then reserved his judgment.

57. [113]

    His Lordship delivered judgment in December of the following year. He rejected the defences put forward on behalf of the Shius. Judgment was entered against Mr Chan (who, as I have mentioned, did not appear at the trial) and against Yuk Tong and Joe Wing, in the sum of CAD 24.9 million (CAD 18.7 million for the first loan and CAD 6.2 million for the second loan). His Lordship made further orders permitting the enforcement of the third-party securities over the Wanchai and MacDonnell Road properties. He also ordered that Yuk Tong and Joe Wing pay OSE’s costs of the proceeding.

58. [114]

    Fourteen days after the judgment was given, Rachel and Yuk Tong made a joint application the dissolution of their marriage pursuant to the Family Law Act. A decree nisi was granted in April 2017 and was made absolute in May 2017. Mr Felix So acted for both Rachel and Yuk Tong.

59. [115]

    Meanwhile, OSE had taken steps to enforce the third-party securities in Hong Kong. OSE took possession of the MacDonnell Road property in May 2017. Yuk Tong had gone there in early January and returned early in May. Rachel had visited for a few days in April. Joe Wing also returned to Sydney early in May, reuniting with the rest of his family at the Chatswood house.

60. [116]

    OSE’s costs of the Hong Kong proceedings were taxed. A cost certificate, resulting in a judgment of HKD 17.5 million, was given in December 2017.

61. [117]

    As already noted, Yuk Tong died, aged 90, in March 2019, and OSE’s proceedings began three months later. The Lane Cove property (contract price $495,00) was purchased later, in September 2020.

62. [118]

    Rachel, Joe Yin and Joe Wing continue to live at the Chatswood property. That property, and the four other properties acquired after 2011, remain in the ownership of Rachel, Joe Yin and GH2, but have been caveated by OSE.

63. [119]

    OSE’s case was largely documentary, and none of the witnesses in its case were required for cross-examination. Rachel, Joe Wing and Joe Yin gave evidence in the Shiu Parties’ defence case and were cross-examined at length. There were wholesale challenges to their credit, or at least their reliability, as witnesses. I deal with those challenges later in the judgment.

64. [120]

    Mr Mark Malanos, an employed solicitor with GHB who acted for Yuk Tong in the transfer of the Ultimo property to Joe Wing and the purchase of the Lindfield property in 1998 (see [79], [82] above), was also called as part of the defence case. So too was Mr So, who acted as Rachel’s family law solicitor in 2009 and 2016-2017 (see [114] above). Mr Malanos was subpoenaed and gave his evidence in chief orally. Mr So’s evidence in chief was given by affidavit. Both of them were briefly cross-examined, but no challenge was made to their credit.

65. [121]

    Mr Teng, who acted for Joe Wing (but with Rachel providing instructions as Joe Wing’s attorney) on the sale of the Ultimo property in 2011 (see [106] above), was not called. He is still practising as a lawyer in Sydney.

66. [122]

    In evidence were Commonwealth Government “movements details” reports showing international arrival and departure information for each of the Shiu family members for relevant periods of time. The reports record arrival or departure dates, airports and flight numbers. Flight origination (for arrivals) and destination (for departures) data is not provided, but it is possible to deduce it in some cases where the flight number’s point of origin or arrival is known from other evidence.

67. [123]

    The reports cover arrivals and departures for:

    1. (1)

       Yuk Tong (April 1995 to May 2017);

    2. (2)

       Rachel (April 1991 to March 1999 and February 2001 to June 2019);

    3. (3)

       Joe Yin (November 1990 to June 2019); and

    4. (4)

       Joe Wing (January 1991 to September 2019).

68. [124]

    Documentary evidence: Later evidence shows that the catalyst for the transfer of the Ultimo property was an approach Yuk Tong received from a property developer, Mr Neil Wilson, in late 1997 or early 1998. Mr Wilson was interested in buying the property through his company, Sakkara Pty Limited (“Sakkara”), for the purposes of a redevelopment involving several properties in the area. He was prepared to pay $1.35 million, which was considerably more than the market value the property had on its own.

69. [125]

    The earliest documentary evidence relating to the transfer is a letter of advice from Mr Peter Vickers, of the accountancy firm Vickers Tolley, to Yuk Tong dated 28 January 1998. Mr Vickers advised that the indexed cost base of the property for capital gains tax purposes was $533,486. He continued:

70. [126]

    The retainer letter from GDB concerning the transfer was dated 23 March. The letter identified two solicitors who would be working on the matter. These were Mr Christopher Brown, the supervising partner, and Mr Malanos.

71. [127]

    The retainer schedule to GDB’s letter of engagement identified the client as Yuk Tong. It outlined the scope of the work as:

72. [128]

    On 27 April Mr Brown wrote to Mr Shiu about the transfer. The letter was addressed to GH1 at the Shiu family home in Chatswood, for the reference of Yuk Tong. The caption identified GH1 as “Transferor” and Joe Yin as “Transferee” and stated that GDB acted for the Transferor.

73. [129]

    The letter enclosed a copy of a valuation report obtained by GDB for the property which valued it at $515,000. It noted that a mortgage in favour of Mercantile Mutual Financial Corporation Limited was registered on the title, but confirmed “your” instructions that the mortgage no longer secured any outstanding debt and that “you” held the certificate of title and an executed discharge of the mortgage, which would need to be delivered to GDB’s office to effect the transfer.

74. [130]

    The letter went on to confirm “your instructions that the Transferor now wishes to transfer the Property to the Transferee for no consideration”. It noted that GDB were preparing drafts of the transfer, and the statutory declaration required by the Office of State Revenue to stamp the transfer. They would soon forward copies of those documents for approval.

75. [131]

    Although the letter referred to the Transferee being Joe Yin, that instruction evidently changed. A telephone message left by Yuk Tong for Mr Malanos on 1 May 1998 recorded that the “documents” should be in Joe Wing’s name, and also stated that Yuk Tong was not a tax resident of Australia.

76. [132]

    All of this took place while Rachel was in Hong Kong. She flew to Sydney on 22 May.

77. [133]

    In evidence is a letter from Mr Wilson to Yuk Tong dated 27 May. In the letter Mr Wilson wrote:

78. [134]

    Two days later, on 29 May, a meeting took place at GDB’s offices to sign the documents prepared by GDB. The meeting was attended by Mr Brown, Mr Malanos, Yuk Tong, Joe Yin, Joe Wing and Rachel. Three documents were signed to effect the transaction.

79. [135]

    The first document was a minute of resolutions of directors of GH1. The minute was signed by Yuk Tong and Joe Yin, who were the directors at the time (see [69] above). The resolutions were:

80. [136]

    The second document was a minute of a general meeting of members of GH1. The minute was signed by Yuk Tong, Joe Yin and Joe Wing. The minute recited that Yuk Tong confirmed that he, Joe Yin, Joe Wing and the late Joe Keung had been the “registered and/or beneficial owners” of the company’s share capital (see [77] above), and that no executor or administrator had been appointed to Joe Keung’s estate. It then recorded that two resolutions had been unanimously passed:

81. [137]

    The third document was an RPA form of transfer of the Ultimo property from GH1 to Joe Wing. The transfer acknowledged receipt of the consideration, being $515,000. It was executed under seal by GH1 as transferor and signed by Joe Wing as transferee. The affixation of GH1’s seal was witnessed by Yuk Tong and Joe Yin. Joe Wing’s signature was witnessed by Rachel.

82. [138]

    Also executed at the same meeting were two powers of attorneys one was given by Rachel in favour of Yuk Tong and the other by Yuk Tong in favour of Rachel. Both were witnessed by Mr Malanos. These powers of attorney played no role in the Ultimo property transfer, and seem to have been executed in contemplation of the purchase of the Lindfield property (see [164] below).

83. [139]

    There is a GDB file note of the meeting by Mr Malanos, dated 29 May at 4:50-6:00pm. It referred to advice apparently given by Mr Brown, stating “Principal place of residence”, below which was written “Must live” and “Should live for at least 12 months”. Further below was written “Can share but can’t earn any income”.

84. [140]

    Not long after the meeting Rachel returned to Hong Kong. She left on 9 June.

85. [141]

    On 10 June the transfer was stamped. Cheques for the stamp duty ($18,665) and for the Land Titles Office ($110) were drawn on an account with Citibank in the names of Yuk Tong, Rachel and Joe Yin. They were dated 29 May and signed by Yuk Tong, presumably at the meeting on that day.

86. [142]

    The GDB file contains an office copy of a letter sent to GH1, to the attention of Yuk Tong, on 11 June reporting on the stamping of the transfer. It was subsequently lodged for registration and registered. There is no evidence that the $515,000 was paid (or at least paid by cheque or bank transfer) on 29 May or at any time thereafter.

87. [143]

    A further meeting took place between Mr Brown, Mr Malanos and Yuk Tong on 26 June which was the subject of a file note by Mr Malanos. The file note recorded advice given by Mr Brown concerning option correspondence from Mr Wilson. Mr Brown advised:

    1. (1)

       Option will tie up property for option period.

    2. (2)

       Too soon to sell now.

    3. (3)

       Do not bank cheque - return it.

88. [144]

    A receipt on CDB’s file records that on the same date the certificate of title for the Ultimo property was handed over to Yuk Tong. Presumably, this happened at the same meeting.

89. [145]

    On 30 June a further power of attorney was executed. This was by Joe Wing in favour of Yuk Tong. Again, the power of attorney was prepared, and witnessed, by Mr Malanos.

90. [146]

    A further meeting took place on 21 August which is recorded in a GDB file note by Mr Malanos. The meeting was attended by Mr Brown, Mr Malanos, Yuk Tong, Joe Yin, and a Mr Paul Turner, who was apparently an accountant acting for the Shius.

91. [147]

    The note recorded that Joe Wing was in hospital, the response (presumably for Mr Brown) being: “must have someone living there”. The note also recorded that the hospital had been told that Joe Wing’s address was at Hercules Street Chatswood. The Shius were advised that the hospital should be told the address was “Harris Street” (the Ultimo property).

92. [148]

    There was some discussion about option arrangements which is not necessary to describe for present purposes. There was also reference to financial arrangements associated with the transfer. The note recorded:

    1. (1)

       How did Joe Wing pay for it.

    2. (2)

       Originally paid by loan from Yuk Tong.

    3. (3)

       Now Asset: debt due by Joe Wing.

    4. (4)

       Paul [Turner] must prepare accounts for Golden Horse.

    5. (5)

       Then liquidate Golden Horse (voluntary liquidation). GBD can assist with preparing documents.

    6. (6)

       All money originally paid by [Yuk Tong] (money from Hong Kong).

93. [149]

    Later in the year GDB opened a new file concerning a “proposed joint venture” for the Ultimo property. The bill which was eventually issued in December referred to a number of meetings with Mr Wilson and his solicitor in October. The documentary record so far as Mr Wilson is concerned peters out at that point, and his purchase proposal seems to have fallen through.

94. [150]

    In May 2001 GHB’s original 1998 file was briefly reactivated for the purpose of a conference with Rachel and Joe Wing. The fee note was addressed to Rachel and referred to “advising” her and Joe Wing at a conference lasting for one hour but the evidence contains no other details.

95. [151]

    GH1’s tax return for the year ending 30 June 1997 (signed in November of that year) is in evidence and confirms that the Ultimo property was generating no income at the time of the transfer to Joe Wing. That seems to have continued until the property was leased to a company named BJ Metro Pty Limited on 1 March 2002.

96. [152]

    The lease was for a period of one year. It was executed by Rachel as attorney for Joe Wing under a general power of attorney granted by him to her the previous November. That power of attorney had been prepared and witnessed by a Mr Edward Lo, solicitor.

97. [153]

    Also in evidence is a letter dated March 2003 from Yuk Tong to a Mr Simon Chan, whose name otherwise does not seem to feature in the evidence. Yuk Tong asked Mr Chan for advice on how to redevelop the property. He enclosed a surveyor’s sketch.

98. [154]

    There is no evidence about what, if anything, came from the approach to Mr Chan. It seems that on expiry of the lease to BJ Metro, the property remained vacant until June 2005 when it was leased to a company named Happy Forever Pty Limited, apparently for retail purposes. The lease, prepared by Mr Teng, was for a three-year period with a three-year option. There was an initial rent-free period of two months. The lease was signed by Joe Wing.

99. [155]

    Counsel for OSE drew attention to various other pieces of evidence which, it was submitted, were inconsistent with any belief on Rachel’s part that she had a beneficial interest in the Ultimo property. First, when giving Mr So instructions for the purpose of the Financial Agreement in November 2009, Rachel did not say that she (or Yuk Tong) had any interest in the Ultimo property (see [100] below). Nor did she tell her financial planner, Mr McGree when consulting him between April and July 2010, that she (or Yuk Tong) had any such interest (see [290] below).

100. [156]

     Next, had Joe Wing held the Ultimo property as trustee, it would have been necessary to include the rental income from the property (less allowable deductions) in a trust tax return and disclose the beneficiaries’ shares of that net income in their personal returns. There is no evidence that this was ever done. Instead, the net rental income for 2010-2011 was included in Joe Wing’s personal tax return for that year (the earliest in evidence). Presumably this was done on Rachel’s instructions, as Joe Wing and Yuk Tong were living in Hong Kong in June 2012, when the return was prepared.

101. [157]

     The contract for sale of the Ultimo property was dated 25 November 2011. It was signed by Rachel under the power of attorney previously granted by Joe Wing (he was not in Australia at the time of exchange; he had arrived on 24 October but departed again (together with Yuk Tong, who had arrived on 29 October) on 10 November). The sale was completed on 9 December.

102. [158]

     Mr Teng acted for Joe Wing on the sale. In the usual way, requisitions on title were made and answered by Mr Teng on the vendor’s behalf, presumably on the basis of instructions provided by Rachel. Requisition 23 was answered as follows.

103. [159]

     Joe Wing’s 2011-2012 income tax return again included net rental income for the Ultimo property up to the date of sale. It also included a taxable capital gain from the sale of the property of $217,000. This was much less than the gain for accounting purposes based on the purchase price of $515,000 (plus stamp duty). Presumably that was because the CGT exemption for owner-occupied housing was claimed for part of the period following acquisition in 1998. The tax return in evidence, however, does include any work sheets so it is not possible to confirm exactly how the gain was calculated.

104. [160]

     Rachel’s testimony: Rachel first addressed this aspect of the case in the affidavit that she made in June 2021 in the 2019 proceedings responding to the ex parte garnishee order (see [32] above). She was required under the Rules (r 39.40(1)(a)) to state the grounds on which she believed that the debt claimed by OSE was not owing. She deposed:

105. [161]

     Rachel’s August 2021 affidavit in the 2020 proceedings (see [37] above) was mainly concerned with the Lindfield property. But she referred in passing to the November 2011 power of attorney given by Joe Wing, which she described as having being given so that she could take necessary action with respect to “our” Ultimo property.

106. [162]

     In her July 2023 affidavit in the 2019 proceedings (see [163] above), Rachel went into detail about the Ultimo property. She deposed that she did not participate in the initial decision to purchase the property, and Yuk Tong did not consult her about the establishment of GH1 as the vehicle for the purchase. Nor was she aware of the borrowing arrangements.

107. [163]

     Rachel deposed that so far as she was concerned Yuk Tong first raised the sale of the property “in 1998”, when she was in Sydney (on or around 22 May). Her account of the conversation was:

108. [164]

     Rachel deposed that she also recalled the execution of the two powers of attorney by Yuk Tong and herself in favour of each other. She was certain that they were signed at GDB’s offices in Sydney.

109. [165]

     Rachel also referred to the execution of the 2001 power of attorney by Joe Wing in her favour. She deposed:

110. [166]

     Rachel deposed that it was she who negotiated the March 2002 lease of the Ultimo property to BJ Metro and the 2005 lease to Happy Forever. She used the rent for “general household and family purposes”. She deposed that she believed that the property belonged to her and Yuk Tong and she would not have acted as she did if she had thought Joe Wing was entitled to the rent.

111. [167]

     Rachel’s evidence about the sale of the property in 2011 was:

112. [168]

     In cross-examination, counsel for OSE pressed Rachel on her recollection of the family conversation which took place before the transfer of the Ultimo property to Joe Wing in May 1998. Rachel’s response was that Yuk Tong said that he had been told that there would be a big tax saving if the property was transferred to Joe Wing. Counsel asked her whether she could remember anything about the conversation, to which she repeatedly replied that the tax advice was the “main one” that she remembered. But when counsel asked again, a few questions later, whether the family discussion was the only conversation she could remember on the subject she added that Yuk Tong told Joe Wing “you’re holding it [the property] for your parents”.

113. [169]

     Counsel then took Rachel to her August 2021 affidavit. She agreed that the defence she had advanced in that affidavit was that the money from the sale of the Ultimo property had not belonged to Joe Wing (but rather to GH1), and she therefore did not owe Joe Wing anything for the proceeds. She agreed that in that affidavit there had been nothing about a conversation in which Joe Wing had supposedly agreed to hold the property for his parents, but denied that this was because she had made that detail up later.

114. [170]

     Counsel returned to the May 1998 meeting later in the cross-examination, resulting in the following evidence:

115. [171]

     Counsel then took Rachel to the description of the meeting in her July 2023 affidavit, referring her to that part of the description which included the tax advice and the nomination of Joe Wing as the “best person” to hold the property. The cross-examination continued:

116. [172]

     Counsel also put to Rachel that, through GH1, the children had effectively held a majority economic interest in the property which, on her version of the conversation, was being summarily being taken away from them. The following cross-examination ensued:

117. [173]

     So far as the Joe Wing’s 2001 power of attorney was concerned, Rachel agreed that the document was organised by Yuk Tong, because he, and Joe Wing, were spending less time in Australia, although she later resiled from this so far as Yuk Tong was concerned. She agreed, however, that she discussed management of the Ultimo property with her husband from time to time, and that this continued after gaining the power of attorney. These discussions continued even after their alleged separation in 2009.

118. [174]

     Counsel confronted Rachel with her failure to mention her alleged interest (and Yuk Tong’s alleged interest) in the Ultimo property in her instructions to Mr So and Mr McGree, and her failure to instruct Mr Teng, for the purposes of answering the requisitions of the sale of the property, that Joe Wing held it as trustee. Rachel responded by repeatedly saying “I overlook”, but did not provide any further explanation.

119. [175]

     Counsel also asked Rachel about Yuk Tong’s supposed joint interest in the Ultimo property in the context of the sale of the property and the distribution of the proceeds. The following cross-examination ensued:

120. [176]

     Joe Wing’s testimony: In his April 2021 affidavit in the 2019 proceedings, made for the purposes of the subpoena dispute (see [31] above), Joe Wing deposed:

121. [177]

     In his August 2021 affidavit in the 2020 proceedings (see [37] above) Joe Wing gave a similarly vague account. He deposed:

122. [178]

     Joe Wing returned to the transaction in his September 2023 affidavit in the 2019 proceedings (see [106] above). This time his account was much more detailed. He deposed:

123. [179]

     Joe Wing’s evidence about the 2021 power of attorney was:

124. [180]

     Joe Wing otherwise deposed that he had no recollection of the proposed sale of the property in 1998. Nor did he have any involvement in managing the property or receive any of the rental income from it. He had not expected to do so.

125. [181]

     Summing up, Joe Wing deposed:

126. [182]

     Counsel’s cross-examination of Joe Wing about the transfer of the Ultimo property began with his 2021 affidavit for the application to set aside the subpoenas issued to third-parties (see [37] above). It emerged that his mother had found the lawyers who acted for him and that she was the one who gave them their instructions.

127. [183]

     Joe Wing was asked about the reference in his 2021 affidavit to a “prior iteration” of Golden Horse Australia Pty Limited. He said he did not know what the words “prior iteration” meant. When asked how he had used words in his affidavit when he did not understand their meaning, he suggested that he might have known their meaning at the time of the affidavit, but provided no other explanation.

128. [184]

     Counsel pressed Joe Wing on his recollection of the meeting at which the transfer documents were signed. He initially stated that he recollected the reason for the transfer being that it would be the most beneficial for taxation. He referred to the document signing occurring in a lawyer’s or accountant’s office in the city, but could not remember whether a lawyer or accountant was present. After it was suggested that his recollection of the reason for the transfer was not clear, he stated that it was “so I can hold it for my mum and father for the best tax benefit”. He stated that he did not include that explanation in his 2021 affidavit because he “[d]idn’t think it was important”.

129. [185]

     When asked what had changed when he made his 2023 affidavit, Joe Wing gave a confused answer which referred to further documents having come to light, but he acknowledged that none of these documents actually supported the alleged promise to hold the Ultimo property for the benefit of his parents. Nonetheless, he continued to maintain that he held the property on those terms.

130. [186]

     Counsel asked Joe Wing about the involvement of solicitors in the transfer. Joe wing said that he thought that the family “went to” Mr Brown (he did not mention Mr Malanos). Counsel put to Joe Wing that he never told Mr Brown about holding the property for his parents. In response, he asserted that it was Mr Brown who had suggested it. But when pressed, it became clear that he was referring only to the transfer of the property into Joe Wing’s name, and not the further alleged arrangement to hold the property on trust for his parents. Eventually, he agreed that Mr Brown had said nothing about that part of the transaction. He accepted that he had not told Mr Brown about it.

131. [187]

     Counsel next asked Joe Wing about the later meeting which he attended with Mr Wilson’s representatives to discuss the sale of the property. Initially he said he did not remember it. He was asked about the reference to it in his affidavit, but this produced nothing of any substance. When asked why he had attended the conference if he had no interest in the property, he said: “can’t remember”.

132. [188]

     Joe Wing was also cross-examined on the 2012 tax return under which he disclosed a capital gain on the sale of the Ultimo property as part of his personal income. He said that he had simply signed the return after it had been prepared by an accountant organised by his mother. When counsel suggested that the accountant might have been Mr Lam, he said that “probably” this was so.

133. [189]

     In his affidavit evidence, Joe Wing did not say anything about the distribution of the proceeds of the Ultimo property. He did not suggest that he had been involved in it. In cross-examination, he said that he was not even aware of the sale until he visited Australia at some point in 2012.

134. [190]

     Joe Yin’s testimony: Joe Yin first addressed the Ultimo property in her affidavit of July 2023 (see [67] above). She deposed that her father made all of the arrangements for the purchase of the property and the incorporation of GH1. All she did was consent to act as a director of GH1 at his request (and presumably to execute relevant documents on behalf of the company). Nor did she have any involvement in managing the property or paying off the loan for the purchase price.

135. [191]

     Joe Yin did however depose that the property was mentioned in some family conversations. Her mother complaining about a rat problem and the difficulty this would create for renting the property out. Her father also told her mother from time to time about approaches he had received to sell the property, although those approaches did not come to anything at that point.

136. [192]

     So far as the transfer of the property to Joe Wing was concerned, Joe Yin deposed:

137. [193]

     Joe Yin did not recall anything of substance about the directors’ and shareholders’ resolutions recorded in the minutes. Nor did she have any recollection about the (ultimately unsuccessful) negotiations concerning the sale of the property to Mr Wilson.

138. [194]

     Joe Yin deposed that she had no involvement in the management of the property (although she claimed to have “a recollection” of her mother mentioning the existence of her brother’s power of attorney “a few years” before he went to Hong Kong in 2005). Nor was she involved in the sale of the property in 2011.

139. [195]

     Under cross-examination, Joe Yin initially accepted that the Ultimo property was purchased by GH1, of which she was a shareholder, giving her a substantial economic interest in the property, and that her father stated that the purpose of the arrangement was to benefit her and her brothers. She could not recall any further occasions where her father spoke in her presence about the possible sale of the Ultimo property. Nor could she recall how long the property was retained before it was sold in 2011.

140. [196]

     Counsel for OSE asked Joe Yin about discussions within the family concerning the Ultimo property following its acquisition in 1993. Initially, she said she could not recall any such discussions. Counsel then reminded her of the evidence in her affidavit and asked for details about those discussions, but Joe Yin was unable to provide any meaningful details.

141. [197]

     Counsel then asked Joe Yin about how the property had ceased to be held in the name of GH1. Joe Yin responded that the property had all along belonged to her parents because they had paid for it. Counsel asked how she knew that her mother had contributed to the purchase. Joe Yin’s answers were non-responsive. She conceded that her father had made all the financial arrangements, and her mother had not been in the country at the time but continued to maintain that her mother as well as her father had paid for the property. In the end, when counsel put to her that her mother had had nothing to do with the purchase, she said that she could not remember.

142. [198]

     Counsel then came to the transfer of the property to Joe Wing. After some prompting from counsel, she referred to some advice from a lawyer (that it was desirable to transfer the property to Joe Wing so that a “relative” could live at the property, and that Joe Wing was under 25 and still studying. She said she thought that she and her father had also visited an accountant at the time but could not recall any details.

143. [199]

     Counsel then asked her whether she thought the property at the time belonged to her parents or GH1. She said it belonged to her parents, even after being referred to her earlier evidence about having an economic interest in the property herself through GH1.

144. [200]

     Counsel then asked about whether Joe Yin recalled any discussion with her father at the time about the reasons for the transfer of the property. She said that she did not remember. Counsel referred her to the account of such a conversation in her affidavit. The following cross-examination ensued:

145. [201]

     Mr Malanos’ testimony: In his evidence in chief, Mr Malanos was taken by counsel for the Shiu Parties through the documentary evidence which I have summarised above. He confirmed that he had had the day-to-day conduct of the matter and could only recollect having dealt with Yuk Tong. He did not recall receiving any instructions from Joe Yin or Joe Wing (or Rachel).

146. [202]

     Mr Malanos confirmed, following the review of the file notes, that the transaction was a tax driven one which required the property to be transferred into the name of any individual who would then need to live in the property for at least twelve months so that the CGT exemption would be available. This was the meaning of the reference to “twelve months” of his file note of 29 May 1998, and also the explanation for Mr Brown’s advice recorded in the file note of 26 June 1998 that it was “too soon” to sell the property.

147. [203]

     It would have been astonishing had Mr Malanos been able to recollect, 25 years after the event, who had said what during the conferences which took place in 1998. It became clearer and clearer as his evidence went on that he did not have (and did not profess to have) any such recollection. His evidence only really confirmed the inferences that would be drawn from the documents themselves.

148. [204]

     Under cross-examination, Mr Malanos had no recollection of any suggestion that Joe Wing was going to be a trustee of the property. He agreed however that, if any such suggestion had been made, it would potentially have affected whether the exemption was available. Mr Malanos would therefore have expected there to have been some record of it on the file.

149. [205]

     Purchase of Chatswood property and mortgage to Advance Bank: The RPA transfer of the Chatswood property from the vendor to Rachel and the RPA mortgage from Rachel to Advance Bank are in evidence. Both are dated 13 July 1990. The RPA mortgage schedule incorporated a standard form Memorandum, which does not appear to be in evidence. But the schedule did state that the mortgage was granted to secure the performance of the Mortgagor (Rachel) under a guarantee from her to Advance Bank. It also incorporated an annexure which stated that the term “Borrower” (presumably a defined term used in the Memorandum) was to mean Yuk Tong. The annexure was signed by Yuk Tong as well as Rachel.

150. [206]

     It seems therefore that the purchase of the Chatswood property was financed by a loan from the Bank to Yuk Tong, which was guaranteed by Rachel. But the loan agreement itself does not appear to be in evidence. Nor is the purchase contract, or any written information about payment of the deposit or the duty.

151. [207]

     In her August 2021 affidavit, Rachel deposed that the Chatswood property was purchased in her name because Yuk Tong was not then a permanent resident of Australia and could not buy property in his own name. She did not claim to have made any contribution to the purchase price or to repayment of the loan taken out by Yuk Tong.

152. [208]

     The reason for Rachel being registered as the owner of the Chatswood property came up again in her cross-examination. When asked about the original acquisition of the Ultimo property in the name of GH1, Rachel stated Yuk Tong could not use his name on the purchase because he was not then a resident in Australia. Counsel put to Rachel that the same had been so for the purchase of the Chatswood property three years before, but Rachel did not agree. She said that it was because the Chatswood property was “matrimonial”.

153. [209]

     Counsel then put to Rachel what she had said in her August 2021 affidavit. She responded that what she had said in that affidavit was the truth, but when counsel put to her that the Chatswood property had been acquired in Yuk Tong’s name because he did not have the visa status required to own in property in Australia, she replied “disagree”.

154. [210]

     Discharge of Chatswood mortgage: Again, only the RPA discharge of mortgage is in evidence. It was dated 13 November 1995. There is no record of how Yuk Tong paid off the loan from Advance Bank, or how much he paid. Nor was there any testimony on this subject from Rachel.

155. [211]

     Purchase of Lindfield property and mortgages in favour of ANZ: The contract for the purchase of the Lindfield property does not appear to be in evidence, but a letter from GHB to Yuk Tong records that exchange occurred on 19 March 2008, with a completion date of 30 June. The deposit was $111,000, which was paid from a cash management account with Westpac Banking Corporation in the names of Yuk Tong and Joe Yin. The stamp duty of $46,544 was paid on 23 April from the same account.

156. [212]

     In evidence are the RPA transfer of the Lindfield property to Yuk Tong. The transfer was dated 30 June 1998 and recorded consideration of $1.11 million.

157. [213]

     Also in evidence are ANZ’s loan offer to Yuk Tong, a guarantee and indemnity in favour of ANZ from Rachel and RPA mortgages over the Lindfield and Chatswood properties in favour of ANZ. The letter of offer was accepted by Yuk Tong on 26 June. The mortgages were dated 29 June. The guarantee and indemnity was undated but would have been signed at the same time. It, and the mortgage of the Chatswood property, were signed by Yuk Tong pursuant to the power of attorney granted by Rachel on 29 May (see [164] above).

158. [214]

     There was no affidavit evidence from Rachel of any contribution by her to the purchase of the Lindfield property (passages in her affidavits of August 2021 and July 2023 on this subject were not read). Rachel did depose that following the purchase, the income from the Lindfield property was paid into a bank account in the name of Yuk Tong, which she used “to pay mortgages and property expenses”, topping it up as required. She also said that she “used surplus income” from the Lindfield property (presumably meaning that she used such income, when available, to meet family expenses), but provided no details.

159. [215]

     Mortgage refinance from ANZ to NAB: The RPA mortgage discharges from ANZ and the fresh RPA mortgage to NAB are in evidence. The NAB mortgage was dated 26 August 2004 but the ANZ discharges were not given until 17 September and the NAB mortgage was not registered until October (the Lindfield discharge was not registered until the following January).

160. [216]

     A guarantor’s copy was produced by Rachel of a NAB facility agreement and guarantee. The borrower under the facility agreement was Yuk Tong and the facility amount was $761,000. Rachel was the guarantor.

161. [217]

     The establishment of a new loan facility with NAB for Yuk Tong was accompanied by the opening of a new NAB current account, with a number ending in 1790. Monthly repayments of the NAB loan ($6,000 per month) were automatically deducted from this account. Rental income from the Lindfield property from the managing agent, usually $8,000 per month, was paid into the account, thus producing, in most months, a surplus of $2,000 per month. Occasionally, additional monies were credited to the account or monies were withdrawn but it remained in credit throughout.

162. [218]

     In her August 2021 affidavit, Rachel deposed that the new loan was in Yuk Tong’s name “because he was the principal borrower” and she guaranteed the loan “because I was the registered owner”. Although she did not expressly say so, I assume her evidence to be that she continued to ‘use surplus income’ in the way she previously had.

163. [219]

     During the course of her cross-examination on the instructions she had given Mr So in connection with the financial agreement in November 2009 (see [155] above), however, Rachel claimed that she “had most of” Lindfield because she “contribute a lot there”. The following cross-examination ensued:

164. [220]

     Counsel also asked whether, as an alleged part owner of the Lindfield property, Rachel had ever paid tax on the rental income from it before it was transferred to her in November 2009. She claimed that she did, saying “always pay tax”, and had done so since the purchase of the property in 1999.

165. [221]

     Counsel then put to Rachel the statement in Mr McGree’s file note of April 2010 (see [290] below) that Rachel was “not used to paying tax” on the Lindfield income. After first professing herself unable to recall, she agreed, when confronted by Mr McGree’s note, that she had said that to him. Her explanation was that the income from the Linfield property had been included in Yuk Tong’s tax return, and she was referring to having organised that for him.

166. [222]

     The following cross-examination ensued:

167. [223]

     Under further questioning, Rachel agreed that the tax returns had actually been prepared by Mr Lam, Yuk Tong’s accountant. Mr Lam dealt directly with Yuk Tong in this regard. Counsel suggested that there was no need for Rachel to be involved because Mr Lam could obtain any necessary information directly from the managing agent. Rachel claimed that this was not so “in the beginning” but when asked how long he “beginning” had lasted, could not remember.

168. [224]

     At a later point in the cross-examination, however, Rachel agreed that she did not at any stage between 1998 and 2009 give any actual instructions to her husband’s accountant concerning the preparation of his tax returns. Counsel also showed her correspondence on a tax issue directly from Mr Lam to the managing agent, but Rachel insisted that she was needed to “coordinate” between them.

169. [225]

     Documentary Evidence: The guarantee given by Yuk Tong, Busbridge and Hale Lion pursuant to the first loan agreement between Lanco and OSE (see [93] above) created third-party security interests in favour of OSE over the Hong Kong investment properties but not over the MacDonnell Road apartment. It did however oblige Yuk Tong not to deal with or further encumber the apartment without prior written consent of OSE. Pursuant to this provision, on 31 December 2008 Yuk Tong made a formal request for OSE’s consent to the sale of the apartment:

170. [226]

     The proposed sale of the property to Super Fortune Development (which, it seems to be common ground, was, or was to be, a subsidiary of Lanco) did not proceed. That may be because the proposed sale was at a considerable undervalue: a valuation report for the property which is in evidence, dated 2 January 2009, put its value at HKD 28.9 million.

171. [227]

     Instead, Rachel’s share of the MacDonnell Road property was transferred to Yuk Tong and he granted a third-party mortgage over it to support existing and further borrowing by Lanco from OSE (see [95] above). The transfer of Rachel’s share to Yuk Tong was effected by deed of assignment dated 17 January 2009, which recorded the consideration as HKD 11 million.

172. [228]

     The assignment was made pursuant to a formal agreement for sale and purchase of the same date. Clause 15 of the agreement provided that the consideration was to be paid by cashier’s order for HKD 2 million (described as the “deposit”) and a post-dated cheque dated 15 April 2009 for HKD 9 million.

173. [229]

     Rachel had arrived in Hong Kong on 8 January. A Hong Kong firm named Chui & Lau acted for her on the transaction. T C Foo & Co acted for Yuk Tong.

174. [230]

     Chui & Lau took the precaution of confirming Rachel’s instructions in writing. On 14 January she signed a memorandum of instructions which stated, among other things:

175. [231]

     Over the next three days the instructions changed, with the purchase price being increased to HKD 11 million with a cash payment of HKD 2 million to Rachel and HKD 9 million to be paid by post-dated cheque. A revised letter of instructions to this effect was signed for Chui & Lau by Rachel on 17 January, the day the assignment was effected. The letter relevantly stated (emphasis added):

176. [232]

     Rachel returned to Sydney from Hong Kong on 9 February. On 11 February, she spoke to the managing agent for the Lindfield property. A file note by the agent is in evidence, which records (emphasis added):

177. [233]

     The further loan from Rachel to Lanco (see [97] above) does not appear to have been the subject of a formal written agreement. Instead, the only written record appears to have been a single page acknowledgement document from Lanco.

178. [234]

     The acknowledgement document appears to have been produced by typing or printing on a photocopy of the two cheques by which the loan was made and was to be repaid. The loan cheque was from Rachel to Lanco for HKD 1 million. It was drawn on what appears to have been a Hong Kong bank account and dated 30 March 2009. The repayment cheque was a cheque from Lanco to Rachel for HKD 1,083,330 (the extra HKD 83,000 represented the interest). It was drawn on an account in Hong Kong and dated 30 April 2009.

179. [235]

     Above Rachel’s cheque appeared the words: “[Rachel] (lender)] is now lending HKD 1 million to [Lanco] (borrower)”. Above Lanco’s cheque appeared the words: “A cheque with the sum of HKD 1,083,330 dated April 30, 2009, pay [sic] to [Rachel] for settlement of loan”. At the foot of the page was the imprint of a seal or ‘chop’ of Lanco. At the top of the page was a stamped ‘received’ date of 3 April 2009. The acknowledgement document must therefore have been created sometime between 30 March and 3 April.

180. [236]

     It is common ground that neither post-dated cheque was presented. Rachel must have learned before 15 April that Yuk Tong’s cheque would not be met and before 30 April that Lanco’s would not be.

181. [237]

     The passport control evidence shows that Rachel was in Sydney throughout March and April 2009 (in fact, from 9 February to 4 October). She must have made arrangements with someone acting on her behalf to hold Yuk Tong’s cheque for presentation, to deliver her cheque for the Lanco loan and receive the acknowledgement document from Lanco, and to receive and hold Lanco’s cheque for presentation. Presumably this was Yuk Tong. But how the cheque for Lanco came to be signed by Rachel and dated 30 March 2009 when she was not in Hong Kong on that date is a matter of speculation.

182. [238]

     Under the first and second loan agreements between OSE and Lanco, monthly interest payments of HKD 515,000 and HKD 189,000 were due on 15 and 22 April respectively. Neither payment was made. In May, TC Foo & Co, acting for Lanco, sought an extension for four months on account of “short term cash-flow problem” in Lanco’s business. This apparently was not granted. On 3 August, “invoices” were sent to Lanco by OSE setting out details of unpaid monthly payments and additional interest accruing (at 24% per annum).

183. [239]

     On 24 August, King & Wood, acting for OSE, sent a formal letter of demand to Lanco. Copies were sent to the guarantors, including Yuk Tong and Joe Wing the letter stated that Lanco had defaulted on the five monthly interest payments from April to August and noted that default attracted additional interest at the rate of 24% per annum (totalling HKD 2.6 million for the first loan and HKD 950,000 for the second loans). The letter stated that unless the sums outstanding were paid within 14 days, legal proceedings would be brought to recover debts due under the agreements without further notice.

184. [240]

     Mr George Chu’s testimony: Mr Chu’s affidavit was made in November 2021. As already noted, he was not required for cross-examination.

185. [241]

     Mr Chu deposed that in March or April 2009 he was told by his uncle, Mr Alan Chu, that Lanco was experiencing financial difficulties. Later his uncle asked him to press Lanco and its sureties for repayment.

186. [242]

     Mr Chu deposed that he and his uncle attended a lunch meeting in Hong Kong in July or August 2009 with Mr Chan, Ms Ng, Yuk Tong and Joe Wing. The purpose in arranging the meeting was to discuss Lanco’s default under its loan agreements with OSE and to press for repayment.

187. [243]

     Mr Chu deposed:

188. [244]

     Rachel’s testimony: Rachel’s evidence on this part of the case was set out in her August 2021 affidavit. She described her relationship with Yuk Tong in the years leading up to 2009 in the following way:

189. [245]

     Rachel explained the sale of her half share of the MacDonnell Road property to Yuk Tong in the following way:

190. [246]

     Rachel explained her loan to Lanco in the following way:

191. [247]

     Rachel described finding out that the post-dated cheques she had received from Yuk Tong and Lanco would not be honoured in the following way:

192. [248]

     In cross-examination, counsel for OSE pressed Rachel on her degree of knowledge with respect to Yuk Tong’s business dealings in China. She first said that she “never learned” that Yuk Tong had business in China. But she then conceded that she did hear about such business dealings from Yuk Tong’s younger brother. He, however, was not available to corroborate Rachel’s account, having subsequently been killed in a car accident.

193. [249]

     Rachel’s evidence about this remained vague despite counsel’s further questions. She said that she could not remember whether she had learned about Yuk Tong’s Chinese business dealings in 2008-2009 or earlier. She said that all she was told was that Yuk Tong had been “in China”. She was not told where or when, nor anything about the nature of the aluminium investment in Guangxi.

194. [250]

     The following passage of cross-examination ensued:

195. [251]

     Rachel’s evidence was equally vague about Yuk Tong’s Hong Kong business interests and his dealings with Mr Chan. Rachel said that she was aware of one (but only one) of the three investment properties Yuk Tong owned in Hong Kong. She recalled having dealt with Mr Chan about getting an apartment cleaned at the end of a lease when Yuk Tong was in Sydney, but otherwise professed to have had no dealings with Mr Chan.

196. [252]

     Counsel also pressed Rachel on her account of the sale of her half share of the MacDonnell Road apartment to Yuk Tong for HKD2 million in cash and a HKD9 million post-dated cheque. She said that she initially received a telephone call from Yuk Tong asking her to come to Hong Kong to sign a contract for the sale of the apartment to a third-party purchaser. She placed this call as having taken place before she travelled to Hong Kong on 8 January 2009. She said she was not told who the purchaser was and did not enquire because she was not interested.

197. [253]

     According to Rachel, on arrival in Hong Kong she was told that the sale to the third party had fallen through and instead she was asked to sell her half share to Yuk Tong. She denied that she was told that this was so that Yuk Tong could mortgage the property or that the money was needed for further investment in China. She claimed that Yuk Tong was offering a “good price” but made no enquiries about selling the property to anyone else.

198. [254]

     Counsel then presented some of the documentary evidence to Rachel. She denied any knowledge of the plan to sell to the BVI company referred to in the guarantor letters from Yuk Tong dated 31 December 2008 ([225] above), or any knowledge of any connection between that company and Lanco. She was unwilling to accept that the third-party sale proposal had been discussed during the period that she was away from Australia in December 1998 (which would have fitted the chronology). Although in the end she appears to have accepted that she was indeed in Hong Kong in December 2008, she denied that she had had anything to do with Yuk Tong in that visit.

199. [255]

     Rachel also denied that there had been any change to the arrangement so far as the payment for her share was concerned; seemingly, on her account, it had always been intended that she would be paid HKD2 million in cash with a HKD9 million post-dated cheque, despite that not being mentioned in the first formal letter of instructions prepared by Chui & Lau ([230] above). She said she took a post-dated cheque simply because she did not then know what she would do with the money. Later she said that her husband did not give her a reason for offering her a cheque and she did not ask for one. When pressed concerning the division of the consideration into HKD2 million and HKD 9 million she described the HKD 2 million as “the deposit” but said that she could not recall discussing it with her husband.

200. [256]

     When confronted with the second letter of instructions prepared by Chui & Lau ([231] above), Rachel’s first response was to deny that it was a letter from her recording her instructions. Despite the express statement in the letter about Yuk Tong intending to mortgage the property she maintained that he had not told her that he had any such intention. Similarly, despite the express words of the letter, she initially maintained that she had not been told that she might experience difficulty in recovering the HDK 9 million. In the end, however, her evidence was that she could not recall whether she had been told that.

201. [257]

     Counsel then referred Rachel to the statement in her August 2021 affidavit that she had no reason to think that she would not be paid for the balance of HKD 9 million ([255] above). Despite what appeared in her instructions to Chui & Lau, Rachel continued to maintain that this evidence was truthful.

202. [258]

     Counsel next asked Rachel about her conversations with the agent on 11 February 2009, two days after her return to Sydney. Rachel denied telling the agent that Mr Shiu’s finances were “very bad” and enquiring about what the stamp duty would be if the property was transferred out of his name. When confronted with the agent’s note which recorded her saying these very things ([232] above), Rachel could only respond that she would not have told the agent anything of that character.

203. [259]

     Counsel also questioned Rachel over her dealings with Mr Chan concerning the HKD1 million loan she made in late March 2009. Initially, she said that she “never” spoke to Mr Chan about Lanco. The suggestion was that she dealt with Mr Chan personally and she did not know who the borrower (if not Mr Chan) actually was. She was then confronted with the cheque in her own handwriting to Lanco and the post-dated cheque, drawn by Lanco, which she received in exchange ([234] above). Counsel put to her that she understood perfectly well that she was lending money to Lanco, but her response was that she was “not sure”.

204. [260]

     Rachel accepted that she knew by 30 March that Lanco was a company associated with Mr Chan. But she maintained that she was unaware of any connection between it and her husband. She said she did not discuss the Lanco transaction with Yuk Tong. Nor did she talk to Mr Chan about the purpose for the advance. She denied that she understood that the transaction, involving as it did a post-dated cheque, was a risky one, and also denied that she had any knowledge that Lanco was in financial difficulty.

205. [261]

     Counsel next asked Rachel about being told by Yuk Tong that the post-dated cheque of HKD 9 million would not be met. She said this was before the date the cheque was to be presented (30 March) but could not say how long before. It was only at that point that she told Yuk Tong that that she would need the Lindfield property for “security”. She denied counsel’s suggestion that she had had this in mind since early February at the latest. She said however she could not remember exactly when Yuk Tong had agreed to transfer the Lindfield property, but it could have been as late as when he came to Sydney in November 2009 and signed the Financial Agreement.

206. [262]

     Counsel then took Rachel to her 2021 affidavit, where she had deposed that she tried to contact Mr Chan about presenting the Lanco cheque but could not get any response from him, and that thereafter she felt cheated and decided to proceed with separating with Yuk Tong ([247] above). Counsel suggested, based on the wording of the affidavit, that this must have occurred at some point after the 30 April due date on the cheque, presumably in early May. But Rachel insisted that her first approach to Mr Chan had been before 30 April.

207. [263]

     Counsel then asked why, assuming Rachel was correct in asserting that she was unaware of any involvement of Yuk Tong with Lanco, she saw Yuk Tong as being in some way responsible for the failure to honour its cheque. She maintained she was unaware of the connection but did not provide any further explanation.

208. [264]

     Counsel also asked Rachel about her knowledge of Joe Wing’s affairs, and in particular his involvement with the investments being made his father. This resulted in the following cross-examination:

209. [265]

     Rachel acknowledged that she had attended, remotely, a conference with Joe Wing and his lawyers. She said that Joe Wing asked her to participate but she was “not sure” that it had anything to do with the proceedings against him in Hong Kong.

210. [266]

     Joe Wing’s testimony: In his August 2021 affidavit, Joe Wing described the period after he moved to Hong Kong in late 2005 in the following way:

211. [267]

     In cross-examination, counsel for OSE asked Joe Wing about his time in Hong Kong after he moved there with his father in late 2005. Initially, Joe Wing said that he stayed at the MacDonnell Road apartment, but he soon began to work with Mr Chan, attending his office for several days a week. In the course of this he became aware of Lanco and its investment in the Guangxi project, visiting the site on several occasions. He accepted that he spent some time working with Mr Chan on feasibility studies or other documents connected with the project, although he stated that the quality of his work was poor.

212. [268]

     Joe Wing said that Mr Chan was constantly seeking to raise further funds for Lanco’s investment in the project. For this purpose, Yuk Tong introduced members of his family to Mr Chan, as well as investing and providing financial support himself. This continued after the further guarantees were provided by Yuk Tong and Joe Wing in early 2009.

213. [269]

     Joe Wing said that he had regular conversations with his mother, in the course of which he did refer to the work that he was undertaking with Mr Chan, although he only mentioned management activities on other client’s properties. Still it appears from his evidence that their discussions were not confined to his social activities.

214. [270]

     Joe Wing however maintained that he did not discuss his father’s and his involvement with Lanco, or the Chinese investment, with his mother, either over the phone or when she visited Hong Kong. He said her visits to Hong Kong were relatively short.

215. [271]

     Counsel then asked Joe Wing about a visit by Rachel to Hong Kong in 2006 which lasted for 7 months (movement records show that this was between 25 April and 28 November 2006). The visit began shortly after Joe Wing became a shareholder in Lanco (on 31 March 2006) and he became a director in the course of the visit (on 30 September). He said that during the visit his mother stayed in the master bedroom with Yuk Tong and took part in the usual family gatherings.

216. [272]

     Counsel pressed Joe Wing on his evidence that his father asked him to keep their involvement in Lanco secret from his mother. Counsel suggested that it would have been futile for them to try to keep the secret while Rachel stayed with them for a whole seven months in 2006. Joe Wing did not directly respond to this, but did concede that his father only made the supposed request for secrecy once, before Rachel arrived in Hong Kong in April 2006. He did not thereafter make any further request. Joe Wing also accepted counsel’s point that Rachel in fact made no attempt to stop his and his father’s involvement with Lanco when she was asked to sell her share of the MacDonnell Road property in December 2008/January 2009.

217. [273]

     Joe Wing was also asked about the post-dated cheques given to Rachel by Yuk Tong and by Mr Chan on behalf of Lanco. He agreed that his father probably asked Rachel to lend money to Mr Chan. He said that his mother told him about the HKD 9 million post-dated cheque but that he could not recall when she did so.

218. [274]

     Counsel put to Joe Wing that in about June 2009 he clandestinely accessed the computer in Mr Chan’s office. Joe Wing acknowledged that he had done so, saying that he went through Mr Chan’s emails to find communications with Mr Chu “to find out what they were hiding from us”. He agreed with counsel that he was looking for evidence which might help if a claim were made on the guarantees given by himself and his father and said that at the time demands had already “probably” been made on the guarantees. He however rejected counsel’s suggestion that he was a lot smarter than he had made himself appear in his evidence in the proceedings.

219. [275]

     Counsel also asked Joe Wing about the conference with his Hong Kong lawyers which his mother had attended by telephone. Joe Wing said that he told his mother when he was sued in Hong Kong but could not recall when he did so. He said that the purpose of the conference had been for him and his father to come clean about the existence of guarantees of Lanco’s debt and that his mother was “shocked” and “distraught” to find out about those guarantees. He initially rejected counsel’s suggestion that by 2010 she was already aware of the guarantees and the additional suggestion that the conference was to tell her more about his and Yuk Tong’s prospects of success in the litigation, but in the end said that he could not really remember.

220. [276]

     Joe Yin’s testimony: Joe Yin deposed that after her brother Joe Wing moved to Hong Kong in 2005, she would visit Hong Kong from time to time (presumably staying at the MacDonnell Road apartment). Mostly she visited alone but sometimes accompanied her mother. When Yuk Tong or Joe Wing visited Sydney, they would stay at Chatswood. Joe Yin deposed that “to begin with” her father would stay in Joe Keung’s old room which was on the first floor of the house.

221. [277]

     Joe Yin deposed that at no time did her father tell her anything about his investments in China. Nor did her brother or her mother. Nor after 2010 was she told anything about the legal proceedings involving her father and her brother in Hong Kong. She was not specifically asked about this in her cross-examination.

222. [278]

     Documentary evidence: The Financial Agreement between Rachel and Yuk Tong was dated 17 November 2009. This was about 7 months after Rachel was told that the post-dated cheques in her favour from Yuk Tong and Lanco would not be honoured, and Lanco defaulted on its obligations to OSE.

223. [279]

     The recitals to the Agreement included:

224. [280]

     Clause 15 provided that within four weeks of the agreement having been signed, Yuk Tong would transfer the Lindfield property to Rachel. Clause 16 provided that upon execution of the agreement, Rachel would be declared the sole legal and beneficial owner of the Chatswood property. Further clauses went on to make provision for a motor vehicle and superannuation, and to address other matters. The Agreement made no reference to the Ultimo property.

225. [281]

     Clause 20 provided:

226. [282]

     Clause 23 provided:

227. [283]

     Yuk Tong executed the RPA transfer of the Lindfield property three days after the Financial Agreement had been signed. The transfer records nil consideration but notes that the property was transferred pursuant to the Agreement. The transfer was registered on the same day.

228. [284]

     As already noted, Mr Felix So, solicitor, acted for Rachel in connection with the Agreement. According to Mr So, the referral came from Mr Kelvin Lam. Mr Lam appears to have been the Shiu family accountant. Mr So then proposed another solicitor known to him, Mr Frank Ngo, to act for Yuk Tong. Both Mr So and Mr Ngo signed certificates of independent advice under FLA s 90G(1)(c) which were annexed to the Agreement.

229. [285]

     There is no documentary evidence which records when Mr So was first asked to act. Rachel had gone to Hong Kong on 4 October and returned to Sydney on 2 November. Yuk Tong was also in Sydney to execute the Agreement. He arrived on 14 November and returned to Hong Kong on 26 November.

230. [286]

     Later correspondence shows that on 27 November, the day after Yuk Tong left Sydney, King & Wood issued for a further formal letter of demand to Lanco. That demand does not appear to be in evidence. Demands of the same date addressed to the third party security providers, namely Busbridge, Hale Lion and Yuk Tong, however, are. The letters took the same form as the August letter, noting that there were now eight monthly interest payments outstanding from Lanco, totalling HKD 4.12 million in the case of the first loan and HKD 1.51 million in the case of the second loan.

231. [287]

     It seems that formal notices demanding repayment of the principal as well as outstanding interest were sent on 26 March. As already noted, proceedings were commenced in April.

232. [288]

     Meanwhile, records produced on subpoena by the real estate agent for the Lindfield property show that Rachel had been in discussions with both “her bank” (presumably NAB, whose loan was secured on the Chatswood property) and the agent about requiring one of the tenants of the Lindfield property to enter into a fresh formal lease. A file note dated 17 March records a telephone instruction from Rachel to the agent:

233. [289]

     A few weeks later, Rachel obtained advice from a financial planner, Mr Mark McGree. The referral was apparently arranged by Mr Lam.

234. [290]

     Mr McGree’s file note of his meeting with Rachel on 13 April 2010 is in evidence. Mr McGree recorded that Rachel’s assets consisted of: the Chatswood property (estimated in value at $1.5 million but subject to a mortgage debt of $400,000); the Lindfield property (estimated value $2 million); a portfolio of Australian shares (then worth $928,000) and superannuation in an industry superannuation fund ($100,000). The share portfolio had been held for about 10 years. There was no mention of the Ultimo property.

235. [291]

     Mr McGree recorded that Rachel was then working part-time, earning about $30,000 per annum, which was being entirely paid by way of salary sacrifice into her industry superannuation fund. She was also earning net income of approximately $80,000 from the Lindfield property. Rachel was not “used to paying tax” and was in the process of refinancing the loan on the Chatswood property by transferring it to the Lindfield property so that the interest payments on it would be tax deductible.

236. [292]

     In June 2010 Mr McGree provided a financial plan for Rachel, which was confirmed by a statement of advice issued early in July. He recommended that she establish a self-managed superannuation fund and a discretionary family trust, and split her share portfolio between the fund and the trust.

237. [293]

     At a client meeting with Rachel on 6 July the advice to establish the superannuation fund and the discretionary family trust was discussed with her. Mr McGree’s file note recorded:

238. [294]

     Later in July 2010 GH2 was incorporated. Shortly thereafter GH2 became the trustee of a discretionary trust named the “Yam Lun Tong Family Trust” and a superannuation fund for Rachel’s benefit named the “Yam Lun Tong Superannuation Fund”. Yam Lun Tong was the name of one of Yuk Tong’s ancestors. There appears however to have been a change of heart concerning Joe Wing, who was named in the discretionary trust deed as one of the beneficiaries to whom income or capital of the trust could be distributed.

239. [295]

     As at the date of the Financial Agreement, 17 November 2009, the balance of Yuk Tong’s NAB account numbered 1790 (see [217] above) was $31,722. The transfer of the Lindfield property to Rachel did not affect the way the account was operated. Monthly loan repayments of $6,000 continued to be debited to the account, and, as the February 2010 file note referred to above indicates, the agent continued to deposit the proceeds from the property into the account. As before, there were occasional additional credits and occasional withdrawals.

240. [296]

     Despite the reference in the file notes by the agent and Mr McGree’s to a refinance, it seems that this did not occur. The monthly $6,000 loan repayments continued until the balance of the loan was paid off in February 2012 (see [217] above). The regular rent payments from the agent continued until July 2012 when the funds which had built up in the account were transferred to GH2 and it was closed.

241. [297]

     The transfer occurred in two tranches. The first was a payment of $40,000 on 18 June 2012. The second was a payment $24,814 on 10 July 2012. These payments are the subject of a separate s 37A claim by OSE (see [56] above).

242. [298]

     Rachel’s testimony: In her 2021 affidavit, Rachel described the preparation and execution of the Financial Agreement. She deposed:

243. [299]

     Rachel then described her relationship with Yuk Tong after 2009:

244. [300]

     In her 2023 affidavit, Rachel briefly addressed her use of the Yam Lun Tong name when establishing her discretionary trust and superannuation fund in 2010. She stated:

245. [301]

     Counsel next questioned Rachel about the reference in the Financial Agreement to her having separated from Yuk Tong “on a final basis” in March 2009 ([279] above). Counsel suggested that, on Rachel’s own account, she could not have fallen out with Yuk Tong until early May (or, at the earliest, late April) when it became clear that the Lanco cheque would not be honoured. Counsel put to Rachel that she had put forward an earlier separation date to give it more apparent credibility. Rachel denied this, but it became clear in her evidence that, whatever views she might have privately formed, she did not discuss separation with Yuk Tong until shortly before execution of the Financial Agreement in November. Indeed, she agreed that the date of separation in the Agreement should have been November.

246. [302]

     Rachel acknowledged that the name she used in July 2010 when incorporating the company to act as trustee of her discretionary trust and her superannuation fund, “Golden Horse”, was a reference to Yuk Tong. The Yam Lun Tong name she used for the discretionary trust and the superannuation fund were also associated with Yuk Tong. “Yam Lun” was the name of his father and “Tong” was part of his own name.

247. [303]

     Rachel denied that she selected the Golden Horse name because she saw Yuk Tong as the source of the money which was to flow into the discretionary trust. She did not provide any other explanation apart from saying that she was “not creative about names”.

248. [304]

     Counsel took Rachel to the file note by Mr McGree of 6 July 2020 referring to “issues with creditors” in connection with Joe Wing being a beneficiary under Rachel’s proposed discretionary trust ([293] above). Counsel put to her that she was very conscious at the time of the financial exposure of Joe Wing to creditors, but she said “disagree”. She also denied that her later decision to sell the Ultimo property and dispose of the proceeds had anything to do with concern about Joe Wing’s financial position.

249. [305]

     Mr So’s testimony: Mr So’s affidavit was made in November 2021 for the purposes of the 2020 proceedings. He deposed that when he first received instructions from Rachel, she told him that she and Yuk Tong had already reached an agreement for separation. To the best of his recollection, he was told that they had been living separately from Yuk Tong, she in Australia and he in Hong Kong, for a considerable period of time, and there was no mention that Yuk Tong was in any financial difficulties.

250. [306]

     In cross-examination, Mr So said that Rachel was referred to him by Yuk Tong’s accountant Mr Lam, who was a friend of his. According to his best recollection, it was Mr Lam who told him that a financial agreement had to be done. He was not told that Mr Lam was Yuk Tong’s accountant, or anything about Yuk Tong’s affairs.

251. [307]

     Mr So accepted that, in accordance with his usual practice, he would have asked Rachel for details of her assets. He would also have asked Mr Ngo for disclosure of Yuk Tong’s financial assets. He did not receive any such disclosure from Mr Ngo, although he did not recall if there was any actual refusal or any other reason why he did not do so. Nevertheless, Rachel instructed him to proceed. Mr So accepted that, in accordance with his invariable practice in such circumstances, he would have advised Rachel that she was entitled to disclosure which would have enabled her to be confident that the division of assets in the financial agreement was a fair one.

252. [308]

     Documentary evidence: As already noted, the sale of the Ultimo property was completed on 9 December 1998 at a price of $2.38 million. The deposit of $238,000 payable under the contract had been paid into Mr Teng’s trust account. On settlement, the amount payable by the purchaser was $2,142,673 (after taking into account allowances for council rates etc of $673). The sale was subject to GST and the purchaser was also obliged to pay $238,000 in GST. Mr Teng gave a direction that both of these payments be made by way of bank cheque in favour of Rachel. Following settlement, he accounted to Rachel for a further $235,460, being the deposit less his fees.

253. [309]

     Rachel therefore received a total of $2,378,133 in sale proceeds and $238,000 in GST. These monies followed two paths. Rachel paid the cheque for the deposit proceeds ($235,460) and the GST ($238,000) into an account she held with Hong Kong and Shanghai Banking Corporation (“HSBC”). The balance payable on settlement ($2,142,673) was deposited with the Commonwealth Bank of Australia (“CBA”) where it was split into two term deposits.

254. [310]

     The term deposits matured on 14 February 2012, and the proceeds of $2,164,107 (which included the interest which had accrued) were credited to a bank account of GH2 as trustee for the Yam Lun Tong discretionary trust.

255. [311]

     Three days later, on 17 February, the sum of $275,527 was withdrawn from the GH2 bank account and used to discharge the remaining monies due to NAB on the August 2004 loan facility, which was secured on the Chatswood property (see [215] above). An RPA discharge of mortgage was executed by NAB the following month, but for some reason was not registered until much later, in 2021.

256. [312]

     Also in March 2012, the contract to purchase the Kirribilli unit was entered into. The contract was dated 16 March 2012. The contract price was $582,500, with a deposit of $58,250. Rachel was shown as the purchaser.

257. [313]

     The deposit payment under the contract of $58,250 was paid out of the GH2 bank account, as was $500 paid to Mr Teng on account of his fees for acting in the transaction.

258. [314]

     The purchase was completed on 27 April. The transferee was Joe Yin. The purchase was funded with a $350,000 loan facility from NAB in her name. The amount payable on settlement was $198,195. This included stamp duty, the balance of Mr Teng’s fees ($1,137), and also some NAB lending fees and outgoings adjustments made on settlement. The amount was paid out of the GH2 account.

259. [315]

     A separate bank account was established in Joe Yin’s name on settlement, into which GH2 paid the further sum of $360,000. A few weeks earlier, on 7 April, a record was created to reflect this transaction, which was described as a “non-repayable gift”. The gift to Joe Yin was described as coming from “Rachel Shiu – Yam Lun Tong Family Trust”. The figure given was $350,000 rather than the $360,000 ultimately provided.

260. [316]

     The purpose of establishing this account was plainly to act as an offset account from which the NAB loan to Joe Yin could be repaid (the account balance itself sems to have been offset for interest purposes against the loan account, so as to reduce or eliminate the interest payable). The loan repayments were automatically debited to the account. The property was tenanted and the agent paid the rental income into the account.

261. [317]

     The next property acquired was the Hunters Hill unit. The contract for this unit was dated 31 August 2012. The price was $640,000 with a 10% deposit. Rachel was the purchaser. Mr Teng did not act; the conveyancing work was undertaken by a conveyancing firm known was “Raywood Conveyancing”. The purchase appears to have been completed on 9 November. The RPA transfer which showed Rachel as the purchaser was registered on that date.

262. [318]

     The contract for the purchase of the Willoughby unit was dated 18 September 2012. The purchase price was $580,000 with a 10% deposit and again Rachel was shown as the purchaser and was represented by Raywood Conveyancing. The transaction was completed on 14 November. But on completion the property was transferred to GH2.

263. [319]

     The deposit for the Hunters Hill unit purchase (as to $62,400) was paid out of the GH2 bank account on 10 September. Likewise, the $58,000 for the Willoughby unit was paid out of GH2’s account, on 18 September.

264. [320]

     The money flows which preceded and accompanied these purchases were complex. As already mentioned, in June and July 2012, before the payment of the deposits, a total of $64,814 was paid to GH2 from the NAB account numbered 1790 in the name of Yuk Tong. Funds had earlier been paid out from GH2 to Rachel, and, following the payments of the deposits, further funds flowed from Rachel back to GH2.

265. [321]

     Counsel for OSE asserted that analysis would eventually show that the purchase monies for the Hunters Hill and Willoughby units could be traced, wholly or substantially, back to the $2.16 million received by Golden Horse in February 2012, or to the $235,000 in deposit proceeds received by Rachel in December 2011 (counsel accepted that the GST had eventually been accounted for by Rachel out of the GST cheque received on settlement). Counsel indicated that the tracing questions from this point forward did not need to be investigated at this stage and could be worked out later if OSE was successful. I did not understand counsel for the Shiu Parties to disagree.

266. [322]

     The NAB loan to Joe Yin which had been used to finance the purchase of the Kirribilli unit was paid off on 9 January 2017. At the time, the amount outstanding was about $146,000. The sum of $100,000, described as “proceeds of overseas inward transfer”, was directly credited against the loan account. The balance was paid from the offset account originally funded by GH2. Over the following three months, ten payments of $10,000 were paid from that account to Rachel, effectively transferring to her the $100,000 received by Joe Yin by way of “overseas inward transfer” to her. This effectively exhausted the offset account monies.

267. [323]

     The contract to purchase the Lane Cove unit came significantly later. The contract was dated 26 August 2020. The purchase price was $495,000 and the buyer was GH2. Mr Lo acted for GH2 on the transaction. The purchase was completed, and the transfer to GH2 registered, on 23 September.

268. [324]

     As with the Hunters Hill and Willoughby purchases, counsel for OSE contended that analysis would show that the purchase monies for the Lane Cove unit could be traced back to the proceeds of the sale of the Ultimo property (including income derived from the other properties in the meantime), but indicated that it was unnecessary to go into detail concerning the tracing exercise at this point. Again, counsel for the Shiu Parties did not demur.

269. [325]

     Rachel’s testimony: In her June 2021 affidavit in the 2019 proceedings ([160] above), Rachel squarely rejected the claim the proceeds of the Ultimo property were used as proceeds in an attempt to defraud creditors of Joe Wing. She denied (emphasis added):

270. [326]

     As already noted, Rachel did not raise the suggestion that the property had been held by Joe Wing on trust until her 2023 affidavit. In that affidavit, she stated that the approach to sell the property was an unsolicited one. She continued:

271. [327]

     The affidavit did not go into the paying off the mortgage on the Chatswood house, or the purchases of the Kirribilli and Willoughby units, in 2012. Brief reference was made to the purchase of the Hunters Hill unit in 2012, but only to acknowledge that the purchase (in Rachel’s name) was funded in part with a loan from GH2.

272. [328]

     In cross-examination, Rachel maintained that the sale of the Ultimo property resulted from an unsolicited approach by the purchaser. She denied that the sale resulted from a realisation that assets held by Joe Wing, like assets held by his father, were at risk as a result of OSE’s claims against them in Hong Kong.

273. [329]

     Rachel did not dispute that the decisions as to how the proceeds of sale should be used were made by her. In particular, she accepted that it was her decision to make Joe Yin the purchaser of the Kirribilli property. She also accepted that there was no need to borrow money for the Kirribilli purchase, but said that the loan and offset arrangement had been proposed by the broker and was not undertaken to conceal anything.

274. [330]

     Rachel acknowledged that none of the monies from the sale of the Ultimo property was distributed to Joe Wing or to Yuk Tong. She denied that this was as a result of concern about OSE’s action against them.

275. [331]

     Joe Wing’s testimony: Joe Wing did not address the sale of the Ultimo property or the distribution of the sale proceeds in his 2021 affidavit. In his 2023 affidavit ([178] above) he deposed:

276. [332]

     In cross-examination, Joe Wing said that he did not even become aware of the sale until his next visit to Sydney, after it had happened. According to the passenger movement records, this visit was between 24 December 2011 and 30 March 2012.

277. [333]

     Joe Yin’s testimony: Joe Yin did not suggest in her affidavit evidence that she had any involvement in, or firsthand knowledge of, the decision to sell the Ultimo property. Indeed, she deposed that she did not even become aware of the sale until the following year. Nor did she say anything in her affidavit about her purchase of the Kirribilli property in April 2012.

278. [334]

     Joe Yin was asked some questions about the purchase. It readily emerged, consistently with Rachel’s evidence, that all relevant decisions had been made by Rachel on Joe Yin’s behalf. Joe Yin said that she could not remember any dealings with the loan broker or borrowings from the bank, nor could she recollect anything about the offset account. Nor could she recall any dealing with managing agent for the property.

279. [335]

     Documentary evidence: Following the Financial Agreement Yuk Tong continued to make regular visits to Sydney. After returning to Hong Kong on 26 November 2009, he came back to Sydney on 10 February 2010 and stayed until 7 April. There were further visits between 27 September and 2 November 2010, 7 April and 21 May 2011 and 29 October and 10 November 2011.

280. [336]

     The last of these visits ended shortly before the contract for the sale of the Ultimo property was entered into. Shortly after the completion of the sale, Yuk Tong came back to Sydney on 24 December and stayed until 30 March 2012. During this visit, the NAB loan secured on the Chatswood property, which apparently remained in his name, was paid off, and the contract to purchase the Kirribilli unit was entered into.

281. [337]

     Following the sale of the Ultimo property, Yuk Tong received distributions of income from GH1 as trustee for the family trust in 2011-2012 ($44,000), 2012-2013 ($8,000) and 2013-2014 ($51,000). At the time, Rachel effectively controlled the trust as sole shareholder of GH1, and she and Joe Yin were the directors of the company.

282. [338]

     The evidence also shows that in August 2012, Rachel made a binding death benefit nomination in favour of Yuk Tong as to a 30% interest in her superannuation fund. Correspondence in October 2012 demonstrates that at the time she held a policy of insurance on his life.

283. [339]

     Yuk Tong was in Hong Kong at the time of Rachel’s nomination of him as a beneficiary under her superannuation fund, and at the time the Hunters Hill and Willoughby units were purchased, but he returned to Syndey on 27 December 2012 and stayed until 24 March 2013. He was also in Sydney between March and July 2014 before he returned in February 2015 and stayed for almost two years.

284. [340]

     In evidence was an occupational therapist’s assessment for Yuk Tong prepared in July 2015 following a home visit to him at Chatswood. The assessment identified Yuk Tong, Rachel and Joe Yin as having been present. It stated:

285. [341]

     The hearing of the Hong Kong proceedings began on 29 October 2015 and the evidence lasted until 10 November. Yuk Tong was said to be too unwell to travel and gave his evidence by video link. Final submissions took place on 10 December. Yuk Tong remained in Sydney for the submissions, but Rachel was in Hong Kong; she left Sydney on 7 December and returned on 20 December.

286. [342]

     Further occupational therapy records for Yuk Tong in 2016 are in evidence. A note on 22 June records advice from Rachel that Yuk Tong was “now” sleeping downstairs to avoid having to negotiate the stairs to the first floor.

287. [343]

     Judgment was delivered in the Hong Kong proceedings on 8 December 2016. On 22 December, Yuk Tong and Rachel filed a joint application for a divorce. Mr So acted for both of them in the application.

288. [344]

     The application stated that the date of separation was March 2009. Yuk Tong’s address was given as the MacDonnell Road property in Hong Kong. The application stated that Yuk Tong did not regard Australia as his home and he did not intend to live in Australia indefinitely; that he did not ordinarily live in Australia and had not done so for the preceding 12 months; that at the date of separation he had regarded the marriage as over; and that since separation the parties had not lived together as husband and wife.

289. [345]

     These statements on behalf of Yuk Tong are questionable in the light of the documentary evidence. At the time of the application, Yuk Tong had in fact been living in Sydney, at the Chatswood property, for more than 18 months. And, even if he still regarded the MacDonnell Road property as his home, he cannot, following the adverse decision in the Hong Kong proceedings, have expected to do so for much longer. Inevitably, the property would be sold and he would have nowhere else to live but at the Chatswood property in Sydney.

290. [346]

     Also in evidence were hospital and medical records covering hospitalisations and other medical treatment of Dr Shiu following his return from Hong Kong in February 2015, up to his death in March 2019. Counsel for OSE noted these records contained numerous references to Rachel being the contact person for Yuk Tong. In many of them she was described, as she was in the occupational therapy assessment to which I have just referred, as his “wife”, and this continued even after they were formally divorced in May 2017.

291. [347]

     The tax returns for Yuk Tong which are in evidence up to the year ended 30 June 2014 (which was lodged in June 2015) record his home address as the MacDonnell Road property in Hong Kong. Returns for the years ending 30 June 2015, 2016, 2017 and 2018 were not required. A final tax return lodged (after Yuk Tong’s death) for the year ended 30 June 2019 records his home address as the Chatswood property.

292. [348]

     Rachel’s testimony: I have already set out Rachel’s testimony in her August 2021 affidavit about her relationship with Yuk Tong from 1999 onwards. Rachel’s account of the final few years of Yuk Tong’s life, before he died in March 2019, was:

293. [349]

     There are several inconsistencies between Rachel’s version of events and the documentary evidence. According to the documentary evidence, Yuk Tong did not continue to live continuously in Hong Kong until 2015. He returned to Sydney in February 2015 (not “late 2015”) and thereafter lived in Sydney for the rest of his life, apart from four months in Hong Kong between January and May 2017. Until July 2015 at the earliest, he was not staying downstairs in the Chatswood house; he was resting there during the day but sleeping in a double bed in the bedroom upstairs.

294. [350]

     It is also difficult to accept that, having failed to apply for a divorce by March 2010 in accordance with the intention stated in the Financial Agreement, and having delayed in doing so for a further period of more than five years, it was a coincidence, let alone a coincidence deriving from a suggestion made by Rachel’s friends, that the divorce application was made two weeks after judgment was delivered in Hong Kong in December 2016. The statement that Rachel filed for divorce while Yuk Tong was in Hong Kong is also contrary to the documentary evidence, which records that he did not leave Sydney until 1 January 2017, several days after the divorce application was filed.

295. [351]

     Under cross-examination, Rachel maintained that, as stated in the affidavit, she had ceased to care for Yuk Tong by the time of the Financial Agreement in 2009, and in fact from years before that. She said that Yuk Tong hoarded possessions to such an extent that was virtually a mental illness, but did not identify any other inconsiderate or improper behaviour on his part.

296. [352]

     Rachel acknowledged his August 2012 nomination as a beneficiary under her life insurance, but denied that the previous financial agreement had represented a separation of her financial affairs from his. She also acknowledged the distributions of income to him in 2011-2012, 2012-2013 and 2013-2014, but claimed that he did not in fact receive the money and it was used for the benefit of the family (albeit including Yuk Tong).

297. [353]

     Rachel was also questioned about the living arrangements from 2015 onwards. She maintained that Yuk Tong had used Joe Keung’s former room and by 2015 was sleeping downstairs, despite the occupational therapist report of July 2015. Rachel acknowledged that she visited Yuk Tong in hospital and was with him when he died but her evidence was that this was not as a result of any real ongoing affection.

298. [354]

     Joe Wing’s testimony: In Joe Wing’s August 2021 affidavit in the 2020 proceedings he described later events in the following way:

299. [355]

     Little reference was made to post-2015 events in Joe Wing’s cross-examination. He did agree that Yuk Tong lived in Sydney from 2015 onwards, apart from several months in Hong Kong before OSE took possession of the MacDonnell Road property. Indeed, he said that he and his father stayed in a hotel in Hong Kong during that period.

300. [356]

     Joe Yin’s testimony: In her August 2021 affidavit in the 2020 proceedings (see [37] above), Joe Yin deposed that her father and brother returned from Hong Kong to Syndey to live in 2017. She did not mention the period of almost two years between February 2015 and January 2017 when Yuk Tong was living in Sydney. She said that after using Joe Keung’s old room when he stayed, her father later stayed in the downstairs area of the house, and that when he “moved to Syndey in 2017” he lived in that part of the house.

301. [357]

     Joe Yin deposed that she continued to be told nothing about her father’s and brother’s involvement in litigation in Hong Kong. She deposed:

302. [358]

     Under cross-examination, Joe Yin continued to maintain that, when in Sydney, her father stayed in Joe Keung’s bedroom and not in the master bedroom with her mother. She maintained this position even after being taken to the reference in the occupational therapist’s report of July 2015 to Yuk Tong sleeping and dressing in the room with the double bed upstairs ([340] above). She said the report was, on that point, “wrong”.

303. [359]

     Reliability of Shiu family witnesses: In the course of cross-examining Rachel, leading counsel for OSE put to her on several occasions that her evidence was falsely designed to advance the Shiu Parties’ case in the proceedings. In their written submissions, counsel for OSE launched a full-scale attack on her credit. Counsel identified numerous parts of her evidence which were said to have been false. Her oral evidence, in particular, was criticised for evasiveness and dissembling. Counsel submitted that I should decline to accept her evidence on any disputed matter, except where contrary to the Shiu Parties’ interests.

304. [360]

     Leading counsel likewise challenged the credit of both Joe Wing and Joe Yin in cross-examination. He put to them that their evidence in support of the Shiu Parties’ case was not based on any genuine recollection, but rather had been concocted so as to support the narrative which their mother wished to advance. Counsel for OSE again referred in their written submissions to specific passages which, they argued, were not worthy of credit and demonstrated the unreliability of Joe Wing’s and Joe Yin’s testimony.

305. [361]

     In response, counsel for the Shiu Parties pointed out that the events in question in the proceedings went back to 2009 (in the case of the Lindfield transaction) and as far back as 1998 in the case of the Ultimo transfer. Counsel submitted that the performance of Mr Malanos, whose credit was not in issue, showed that it was not realistic to expect any witness to be able to recollect events as far back as that in any detail, and no adverse inference should be drawn against Rachel, Joe Wing or Joe Yin in this regard.

306. [362]

     In developing this submission, counsel referred to the observations by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 about the frailties of oral testimony where past oral dealings are concerned. As his Honour mentioned, once litigation has begun, there is always a risk of testimony being shaped by self-interest, and that may happen subconsciously even in an honest witness.

307. [363]

     In response, counsel for the Shiu Parties submitted that I should accept Rachel (within the limitations of her memory) as a witness of credit. Counsel did not, however, otherwise address the topic of credit in detail or respond to the specific criticisms made by counsel for OSE.

308. [364]

     So far as the evidence of Joe Wing and Joe Yin was concerned, counsel for the Shiu Parties in effect accepted that they had not presented as impressive witnesses. In the course of his oral closing submissions, senior counsel for the Shiu Parties himself stated that neither Joe Yin nor Joe Wing was “of particularly strong character or particularly vigorous intellect”. Later, senior counsel stated that Joe Wing was “not the sharpest tool in the shed”.

309. [365]

     Counsel nevertheless submitted, as I understood them, that, within these limitations, I should accept that the evidence of Joe Wing and Joe Yin was honestly given and could be relied upon. Again, however, counsel did not attempt a point-by-point rebuttal of the criticisms made of that evidence by counsel for OSE.

310. [366]

     While I acknowledge the difficulties involved in giving evidence about long-ago events, I do not think that the comparison with Mr Malanos does anything for the credit of the Shiu witnesses. Mr Malanos was not professing to be able to remember details of transactions from 25 years ago. They were. The question is how reliable their evidence on the question was. The experience of the courts, as distilled by McLelland CJ in Eq in Watson v Foxman, provoked immediate scepticism which their performance as witnesses did nothing to overcome.

311. [367]

     And this is indeed relevant to the reliability of their evidence more generally. For a witness to say that he remembers something when he is merely reconstructing based on what he thinks probably happened may not be as bad as making up a story which the witness consciously knows to be false. But it is still false evidence. The witness is saying that he remembers specified events when in fact he does not. Even where the witness is not conscious of the reconstruction, the fact that he offers a reconstruction when asked for a recollection says nothing for his general reliability as a witness.

312. [368]

     Generally speaking, I was not impressed by Rachel’s testimony. It was, in important respects, contradicted by the documentary record or contrary to the natural inferences that one would draw from the established facts. On few if any occasions was Rachel able to provide a satisfactory explanation for these contradictions. As will be seen below, I have disbelieved her evidence on many, if not all, of the critical factual issues.

313. [369]

     Nor did Rachel’s manner of giving evidence do anything to persuade me that what she said was based on genuine recollection. I got the general impression that she was more interested in telling a story which would advance her case than trying to give me her candid recollection (to the extent that she had a recollection) of the relevant events. I am not persuaded of her reliability as a witness and I treat her written and oral testimony, except where contrary to interest or corroborated by reliable evidence, with great reserve.

314. [370]

     Joe Wing presented as being much less artful than his mother. I accept that he may always have been a follower rather than a leader. But that makes it even less likely that he would actually have recollected events in the detail required for resolving the issues in this case.

315. [371]

     And even where the subject-matter of Joe Wing’s testimony was something which he might have been expected to recall, I generally did not find his evidence persuasive. Overall I was left with the impression that he had little or no recollection of the relevant events and was simply saying what he thought he needed to say to support his mother. Again, I am not persuaded that he was a reliable witness.

316. [372]

     Similar comments apply to Joe Yin’s testimony. There was also a suggestion that the brain surgery which she underwent in 1992 might have had ongoing effects on her cognitive processes. Whether that be so or not, I was not persuaded that she had any genuine recollection of the details of the relevant transactions which are critical for present purposes. Again, I was not satisfied that she was a reliable witness.

317. [373]

     Transfer of Ultimo property to Joe Wing: The principal factual issue between the parties was whether Joe Wing agreed to hold the Ultimo property as trustee for his parents, as alleged by the Shiu Parties.

318. [374]

     Counsel for OSE, in their closing submissions, began with the point that the Ultimo property was transferred to Joe Wing as registered proprietor. Counsel submitted that the onus lay squarely on the Shiu Parties to prove that the legal interest held by Joe Wing was not also a beneficial interest. I did not understand this to be in dispute, but I will nevertheless summarise the submissions made for OSE before turning to the submissions made by counsel for the Shiu Parties.

319. [375]

     Counsel for OSE pointed out that the alleged arrangement was nowhere referred to in the documentary record. The only evidence for it was the Shiu witnesses’ testimony about the alleged exchange between Yuk Tong and Joe Wing (at which Rachel and Joe Yin were allegedly present) about Joe Wing holding the property for his parents. Counsel submitted that the observations in Watson v Foxman were particularly apposite.

320. [376]

     Counsel submitted that I should not be so satisfied in the present case. Counsel’s main points were as follows.

     1. (1)

        The alleged arrangement was inherently unlikely. It would have involved taking the economic interest of the children in the property away and giving it to their parents for no good reason.

     2. (2)

        The purpose of the transfer was to avoid CGT on the expected profit on the sale of the property to Mr Wilson. That required Joe Wing to be the owner of the property. It did not require him to hold it on trust. Indeed such an arrangement might have imperilled the CGT exemption, and thus negated the whole purpose of the transaction. As Mr Malanos’s testimony confirmed, if a trust for the Shiu parents had been mentioned, it would have been considered by GBD and mentioned on the file.

     3. (3)

        The parties’ tax returns were not consistent with there having been a trust in favour of the Shiu parents. Rental from the property was returned by Joe Wing as his own income. The capital gain was likewise included in his personal tax return

     4. (4)

        The financial information which Rachel provided to Mr So in 2009 and to Mr McGree in 2010 was not consistent with either of the Shiu parents holding a beneficial interest in the property. So was the answer given by Mr Teng to the requisition from the purchaser under the 2011 sales contract, which presumably was based on instructions given by Rachel. Counsel suggested that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn against the Shiu Parties as a result of failure to call Mr Teng.

     5. (5)

        Nor were the affidavits made by Joe Wing and Rachel in 2021 consistent with the alleged trust arrangement. At that time their defence seemed to be an entirely different one, namely that there was some sort of resulting trust in favour of GH1.

     6. (6)

        The first mention of the alleged arrangement came in the affidavits from the Shiu family witnesses made in 2023, 25 years after the event. The wording in the affidavits was strikingly similar. Moreover, they recorded the alleged conversation as having occurred at Chatswood when signing the transfer. The documentary evidence, however, indicated that the transfer was signed at GDB’s office in Sydney, and the oral evidence of Joe Wing and Joe Yin was to the same effect.

     7. (7)

        Counsel submitted that Rachel failed under cross-examination to give any plausible explanation for the discrepancies between her 2023 affidavit and what she had said earlier. She also failed to give convincing oral testimony in support of her account ([168]-[175] above). When asked for her unaided recollection, she gave a different account. Counsel was particularly harsh about her attempt to explain this by saying she might have misunderstood the question. They submitted that this answer showed her to be calculating and disingenuous.

     8. (8)

        Joe Wing’s initial evidence in cross-examination about the circumstances surrounding the transfer was very vague and lacked any detail of the supposed arrangement for him to hold the property in trust for his parents. It contrasted unfavourably with the detailed account set out in his 2023 affidavit. There was a similar contrast between the 2023 affidavit and the earlier affidavits made by Joe Wing in 2021, which involved a quite different (and inconsistent) line of defence to OSE’s claim. Joe Wing was unable to explain the inconsistencies. The idea that Mr Brown proposed the holding of the property on trust was absurd, and showed that Joe Wing was “searching for a story”. Although he continued to maintain that he held the property for his parents, this was just a conclusory assertion without any evidentiary foundation.

     9. (9)

        Joe Yin, too, began by giving very vague evidence about the transfer and about prior conversations concerning the property. Her dogged insistence that her parents owned the property was contrary to her own evidence about it being held by Yuk Tong and the children through GH1. In counsel’s submission, Joe Yin’s suggestion that her parents had provided the purchase money showed “some sophistication in her thinking” but it was not sustainable as a matter of fact. The evidence showed clearly that her father had been responsible for the acquisition and her mother had nothing to do with it. Counsel likewise contrasted Joe Yin’s initial testimony in cross-examination with the detail in the affidavit, which she proved unable to recall when she was asked to put it aside. Counsel submitted that Joe Yin had no real recollection of the transaction at all.

321. [377]

     Counsel for the Shiu Parties began by referring to the accounts for GH1 for the year ending 30 June 2017. Counsel pointed out that the accounts showed negative shareholder’s funds (no doubt arising from the interest payments and other holding costs incurred on the property). In counsel’s submission, the economic interest the children had in the property through GH1 was of no value; the property was a source of liability, not of potential benefit.

322. [378]

     In this context, counsel emphasised the unlikelihood of Joe Wing buying the property for himself at a cost of $515,000. Counsel pointed out that at the time Joe Wing was a 22-year-old TAFE student whose only work experience had been as an employee in a chain store selling donuts. In counsel’s submission, it was obvious that he would have not had the financial resources (nor, for that matter, the drive) to make such a purchase himself.

323. [379]

     Counsel seized on the statement in GBD’s letter of 27 April 1998 about the transaction being undertaken for nil consideration. Counsel submitted that in fact the purchase price of $515,000 in the transfer was never paid, and had never been intended to have been paid. Counsel argued that this in itself tended to support the idea that Joe Wing had not acquired any beneficial interest in the property, and instead held it for his mother and father.

324. [380]

     Counsel appeared to accept that the family conversation concerning the alleged arrangement about the property being held on trust by Joe Wing did not occur at GDB’s office. The Court however should accept that such a conversation, in accordance with the account set out in the Shiu witnesses’ affidavits, did occur at Chatswood before they attended the GDB office to sign the transfer. Counsel submitted that their accounts of the conversation might be open to criticism, but asked rhetorically how else they would have come to attend the GDB offices.

325. [381]

     In this regard, counsel made the following points.

     1. (1)

        The preliminary explanation provided by Yuk Tong, as recorded by the Shiu witness affidavits, was credible. The transaction plainly was motivated by a desire to avoid capital gains tax. In counsel’s submission, the rest of the alleged conversation, including the part about Joe Wing holding the property for his parents, followed naturally from that.

     2. (2)

        It was consistent with the Shius’ story that the stamp duty for the purchase, a not insignificant amount, was paid out of a joint bank account of Yuk Tong and Rachel. Joe Yin was also recorded as a joint owner on the account, but submitted that her other evidence demonstrated that she had no real interest in the moneys and had simply been made a party for convenience.

     3. (3)

        The Shiu witnesses’ account was consistent with Joe Wing’s later conduct in leaving the management of the property entirely to his parents (and in particular, Rachel). His evidence that he believed he had no interest in the property was consistent with this. That evidence had not been challenged in cross-examination. Subsequent conduct of this type could just as readily found an inference as contemporaneous conduct.

326. [382]

     The premise of the argument presented by counsel for the Shiu Parties was that the Ultimo property was transferred to Joe Wing without the payment of consideration. I do not accept that premise. In my view, it faces two fundamental difficulties.

327. [383]

     The first is that, while instructions to the effect that there was to be no consideration payable were “confirmed” of the letter of 27 April, the documentation was later prepared on a different basis (just as the intended transferee was changed from Joe Yin to Joe Wing). The directors’ and shareholders’ resolutions passed on 29 May both explicitly stated that the consideration was $515,000. Furthermore, the resolutions were clearly drafted with care, so as to guard against the possibility of some later claim on the basis of sale at an undervalue. If the transaction had been intended to take place at a nil value, assuming that to have been considered justifiable, their wording would have been completely different.

328. [384]

     Furthermore, pursuant to s 36(11) of the Real Property Act 1900, the transfer took effect as a deed. As counsel for the Shiu Parties accepted, this made Joe Wing legally liable to GH1 for the consideration. If in fact it had not been paid, the liability could have been enforced by action. There was nothing in the documentation to release it.

329. [385]

     The second difficulty is that counsel’s argument overlooks what is recorded in the August 1998 file note ([148] above). The note proceeds on the basis that the liability to GH1 was in fact discharged, by means of a payment from Yuk Tong. The payment was by book entry rather than cash. In GH1’s accounts, this would have been reflected by a credit in favour of Joe Wing and corresponding debit to Yuk Tong (which was presumably set off against the monies which Yuk Tong had provided to finance the acquisition).

330. [386]

     Thus, the supposed difficulty with Joe Wing buying the property for himself disappears. Joe Wing could afford to, and did, make payment because his father lent him the money (whether he himself understood that or not). No doubt the expectation was that when the property was sold to Mr Wilson Yuk Tong’s loan would be repaid from the proceeds. That sale did not come to pass but this did not deprive the loan of its validity.

331. [387]

     Nor do I agree with counsel for the Shiu Parties that there was no economic value in the Ultimo property. The whole premise for the transaction was that the property would be sold to Mr Wilson for far more than its acquisition price (and for far more than its then value on the ordinary market). Even if one ignores the gain on the sale, I disagree with counsel. On that assumption there may have been no equity in the property but that only means that would only mean that it had no economic value for GH1’s shareholders. The property still had considerable economic value to Yuk Tong as GH1’s creditor.

332. [388]

     I accept of course that the intent of the transaction was to avoid capital gains tax by making Joe Wing eligible (at least ostensibly) for the owner-occupied property exemption. I also accept that Yuk Tong would have arranged for the other members of his family to attend the offices of GDB on 29 May 1998. But it by no means follows that an additional undertaking was given by Joe Wing, in advance of the meeting, to hold the property for his father and mother. That proposition depends entirely on the 2023 testimony of the Shiu family members, and in that regard the Watson v Foxman point is well taken.

333. [389]

     The evidence shows that the transfer was the brainchild of Yuk Tong. He had always been, and remained, the person who controlled GH1 and directed the family’s tax affairs. Both Joe Yin and Joe Wing simply did whatever Yuk Tong asked them to do by way of implementing the transfer, probably without even fully understanding it. They had no other intention apart from his.

334. [390]

     Rachel was neither a shareholder nor a director of GH1. And although she was present when the transfer was signed, there is no evidence (or at least no reliable evidence) that she played any part in conceiving and planning the transaction. It clearly originated with Yuk Tong long before she came to Sydney in May 1998.

335. [391]

     In these circumstances, I do not place the same significance as counsel for OSE on the transaction arbitrarily depriving the Shiu children of their existing economic interests, through GH1, in the Ultimo property. I suspect that Yuk Tong’s dominance in the family was such that he considered himself (accurately, as the course of events showed) to be free to move the ownership of the property around in whatever way he thought would best advance the family’s overall economic interests.

336. [392]

     What is however correct about counsel’s submission is that there was no reason for Yuk Tong, in effecting the transfer, to prefer Rachel’s interest to that of any other family members. She had, so far as the evidence goes, never participated in the purchase or financing of any of the family’s investment properties, either in Hong Kong or in Sydney.

337. [393]

     What this means is that, to the extent that the intentions of the parties to the putative arrangement (GH1 as transferor/settlor and Joe Wing as transferee/trustee) are relevant, that intention was that of Yuk Tong (and those advising him). And it was clearly dominated by one thing, which was to avoid tax on the prospective profit from a sale to Mr Wilson by obtaining the owner-occupied CGT exemption for the property.

338. [394]

     In these circumstances it would be wrong to characterise Yuk Tong’s intention in terms of whether he wished to benefit himself, or himself or his wife, or his children. His wish was to do whatever he was necessary (in accordance with the advice he received) to obtain the exemption. If that required the property to be transferred to Joe Wing, as it did, then that was the intention which he must have had.

339. [395]

     In the course of their submissions, counsel for the Shiu Parties flirted with the idea that the transfer was some short of sham. Certainly, it is questionable whether Joe Wing actually lived at the property afterwards. The CGT exemption which was later claimed in his name may have been unjustified or even fraudulent. But that did not make the transaction a sham. There was a genuine intent to transfer the property so that the exemption could be claimed, whether lawfully or not.

340. [396]

     The documentary evidence (particularly the August 1998 file note) shows that the GDB lawyers were concerned to ensure that it was undertaken in such a manner as to be legally effective. Likewise, the Shiu family’s accountants were concerned to ensure that the accounting and tax records would be consistent with an effective transaction. The contemplation would have been that, on the sale of the property to Mr Wilson, the proceeds, after repayment of the monies advanced by Yuk Tong, would for legal and tax purposes pass to Joe Wing so that the tax exemption could be claimed (as in fact appears to have happened in 2011-2012).

341. [397]

     There is thus nothing whatsoever in the objective facts to suggest that there was any intention for Joe Wing to hold the Ultimo property on trust for his parents. Indeed, the contrary is the case.

342. [398]

     It is not necessary to go into whether Joe Wing could legitimately have claimed the principal place of residence exemption if he had acquired the Ultimo property as trustee for his parents. Had that idea been floated, then it would at least have required specific consideration by the GDB lawyers. I am satisfied that no one ever mentioned to them any thought of the property being held on trust. If that had happened, then, as Mr Malanos said in his evidence, there would have been a record of it.

343. [399]

     I accept that in a case such as this, the parties’ subsequent conduct may be relevant. But that is only to the extent that such conduct throws light on what their intentions were at the time of the transfer. The more time which elapses between the transfer and when the conduct occurs, the less weight it is likely to have.

344. [400]

     I think the case for the Shiu Parties placed more emphasis on the 2001 power of attorney from Joe Wing in favour of his mother than was warranted. Any significance it may have must be evaluated in the light of the earlier power of attorney granted by Joe Wing to his father.

345. [401]

     The power of attorney in favour of Yuk Tong was granted in June 1998, just after Joe Wing received the transfer of the Ultimo property. This was well before Joe Wing had moved to Hong Kong, which did not happen until 2005. Clearly, Yuk Tong contemplated that he himself would continue to manage the property, even though it would now be in Joe Wing’s name, by means of the power of attorney, and I infer that this was what happened.

346. [402]

     The power of attorney in favour of Rachel (which, on the evidence was arranged by Yuk Tong: see [138] and [164] above) was given at a time when Joe Wing was still living in Sydney. Its evident purpose was to accommodate the fact that Yuk Tong was now more frequently in Hong Kong than before.

347. [403]

     In these circumstances it would be quite wrong to see the 2001 power of attorney as some type of recognition that Rachel had a special or individual interest in the property. The obvious explanation was to allow the management of the property, presumably under the continued direction of Yuk Tong, to take place while he was in Hong Kong.

348. [404]

     There is no reason to think that Yuk Tong intended to exclude Joe Wing completely from the management of the property. It seems to me that the most likely explanation for the grant of the power of attorney, however, was that it was convenient to Yuk Tong to be able to deal with the property without prior reference to Joe Wing, whether he was in Australia or not. The later grant of the power of attorney in favour of Rachel was simply a continuation of this practice.

349. [405]

     There are further reasons why the emphasis on the 2001 grant is misplaced. First, there is no reason to think that it was anticipated in 1998, or that it casts any light on the intention of the parties as at that date. And the subjective intentions of neither Joe Wing (as donor) nor Rachel (as donee) was relevant for the purposes to the 1998 transaction anyway.

350. [406]

     Nor is there any significance in the later use of the rent income from the Ultimo property to meet family expenses. It is not uncommon, in a discretionary trust context, to see distributions made by book entry and tax paid on those distributions, with the residual cash being shared out among family members (see for example Irwin v Pamplin (No 4) [2024] NSWSC 73). Something similar may have happened here, but it would not have altered Joe Wing’s legal entitlements. As already noted, in Joe Wing’s 2010-2011 tax return, which is the only one for his period of ownership of the Ultimo property, which is evidence, the Ultimo income was allocated to him. I have no doubt that the same would have been so in earlier years.

351. [407]

     Joe Wing may, following the transfer, have seen himself as being under some sort of obligation to allow his parents to use the property for the benefit of other family members. But if so that would have been an obligation stemming from his filial obligations, reinforced, perhaps, by his docile nature. It does not cast any real light on what his intention was when entering into the transaction. In any event, as already noted, he did so in accordance with his father’s wishes and for practical purposes it was his father’s intention, not his, which was relevant.

352. [408]

     In the end, the allegation of an agreement by Joe Wing to hold the Ultimo property on trust for his parents rests exclusively on the testimony of the Shiu family witnesses. Counsel for the Shiu Parties did not attempt a point-by-point rebuttal of the criticisms which counsel for OSE made of that testimony. In my view those criticisms were well-founded, and no such rebuttal could plausibly have been made.

353. [409]

     I doubt that any of the Shiu witnesses had any real recollection of the events of 29 May, or of the period leading up to it, beyond a vague understanding that the transfer took place for tax reasons at the instigation of Yuk Tong. I do not accept their testimony on the issue. I am not satisfied that Joe Wing received the Ultimo property subject to any undertaking to hold it for his parents.

354. [410]

     Financial contributions to Lindfield and Chatswood properties: Counsel for the Shiu Parties contended, by way of defence and cross-claim in the 2020 proceedings, that as at the date of the financial agreement (November 2009) Rachel had an interest in the Lindfield property by way of resulting trust because she had contributed to its purchase. Counsel quantified her interest at 42.79%. This was calculated by dividing the deposit and stamp duty monies equally between Yuk Tong and Joe Yin, on the ground that those amounts were paid out of a joint bank account in their names, and dividing the ANZ loan monies used to fund the rest of the purchase equally between Yuk Tong and Rachel, on the ground that both had been liable to repay the loan.

355. [411]

     Later in the judgment I will consider whether it is proper to divide the loan monies equally between Yuk Tong and Rachel on the basis suggested by counsel. But on a factual level it is clear that Yuk Tong was the borrower and Rachel participated only as a guarantor. Nor did Rachel claim to have contributed to the loan repayments, either by way of principal or interest. The position remained the same when the loan was refinanced as a loan from NAB secured on the Chatswood property.

356. [412]

     The same was also the case for the initial acquisition of the Chatswood property. Rachel did not claim to have contributed to paying the deposit or stamp duty. Yuk Tong was the borrower under the loan from Advance Bank, with Rachel as guarantor, and Rachel did not claim to have contributed to the repayments.

357. [413]

     Financial Agreement and transfer of Lindfield property: The claim with respect to the transfer of the Lindfield property gave rise to various factual issues about the purposes and states of mind of Yuk Tong and Rachel when entering into the Financial Agreement and the transfer itself. I will consider the factual questions is this section of the judgment and deal with the legal consequences of my findings at a later point.

358. [414]

     The principal contention by counsel for OSE was that the transfer was made with intent to defraud Yuk Tong’s creditors, specifically OSE. Counsel also contended that the Financial Agreement was a sham.

359. [415]

     It was common ground that the onus of proof on both of these questions lay on OSE, as the party impeaching the relevant instruments. Counsel for the Shiu Parties submitted that OSE had not made out its case on either allegation. But alternatively, counsel contended that Rachel was a bona fide purchaser without notice” for the purposes of s 37A(3). It was also common ground that, s 37A(3) being an affirmative defence, the onus proof on this factual issue lay with Rachel.

360. [416]

     The factual issues thus involved disparate issues as to the states of mind of Yuk Tong and of Rachel, and the onus of proof differed on those issues. For convenience, however, I will summarise the submissions on all issues by both parties, dealing first with the submissions made by OSE. I will return to my findings on the separate issues, having regard to the onus of proof, after that.

361. [417]

     Counsel for OSE submitted that long before November 2009, the problems with Lanco’s Chinese investment and the borrowings from OSE had put Yuk Tong in financial trouble. Counsel invited me to accept the agent’s file note of 11 February 2009 ([232] above) to that effect, and to reject Rachel’s evidence to the contrary.

362. [418]

     In counsel’s submission, the note had a dual significance. It demonstrated, of course, Rachel’s knowledge that Yuk Tong’s financial position was “very bad”. But furthermore, the likely source of Rachel’s information was Yuk Tong himself. The note thus demonstrated his consciousness of being in financial difficulties well before the transfer of the Lindfield property nine months later.

363. [419]

     Counsel submitted that the 11 February file note was not the only documentary evidence which demonstrated knowledge on Rachel’s part of what was really going on in Hong Kong. In particular, the letter of instructions from Chui & Lau clearly established, despite Rachel’s prevarications in cross-examination, that she was aware that Yuk Tong was purchasing her share of the property so that he could mortgage it as security for liabilities he had undertaken.

364. [420]

     There was also Rachel’s agreement to accept payment of most of the consideration by means of a post-dated cheque. Again, despite Rachel’s prevarications, the risks were obvious and were squarely drawn to her attention. Rachel would hardly have accepted that risk unless there had been no alternative.

365. [421]

     Counsel also noted that Rachel’s loan of HKD 1 million to Lanco occurred well after the agent’s note recorded her as being aware of her husband’s “very bad” financial position, and after she had been told that Yuk Tong’s HKD 9 million post-dated cheque would be dishonoured. Counsel submitted that the proper inference was that the loan was part of a last-minute attempt to salvage Lanco’s financial position, made with a clear understanding that there was a risk (and probably even a likelihood) that it would not be successful.

366. [422]

     In these circumstances, counsel submitted that I should not accept Rachel’s insistence of some sort of separation between the Lanco loan and the loan to her husband. Her actions (and her own evidence about feeling cheated) bespoke an understanding that the financial fortunes of Lanco and Yuk Tong were connected, as was indeed the case.

367. [423]

     Counsel laid particular emphasis on Rachel’s evidence that when she was first asked not to present Yuk Tong’s cheque for HKD 9 million, she responded that she would “take” Lindfield or would “want [it] for [her] security” ([261] above). Counsel submitted that, given Rachel’s knowledge of Yuk Tong’s poor financial position, those assertions took on “a more sinister colour”.

368. [424]

     Counsel submitted that in these circumstances I should infer, contrary to Rachel’s denials, that the “focus” of the Financial Agreement was to provide a false pretext for the transfer of the Lindfield property to her. Counsel’s main points were as follows.

     1. (1)

        The transfer of both the Chatswood and the Lindfield properties to Rachel resulted in a “thoroughly lopsided” division of the parties’ assets. It left Yuk Tong without the means to meet his labilities or to pay for his own subsistence. Nor was is a remotely fair reflection of the financial contributions made by him to the cost of acquiring and financing the properties.

     2. (2)

        Despite advice from Mr So of an entitlement to disclosure, Rachel did not ask for it. This was a departure from “ordinary prudent conduct” which was an indication that the Agreement was collusive.

     3. (3)

        The statement in the Financial Agreement that the parties had separated in March 2009 was false. On her own evidence, Rachel never communicated any intention to Yuk Tong to separate until shortly before the Financial Agreement was signed in November 2009.

     4. (4)

        Indeed, the Agreement was fraudulent in an even more fundamental way. Separation was a condition of its validity for the purposes of the FLA: s 90DA(1). But the objective evidence was inconsistent with Yuk Tong and Rachel ever having separated at all. There was no objective change to the nature of their relationship following the execution of the Agreement. They continued to live between Hong Kong and Sydney, and to share the two family homes in the two cities, as they had previously done.

     5. (5)

        Financially there was no real separation either. Rachel continued to treat Yuk Tong as part of her family for life insurance and superannuation death benefit purposes ([338] above) and the distribution of income from the discretionary trust ([337] above). As late as 2017, Yuk Tong transferred $100,000 to Rachel as a gift ([322] above).

     6. (6)

        Counsel submitted that the subsequent divorce (which occurred long after the date foreshadowed in the Agreement, and only just after judgment was given against Yuk Tong in Hong Kong) was likewise a sham. So far as the documentary evidence was concerned, there was no reason to doubt that she remained in a close and loving relationship with Yuk Tong until the end of his life.

369. [425]

     In response, counsel for the Shiu Parties first submitted that the objective evidence did not sustain the proposition that Yuk Tong was in dire financial straits in 2009. Counsel pointed out that the MacDonnell Road transaction property actually involved Yuk Tong raising fresh funds for investment in Lanco rather than paying off existing debt. In counsel’s submission, it was the opposite of trying to defraud Lanco’s creditors.

370. [426]

     Counsel urged me to accept Rachel’s denial that she told the agent that Yuk Tong’s financial position was “very bad” in February 2009. Alternatively, if the agent’s note was correct, counsel accepted that the source of information in it would have been Yuk Tong, but submitted that at most it indicated that Yuk Tong needed to buy the half share in MacDonnell Road to shore up his (hitherto) “fragile financial position”. In this connection, counsel noted that, on the January 2009 valuation, Rachel’s half share was acquired at a significant undervalue.

371. [427]

     Counsel also referred to the evidence of the payment demands made by OSE’s solicitors in 2009 ([102] above). Although a demand was made on Lanco in August 2009, the first formal demand appeared not to have been made on Yuk Tong personally until 27 November. Yuk Tong would not have received it until after he returned to Hong Kong following the execution of the Financial Agreement and the transfer of the Lindfield property.

372. [428]

     Counsel submitted that the true explanation for the Financial Agreement lay in Rachel’s evidence (which, counsel submitted, had not been challenged) that, upon being told that Yuk Tong’s cheque for HKD 9 million would not be met, she said that she would “take” Lindfield or would want it “as [her] security”, to which Yuk Tong agreed. The purpose of the Agreement was to give effect to this agreement and “overcome” Yuk Tong’s failure to meet the cheque.

373. [429]

     Counsel also submitted that it was wrong to see the transfer of the Lindfield property as an outright gift to Rachel. Because of the resulting trust which had arisen on the purchase of the property, Yuk Tong only really owned half of it. Counsel submitted that, at the November 2009 exchange rate, Yuk Tong’s real share of the property was worth less than his liability to Rachel under the HKD 9 million post-dated cheque, which was covered by the release in the Financial Agreement.

374. [430]

     Counsel submitted that in these circumstances, I should not be satisfied that the Financial Agreement, or the consequent transfer of the Lindfield property, was entered into to defraud Yuk Tong’s creditors in general or OSE in particular. Rather, it involved discharging Yuk Tong’s obligations to one of his creditors, namely Rachel.

375. [431]

     Counsel’s next contention was that, even if I were satisfied that Yuk Tong’s purpose had been to put assets beyond the reach of OSE, I should find that Rachel was not aware of that purpose and acted in good faith. Counsel urged me to accept Rachel’s evidence that she did not know Yuk Tong was in financial trouble and she entered into the Financial Agreement because of a genuine breakdown in her marriage. Counsel referred in particular to Rachel’s evidence that she felt “cheated” when Lanco defaulted on her loan to it. Counsel submitted that this would have been a natural reaction, especially if (as they suggested) Rachel had exhibited a trusting nature in accepting a post-dated cheque in the first place.

376. [432]

     I turn now to my conclusions. It is true that the mortgage of the MacDonnell Road apartment was accompanied by a further loan from OSE to Lanco. But it does not follow that Yuk Tong’s financial position was sound at the time. The overall effect of the transaction was to increase his indebtedness and to encumber his one remaining unencumbered Hong Kong property asset. It is hardly likely that he would have agreed to do so, especially when the apartment was the family home in Hong Kong, unless he felt he had no choice.

377. [433]

     In any event, the agent’s note of 11 February 2009 makes the position clear. I do not accept Rachel’s attempt to cast doubt on the note’s accuracy. Counsel for the Shiu Parties did not suggest there was any plausible way in which the information in the note could have come to the agent if it did not come from Rachel herself.

378. [434]

     Nor do I accept counsel’s attempt to read the note down. Had Rachel acknowledged in her evidence that she had discussed Yuk Tong’s finances with the agent, it might have been possible to put forward a plausible suggestion that the agent might have misunderstood or exaggerated something which she said. But that was not Rachel’s case. Her evidence was a bare denial of ever having said anything to the agent about the matter at all.

379. [435]

     Having disbelieved Rachel’s evidence on this point, I see no reason whatever to read the note in other than its natural way. Yuk Tong’s financial position was “very bad”, and he told Rachel so. There is no reason to think that something changed between the sale of the Rachel’s half interest in the MacDonnell Road property and 11 February. I infer that Yuk Tong knew that his financial position was “very bad”, and told Rachel so, even before that transaction.

380. [436]

     It must be borne in mind that the issue for determination by the Court concerns Yuk Tong’s intentions in November 2009, when the parties entered in the Financial Agreement and the transfer of the Lindfield property. That was eight months after Yuk Tong had found himself unable to meet the post-dated cheque in favour of Rachel. It was also six months after Lanco had defaulted on its loan from Rachel (and presumably the loans made by other members of her family). As Rachel blamed Yuk Tong for that default, he can hardly have been unaware of it. Indeed, he probably organised the loan in the first place.

381. [437]

     By November 2009, Lanco had also been in default of its ongoing repayment obligations to OSE since April (or perhaps March), a period of at least six months. There is also the uncontested evidence of Mr George Chu. According to that evidence, Yuk Tong had attended at least one meeting with representatives of OSE in July or August. He evidently did so because of his position as a director of Lanco and a guarantor of its liabilities. In that capacity he made a direct appeal to Mr Chu to withhold action. It would be fanciful to think that when the Chus rejected that appeal by issuing a demand at the end of August he would have been unaware of it.

382. [438]

     There is also the evidence of Joe Wing’s attempt to extract information from Mr Chan’s computer ([274] above). Joe Wing did not dispute that this occurred in June 2009. It is clear from Joe Wing’s description that the attempt was made both on behalf of himself and his father. This also bespeaks an appreciation that legal action by OSE to enforce the Shius’ obligations was impending.

383. [439]

     It may be accepted that a formal demand was not made on Yuk Tong personally until 27 November. But at the time the Financial Agreement was made and the Lindfield property was transferred, Yuk Tong could have been in no doubt that action to recover debts against him on the guarantee was only a matter of time.

384. [440]

     The argument from counsel for the Shiu Parties based on the release in the Financial Agreement of Yuk Tong’s liability to Rachel for the post-dated cheque is ingenious, but I find it unconvincing. Although as a matter of interpretation the release would have covered that liability, there is no evidence that the parties had it in mind when entering into the Financial Agreement. Indeed, there is no evidence that Mr So was even told about it. But the difficulty is more fundamental than that.

385. [441]

     Even if I assume that the parties were in November 2009 aware of the liability created by the post-dated cheque and wished to compensate Rachel for the shortfall, the most natural way of doing so would be to have given Rachel security over the property. Indeed, that was the language which Rachel herself used. Even if the property was to be assigned to Rachel in exchange for release, that could have been done by executing a deed of release and a transfer.

386. [442]

     What counsel’s theory does not explain is why, in addition, it was thought necessary to enter into a financial agreement under the FLA. To my mind, the answer is obvious. Yuk Tong and Rachel, or their financial advisors, would have recognised that the grant of a security or some other transaction of equivalent effect would have been a preference liable to be overturned should Yuk Tong later become bankrupt. A financial agreement for the purposes of the Family Law Act, however, would not have suffered from that potential vulnerability.

387. [443]

     Nor do I accept the argument that the transaction was somehow justified, or made more justifiable, because of a perception that Rachel already had a substantial equitable interest in the Lindfield property. It may be accepted that the Financial Agreement contained a provision recognising that Rachel had made a substantial contribution both the Lindfield property and to the Chatswood property. But on the evidence before me this statement was false. Rachel did not contribute financially either to the purchase price or to the repayment of the loans on either property.

388. [444]

     Not only was it false to say that Rachel had contributed to the acquisition of the property, but Yuk Tong would have known it to be false. He was the borrower and the person making the repayments. The reference in the Agreement to contributions by Rachel is another badge of fraud.

389. [445]

     I acknowledge the argument by counsel for the Shiu Parties that, independently of any actual financial contribution by Rachel, she had, as a consequence of the liability assumed by her as guarantor, an interest by way of resulting trust as to half of the Lindfield property. I will address that argument later in this judgment when I deal with the legal issues which arise. But that is the point. The argument is (and this is not said critically) a lawyer’s one. It has been formulated for the purposes of these proceedings. It would not have been in the mind of Yuk Tong in 2009.

390. [446]

     Another significant feature of the Agreement is the inclusion of an acknowledgement that the Chatswood property belonged to Rachel. Again, the theory advanced by counsel is incapable of explaining this. The property was held in the name of Rachel alone, but, as Yuk Tong was well aware, it had been paid for by him. Again, it seems likely that Yuk Tong and Rachel, or their advisors, recognised that if he later became bankrupt, there was a risk of his trustee making a claim to the property based on his financial contribution. Hence the perceived need to bring her ownership of the property within the shelter of the FLA.

391. [447]

     At one point in Yuk Tong’s and Rachel’s married life, it might have been a fair division for her to receive all of the Australian assets and for him to receive all of the Hong Kong assets. But by November 2009 all of Yuk Tong’s Hong Kong assets had been encumbered and the recognition that his financial position was “bad” makes it clear that they were all perceived to be at risk of being swallowed up by the debts owed to OSE which Yuk Tong had guaranteed.

392. [448]

     In those circumstances, handing over the whole of the couple’s assets to Rachel could never have been considered a reasonable division. I accept that there might have been an argument that Rachel was entitled to some share of those assets on account of non-financial contributions, but on no view would that result in her receiving all of them when Yuk Tong had been solely responsible for their acquisition. The haste with which the transaction was undertaken, and the failure to obtain formal disclosure, are further indicators that it was in no sense an arm’s length bargain between genuinely estranged spouses.

393. [449]

     Counsel for OSE were also right to point out that the separation date of March 2009 was false. It is true that at the time Yuk Tong was in Hong Kong and Rachel was back in Sydney. But that was nothing new for them. In their circumstances, separation required something more than periodic absence from each other’s company. Nor would a mere intention to separate on Rachel’s part (which I do not necessarily accept has been established by the evidence) suffice. At the very least, it would need to have been communicated to Yuk Tong. On Rachel’s evidence that did not happen until November 2009 at the earliest.

394. [450]

     This leaves the evidence about the later family affairs of Yuk Tong and Rachel. But they did not address that evidence, and the submissions from counsel for OSE based on it, in any detail. I understood their position to be that the questions raised by that evidence was too marginal to require a response.

395. [451]

     I acknowledge that, in the light of the findings I have already made about the Financial Agreement, the question whether Yuk Tong and Rachel actually did intend to separate in November 2009 is not a critical one. I also acknowledge that their subsequent conduct is relevant only insofar as it casts light upon this question, and the longer the conduct occurred after that date the less weight it has for the purpose.

396. [452]

     But, as already noted, a finding that Yuk Tong and Rachel did not actually intend to separate in November 2009 would add a further dimension to the fraud involved in the execution of the Financial Agreement. The evidence of their subsequent relationship therefore does have some relevance, albeit diminishing over time. Some parts of it are also relevant to Rachel’s general credibility as a witness.

397. [453]

     I broadly accept the submissions made by counsel for OSE on these issues. On the objective evidence, there was no significant change to the established pattern of their lives. Neither of them appears to have sought relationships with anyone else, and they told no one that they had separated. The documentary evidence shows the normal incidents of marriage continuing right through to Yuk Tong’s death, except for the inevitable effects of his failing health.

398. [454]

     The eventual divorce between Yuk Tong and Rachel also smacked of collusion. I have already referred to the questionable truth of some of the statements made in support of the application. The fact that it was made only two weeks after judgment was given against Yuk Tong (and years after the date foreshadowed in the Financial Agreement) is also very suggestive. I find Rachel’s testimony that this was a coincidence and the divorce happened when it did because of suggestions from her friends ([348] above) highly implausible.

399. [455]

     Another significant factor was the payment by Yuk Tong of $100,000 to Joe Yin (subsequently passed on to Rachel) a few weeks later. The circumstances strongly suggest that the monies came from scraping together whatever remaining assets Yuk Tong had in Hong Kong and remitting them to Australia to keep them out of OSE’s hands.

400. [456]

     On the other findings which I have made, the payment would seem to have been a clear alienation of property to defraud Yuk Tong’s creditors, although no claim to that effect has been made in these proceedings. But what is significant for present purposes is that Yuk Tong entrusted the payment to Rachel, even though they had ostensibly just been divorced. That is difficult to explain except on the basis of an ongoing financial relationship between them.

401. [457]

     I did not find Rachel’s evidence on her later relationship with Yuk Tong persuasive. In particular I see no reason to accept her self-serving testimony that when she visited Hong Kong after 2009 she only did so in transit to other places ([244] above) or that while there she did not socialise with Yuk Tong or spend any time with him. I accept that to some extent they may have grown apart, and this may have increased as Yuk Tong aged, and his health declined. But the evidence of other witnesses does not support a complete rupture of all family ties.

402. [458]

     On the evidence as a whole, I am satisfied that the Financial Agreement was not an arm’s length division of Yuk Tong’s and Rachel’s matrimonial assets consequent upon separation. Rather its purpose was to create a false pretext for the transfer of the Lindfield property to Rachel (and the confirmation of her ownership of the Chatswood property). The overall purpose was to put Yuk Tong’s Australian assets beyond the reach of his Hong Kong creditors, and in particular beyond the reach of OSE.

403. [459]

     This brings me to Rachel’s alleged good faith and lack of knowledge. I found the evidence which Rachel gave on this topic generally unsatisfactory, especially in the light of some of the documentary evidence. The following points in particular stand out.

     1. (1)

        I thought Rachel’s testimony about her knowledge of Yuk Tong’s financial dealings in Hong Kong and China was suspiciously vague. It gave me an impression of obfuscation. Given the amount of time she spent in Hong Kong (including seven months straight in 2006), and her ongoing communications, even on her own case, with Joe Wing, I find her claim to have known nothing about Lanco and the Chinese venture quite implausible.

     2. (2)

        Similar comments apply to Yuk Tong’s request for consent from OSE to the sale by him and Rachel of the MacDonnell Road apartment to a BVI company ([225] above). I can see no good reason why he would have made the request without her agreement. Rachel did not suggest one.

     3. (3)

        Rachel’s prevarications when confronted with her letters of instruction to Chui & Lau ([255]-[256] above) were, I thought, very unimpressive. Her initial response was to deny receiving advice which the letters plainly indicated had been given, and was contrary to her affidavit testimony that she believed that she was unaware of borrowing by Yuk Tong and she thought that there was no risk involved in the transaction ([257] above). In the end, the contradictions were not explained. It is difficult to see how they could have been the product of an honest mistake.

     4. (4)

        I have already rejected Rachel’s evidence in cross-examination in which she tried to deny the accuracy of the agent’s note of 11 February 2009. As already noted, Rachel did not suggest that something she had said might have been misinterpreted. The note flatly contradicted her earlier affidavit evidence that she did not know Yuk Tong was in financial trouble. Again, there seems no possibility of an honest mistake.

     5. (5)

        The agent’s note also shows that the possibility of Rachel taking the Lindfield property had been considered by February 2009 at the latest. I am not prepared to accept Rachel’s uncorroborated testimony that this was only something which she considered and discussed with Yuk Tong when she was told his post-dated cheque would not be met.

     6. (6)

        Other aspects of Rachel’s story about making her supposed decision to separate from Yuk Tong in late April or early May 2009 did not make sense. She was unable to explain why she blamed him for Lanco’s failure to repay her loan if, as she claimed, she was unaware of any link between him and Lanco. Nor do I accept the suggestion by counsel for the Shiu Parties that her conduct is explained by some sort of commercial naivete. I saw no sign of that.

     7. (7)

        Rachel’s evidence of the circumstances in which the Financial Agreement was entered into was, I thought, generally unimpressive. She was ostensibly the moving party. But she gave no explanation for why she waited for seven months after, on her own case, having determined to divorce Yuk Tong in April or May, before she took action.

     8. (8)

        In this connection, Rachel’s visit to Hong Kong only a matter of weeks before she approached Mr So is suggestive, but she said nothing about it in her evidence. Nor was Mr Lam’s role in recruiting Mr So explained. I was left with the impression that Rachel gave as little evidence as she could on the topic and I am far from convinced that she told the Court everything she knew about it.

     9. (9)

        As already noted, on Rachel’s own evidence, the separation date of March 2009 which she gave Mr So was false. Rachel must also have been well aware that the statement that she had made a significant financial contribution to Lindfield was false. No real explanation was given for how these instructions came to be given to Mr So.

     10. (10)

         I have not overlooked the fact that in cross-examination that Rachel asserted that she had made payments towards the acquisition of the Lindfield property. But she referred to no concrete instances of this occurring, even though, it seems, extensive bank statements were in evidence. The previous failed attempts to give admissible evidence in support of her case make her assertions in cross-examination even less credible.

404. [460]

     Having regard to the documentary evidence, and my reservations as to Rachel’s credibility as a witness, I am not prepared to accept she acted either in good faith or without notice of the fraudulent intention I have found Yuk Tong to have had. Rather, I think she probably shared it.

405. [461]

     Sale of Ultimo property and subsequent family property purchases: So far as intention to defraud is concerned, it was not suggested that Joe Wing had any assets available to him, nor any earning capacity, which would allow him to meet the claims being made against him in Hong Kong by OSE. Clearly, both he and his father, at least, must have appreciated at the time the Ultimo property was sold that it was at risk.

406. [462]

     As already noted, Rachel asserted in her June 2021 affidavit that she was unaware at the time of the sale of the Ultimo property of Joe Wing’s financial difficulties in Hong Kong. This assertion was read as part of her evidence at the trial in October 2023. I disbelieve it.

407. [463]

     On Rachel’s own evidence, she had learned by 2010 that Joe Wing was being sued by OSE, as well as Yuk Tong, in Hong Kong. There is contemporaneous evidence from July 2010, in the form of Mr McGree’s file note ([293] above) of a concern about Joe Wing being exposed to claims from creditors. Rachel denied having such concerns, but gave no explanation for how they could have come to be recorded in Mr McGree’s file note if she had not told him about them. Again, there seems no possibility of honest mistake. I am satisfied that she was well aware at the time of the sale that Joe Wing was facing financial ruin in Hong Kong.

408. [464]

     Given the reservations I have about Rachel’s reliability, I am not prepared to accept her assertion that the sale of the Ultimo property resulted from an unsolicited approach from the purchaser. That evidence is self-serving and uncorroborated. But that does not mean I can be affirmatively satisfied that it was false. There is simply no reliable evidence one way or the other.

409. [465]

     In fact, the documentary evidence leaves open the possibility that, at the time of the sale of the property and the 2012 property transactions which followed, Yuk Tong was still involved, or at least was being consulted, behind the scenes. He was in Sydney until not long before the Ultimo sale contract was signed, and visited again for the first quarter of 2012, which coincided with the discharge of the Chatswood mortgage and the exchange of contracts on the Kirribilli property. But again, there is no reliable evidence on which I can make a finding about this one way or the other.

410. [466]

     I am not sure in the end that there was really any dispute about these conclusions. But counsel for the Shiu Parties pointed to the evidence from Rachel that she sold the property and appropriated the proceeds because she thought she was entitled to do so because she (and Yuk Tong) effectively owned it. Counsel submitted that even if this belief was incorrect on a legal level, it did not make her conduct dishonest.

411. [467]

     One difficulty with this contention is how, even if there had been some form of constructive trust in favour of Rachel and Yuk Tong, that would have entitled Rachel to appropriate all of the proceeds of the property to herself. But it is not necessary to consider this question any further. For reasons which I have already given, I do not accept that there was any conversation with Joe Wing about him holding the property for his parents in 1998.

412. [468]

     Furthermore, as already noted, the entitlement explanation did not appear in Rachel’s initial affidavits in 2021 and was only presented in affidavits prepared shortly before the trial, two years later. Whatever its legal merit as an ex post facto justification for Rachel’s actions (a question which I will consider when addressing the legal issues which arise, later in the judgment), I do not believe that it formed any part of Rachel’s thinking in 2011.

413. [469]

     Similarly, Joe Wing’s evidence that he did not expect to be consulted is an ex post facto rationalisation for his mother’s actions. The fact is that he was not consulted in advance, and, on his own evidence, he only learned of the transaction after it had taken place. There is, however, no reason to doubt the evidence that when he did learn of the transaction, he made no complaint about it. I will consider the significance of this later in the judgment.

414. [470]

     The course taken by the proceeds after they were appropriated by Rachel is a matter of record and I have already summarised it sufficiently for present purposes earlier in the judgment. There is no doubt that, if OSE is entitled to an account on equitable principles, the monies used to pay the deposit and the other acquisition costs for the Kirribilli unit were traceable proceeds of the Ultimo monies. So too was the payment of $276,000 made to discharge the mortgage on the Chatswood property, and the $360,000 used to fund the offset account for Joe Yin ([315] above).

415. [471]

     After mid-2012, the flows become more complicated, but, as already noted, I was not asked to make any further findings on the subject at this stage.

416. [472]

     Counsel for the Shiu Parties invited me to find that no knowledge of any breach of duty by Rachel could be attributed to Joe Yin for the purposes of tracing claims against her. I decline to do so. The monies which she received were provided to Joe Yin as a gift. She cannot have been unaware of that, and must have appreciated that the monies were coming to her from family sources.

417. [473]

     There is no positive evidence, or at least no reliable positive evidence, that Joe Yin was unaware of the sale of the Ultimo property by April 2012 when she was substituted as the purchaser of the Kirribilli unit and entered into the borrowing arrangements with NAB. In any event, on both her mother’s evidence and her own, her mother was responsible for the entire transaction as her agent. She is thereby fixed with her mother’s knowledge of all relevant circumstances.

Transfer of Lindfield property

1. [474]

   As already mentioned, the case for OSE with respect to the Lindfield property was that the transfer of the property from Yuk Tong to Rachel in November 2009 had been a fraudulent alienation of property for the purposes of CA s 37A(1). OSE had exercised its right to avoid the transfer by bringing the 2020 proceedings. As a result, ownership of the property had reverted to Yuk Tong.

2. [475]

   In consequence, it was claimed that OSE was entitled to a mortgage over the property to secure the amounts due to it. Alternatively, a charging order was sought or an order appointing a receiver to sell the property and use the proceeds to satisfy that debt.

3. [476]

   A claim was also made to have Rachel account for the rent received by her from the property. Under s 37A(1) the account was confined to the period since the commencement of the 2020 proceedings. But a further contention was presented that the transfer attracted separate equitable relief under the principles in Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125, which entitled OSE to an account going back to November 2009.

4. [477]

   In the remainder of this part of the judgment, I will first consider whether OSE’s contention that it has avoided the transfer is made out on a prima facie basis. I will then deal with the affirmative defences which were advanced on behalf of Rachel. Next, I will address the different forms of relief claimed on behalf of OSE. Finally, I will address the extended accounting claim based on Chesterfield v Janssen.

5. [478]

   CA s 37A(1) relevantly provides:

6. [479]

   The High Court authoritatively considered the operation of s 37A(1) in Marcolongo v Chen (2011) 242 CLR 546. After referring to the case law on the Elizabethan predecessor to s37A, the Court stated (at [20]):

7. [480]

   The Court also addressed the meaning of “defraud” in s 37A, concluding:

8. [481]

   There was some debate between the parties about identifying the “alienation” for the purposes of the enactment in the present case. Counsel for Rachel pointed out that the transfer was expressed to have been made in consideration of Yuk Tong’s obligations under the Financial Agreement.

9. [482]

   Counsel for Rachel noted that no application had been made by OSE to have the Agreement set aside (OSE was not a party to the Agreement but the Agreement could be set aside under FLA s 90K(1) by a court having the necessary jurisdiction). Counsel submitted that, while the Agreement stood, valuable consideration had been given and the property had not been “alienated”. I understood this submission to be based on the proposition that the Agreement being given for valuable consideration, gave Rachel an equitable interest in the property which meant that Yuk Tong owned only a bare legal interest.

10. [483]

    In part this argument was based on the contention that Rachel already had a beneficial interest as to half of the property by way of resulting trust. As I explain below, I have rejected that defence. But there was another limb to the argument. The Agreement contained a release which had the effect of compromising Yuk Tong’s liabilities to Rachel, and in particular his liability under the HKD 9 million unpresented cheque. This was said to provide independent valuable consideration for the transfer, which allowed Rachel to resist an order for re-transfer.

11. [484]

    Counsel for OSE focussed on the transfer of the Lindfield property itself. Counsel acknowledged that no claim for relief had been made against the Financial Agreement, considered on its own, on the basis that the Agreement itself was an alienation of property with intent to defraud creditors for the purposes of CA s 37A(1). In counsel’s submission, there was no need to do so. OSE could simply “go around” the Agreement and focus on the subsequent transfer.

12. [485]

    Counsel’s submission was based on a line of decisions in this Court. The first was the decision of Hodgson J in Silvera v Slavic [1999] NSWSC 83. In that case the property which was the subject of the s 37A claim had been transferred between two parties to a de facto relationship pursuant to an order of the Local Court in the exercise of its jurisdiction under the Property (Relationships) Act 1984. The creditor alleged that the order had been obtained by collusion and misrepresentation. The question was whether this Court could make an order for re-transfer under s 37A while the order of the Local Court, which had not been set aside, stood.

13. [486]

    Hodgson J stated that, for the purposes of applying s 37A, the “alienation” involved both obtaining the collusive order and effecting the transfer in consequence of it. He also accepted a submission by the creditor that s 37A relief might be granted (including, it seems, by means of a “make available” order of the type discussed below) without the need to set the Local Court order aside.

14. [487]

    Similar conclusions were reached by Barrett J in Green v Schneller (2002) 11 BPR 20,935, where the property had been transferred between spouses pursuant to a collusively obtained order under FLA s 79. And in Zaravinos v Houvardas [2004] NSWCA 421 the Court of Appeal upheld a s 37A order where the property had been the subject of a collusive declaration under FLA s 78.

15. [488]

    In my view, these conclusions apply a fortiori in the present case. The Financial Agreement is not a court order. It is simply an agreement inter partes, albeit one which, to the extent valid, may lead to consequences for later FLA proceedings. I say “to the extent valid” because, as already noted, counsel for OSE submitted that FLA s 90DA required that, before the Agreement could have any consequence under the FLA, there had to have been an actual separation between the parties; on my findings, there was not.

16. [489]

    It is not necessary in my view to decide in these proceedings whether the Agreement has any force under the FLA (the question in fact has been deferred as a result of the separation hearing order made in the present proceedings: see [51] above). Whether a court exercising FLA jurisdiction could set the Agreement aside does not need to be addressed.

17. [490]

    Nor do I accept the argument from counsel for Rachel that there was no “alienation” because Rachel had some sort of equitable ownership of the property, as a result of having given valuable consideration for the transfer through the release in the Agreement. CA s 37A(1) renders an alienation of property void at law. The legal title was alienated. There is no occasion to consider equitable interests or titles.

18. [491]

    Furthermore, the “equitable ownership” posited in counsel’s argument depends upon saying that Rachel could have obtained, on the basis of the Financial Agreement, an order for specific performance requiring the transfer of the Lindfield property to her. The onus must be on Rachel to demonstrate this rather than on OSE to negative it.

19. [492]

    I therefore do not see Rachel’s alleged entitlement to enforce the Financial Agreement as raising any issue which goes to OSE’s entitlement to relief under s 37A(1). I will instead deal with it when considering Rachel’s affirmative s 37(3) defence, below.

20. [493]

    On my findings, the Financial Agreement was simply a pretext by Yuk Tong to provide a cover for the transfer of the Lindfield property to Rachel. I am satisfied that he entered into the Agreement, and the subsequent transfer, with the requisite intent to defraud his creditors for the purposes of s 37A(1). Subject to Rachel’s affirmative defences, the transfer is prima facie void under CA s 37A(1).

21. [494]

    CA s 37A(3) provides:

22. [495]

    Textually, the enactment requires the satisfaction of two conditions. One is that Rachel was a “purchaser in good faith” and the other is that she lacked notice Yuk Tong’s fraudulent intention.

23. [496]

    The first element engages the arguments from counsel for Rachel which concern the consideration for the transfer and the release effected by the Financial Agreement (see above). On its face the transfer involved consideration in the form of the release provided by Rachel.

24. [497]

    Counsel of OSE, however, submitted that the Financial Agreement was a sham. If so, it was void and provided no consideration for the transfer.

25. [498]

    The submission is an understandable one, given the allegation (which I have upheld) that the Agreement was a not a genuine division of the parties’ matrimonial property consequent upon their separation. I have also found that the parties entered into the agreement to provide a pretext for the transfer of the Lindfield property, and some of the recitals to the Agreement were knowingly false.

26. [499]

    But the Agreement would only be a sham if the parties did not intend it to have the legal effect for which it purported to provide. It is true that, in billing itself as a financial agreement for the purposes of the FLA, the Agreement was fraudulent. But as already noted, it was first and foremost an agreement inter partes providing for mutual releases and the transfer of the Lindfield property in consideration of those releases. To this extent, the parties clearly intended it to take effect in accordance with its terms. Indeed, they proceeded on this basis by executing the transfer. In my view the mutual releases and the agreement to transfer the property in consideration of those releases, although fraudulent as against creditors, were not sham transactions as between Yuk Tong and Rachel.

27. [500]

    But it does not follow that “good faith” for the purposes of s 37A(3) has been established merely because valuable consideration was provided for the transfer: see Marcolongo v Chen at [12] citing Glegg v Bromley [1912] 3 KB 474. On my findings, Rachel was an active participant in defrauding Yuk Tong’s creditors. Although a “purchaser” she was not a “bona fide purchaser” for the purpose of s 37A(3). Furthermore, on my findings, she was well aware of Yuk Tong’s fraudulent intent. The s 37A(3) defence fails.

28. [501]

    As already noted, Rachel’s next defence was that, at the time of the transfer, Yuk Tong held half of the Lindfield property for her on a resulting trust. The trust allegedly arose from the purchase arrangements for the property.

29. [502]

    As already noted, the deposit and the stamp duty ($156,544) were paid out of a bank account in the name of Yuk Tong and Joe Yin. The remaining $990,000 of the purchase was borrowed by Yuk Tong, with the loan being secured by a guarantee from Rachel supported by a third-party mortgage over the Chatswood property, which was in her name.

30. [503]

    In their written submissions, counsel for the Shiu Parties split the monies from the joint bank account equally between Yuk Tong and Joe Yin. Counsel also split the borrowed contribution to the balance of the purchase price equally between Yuk Tong and Rachel. The resulting calculation was that there was a resulting trust as to Yuk Tong for 50%, Rachel for 43% and Joe Yin for 7%.

31. [504]

    Counsel for OSE took a preliminary objection to splitting the payment from the joint bank account equally between Yuk Tong and Joe Yin. Counsel stated that there was no pleaded allegation that Joe Yin had an interest in the bank account monies. Counsel submitted, by reference to Croton v The Queen (1967) 117 CLR 326, that the mere fact that monies were held in a joint account was not sufficient to give Joe Yin an ownership interest in them. What needed to be demonstrated was that Yuk Tong was not free to draw on the monies in the account for his own purposes. This had not been pleaded, and the evidence before the Court did not establish it.

32. [505]

    There was no reply to these points from counsel for the Shiu Parties. And it was not merely a matter of un-pleaded factual allegations. No claim was made to any interest in the property by Joe Yin. The cross-claim for a declaration that the property was held on resulting trust was made by Rachel alone. The claim was that the property was held on resulting trust for her as to 50%.

33. [506]

    In these circumstances, the only issue in the proceedings was whether Rachel had an interest in the Lindfield property by way of resulting trust. On her own case, that interest could not exceed 43%. There could thus be no challenge to Yuk Tong’s equitable ownership of the remaining 57%.

34. [507]

    Counsel for Rachel based the claim for a resulting trust on the decision of the High Court in Calverley v Green (1984) 155 CLR 242. In that case, the appellant and the respondent borrowed monies in their joint names to buy a home which was likewise put into their joint names. The loan was later paid off by the appellant. It was found that he had no intention to give the respondent a beneficial interest in the property, thus rebutting any presumption of advancement on his part. His contention was that the respondent therefore held her share of the property on resulting trust for him. But the Court rejected that contention.

35. [508]

    Gibbs CJ said (at 251, 252-253):

36. [509]

    Counsel accepted that in the present case Yuk Tong alone was the borrower. But the guarantee documents were worded so as to make Rachel liable for the debt as principal, independently of whether the repayment obligation could be enforced against Yuk Tong. Counsel submitted that this meant that Rachel and Yuk Tong were equally liable to repay the loan, and the reasoning in Calverley was applicable.

37. [510]

    Counsel for OSE, in reply, submitted that Rachel’s liability as principal, vis-à-vis the Bank, made no difference. There was a distinction between primary and secondary liability, which was a matter of substance, not form: Valstar v Silversmith [2009] NSWCA 80 at [36]. Rachel’s liability was secondary. The reasoning in Calverley therefore did not apply.

38. [511]

    I think that these submissions must be accepted. In my view there is no justification for focussing solely on Rachel’s liability to the Bank. That may have been a liability as principal. But as between herself and Yuk Tong, she was still a surety. If she had been called upon to pay, she would have had an equivalent right of indemnity against Yuk Tong: Peter Watts and F.M.B. Reynolds, Bowstead and Reynolds on Agency (23rd edition, 2024, Sweet & Maxwell) at [7-057]-[7-058]. In substance, as between them, the liability was his.

39. [512]

    The reasoning of Gibbs CJ in Calverley expressly proceeds on the basis that the appellant and the respondent in that case were joint borrowers. In fact, the appellant was unable to borrow on his own and the financier insisted on a joint loan: see at 245-246. Counsel for the Shiu Parties did not point me to any decision in which the reasoning of Gibb CJ has been extended so as to treat a surety as contributing to the purchase price in the relevant sense. To recognise a resulting trust in such cases would greatly expand the doctrine, and produce results which, in my view, would be difficult to reconcile with principle.

40. [513]

    The resulting trust defence (and cross-claim) fails.

41. [514]

    The next of Rachel’s affirmative defences was one of release. Counsel contended that the effect of the Assignment Deed was to release all of OSE’s claims against Joe Wing, whether arising out of the registered judgment in this Court, or the underlying Hong Kong judgments, or the further underlying liabilities under the Loan Agreements. Counsel further contended that those liabilities were jointly owed by Yuk Tong, and consequently the release of Joe Wing also released all of OSE’s claims against Yuk Tong. This, in counsel’s submission, was a case for the application of the common law that the release of one joint obligor releases all of them: Duck v Mayeu [1892] 2 QB 511.

42. [515]

    Counsel for OSE disputed that the Assignment Deed had the effect of releasing OSE’s claims against Joe Wing. I will return to this issue below. But counsel also contended that even if the Deed had that effect, the release of Joe Wing would not also release Yuk Tong.

43. [516]

    Counsel’s arguments on this point were put trenchantly. Counsel submitted that the liabilities under the judgments were several as well as joint. So were the underlying liabilities under the Loan Agreement. Counsel referred specifically to the provision of the agreements and the terms of the judgments in that regard.

44. [517]

    There was no response to these submissions. Presumably, that was because no reply was possible. I accept the submissions. This defence fails.

45. [518]

    A transaction caught by CA s 37A(1) is not automatically void but is voidable at the insistence of any person prejudiced by it (in this regard s 37A(1) reflects the previous caselaw: Brady v Stapleton 88 CLR 322 at 333-334). The person prejudiced must therefore take some action which amounts to voiding the transaction. Counsel for OSE submitted that the necessary action had been taken by bringing the 2020 proceedings, which were commenced on 23 September of that year. I did not understand this to be in dispute.

46. [519]

    Once an alienation of property has been voided under CA s 37A, the alienation is void at law and, where possible, the property revests in the alienor. Once this has occurred, the plaintiff creditor, and any other creditors of the alienor, may pursue recovery of their debts from the alienor in the ordinary way. CA s 37A does not create any additional security interest, or priority, in favour of the plaintiff creditor.

47. [520]

    In some cases, revesting of the relevant property at common law may be sufficient for the purposes of the consequential exercise of creditors’ rights. But where it is not, equity, acting in its auxiliary jurisdiction, can grant relief in the nature of rescission to give proper effect to the avoidance of the alienation. That relief may involve orders for delivery up and cancellation of instruments, re-transfer of the relevant property (with or without conditions), and accounting for benefits received under the transaction which has been voided. In principle, it seems to me that the grant of such auxiliary relief is analogous to the recessionary relief which is granted in equity where a contract has been voided for fraud at common law: see Dyson Heydon, Mark Leeming, Peter G Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5th ed, 2014, LexisNexis) (“MGL”) at [25-065].

48. [521]

    Where, as here, Torrens title land has been alienated and the alienee has been registered as the owner, merely making a declaration that the transfer was void under CA s 37A will not be enough. The alienor must be restored as the registered proprietor, which requires an order for re-transfer in equity, or, perhaps, under the Real Property Act 1900 (see the discussion of the statutory provisions (in a Victorian context, but including New South Wales references) in Bremner v French (No 4); Aesthete 101 Pty Ltd v Stone [2024] NSWSC 793 at [65]-[85]).

49. [522]

    In the present case, retransfer would require the property to be somehow registered in the name of Yuk Tong’s estate. That is problematic because there has been no grant of administration of the estate to a legal personal representative of Yuk Tong. His property remains vested in the NSW Trustee pursuant to the Probate and Administration Act 1898, s 61, pending such a grant.

50. [523]

    The relief claimed by OSE did not try to confront this problem. Instead, the property was treated as having notionally revested in the NSW Trustee, but OSE claimed to be entitled, as against the Trustee, to a mortgage securing Yuk Tong’s liabilities under the judgment against him.

51. [524]

    Thus, relief in the nature of rescission was not sought on behalf of OSE, so far as accounting for the property itself was concerned. Counsel for OSE did however contend that income derived from the Lindfield property should be made available to meet Yuk Tong’s debts in the same way as the property itself. For this purpose, counsel sought an account should be taken of the income derived by Rachel from the property from 23 September 2020 onwards.

52. [525]

    Counsel limited the account to the period after the commencement of the 2020 proceedings because they considered that this was mandated by the decision in Brady v Stapleton. In that case, the fraudulent debtor (“D”) transferred property to an associated company (“C”), which, through D, was complicit in the fraud. Before the fraud was discovered and the transaction voided, C sold the property to a bona fide purchaser (“3P”). A claim by D’s trustee in bankruptcy against C for recovery of the value of the property received by it was rejected by the High Court.

53. [526]

    The Court stated that the fact that 3P was a bona fide purchaser for value without notice meant that the CA s 37A(3) defence covered not only the transaction between it and C, but also the prior transaction between C and D. This was so even though C was not itself a bona fide purchaser. The Court concluded:

54. [527]

    Counsel for the Shiu Parties contended that OSE had no entitlement to a mortgage over the Lindfield property to secure the judgment. But they did not contend that, if the s 37A claim succeeded, an order should be made retransferring the property to Yuk Tong’s estate either. Instead, they submitted, the appropriate relief was to make an order requiring Rachel to make a share of the property available for claims by Yuk Tong’s creditors (I will refer to an order of this type as a “make-available” order). I will return to these competing contentions shortly.

55. [528]

    As I understood it, counsel for the Shiu Parties did not object, if the s 37A claim succeeded, to an order for account being made against Rachel for the period from 23 September 2020 onwards. There might however have been a question about whether the concession that rent prior to that date was necessary.

56. [529]

    It is one thing to say that the transfer was effective until and unless voided. It does not necessarily follow that once it has been voided, the Court cannot grant equitable relief against the alienee ab initio. The claim against C in Brady v Stapleton was a common law one for money had and received. No question of rescission of the transfer between D and C arose. There was, however, no argument about the point.

57. [530]

    As already noted, OSE claimed to be entitled, upon the avoidance of the transfer to Rachel, to a mortgage over the Lindfield property securing for Yuk Tong’s liability under the judgment in the 2019 proceedings. The claim arose out of the further assurances clauses in the 2008 and 2009 Loan Agreements. The Agreements were relevantly in the same form, and I will refer only to the 2008 Loan Agreement.

58. [531]

    Clause 12.2 provided:

59. [532]

    The obligation in cl 12.2 was an obligation on Yuk Tong as one of the Securing Parties under the agreement. Clearly it could not be enforced against Yuk Tong once he had died. But the contention for OSE was that it could be enforced against the NSW Trustee as Yuk Tong’s successor, and the party entitled to the Lindfield property. Counsel relied upon cl 16.1, which provided:

60. [533]

    If still applicable, cl 12.2 required that a notice be given to the borrower or surety as the case might be. For present purposes, OSE relied on a formal notice given by it, through its solicitors, on 9 September 2020. This was shortly after the institution of the 2020 proceedings.

61. [534]

    After reciting the terms of the loan agreements and guarantee agreements, the Hong Kong judgment and the judgment in this Court, OSE’s solicitors made a demand in the following terms:

62. [535]

    The notice went on to set out the terms of cll 16.1 and 12.2. It then referred to the transfer of the Lindfield property to Rachel and stated that OSE intended to commence proceedings alleging that transfer had been made in order to defraud creditors, and the effect of s 37A was to revest the property in Yuk Tong’s estate.

63. [536]

    Attached to the notice was the form of a mortgage which was the subject of the demand. It was a mortgage document consisting of 9 pages (a three page RPA form and a six page schedule to the form) and an accompanying memorandum containing supplementary terms and consisting of 2 pages of closely printed type.

64. [537]

    The RPA form relevantly stated:

65. [538]

    The schedule also contained standard form additional terms which included the grant of a power of attorney by the Mortgagor to the lender for the purpose of signing any documents required (cl 2(a)). There was also a personal covenant to repay (cl 3(a)), and a provision extending the benefit of the Mortgage to any documents of title or insurance policies (cl 3(b)). The terms further contained a personal obligation to indemnify the lender for costs and disbursements of any enforcement action (cl 3(d)) and the usual clause for providing for events of default which allow the lender to take possession of the land or appoint a receiver (cl 3(h)).

66. [539]

    The memorandum contained further detailed provisions of the type normally found in commercial mortgages. These included covenants by the Mortgagor: to insure the property (cl 2); to carry out any works required on it by any competent public authority (cl 3); and to pay any expenses incurred by the mortgagor in respect of “the mortgage security”.

67. [540]

    The premise for this claim for relief was that OSE remained entitled to enforce the obligation in cl 12.2 against the NSW Trustee by means of an order for specific performance. But OSE did not actually seek such an order. Instead, a declaration was sought that OSE was entitled to a “mortgage or charge” over the Lindfield property on the terms of the mortgage which accompanied the notice.

68. [541]

    Counsel for the Shiu Parties submitted that there was no such entitlement because the notice was invalid. Counsel’s arguments may be summarised as follows.

    1. (1)

       The entitlement at cl 12.2 was limited to the grant of encumbrances to secure monies “owing under” the Loan Agreement. Yuk Tong’s obligations under the Agreement, however, had been the subject of the Hong Kong judgment (and then the judgment registered in this Court). Any monies owing by Yuk Tong were owing under the judgment, not the underlying Agreement.

    2. (2)

       Even if there had, strictly speaking, been no merger, the alleged entitlement should have been pursued by way of a claim for specific performance against Yuk Tong in the Hong Kong proceedings. The attempt to make a claim now was barred by Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589).

    3. (3)

       The obligation was also confined to compliance with “reasonable” demands. Counsel submitted that the demand in the notice for execution of the proffered mortgage was not reasonable on various grounds. These included that the claim could and should have been brought in the Hong Kong proceedings. Other grounds arose out of the form of the proffered mortgage. Counsel submitted that in various ways the obligations in that mortgage imposed additional obligations on the mortgagor which went beyond those which Yuk Tong had had under the Agreement.

69. [542]

    Counsel also challenged the idea that specific performance could be obtained against the NSW Trustee. Counsel submitted that the Trustee was merely a repository for property which had formerly belonged to Yuk Tong. In the absence of a grant of representation, the Trustee had no active duties to perform: Deigan v Fussell [2019] NSWCA 299 at [174]. In particular, the Trustee could not be compelled to grant a mortgage.

70. [543]

    These contentions were resisted by counsel for OSE. Counsel argued as follows.

    1. (1)

       The action brought in Hong Kong was an action in debt for repayment of the sum due under the mortgage. It was not an action for damages for loss of bargain. OSE had never terminated the Agreement and it remained available as an ongoing source of rights.

    2. (2)

       The fact that the right to repayment of the debt had merged in the judgment did not prevent the judgment from being an “amount owing under [the] Agreement” for the purpose of cl 12.2. On the proper interpretation, the judgment sum was indeed an amount so owing.

    3. (3)

       Even if an application for specific performance could have been pursued in the Hong Kong proceedings, there was nothing in the Hong Kong judgment which was inconsistent with it being pursued now. There was thus no Anshun estoppel.

71. [544]

    There are I think clear instances of overreach in the demand. Clause 12.2 entitled OSE, at most, to require execution of a mortgage to secure obligations imposed on Yuk Tong by the Agreement. Even if that entitlement continued after Yuk Tong’s death, it did not extend to imposing fresh obligations on Yuk Tong’s legal personal representative, such as the personal obligations to pay the debt and to pay the costs and expenses associated with its enforcement.

72. [545]

    It is however unnecessary to go through all of the terms of the proffered mortgage to see what can be salvaged. Nor is it necessary to go into the questions of merger or Anshun estoppel. That is because I think there are more fundamental difficulties with the demand.

73. [546]

    The most obvious difficulty is that the Mortgage could not be validly created except by the registered proprietor of the land. This required Yuk Tong’s estate to have a legal personal representative who could receive the re-transfer of the Lindfield property from Rachel and then execute the mortgage demanded by OSE. But that required a grant of administration which had not, and has not, happened.

74. [547]

    The NSW Trustee could, of course, make an application for letters of administration, but it cannot be required to do so. To raise a prosaic but instructive question: who would pay the costs of making the application or the ongoing costs of administering the estate (if OSE’s claim is correct, the Lindfield property will not be available for that purpose as it will be swallowed up by the judgment debt).

75. [548]

    The demand is addressed to the NSW Trustee but purports to be directed to the legal personal representative of Yuk Tong. It is also the legal personal representative of Yuk Tong (necessarily) who is defined as the “Mortgagor” for the purposes of the proffered mortgage. The problem is that no such person exists. The attempt to gloss over the problem by means of a “drafting note” only draws attention to it. Until and unless there has been a grant of administration, there is no one upon whom the demand can be made and there is no one against whom specific performance can be ordered.

76. [549]

    If this was not enough, there is an even more fundamental problem. The demand treats the property over which security is to be granted for the purposes of cl 12.2 as the Lindfield property itself. But as already noted, avoidance of the transfer under CA s 37A(1) at most gave Yuk Tong’s estate the right to call for the transfer of the Lindfield property from Rachel (I say “at most” for reasons which will appear shortly). The relevant property for the purposes of cl 12.2 was not the land itself but a chose in action. That is what OSE should have demanded security over.

77. [550]

    For these reasons, OSE has no entitlement by way of specific performance to require NSW Trustee (or any other person) to grant the proffered mortgage in its favour. The claim to relief by way of security fails.

78. [551]

    The next contention from counsel for OSE was that, if its claim to be entitled to a mortgage was denied, I should instead grant execution remedies in aid of the judgment against Yuk Tong. The primary remedy sought was a charging order under s 106(1)(c) of the Civil Procedure Act 2005 (“CPA”). If for any reason this remedy was not available, the Court was asked to make an order for judicial sale of the Lindfield property or appoint a receiver to the property by way of “equitable execution” (see MGL at 965-967 [29-065]-[29-070).

79. [552]

    Section 126 of the Civil Procedure Act defines the types of property which may be the subject of a charging order. OSE relied on s 126(1)(c). The section relevantly provides:

80. [553]

    The making of a charging order, if available, is not discretionary. Accordingly, I must consider whether there is an “equitable interest in” the Lindfield property which belongs to, or otherwise exists “in relation to”, Yuk Tong’s estate (for the moment I pass over the problem that the estate has no legal personal representative).

81. [554]

    As a preliminary point, the relief claimed in OSE’s statement of claim is a charging order against the Lindfield property “and the rents and profits thereof”. But s 126 can only operate on an interest in such property, not the property itself. The question is whether the estate’s interest, if any, in the property following the avoidance of the transfer is an “equitable interest” in that property so as to require a charging order to be made against that interest.

82. [555]

    In a sense, the avoidance of the transfer did confer on the estate a right to require transfer of the property to it (although this right was not unique to the estate: OSE as a person prejudiced by the transfer could also require a transfer in its favour). But the right was however an unusual one. First, it was a right consequential upon a successful action under CA s 37A by OSE, an action by a creditor rather than by the estate. Second, it was a right called into existence for the benefit of OSE (and other creditors of Yuk Tong). Third, and relatedly, the right was not an absolute one; it was open to the Court to make a make-available order instead, which would result in the creditors being directly satisfied out of the property in Rachel’s hands without the need for a re-transfer at all.

83. [556]

    In the central meaning of the term, an equitable interest in property arises when the owner can be compelled by equity to create the interest, such as where there is a specifically enforceable contract to convey the interest. It is an illustration of the maxim that equity regards as done that which ought to be done (MGL at 93-95 [3-185]-[3-215]).

84. [557]

    The estate’s “interest” in the Lindfield property arising from CA s 37A is quite different. In my opinion it is not an “equitable interest in” the Lindfield property in the relevant sense. The application for a charging order fails for that reason alone.

85. [558]

    An order for judicial sale of the Lindfield property, or the appointment of a receiver by way of “equitable execution”, is discretionary. In the circumstances of this case, such an order is unnecessary when the sale of the property and the distribution of the proceeds to the creditors will be achieved through a make-available order, as discussed below. A receiver could be appointed in aid of that order (as I refer to below), but that is a different matter.

86. [559]

    As already noted, counsel for the Shiu Parties submitted that, should OSE’s s 37A(1) claim be sustained, the proper approach was to make a make-available order of the type which I made in Nguyen v Corbett (No 2) [2018] NSWSC 441. That order provided a mechanism for any creditors (apart from the plaintiff creditor) to be identified and for the value of all creditors’ claims to be verified. The relevant property was then to be made available (and if necessary sold) for the payment of the debts owed by the alienor to the creditors on a rateable basis: Nguyen v Corbett (No 2) at [8]-[27]; Nguyen v Corbett (No 3) [2018] NSWSC 890 at [2]-[8].

87. [560]

    Counsel argued that such an order was necessary in the present case because Rachel had herself been a creditor of Yuk Tong for HKD 9 million, which entitlement had been released in the Financial Agreement. Rather than the whole of the Lindfield property being made available for OSE (and any other creditors of Yuk Tong), Rachel should be permitted to retain a rateable share of its value to reflect the entitlement she had foregone in connection with the transfer.

88. [561]

    As I have rejected OSE’s claim to be entitled to a mortgage over the Lindfield property, and a mechanism for re-transfer of the property to Yuk Tong’s estate does not exist, there is really no alternative to a make-available order if effect is to be given to the avoidance of the transfer. In any event, I agree with counsel for the Shiu Parties that Rachel must be permitted to retain a rateable share of the proceeds of the Lindfield property and the rent for which she is obliged to account, to reflect the value of her release of Yuk Tong’s liability on the HKD 9 million post-dated cheque. This points to a make-available order rather than requiring Rachel to surrender the whole property (cf Nguyen v Corbett (No 2) at [9], [17]).

89. [562]

    This is not because the Financial Agreement has been set aside: as I have indicated, that relief has not been sought and even if the Agreement were set aside the statute of limitations would long since have expired for Yuk Tong’s liability on the cheque. It is simply a matter of tailoring equitable relief so to achieve “practical justice” where restitutio in integrum is not possible: Alati v Kruger (1955) 92 CLR 216 at 223-225.

90. [563]

    I will hear further from the parties on the mechanics of the process. This will include how allowance should be made for the time value of money and, perhaps, movements in exchange rates, since the cheque fell due for payment and the release was given.

91. [564]

    Following the transfer, loan repayments were made from the Lindfield bank account, and the loan was then paid off by Rachel with monies derived from the proceeds of the Ultimo property. Arguably Yuk Tong’s creditors may have benefited from these payments. I do not propose to address the question further at this stage, but allowance may have to be made for any such benefit when dividing the proceeds under the make-available order.

92. [565]

    As already noted, a make-available order will require the Lindfield property to be sold, the amount owing by Rachel for income to be determined by means of an account, and the proceeds shared between Rachel and Yuk Tong’s creditors, who will have to be determined by a process of advertisement. In theory, it would be possible for Rachel herself to undertake these tasks. In practice, however, there are likely to be conflicts of interest which could complicate and delay the process.

93. [566]

    In Nguyen (No 3), problems of this sort led me in the end to appoint a receiver to perform the tasks required. Again, I will leave this to the parties to consider in working out the orders necessary to give effect to my conclusions.

94. [567]

    Counsel for OSE contended that, as well as relief against the transfer under CA s 37A(1), it was entitled to relief against the transfer on the ground of equitable fraud. This claim made no practical difference so far as the property itself was concerned, but counsel contended that there was a difference so far as an account for rent was concerned. Counsel submitted (and there appeared to be no dispute about this) that relief for equitable fraud would result in an account going right back to the date of transfer in 2009.

95. [568]

    Counsel contended that the transfer fell within the fourth class of equitable fraud identified by Lord Hardwicke LC in his celebrated judgment in Chesterfield v Janssen. Lord Hardwicke described a fraud in this class as one which:

96. [569]

    After discussing certain examples of this category of fraud, his Lordship sought to rebuff the suggestion that in acting on basis of “public utility” the courts were acting politically. His Lordship’s response was that the decisions were not political but rather were founded on narrowly conceived legal concepts. He stated:

97. [570]

    Counsel for OSE referred me to the more modern statement of the law given by Drummond J in Westpac v The Bell Group (No 3) (2012) 270 FLR 1; [2012] WASCA 157 at [2601]:

98. [571]

    Counsel referred to several other decided cases, including my judgment in Samimi v Djamshidi [2018] NSWSC 1944. But none of the cases involved any close factual analogy to the present circumstances. The claim was in the end put on the basis of general principle.

99. [572]

    Examples of the cases identified by Lord Hardwicke are instructive. They included the following:

100. [573]

     A feature of these claims is that in each case the person defrauded took some action which was then the subject of the claim for relief. In the case of the deed of composition, the creditors who were not in the know entered into a compromise of their debts which was binding at law. In the case of a premium or bribe paid for preferring or recommending a person for public employment, the person who made the appointment was deceived into doing so.

101. [574]

     That is not a feature of the present case. In no way did OSE, or any other creditor, act, or fail to take action, as a result of the Financial Agreement and the transfer. Indeed, they were not even aware that these transactions had taken place.

102. [575]

     The exercise of the power to relieve against such transactions is an example of the exercise of equity’s powers in the exclusive jurisdiction. As with all forms of equitable relief, equity acts because there is no relief available at common law or that relief is inadequate. I did not understand counsel for OSE to dispute this proposition; in fact, the proposition was stated, without any apparent criticism by them, in their written submissions.

103. [576]

     Against this background, there is a further difference which I think is important. In Samimi at [29], I explained that where equitable relief is given, it usually takes the form of an order restraining the person having the benefit of the fraudulent contract from giving effect to it against the debtor, or an order for recovery of monies paid under that contract. The present case is not of that character. The Financial Agreement, although it contained false statements, never had any effect for the purposes of the FLA. It did not in the end affect Yuk Tong’s creditors at all. And the transfer itself has already been voided under CA s 37A.

104. [577]

     It follows that there is no need for equity to anything more than act in its auxiliary jurisdiction so as to undo the effect of the transfer, to the extent possible. If, in accordance with the concession by counsel for OSE, that only allows for recovery of rent back to September 2020, that is the appropriate measure of relief. There is no warrant for additional relief in the exclusive jurisdiction.

105. [578]

     In my view, the case does not fall within the fourth category of frauds identified in Chesterfield v Janssen. This alternative claim fails.

Appropriation of proceeds of Ultimo property

1. [579]

   As already noted, OSE’s claims concerning the appropriation of the proceeds of the Ultimo property was put on two bases. One was that the appropriation was a disposition which was void under CA s 37A(1). The other was that it represented a breach of fiduciary duty owed to Joe Wing by Rachel as attorney. At least for the purposes of the fiduciary duty claim, OSE eventually presented its case as being one brought as assignee of Joe Wing’s right of action which had, on his bankruptcy, passed to the Bankruptcy Trustees. The onus therefore lay on OSE to establish that the assignment it had taken from the Bankruptcy Trustees was valid and covered the relevant claims.

2. [580]

   As well as denying that OSE had established any prime facie entitlement to the relief claimed by it, the Shiu Parties advanced two affirmative defences to the claims. The first, as already mentioned, was that the Ultimo property had been the subject of a prior constructive trust in favour of Rachel, (and Yuk Tong, but the alleged constructive trust was in favour of him and Rachel jointly; after his death, so it was contended, the trust inured to Rachel’s sole benefit). The second, which has also been mentioned, is that the claims had been released under a clause of the Assignment Deed.

3. [581]

   In their closing submissions, counsel for OSE put the breach of fiduciary duty claim in the forefront of their argument. But that was a claim in equity’s exclusive jurisdiction which presupposed the validity of the appropriation at law. CA s 37A(1), on the other hand, renders transactions void at law, and equitable relief, as already mentioned, is sought in the auxiliary jurisdiction. It therefore seems to me to be more logical to deal with the s 37A(1) claim first.

4. [582]

   Counsel for OSE pointed out that by the time the Ultimo property was sold and the transaction was settled in December 2011, the proceedings in Hong Kong against Yuk Tong and Joe Wing were well under way. The effect of the transaction was to remove the proceeds of sale from the assets available to satisfy Joe Wing’s liabilities to OSE (and any other creditors he may have had). Counsel submitted that this was a classic case where an intent to defraud creditors would be inferred: Marcolongo v Chen at [32]-[34].

5. [583]

   In response, counsel for the Shiu Parties pointed out that the transaction was effected by Rachel without Joe Wing’s prior knowledge or involvement. Counsel submitted that in these circumstances there could be no question of Joe Wing, the legal alienor, having any intention to defraud his creditors. Any fraudulent intent which Rachel may have had did not bind him as principal, because the transaction was unauthorised: Beach Petroleum NL and Claremont Petroleum NL v Malcolm Keith Johnson & Ors [1993] FCA 283 at 25-26.

6. [584]

   Counsel further submitted that, to the extent that Rachel’s intention was relevant, she appropriated the monies to herself because she genuinely believed she was entitled to do so. Even if she was mistaken in that belief, this did not amount to an intent to “defraud” for the purposes of CA s 37A(1).

7. [585]

   In reply, counsel for OSE submitted that the intention of Rachel, as Joe Wing’s attorney effecting the appropriation purportedly on his behalf, was relevant. In this regard, counsel referred to the Full Federal Court decision (Beaumont, Whitlam and Tamberlin JJ) in Caddy v McInnes (1995) 58 FCR 570. That was a case concerning an allegedly void or voidable disposition under the Bankruptcy Act. The disponor was disabled, or was at least suffering episodes of temporary disablement, as a result of a debilitating disease. The transaction was effected on her behalf by members of her family. The Full Court held that the transactions were invalidated.

8. [586]

   The Court reasoned:

9. [587]

   In support of this reasoning the Court quoted from the judgment of Fisher J in Official Trustee v Marchiori (1983) 69 FLR 290 at 297-298:

10. [588]

    The passage from Marchiori quoted by the Full Court in Caddy concerned the mental state of a recipient of property from a debtor, not the debtor’s mental state. However, the Full Court applied it in a case where the state of mind of the debtor was relevant. As a matter of authority, it does indeed support the submissions of counsel for OSE.

11. [589]

    Further support is provided by the observation of Palmer J in Hall v Poolman [2007] NSWSC 1330, where his Honour pointed out that CA s 37A(1) speaks solely of an alienation “with intent” to defraud creditors. It does not actually require in terms that the intent must be that of the alienor. And even without the authority of Caddy, I would have concluded that, on ordinary agency principles, where the disposition is made by an agent acting within the scope of the owner’s authority, an intent by the agent to defraud the owner’s creditors will be sufficient.

12. [590]

    For reasons given below, I am satisfied that Rachel’s appropriation of the proceeds of the property to herself involved a breach of fiduciary duty on her part. In that sense, it involved a type of equitable fraud by Rachel on Joe Wing. But, as counsel for OSE pointed out, the authorities relied upon by counsel for the Shiu Parties involved frauds by agents outside the scope of their authority. That is not the case here: cf Taheri v Vitek (2014) 87 NSWLR 403 at [35]-[36], [125].

13. [591]

    I accept this submission. I have already noted that CA s 37A(1) voids transactions at law. For the purposes of applying it, therefore, the Court should not have regard to equitable interests or obligations.

14. [592]

    On my findings concerning Rachel’s mental state, I am quite satisfied that she intended by the appropriation to defeat or delay Joe Wing’s creditors. As she was the recipient of the monies appropriated, no question of her having a defence under s 37A(3) arises.

15. [593]

    Questions arise about whether s 37A applied directly to GH2 and Joe Yin as indirect recipients of some of the proceeds appropriated by Rachel. I will return to these questions when I consider accounting and tracing issues below.

16. [594]

    There was no dispute that an attorney acting under a general power granted by the principal owes to the principal a fiduciary obligation in the exercise of that power. In the present case, Rachel used the power granted to her by Joe Wing to appropriate the proceeds of the Ultimo property to herself. There was no advantage to Joe Wing, and on my findings, Rachel did not genuinely believe that she had any entitlement to the money herself. In reality, she exercised the power so as to advantage herself and other members of the family selected by her and to disadvantage Joe Wing’s creditors.

17. [595]

    Counsel for the Shiu Parties raised two main points in response to the allegation of breach. First, counsel submitted that a fraudulent intent as against third parties (in this case Joe Wing’s creditors, including OSE) was not the same as fraudulent conduct against Joe Wing. Second, counsel submitted that the appropriation of the monies was undertaken with Joe Wing’s informed consent.

18. [596]

    Dealing with the first point, the gravamen of the claim against Rachel as a fiduciary agent is that she exercised her fiduciary powers to enrich herself. The fact that she did so in an attempt to put Joe Wing’s assets beyond the reach of his creditors does not prevent her conduct from being a breach of her obligations to Joe Wing.

19. [597]

    Judged objectively, the fiduciary obligation in favour of Joe Wing required the conservation of assets for his benefit. In my view, neither Rachel nor Joe Wing should be heard to say that, as his financial position was hopeless, conserving those assets would be of no personal benefit to him. There is an analogy with the fiduciary duties owed by company directors: ordinarily the interests of the company will be equated to the interests of the shareholders, but in circumstances of potential insolvency, creditors’ interests come to the fore: Corporations Act 2001 s 563A.

20. [598]

    For similar reasons, the attempt to invoke fully informed consent fails. In fact, on the evidence of Rachel and Joe Wing themselves, the appropriation happened without any prior consent from Joe Wing at all. Nor was there any subsequent request for consent. Joe Wing simply took no action. He was never provided with any independent advice. Had he been, that advice would have had to address his obligations to his creditors.

21. [599]

    The answers to the last two points perhaps underline the point which I have earlier made about breach of fiduciary duty being a doctrine in equity’s exclusive jurisdiction, and the primacy of the CA s 37A claim at law. But in my view, breach of fiduciary duty is established, and the Bankruptcy Trustees were entitled to obtain the applicable equitable remedies for such a breach.

22. [600]

    The Assignment Deed was styled “Deed of assignment of Bankruptcy Action”. It was executed on 21 November 2023. The Deed required the payment of an agreed consideration and that payment was made on the following day, 22 November. A notice of assignment was given to the Shiu Parties on 16 February last year.

23. [601]

    In the Deed, the Bankruptcy Trustees were collectively defined as the “Assignor” and OSE was defined as the “Assignee”. Recital D stated:

24. [602]

    The definition of the term “Assigned Interest” was:

25. [603]

    Section 100-5 of the Insolvency Practice Schedule, referred to in recital D, relevantly provides:

26. [604]

    The assignment itself was dealt with by clauses 3.1 and 3.3 which provided as follows:

27. [605]

    Counsel for the Shiu Parties took two points. First, it was argued that the Deed did not effect an assignment of any interest in any tangible property (such as an interest arising by tracing into the properties purchased in 2012). Rather, it was confined to rights of action which the Bankruptcy Trustees had. The second point was that, even so far as it applied to such rights of action, it was limited in scope. Counsel submitted that the only rights of action which were covered by the assignment were rights of action which the Bankruptcy Trustees had under the Bankruptcy Act.

28. [606]

    There thus appeared to be disputes between the parties as to the scope and effect of the Assignment Deed. But on analysis it seems to me that those disputes, if real at all, have no consequences for the outcome of these proceedings.

29. [607]

    In the first place, I think the apparent dispute about whether the assignment extends to interests in property other than choses in action is an arid one. OSE makes no direct claim to the title of the five properties which were allegedly implicated in the appropriation of the Ultimo proceeds. Its claims all involve tracing those proceeds through an accounting process. Even if they ultimately result in an order for transfer of those properties or interests therein (see Irwin v Pamplin (No 5) [2024] NSWSC 484 at [83]-[84]) that will be as a result of the accounting process. In substance, all of the claims which OSE seeks to litigate are claims as assignee of causes of action with respect to the properties, not as assignee of the properties themselves.

30. [608]

    Second, while IPS s 100-5 may be limited to rights of action under the Bankruptcy Act (a view supported by the terms of s 100-5(5)), that is not a complete answer to OSE’s claims as assignee. The terms of the assignment in cl 3.1 may include, but were not limited to, claims of that type. This is reinforced by the use of the word “and” in recital D.

31. [609]

    Claims for recovery under CA s 37A(1) or for breach of fiduciary duty may not be claims under the Bankruptcy Act, but they vested in the Bankruptcy Trustees pursuant to s 58 as part of the bankrupt estate of Joe Wing. It is well established that the Bankruptcy Trustees had power to sell those choses in action, and to effect assignments of them, as part of their powers of administration of that estate: Bankruptcy Act s 190(2)(d).

32. [610]

    I am therefore satisfied that, to the extent that the claims which are the subject of the 2019 proceedings are claims that vested in, or accrued to, the Bankruptcy Trustees as trustees of Joe Wing’s bankrupt estate have validly passed to OSE. Those claims may be pursued by OSE in the proceedings.

33. [611]

    This defence was based on an allegation, as already noted, that at the time the Ultimo property was sold it was already subject to a constructive trust in favour of Yuk Tong and Rachel. Counsel for OSE disputed that any such pre-existing trust had been created. They also contended that if there had been any agreement by Joe Wing to hold the property on trust as alleged, the agreement fell afoul of the statute of frauds (CA s 23C(1)(c)).

34. [612]

    As already noted, the pre-existing constructive trust which was alleged was one for the benefit of Yuk Tong and Rachel jointly. The case for the Shiu Parties was presented on the assumption that Rachel succeeded to the joint beneficial interest to Yuk Tong on his death, by means of survivorship.

35. [613]

    Incidentally, the August 1998 file note records that all of the monies used to purchase the property came from Yuk Tong (in Hong Kong). Even if Joe Wing had undertaken some sort of trust obligation which followed the existing economic interest in it, that would have been an interest purely of Yuk Tong’s. There would have been no reason to recognise Rachel as having had any such interest in the property.

36. [614]

    The logical conclusion from the Shiu Parties’ submissions would therefore seem to be that any trust arrangement was an arrangement for Joe Wing to hold the property for the benefit of his father, not for the benefit of his parents as co-owners (and still less as joint tenants, incorporating survivorship).

37. [615]

    Even putting this problem to one side, I am not sure that the assumed succession by Rachel to a joint beneficial interest held by Yuk Tong can work. At the time of the appropriation of the Ultimo proceeds by Rachel, Yuk Tong was very much alive. If the moneys had been appropriated by Rachel and placed in a separate account which had endured or could be traced into an asset which still subsisted at Yuk Tong’s death, then, had there truly been a joint beneficial interest, she might have succeeded by survivorship at that point. But this is not what happened. Rachel simply appropriated the funds to herself and mixed them with her own monies and those of GH2.

38. [616]

    It seems that, at best, on Rachel’s own case, she would have been a constructive trustee for half of Yuk Tong’s share of the proceeds. But it is not necessary to pursue the analysis further. There are other fundamental difficulties with the claim.

39. [617]

    In the course of argument, counsel for the Shiu Parties said that the existence of the power of attorney in her favour was in some way relevant to this defence. The suggestion was that Rachel had some good faith belief that she was entitled to appropriate the proceeds to herself under the power. But for reasons given by counsel for OSE in reply, this does not assist. I have already made the point that the Shiu Parties’ case over-emphasises the significance of the grant of the power; it was simply for management purposes.

40. [618]

    Nor was there any evidence from Rachel that she actually believed that the power of attorney gave her the right to appropriate the money. In any event, had she held such a belief, it would not have been reasonable.

41. [619]

    The short further answer to the defence is that I have rejected, on a factual level, the allegation that Joe Wing agreed to hold the property on trust for his parents. The defence fails. There is no need to consider the application of the statute of frauds.

42. [620]

    As counsel for OSE pointed out, the use of a power of attorney to effect the sale of the property and the distribution of the proceeds created some difficulties for the trust argument. In particular, CA s 163B(2)(a) provides that such a power of attorney does not extend the attorney’s authority to exercise the powers, duties or functions of a trustee.

43. [621]

    As counsel pointed out, had the trust been disclosed to Mr Lo, the solicitor responsible for preparing the power of attorney, it would have been necessary for him to give careful consideration to how a power of attorney would function in that context. Similarly for Mr Teng. If he had been told that the property was held on trust and the monies were effectively to be distributed to the beneficiaries, there might have been a question about whether the power extended so far. But again, it is not necessary to go into this question.

44. [622]

    The release defence was based on cl 11 of the Assignment Deed which provided:

45. [623]

    The meaning of the defined term “claim” was:

46. [624]

    Counsel for the Shiu Parties submitted that, on its true interpretation, cl 11 defeated “all claims against the person or property of Joe Wing in the 2019 proceedings”, including claims predicated on indebtedness under the Hong Kong judgments and the registered judgments in Australia. Counsel submitted that this included all of the claims advanced by OSE in the 2019 proceedings concerning the proceeds of the Ultimo property.

47. [625]

    In reply, counsel for OSE submitted that on no view did the release extend to all of the claims advanced on its behalf. The claim for breach of fiduciary duty, for instance, was a claim by Joe Wing against Rachel. It was not in any sense a claim against Joe Wing or a property on the part of OSE.

48. [626]

    There was also a broader argument. Counsel pointed out that the parties released under cl 11 were the Bankruptcy Trustees. Counsel submitted this provision meant what it said. It was limited to claims which OSE might otherwise have made against the Bankruptcy Trustees or against any property held by them in the administration of Joe Wing’s estate. It was not a release of claims against, or liabilities of, Joe Wing himself.

49. [627]

    I do not think it is necessary to deal with the release defence on a claim-by-claim basis. In my view, the point taken by counsel for OSE about the beneficiary of the release being the Bankruptcy Trustees, rather than Joe Wing, is well taken.

50. [628]

    The Bankruptcy Act does not effect some form of novation of the bankrupt’s liabilities to the bankrupt’s trustee. Rather, it places statutory bars on the enforcement of those liabilities while the bankruptcy continues, and provision is made for them (to the extent provable) to be discharged from the property of the bankrupt vesting in the trustee.

51. [629]

    As a result, there is a distinction between the bankrupt’s pre-bankruptcy liabilities and the trustee’s obligations to the bankrupt’s creditors under the Act. Moreover, trustees may incur liabilities of their own in the course of administration (for example, legal fees and other expenses incurred in administering the estate) which are quite separate from liabilities incurred by the bankrupt.

52. [630]

    Against this background, I think it is clear that, when the Assignment Deed provided for a release of claims against the Bankruptcy Trustees, it meant what it said. OSE was releasing the Trustees from any liability they would otherwise have had to it with respect to property in their hands, together with any liability they might have incurred to OSE as a result of their administration of Joe Wing’s bankrupt estate. None of this involved any release of Joe Wing’s liabilities to OSE.

53. [631]

    Although I think that this outcome is quite clear as a matter of language, it is also supported by consideration of business common sense. The deal reflected in the Assignment Deed was for OSE to withdraw from participation in the administration, and to pay a sum of money into the administration, in exchange for an assignment of the rights the Bankruptcy Trustees had against Joe Wing. To interpret the release in the way for which counsel for the Shiu Parties contended would defeat the Deed’s commercial purpose.

54. [632]

    The property which was subject to the alienation which I have found to have been fraudulent (and in breach of fiduciary duty) consisted of two sums of money. No question of retransfer of assets in specie arises. Nor is there any occasion to consider a make-available order. The case was conducted on the basis that that the proper remedy (apart from On Sky’s claimed entitlement to mortgages over the relevant properties, and, possibly, execution remedies) would be by way of account.

55. [633]

    Strictly speaking there were two possible bases for ordering an account: in the auxiliary jurisdiction, in aid of the avoidance effected at law by CA s 37A, and in the exclusive jurisdiction, by way of relief consequent upon Rachel’s breach of fiduciary duty. Counsel for OSE put the latter basis in the forefront of their case. It was not suggested by counsel for the Shiu Parties that this approach was in any way qualified by the existence of an alternative basis for relief at law.

56. [634]

    The overall account will, on findings, be twofold. Rachel will be required to account for the cheques totalling $474,000 which she paid into her HSBC account. Rachel and GH2 will jointly be required to account for the term deposit proceeds totalling $2,164,000 deposited into GH2’s bank account. To the extent that these monies can be traced into assets held by any of Rachel, GH2 and Joe Yin, proprietary relief will be available; otherwise, there will be a monetary liability (see Irwin v Pamplin (No 5) at [83]).

57. [635]

    On the evidence, all of the purchase monies for the Kirribilli property came from GH2 and can be traced back to the monies appropriated by Rachel. So too can the $360,000 paid into the offset account. On the face of it, OSE would be entitled to elect between receiving the Kirribilli property or the amount paid towards the purchase. Joe Yin will also have to account for the $360,000 received by her in cash, but will be entitled to deduct repayments on the loan if OSE elects to take the Kirribilli property.

58. [636]

    It is also established, on the evidence, that the $276,000 paid to discharge the mortgage on the Chatswood property represents the traceable proceeds of monies appropriated by Rachel. That sum would be included in the overall sum for which Rachel will be required to account.

59. [637]

    Counsel for OSE, in their written submissions, contended that OSE would be entitled to a charge on the Lindfield property for that amount. Subrogation was also mentioned. If some form of proprietary claim is pursued, then it may be necessary to elect between such relief (if available) and payment of the amount in question (including the enforcement of the garnishee order: see below). As already mentioned, it will be necessary to consider how such relief would dovetail with the make-available order which I propose to make against that property.

60. [638]

    As already mentioned, counsel for OSE did not press for me to consider any issues which would arise in the account after mid-2012. Whether, and to what extent, the remaining investment units at Hunters Hill, Willoughby and Lane Cove can be the subject of proprietary orders against their respective proprietors (GH2 and Rachel) will be worked out in due course in the account ordered against Rachel and GH2.

61. [639]

    As already noted, counsel for OSE contended that it was entitled to mortgages to secure Joe Wing’s liability under the judgment as well as a mortgage to secure Yuk Tong’s liability. The alleged entitlement so far as Joe Wing’s liability was concerned was based on a demand for security from Joe Wing pursuant to his obligations, said to be ongoing, under the 2008 and 2009 Loan Agreements, of the same type that had been made over the Lindfield property with respect to Yuk Tong’s liability.

62. [640]

    The provisions of the Loan Agreements upon which OSE relied were the same as were relied upon in the 2020 proceedings as against Yuk Tong (see [530]-[540] above). OSE claimed to be entitled to mortgages over each of the properties allegedly implicated in the appropriation of the proceeds of sale of the Ultimo property: namely, the Chatswood house and the four investment units at Kirribilli, Willoughby, Hunters Hill and Lane Cove.

63. [641]

    The proffered mortgage in each case was in evidence. It is admitted on the pleadings that OSE made demands on Joe Wing (on 2 June 2021, in the case of the Lance Cove property, and on 27 May 2021, in the case of the others) for him to grant mortgages in those terms, although the demands themselves do not appear to be in evidence.

64. [642]

    Each of the proffered mortgages was, at a glance, in similar terms to the mortgage sought from the NSW Trustee pursuant to OSE’s alleged rights against Yuk Tong. The mortgagor in each case was identified as Joe Wing.

65. [643]

    Whether, putting aside the other difficulties with the form of the mortgages, an order for specific performance could have been made against the Bankruptcy Trustees is extremely doubtful. But there is a more fundamental difficulty.

66. [644]

    Any rights with respect to the properties were not rights of ownership of those properties but rights of action which might ultimately result in the properties being transferred. In short, any demand should have been a demand for security over a chose in action, not the properties themselves. As with the demand for a mortgage over the Lindfield property, the claimed entitlement to mortgages over the other Shiu family properties fails for that reason alone.

67. [645]

    In their written opening submissions, counsel for OSE contended that, if OSE’s claim to be entitled to mortgages over the properties failed, a charging order, or failing that, an order for the appointment of a receiver by way of equitable execution, should be made. Counsel also contended that the garnishee order made against Rachel was enforceable, since the equitable debt arising from her obligation to account was a sufficient basis for it.

68. [646]

    I do not think it is necessary to go into these questions at present. An order requiring Rachel and GH2 to account will be made in favour of On Sky and that account may ultimately result in orders for transfer of some or all of the properties in question. I am not sure how a charge in OSE’s favour could be ordered over rights under the order which OSE already effectively owns, or, if it were granted, what practical benefit it would achieve. The same is so for equitable execution. The garnishee order may be capable of continued effect (if no proprietary relief is sought with respect to the Lindfield property) but again it is not clear to me what practical benefit it would have.

69. [647]

    I will leave these questions for further consideration by the parties in the course of formulating orders to give effect to my reasons.

Payments from Lindfield bank account

1. [648]

   As already noted, the Lindfield bank account remained in the name of Yuk Tong up until it closed. The payments made in June and July 2012 out of that bank account were, in law, therefore payments of his legal property. It is unclear whether the payments were made by Yuk Tong himself, or (as seems more likely) by Rachel. But even if they were made by Rachel, they were alienations on Yuk Tong’s behalf, for the same reasons as the appropriation by her of the Ultimo proceeds was an alienation caught by s 37A(1).

2. [649]

   On my findings, both Yuk Tong and Rachel would have been well aware of the existence of claims by creditors of Yuk Tong at the time the payments were made. But it is necessary to consider where the monies to make those payments came from.

3. [650]

   It is clear from a cursory review from the bank statements that most of the credits to the Lindfield account were rental receipts from the Lindfield property. As at the time the transfer was effected, the monies in the Lindfield account represented an asset of Yuk Tong which was largely if not wholly attributable to his previous ownership of the property. They were in every sense his property. But thereafter the monies flowing into the account from the Lindfield property belonged to Rachel, as the new owner of that property.

4. [651]

   If payments to Rachel immediately after the transfer of the property could have been identified, and those payments represented traceable proceeds of the monies in the Lindfield account as at the date of transfer, s 37A(1) might have applied; but that was not the way in which OSE put its case. The payments which it challenged were made almost three years later, after significant sums had passed through the account in the meantime.

5. [652]

   If the monies paid out in June and July 2012 represented the proceeds of rental income after November 2009, those monies belonged, in equity, to Rachel. Counsel for OSE did not attempt to demonstrate otherwise. I am not satisfied that there was any prejudice to Yuk Tong’s creditors in Rachel applying them as she wished. The claim with respect to the payments from the Lindfield bank account fails.

Conclusions on parties’ claims

1. [653]

   I have concluded that:

   1. (1)

      the transfer of the Lindfield property by Yuk Tong to Rachel in November 2009 was an alienation of property made with intent to defraud creditors for the purposes of CA s 37A;

   2. (2)

      Rachel is obliged to account for the benefit of Yuk Tong’s creditors both for the property and for the income received from it from 23 September 2020 onwards;

   3. (3)

      the appropriate remedy is an order against Rachel requiring her to make the property and the income for which she is obliged to account available to the creditors of Yuk Tong, but subject to an allowance in her favour for the value of the HKD 9 million debt which she released in the Financial Agreement which preceded the transfer;

   4. (4)

      the appropriation of the proceeds of sale of the Ultimo property by Rachel, acting as attorney for Joe Wing, was also an alienation of property with intent to defraud creditors for the purposes of CA s 37A;

   5. (5)

      the appropriation was also a breach of fiduciary duty owed to Joe Wing by Rachel as his attorney;

   6. (6)

      Joe Wing’s rights of recovery consequent upon the appropriation have been validly assigned by his bankruptcy trustees to OSE;

   7. (7)

      Rachel is liable to account to OSE for the amounts appropriated, and GH2 and Joe Yin are also liable to account to OSE to the extent that traceable proceeds of those amounts were received by them;

   8. (8)

      OSE’s claims to be entitled to mortgages over the Lindfield property, and over the Chatswood, Kirribilli, Willoughby, Hunters Hill and Lane Cove properties, fail;

   9. (9)

      so too does OSE’s claim with respect to the payments made from the Lindfield bank account in June and July 2012.

2. [654]

   On 30 May this year, I issued to the parties a draft of the judgment to this point. I invited them to identify any errors or omissions in the draft, and to confer on the form of orders to give effect to the conclusions which I had reached, and on costs.

3. [655]

   The process proved to be a lengthy one. Numerous questions emerged, and the parties agreed that a further hearing would be necessary to deal with them. The hearing took place on 3 and 4 November. It was preceded by the exchange of detailed written submissions. There was also some further supplementary affidavit evidence. This was of a formal nature, apart from some valuation evidence from the Shiu Parties (see [667] below) which was not challenged. No further factual issues were raised.

Form of orders

1. [656]

   It was common ground that the decree to be made by the Court should incorporate the same elements of the decree I made in Nguyen v Corbett (No 2): see [559] above. It would therefore include a declaration that the transfer of the Lindfield property from Yuk Tong to Rachel had been rendered void by CA s37A and an order requiring Rachel to make the property, or at least a share of the property, available to satisfy the liabilities of Yuk Tong’s estate to OSE and any other creditors who might be identified.

2. [657]

   It was also common ground that the make-available order should extend to the net income received by Rachel from the property after the date of avoidance (September 2020), and that this should be quantified by means of an account (see [476] above). But there was a significant area of dispute about the formulation of the make-available part of the decree, consequential orders proposed by counsel for OSE for the appointment of a receiver, and costs.

3. [658]

   Declaration: Counsel for OSE proposed that it be declared that the transfer was “void under” CA s 37A. The reference to the transaction being void for the purposes of s37A is important. It underlines that the effect of s37A is not necessarily to make the transaction wholly void as against all parties. Rather the transaction is avoided as between the transferee and the transferor’s creditors to the extent necessary to avoid prejudice to those creditors: see Nguyen v Corbett (No 2) at [7]-[16]. There was no issue about this from counsel for the Shiu Parties.

4. [659]

   Account of Lindfield property income: Similarly, there was no argument about the form of the order quantifying the net income received by Rachel since the avoidance of the transfer. The accounting process will, in the usual way, require Rachel to identify all of the monies she received over the relevant period, and to vouch for, and if necessary justify, all of the items of expenditure which she claims to be proper deductions against that income. The account sought was purely monetary; counsel for OSE did not ask for it to extend to possible tracing into other assets.

5. [660]

   Make-available order - general: Counsel for the parties agreed that the make-available order would result in a fund of money made up of the proceeds of sale of the house (or equivalent payment of money from Rachel) and the net income from the property, as determined by the account. From this there would be deducted realisation and fund administration expenses. I will refer to the fund, after deduction of realisation and administration expenses, as the “Lindfield net proceeds”.

6. [661]

   In my judgment ([653] above) I spoke of making an “allowance” in favour of Rachel out of the Lindfield net proceeds. This allowance was to be calculated “pro-rata” by reference to Yuk Tong’s liability under the HKD 9 million cheque, post-dated 15 April 2009, which he gave to Rachel for payment of the balance due to her for her share of the MacDonnell Road property. I acknowledged that questions would arise about how the calculation was to be carried out.

7. [662]

   In the end, eight issues were left for resolution after the parties had presented their closing submissions. The first issue was whether Rachel should, after all, have an allowance for the Hong Kong cheque. Counsel for OSE contended that, on further analysis, she should not. The whole of the Lindfield proceeds should be made available to meet the debts of Yuk Tong’s estate to OSE (and any other remaining creditors of the estate).

8. [663]

   Counsel for the Shiu Parties contended that such an argument was no longer open in view of what I had said in my judgment. But if it was, it should be rejected. Counsel submitted that the proceeds should be divided between the creditors and Rachel, with Rachel retaining her share and the creditors’ share then being made available for division between OSE and any other creditor of Yuk Tong’s estate who might emerge.

9. [664]

   The second issue was whether a further allowance should also be made in Rachel’s favour on account of the payments made by her between 2009 and 2012 to discharge the balance of the Chatswood property loan (see [32] above). Those payments were said to total $380,000. Counsel for the Shiu Parties contended that they should likewise attract an allowance in Rachel’s favour. This was disputed by counsel for OSE.

10. [665]

    The third issue, if Rachel was to have an allowance out of the Lindfield proceeds, was how that allowance was to be calculated. Counsel for the Shiu Parties contended that the Hong Kong cheque liability should be compared with the value of the Lindfield property on 17 November 2009 when, as they contended, Rachel had released Yuk Tong from liability under the cheque as part of the consideration for entry into the Financial Agreement. The allowance would be fixed at that point as a percentage of the then value of the Lindfield property. On distribution, Rachel would retain that same percentage of the net proceeds.

11. [666]

    Counsel for OSE adopted a quite different approach. If the cheque liability was to be taken into account at all, the share based on it should be a calculated pro-rata by comparison with the liability of Yuk Tong’s estate to OSE (and to any other creditors). This calculation should be carried out after the Lindfield property had been realised and the quantum derived from the account had been determined.

12. [667]

    The difference between the two approaches was stark. On Rachel’s approach, the Hong Kong cheque liability in 2009 was worth more than 73% of the value of the Lindfield property at the time (assessed in a valuation tendered by counsel for the Shiu Parties on the hearing at $2.2 million). If there was also to be an allowance for the Lindfield loan repayments, and further adjustments discussed below were to be made in favour of Rachel, she would receive over 90% of the proceeds.

13. [668]

    On the other hand, on OSE’s approach, the judgment debt in its favour, which included interest at a contractual rate of 24%, would greatly predominate over the cheque liability by the time the distribution date arrived. When taking into account other adjustments discussed below, and even if no other creditors emerged, Rachel would receive less than 5% of the net proceeds.

14. [669]

    The next question concerned the deductions to be made from the proceeds of the property and the account before division of the net amount between those entitled to it. As already noted, it was common ground that the costs of the realisation and administration process should be so deducted. These would include the costs of any receiver appointed for the purpose of giving effect to the Court’s decree.

15. [670]

    Counsel for OSE contended that its costs (both of the 2020 proceedings and of the 2019 proceedings) should also be paid out of the Lindfield net proceeds at this point. That contention was resisted by counsel for the Shiu Parties. This was issue four.

16. [671]

    Some further questions arose as to how the debts owing to OSE should be calculated for the purposes of the pro-rata division, should OSE succeed on issue three. These were: whether the debts should carry interest at the contractual rates for the period after registration of the judgment in 2019 (issue five); and when the judgment debts (which were in CAD and HKD: see [28] above) should be converted into AUD for the purposes of the calculation (issue six).

17. [672]

    Finally, similar questions arose concerning the quantum of the allowance to be made in Rachel’s favour. The questions were: when the HKD 9 million should be converted into AUD (issue seven); and what, if any, interest should be allowed on that liability, and on the Lindfield loan repayments, for the purposes of the calculation (issue eight).

18. [673]

    Make-available order – issue one: Counsel for OSE began by reminding me of some critical findings in the judgment. Rachel was, from early 2009 at the latest, aware of Yuk Tong’s parlous financial position. She received the Hong Kong cheque with full appreciation that, at the least, there was a risk that it would not be met. When that happened, she told Yuk Tong that she wanted the Lindfield property “for [her] security” ([261] above). To her knowledge, the Financial Agreement was simply a pretext to achieve that result.

19. [674]

    As already noted, counsel for the Shiu Parties submitted that I had already decided that Rachel was to receive an allowance on account of the Hong Kong cheque, and it was not open to counsel for OSE to challenge that decision. The purpose of the hearing was limited (apart from any contentious corrections such as typographical errors in the draft judgment) to fashioning orders to give effect to my conclusions. Counsel pointed out that my conclusions expressly included making an allowance in Rachel’s favour ([653(3)] above), and this reflected express findings earlier in my judgment.

20. [675]

    Counsel submitted that if it were possible to go behind the conclusions in my draft judgment, the facts of the case amply justified making an allowance in favour of Rachel on account of the Hong Kong cheque. They maintained that the effect of the Financial Agreement had been to release that liability. This had provided a clear benefit to Yuk Tong’s creditors.

21. [676]

    On the release question, counsel relied on recital 10 (quoted at [279] above) and cl 20 (quoted at [281] above). They also referred to cl 21, which excluded any claim between the parties for spousal maintenance. It would, in counsel’s submission, be absurd to suppose that Yuk Tong and Rachel could have intended that, following the execution of the Agreement and the transfer of the Lindfield property, Rachel could have turned around and sued Yuk Tong on the cheque.

22. [677]

    Counsel could not for present purposes dispute my findings concerning Rachel’s conduct. But counsel submitted that my findings did not amount to more than this: Rachel was not a bona fide purchaser of the Lindfield property, and therefore did not obtain the protection of CA s 37A(3). She had nevertheless, in counsel’s submission, given consideration for the transfer. She should still be entitled to counter-restitution for the value of that consideration.

23. [678]

    In support of their submissions, counsel for the Shiu Parties referred me to the following statement of Stable J in My Kinda Town Ltd v Soll [1983] RPC 15 at 55 (counsel’s emphasis):

24. [679]

    Counsel pointed out that statements to the same effect, and not limited to passing off cases, have been made in the High Court: Dart Industries Inc v Décor Corporation Pty Ltd (1993) 179 CLR 101 at 111; Warman International Ltd v Dwyer (1995) 182 CLR 544 at 561, 570. Counsel also referred in support of their argument to UCPR r 46.8. That rule provides, for the purposes of accounting proceedings, that “all just allowances must be made”. Counsel submitted that this was not a matter of discretion.

25. [680]

    For their part, counsel for OSE did not accept that I had finally decided in my draft judgment that Rachel was entitled to an allowance in her favour out of the Lindfield proceeds. In any event, counsel pointed out that I had not yet made any final orders in the proceedings. Counsel submitted that I could, and should, entertain their further arguments, which did not involve any further evidence or require any further factual findings.

26. [681]

    As to whether the Financial Agreement effected a release of Yuk Tong’s liability for the Hong Kong cheque, counsel made three main points. The first point concerned the interpretation of the Financial Agreement.

27. [682]

    Counsel acknowledged that recital 10 recorded the parties’ intention “to settle and to discharge all claims of any nature relating to financial matters” both arising out of the marriage “or otherwise at law or in equity”. But counsel pointed out that this was a recital, not an operative provision.

28. [683]

    Counsel submitted that the only operative provision which was relevant was cl 20. For convenience, I set the clause out again:

29. [684]

    Counsel submitted that the clause was only concerned with property. Its effect was simply to provide that any property not otherwise dealt with in the settlement was to remain with the party to the marriage who owned that property. Counsel characterised this as the “opposite” of a release; but even if, by implication, it contained a release, that release was confined to proprietary claims. It did not affect Yuk Tong’s liability under the cheque, which was an unsecured claim unrelated to any of the property held by Yuk Tong and Rachel at the time.

30. [685]

    Counsel’s second point was that, even if, as a matter of interpretation, the Financial Agreement provided for a release of Yuk Tong’s liability under the cheque, the Agreement was ineffective. This was, counsel contended, as a result of the application of FLA s 90DA, which provides (emphasis added):

31. [686]

    Counsel acknowledged that declarations from Yuk Tong and Rachel to the effect required by s 90DA(4) were annexed to the Financial Agreement. But counsel submitted that on my findings the statements were false. In fact, there had been no separation at all ([449] above).

32. [687]

    Counsel acknowledged my finding that the Financial Agreement was intended by Yuk Tong and Rachel to have legal effect; it therefore was not a sham. But in counsel’s submission this did not prevent the Court from finding that the Agreement failed to satisfy the requirements of s 90DA(4) and was therefore of no contractual effect.

33. [688]

    Thirdly, counsel submitted that even if the Agreement contained a release which was contractually effective despite FLA s 90DA, that was not the end of the matter. It would always have been open to Rachel, had she wished to enforce liability under the cheque, to come clean about the fraudulent nature of the Agreement, and apply herself to have it set aside under FLA s 90K (see (a) and (aa)). She could then have pursued a genuine matrimonial property claim under s 90K(3). Counsel did, however, ultimately accept that, this could only have been done before Yuk Tong died in March 2019: cf s 90K(5), In the marriage of RH and DI Sims (1981) 55 FLR 67.

34. [689]

    But counsel did not go so far as to contend that a liability under the cheque still subsisted. There was no evidence before me of the limitation period applying to liabilities under bills of exchange in Hong Kong. But counsel accepted that I should proceed on the basis that any limitation period would have expired well before Yuk Tong’s death and the institution of the present proceedings.

35. [690]

    Turning to the applicable principles, counsel accepted in their written submissions that, in making a make-available order, the Court would be exercising equitable jurisdiction to grant relief in the nature of rescission. Complete restitution not being possible, the Court should aim to exercise its powers so as to achieve “practical justice”. The objective should be to compensate the party wronged, not to punish the wrongdoer.

36. [691]

    Counsel did not however accept that UCPR r 46.8, or the statements of principle quoted by counsel for the Shiu Parties concerning just allowances, were applicable to the present case. In this regard, counsel referred me, in oral submissions, to the judgment of Hamilton J in Lym International Pty Ltd v Chen [2009] NSWSC 167.

37. [692]

    That case concerned rescission of a transaction under which some land had been transferred and used for a townhouse development. The defendant, Mr Chen, contended that he should not be obliged to transfer the remaining units in the development back to the plaintiff unless the plaintiff had first reimbursed him for money he had laid out on the development. He also sought an allowance in his favour for his work and skill in completing it.

38. [693]

    Hamilton J accepted that Mr Chen was entitled to reimbursement, but considered that his position would adequately be protected by a charge, rather than by requiring the amount in question to be reimbursed in advance of the transfer. Turning to the question of an allowance for work and skill, his Honour observed that the authorities on the question were “lacking in incisiveness, clarity and consistency”. The only conclusion he felt able to draw was that cases have to be decided on their own facts and the court “has a wide discretion as to the stance it takes… it must attempt to do what it regards as just in the circumstances”.

39. [694]

    In the end, his Honour declined to make any allowance for Mr Chen’s work and skill. He observed that he had found substantial dishonesty on Mr Chen’s part. The completion of the townhouses had been “avowedly carried out to increase [Mr Chen’s] own profit”. His Honour stated (at [14]):

40. [695]

    Counsel for OSE submitted that his Honour’s reasoning applied a fortiori to the present case. The allowance was not being sought on account of some sort of profit made as a result of special care or skill on Rachel’s part. All she had done had been to hold the property and collect the rents. Nor was there any question of reimbursing her for expenses incurred. At most she had given a release or allowed a limitation period to expire. This had been her own choice.

41. [696]

    Counsel also submitted that there were further discretionary reasons for refusing any allowance to Rachel. They contended that the claim for an allowance was never expressly pleaded as part of Rachel’s defence. Counsel acknowledged that the defence alleged that the effect of the Financial Agreement had been to release Yuk Tong’s liability under the $9 million cheque. They submitted, however, that this pleading was “only in aid of” the s 37A(3) defence.

42. [697]

    According to counsel, the contention that Rachel was entitled to an allowance on account of having released the Hong Kong cheque liability was raised for the first time in the course of the final submission by counsel for the Shiu Parties. There had been no opportunity in cross-examine Rachel about what counsel for OSE characterised as her failure to take steps to have the Financial Agreement set aside and to let the limitation period on the cheque expire. Furthermore there had been no need to be concerned about the interest rate on OSE’s registered judgment. If there were technical difficulties with now obtaining interest on the judgment at contractual rates this was a further source of prejudice.

43. [698]

    Finally, in the course of supplementary reply submissions on the final day of the hearing, counsel for OSE referred me to the following passage from Henry May, A treatise on the statutes of Elizabeth against fraudulent conveyances: the Bills of Sale Acts, 1878 and 1882 and the law of voluntary dispositions of property (2nd ed, 1887, Stevens and Haynes) (at 320; I have numbered the propositions in the passage for ease of reference; emphasis added):

44. [699]

    I asked counsel whether this was a case in which additional equitable relief was being claimed for the purposes of proposition (3). As I understood the answer, counsel accepted that the Court was exercising equitable jurisdiction in aid of common law rights. Counsel referred in particular to the grant of administration-style relief with respect to Yuk Tong’s estate. But proposition (3) only says that this “may” make a difference. It was unclear to me whether counsel were acknowledging that it would actually do so in the present case.

45. [700]

    In response to these arguments from counsel for OSE, counsel for the Shiu Parties maintained that cl 20 of the Agreement should be read, in the circumstances of the case, as a release of Yuk Tong’s liability under the Hong Kong cheque. Counsel relied in particular on recital 10. Counsel also pointed out that the cheque itself represented the remainder of the consideration due to Rachel for the sale of her interest in the Hong Kong matrimonial home at MacDonnell Road.

46. [701]

    Counsel also contested the application of FLA s 90DA(1). In their submission, the requirements of s 90DA(4) had clearly been complied with. The necessary statements had been made in the statutory form. The truth or otherwise of those statements was not relevant.

47. [702]

    As I understood them, counsel did not dispute that it would have been open to Rachel, at least up until Yuk Tong’s death, to apply under FLA s 90K to set aside the Financial Agreement and to pursue a claim for a division of the matrimonial property, including the Lindfield property, between herself and Yuk Tong. But counsel submitted that it was not meaningful to speak of this (or of Rachel “allowing” the limitation period on the Hong Kong cheque to expire) as if it represented some sort of election on her part. The truth was that after entering into the Financial Agreement and obtaining the transfer of the Lindfield property, Rachel simply remained in possession of the property and treated it as her own. No occasion for considering the validity of the release, or pursuing the liability under the Hong Kong cheque, arose.

48. [703]

    Counsel also submitted that there was no valid basis for counsel for OSE to complain about surprise was appropriate. Reliance on the release had been expressly pleaded. In any event, the allowance issue was one which arose as part of the quantification of “just allowances” as part of determining the relief to which OSE was entitled. The Court was required (by UCPR r 46.8), or at least permitted, to consider it, whether it had been pleaded or not.

49. [704]

    I agree that the arguments presented by counsel for OSE go beyond debating the form of orders required to give effect to the views expressed in my draft judgment. In effect they invite me to reconsider the conclusion expressed at [653(3)] above. But it does not necessarily follow that they should not be entertained.

50. [705]

    As counsel for OSE pointed out, I have at this stage made no final orders in these proceedings. It is open for me to reconsider the conclusions which I have expressed in the draft judgment. That does not mean that I should permit the parties to recontest any and all findings against them with which they are dissatisfied. But If I can deal with a point where all available arguments were not previously put, and thereby potentially save the parties the trouble and expense of taking the point to the Court of Appeal, then I think that I should do so.

51. [706]

    For these reasons, I have decided to deal with the arguments by counsel for OSE on their merits. Although counsel for OSE did not, or did not clearly, contend that the Court lacked power to make an allowance in Rachel’s favour, I will begin by briefly saying something about the Court’s jurisdiction in the present case.

52. [707]

    As already noted, alienations of property caught by CA s 37A are void at law. The interplay between legal and equitable remedies was explained by Stirling J in In re Mouat. Kingston Cotton Mills Company v Mouat [1899] 1 C.h. 831 at 833-834:

53. [708]

    The authority cited for May propositions (2) and (3) is the decision of the Privy Council in an Indian appeal, Sherazee v Begum (1854) 8 Moore PC 90. The case concerned the purported sale by a debtor of his half share of a dockyard property, which was found to have been a fraud on his creditors (although it is unclear from the report whether this was because the Statute of Elizabeth applied). The dockyard was seized by the sheriff on the application of the creditors and the seizure was challenged by the purchaser. The challenge was unsuccessful, but it was argued for the purchaser that, even so, he should be entitled to recoup monies which he claimed to have laid out on repairs to the dockyard. That claim was rejected by the Board.

54. [709]

    The judgment of the Board referred to an old decision of Lord Hardwicke LC (Hamblyn v Ley 3 Swan 301), a similar case involving a fraudulent assignment of land subject to a mortgage, where his Lordship set aside the transfer in question but made an allowance in favour of the transferee for expenditure on mortgage interest and on taxes and repairs. The Board commented (at 113-114):

55. [710]

    An account was impossible because the purchaser’s claim was one in the nature of ejectment, a legal remedy. For this reason, no claim had in fact been made for an equitable allowance by way of account. Furthermore, the Indian court had found on the facts that the whole transaction (“from the beginning to the end”) was a sham (at 114).

56. [711]

    The judgment is expressed in less than absolute language (“probably there might have been an account”). But no such reticence is found in the original decision of Lord Hardwicke LC, who appears to have treated the making of an allowance as a matter of course.

57. [712]

    In the present case there could have been, if required, a formal grant of administration with respect to Yuk Tong’s estate, followed by an order for re-transfer of the Lindfield property and the proceeds of the account in favour of Yuk Tong’s legal personal representative for distribution among Yuk Tong’s creditors. A make-available order is simply a shortcut. As counsel for OSE appeared to accept, this gives the remedy some of the character of an administration decree. That in itself would be sufficient to empower to Court to order that appropriate allowances be made out of the Lindfield proceeds in the present case.

58. [713]

    But I would go further. A make-available order, whether the debtor has died (as in the present case) or is alive but for some reason not amenable to formal administration proceedings (as in Nguyen v Corbett, above), involves the exercise of equitable jurisdiction in aid of common law rights. It is simply an alternative to the usual order which would be made in the Court’s equitable jurisdiction in the case of an alienation of Torrens Title land, namely an order for re-transfer of the land. As such, it clearly may, in a proper case, be made conditional upon an allowance being made in favour of the recipient.

59. [714]

    Turning to the applicable principles, I think, with great respect to counsel on both sides, that the debate concerning “just allowances” rather misses the point. In the caselaw to which I was referred, and in UCPR r 46.8, the term “just allowance” is used in a specific sense. Where a defendant is ordered to give an account of profits, and the defendant has brought effort or skill to bear in making the profits, such an allowance may be made by way of credit. Similarly such a credit may be allowed where the defendant is ordered to account for property and the defendant has expended time or effort on managing the property, at least where that has enhanced its value.

60. [715]

    In other words, the term as used in the caselaw to which I referred was being used in the context of post-decree accounting proceedings. That is expressly so in the case of UCPR 46.8. But in the present case, the time for making “just allowances”, in that sense, has not yet arrived. What I am concerned with are the terms on which the decree should be made in the first place.

61. [716]

    In considering those terms, as I indicated at [562] above, the question is whether an allowance should be made so as to achieve “practical justice” where a transaction has been set aside and restitutio in integrum is impossible. A punitive approach is not justified any more than it would be in an accounting context. Even a defendant who has procured a transaction by means of fraudulent representations is entitled to counter-restitution from the plaintiff for benefits the plaintiff has actually received.

62. [717]

    Rachel may not have thought, following the effective dishonour of the cheque in April 2009, of suing Yuk Tong. But even if the claim on the cheque was only worth cents on the dollar, it would of have some value. Had OSE obtained judgment against Yuk Tong at that point and proceeded to bankruptcy, Rachel would have been entitled to prove in the bankruptcy as a creditor, and I have no doubt that she would have done so.

63. [718]

    The arguments from counsel for OSE about the interpretation of the Financial Agreement make the question of release seem less certain than it appeared in closing submissions last year. I agree that, looked at in isolation, cl 20 appears to be confined to property claims. But it is still difficult to accept that the parties could have contemplated that, the day after obtaining the transfer of the Lindfield property pursuant to the Agreement, Rachel could have commenced proceedings and obtained judgment against Yuk Tong on the Hong Kong cheque. In fact, it seems implicit in the oral agreement between Rachel and Yuk Tong for her to have the Lindfield property “for [her] security” that this was to take the place of her right to enforce payment of the cheque.

64. [719]

    In the course of argument, I suggested to counsel for OSE that the oral agreement might amount to an enforceable contractual release, at least once the Lindfield property had been transferred to Rachel. Counsel did not accept this. They submitted that no intention to enter into immediately binding contractual relations would be inferred at the time of the April 2009 conversation. They also invoked the parol evidence rule.

65. [720]

    It is convenient at this point to address the argument from counsel for OSE that, quite apart from the interpretation issue, the Financial Agreement was deprived of contractual force by FLA s 90DA. I do not accept that argument.

66. [721]

    Although this point was not argued between the parties, I think the argument is based on a misapprehension as to the scope of s 90DA. The section is concerned with financial agreements to the extent to which they deal with matrimonial assets and thereby, by force of FLA s 71A, displace the Family Court’s power to adjust the rights of the parties to the marriage so far as those assets are concerned. An agreement which fails to meet the requirements of s 90DA is of “no force of effect” for that purpose. The section says nothing about the validity of the contractual rights between the parties otherwise created at general law.

67. [722]

    If I were wrong in this view, I would nevertheless agree with counsel for the Shiu Parties that the requirement in s 90DA(1) that a separation declaration be “made” is satisfied if documents containing the relevant statements accompany the agreement. Even if the statements are not accurate, the agreement is still an agreement for the purposes of s 90DA. If the argument from counsel for OSE were correct, then an apparently regular financial agreement will have been invalidated by factual findings made in collateral litigation long after the agreement was executed and put into effect. I think it would be unrealistic to impute such an outcome to Parliament: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91]-[93].

68. [723]

    Returning to the effect of the Financial Agreement on Yuk Tong’s liability under Hong Kong cheque, it might be a strained reading of cl 20 to read it as applying to such an unsecured liability. But it may not be an impossible reading, given the wide language of recital 10.

69. [724]

    Nor do I think the oral agreement between Rachel and Yuk Tong in April 2009 can be put aside as readily as counsel for OSE would have me do. It may be accepted that the agreement did not give rise to any immediately binding contractual obligation to transfer the Lindfield property. But there seems no reason why it could not take effect as a collateral contract under which, if Yuk Tong transferred the property to Rachel, she would release him from his liability under the cheque. Alternatively, the oral agreement followed by the transfer could be analysed in terms of an estoppel preventing Rachel from thereafter suing on the cheque.

70. [725]

    Strictly speaking, this would mean that the release took effect on the transfer on the property, rather than on execution on the Financial Agreement a few days earlier. The difference is, however, inconsequential for practical purposes.

71. [726]

    In the end I do not find it necessary to reach a final view on these questions, or on the contractual scope of the release in the Financial Agreement. Even if no formal release was given, for practical purposes Rachel abandoned her right to enforce payment under the cheque once the transfer was obtained. It is common ground that the right is now statute barred.

72. [727]

    I also agree with counsel for the Shiu Parties that it would be unrealistic to treat Rachel as having consciously made a choice, following completion of the Financial Agreement, not to move to set the Agreement aside under s 90K and to allow the limitation period on the cheque to expire. However liable to being set aside the transfer of the Lindfield property might have been, it had not been a sham and it had been put into effect. Whether there was some alternative basis for recovery against Yuk Tong simply did not arise for consideration. It might have been otherwise once OSE had brought proceedings challenging the transfer under CA s 37A, but by then it was too late.

73. [728]

    Nor do I accept the suggestion that in some way there has been prejudice to OSE in connection with the issue. While Rachel may not have pleaded an entitlement to an allowance, OSE did not plead a claim for a make-available order in the first place. It was therefore legitimate, when that claim was made in final submissions, for counsel for the Shiu Parties to advance any claim for allowance which was fairly available on the evidence. Furthermore, for reasons just given I do not think that there had been any prejudice suffered from an inability to cross-examine Rachel on her failure to bring proceedings on the Hong Kong cheque or to pursue a claim for a matrimonial property adjustment under FLA s 90K.

74. [729]

    In my view, the simple fact is that, as a consequence of the transfer of the Lindfield property to her, Rachel abandoned her rights against Yuk Tong under the Hong Kong cheque. Those rights cannot now be enforced. In circumstances where the Lindfield proceeds are to be made available to Yuk Tong’s unsecured creditors, I remain of the view that a benefit has been conferred on them for which an allowance must be made in Rachel’s favour.

75. [730]

    Make-available order – issue two: Counsel for the Shiu Parties contended that, if Rachel’s entitlement to an allowance on account of the Hong Kong cheque were confirmed (as it has been), she should likewise receive an allowance in her favour for paying off the Lindfield property loan. The loan had been made the subject of a mortgage over the Chatswood property (owned by Rachel) as a result of the ANZ-NAB refinance ([87] above). But it remained a liability of Yuk Tong. The liability secured by the mortgage granted by Rachel over the Chatswood property was a liability as guarantor ([216] above).

76. [731]

    It followed, in counsel’s submission, that when Rachel paid off the loan she was paying off another unsecured creditor of Yuk Tong. Had the Lindfield property not been transferred to Rachel and instead been made available to meet the debts owed to Yuk Tong’s creditors, OSE would have found itself in competition with NAB. Alternatively, had NAB enforced the Chatswood mortgage against Rachel, she would have been entitled to an indemnity which likewise would have been in competition with the debt owed to OSE.

77. [732]

    Counsel for OSE urged me to reject the claim. Counsel pointed out that Rachel had not previously made a claim for such an allowance, even in final submissions. On the face of it, Rachel had chosen to make the payments because it suited her to do so. In particular, it had presumably suited her to discharge the Chatswood mortgage so as to remove any encumbrance from the title.

78. [733]

    Counsel added that, in so far as the money was paid from the Lindfield bank account (between November 2009 and February 2012), the monies had been paid out of the income from the Lindfield property, which was the very subject matter of the successful claim against Rachel. OSE had conceded that it was unable to obtain an account of the income from the property prior to September 2020, and Rachel had accepted, and thereby taken advantage of, that concession. It would in those circumstances be wrong to see her as having used her own resources to pay Yuk Tong’s debt to NAB. Alternatively, if an allowance was prima facie to be made in Rachel’s favour, there should be a right of counter-restitution in OSE’s favour which would extinguish it.

79. [734]

    In counsel’s submission, the money used to pay off the remaining principal in February 2012 was not really Rachel’s money either. It was money that she had obtained from the Ultimo property, which had belonged to Joe Wing and which should have been made available to his creditors.

80. [735]

    Counsel also pointed out that Rachel had successfully resisted the claim under CA s 37A with respect to the monies paid out of the Lindfield bank account. She had also enjoyed, and would retain the benefit of, another eight years of rental income from the Lindfield property (that is, up until the proceedings were commenced against her in September 2020). She also retained the benefit of the $100,000 sent to her via Joe Yin in 2017 (see [322] above).

81. [736]

    Counsel submitted that the terms of the Financial Agreement were potentially relevant but had not been addressed. Counsel referred to cl 16 of the Agreement, which provided:

82. [737]

    Counsel submitted that one reading of cl 16 was that Rachel was promising to bear all of the Chatswood mortgage payments, in return for Yuk Tong’s agreement to surrender any claim to the property. As Rachel’s ownership of the Chatswood property was not being challenged, there was no warrant for making any allowance in favour of Rachel on account of that bargain.

83. [738]

    According to counsel, the application of cl 20(b) was also unclear. On one reading of the clause, Yuk Tong remained liable to indemnify Rachel against any liability with respect to the Chatswood property. On that view, she had not given up any relevant rights in entering into the Agreement. In any event, a right of indemnity would at that stage have been practically worthless; counsel referred to it as a “dry remedy”.

84. [739]

    I do not think that any allowance should be made in Rachel’s favour for the rental payments made out of the Lindfield bank account from November 2009 until February 2012. As already noted, I am not sure that an account could not have been sought for the income received during that period. But if the Court were now to make an allowance in Rachel’s favour, she would be double-dipping. In effect, I accept the counter-restitution argument advanced by counsel for OSE.

85. [740]

    The payment of $276,000 which discharged the remainder of the loan in February 2012 is, however, in a different position. While that money came from the proceeds of the Ultimo property, and thus belonged to Joe Wing, the orders in the 2019 proceedings will require Rachel to account fully for that payment. In the end, she will have paid for it out of her own assets, independently of both the Ultimo property proceeds and the Lindfield rental receipts.

86. [741]

    As with the liability under the Hong Kong cheque, I do not think it is necessary to reach a final conclusion on the impact of the Financial Agreement on the legal obligations and entitlements associated with the discharge of the Chatswood mortgage. At the point the Agreement was entered into, Rachel’s only obligation under the mortgage was a guarantor and she undoubtedly possessed a right of indemnity for any payments that she might make to discharge it. If the effect of the Agreement was that she surrendered that right of indemnity, then I think it would be unrealistic to treat that surrender as purely relating to potential claims against the Chatswood property. The transfer of the Lindfield property was an essential, if not the predominant, part of the bargain in the Agreement. If the Agreement left Rachel free to pursue the right of indemnity, she still did not in fact do so and would now be statute barred.

87. [742]

    Rachel’s motivation in making the payment may have been to secure her ownership of the Chatswood property by removing the mortgage from the title. In this sense, the payment can be seen as a voluntary one. But I do not think it makes any difference for practical purposes. The fact is that by making the payment Rachel conferred a benefit on OSE and the other unsecured creditors of Yuk Tong. I think this is enough to support an allowance in her favour.

88. [743]

    It is true that Rachel will retain the benefit of the Lindfield rental income up to September 2020, and of the $100,000 paid to her (via Joe Yin) by Yuk Tong in 2017. But that is because no claim was advanced to those monies. Whatever may be the explanation for that, it has nothing to do with Rachel and is irrelevant to whether she should have the allowance now claimed.

89. [744]

    For these reasons I conclude that an allowance should be made in Rachel’s favour for the sum of $276,000 paid to discharge the Chatswood loan in February 2012.

90. [745]

    Make-available order – issue three: As already noted, counsel for the Shiu Parties contended that Rachel’s allowance should be fixed by comparing the value of the Hong Kong cheque liability with the then value of the Lindfield property. Counsel argued that it was proper to do so because the cheque was part of the consideration for the transfer of Rachel’s half share of the MacDonnell Road property in Hong Kong to Yuk Tong (see [96] above). The liability was thus of proprietary origin.

91. [746]

    Making a related point, counsel submitted that the arrangements concerning the sale of the MacDonnell Road property had resulted in Rachel’s unpaid portion of the purchase price being swallowed up in OSE’s security. Counsel submitted that to allow OSE a share of the property based on the unsecured portion of the debt would effectively allow it to “double dip”.

92. [747]

    In response, counsel for OSE challenged the approach for which counsel for the Shiu Parties contended. It would, they submitted, effectively treat Rachel as a part-owner of the Lindfield property, rather than an unsecured creditor. As such, she would receive a windfall share of the increase in value of the Lindfield property since 2009 (I was informed from the Bar Table that the property was believed to be worth between $7.5 and $8.5 million).

93. [748]

    Counsel submitted that CA s 37A could not be used to rewrite the transaction between Yuk Tong and Rachel. The statutory obligation was to rescind it. Giving Rachel an allowance of the type claimed by her would put in a better position than she had occupied in 2009.

94. [749]

    Counsel submitted that in formulating the reasons for my conclusions that a make-available order should be made, I had contemplated that the Lindfield net proceeds would be divided pro-rata according to the value of the Hong Kong cheque liability and the value of the debts owed to Yuk Tong’s creditors. Counsel referred in particular to [653] and [661] above. Counsel submitted that there was no justification for departing from this approach.

95. [750]

    Counsel’s approach would result in OSE’s debt predominating, as it increased at the contractual rate of 24% and came to include further enforcement costs. But counsel submitted that Rachel could hardly complain about such an increase while OSE was forced, over the years, to litigate its claim in Hong Kong, proceed to enforcement of its judgments there, and then pursue further recovery by registration proceedings in Australia. Rachel might not have been aware of the precise terms of the OSE loan but she knew that Yuk Tong owed money to commercial lenders. There was nothing to suggest that the interest rate on the OSE loan was beyond what she might reasonably have expected at the time.

96. [751]

    Still less, in counsel’s submission, could Rachel complain about the increase in OSE’s debt, and the incurring of further costs, which occurred after OSE instituted the 2019 proceedings, and then the 2020 proceedings. Rachel had fought the proceedings tooth and nail. She would have been well aware that, as she did so, OSE’s interest charges and costs were mounting.

97. [752]

    I think the wording of the draft judgment makes it clear that I did contemplate a pro-rata division of the property according to the respective values of the Hong Kong cheque liability and the value of the debts owed to Yuk Tong as at the distribution date, rather than the approach proposed by counsel for the Shiu Parties. But again, I have thought it best to reconsider the question in the light of the further submissions I have received.

98. [753]

    It is true that, as counsel for the Shiu Parties pointed out, the cheque was consideration for the transfer of Rachel’s proprietary interest in MacDonnell Road. But on my findings, it is quite clear that Rachel, for her own purposes, agreed to be an unsecured creditor of Yuk Tong for that amount. To treat her now as if she gave up a proprietary interest in the property would indeed allow her, retrospectively, to secure a proprietary interest in the Lindfield property, which, on my findings, was alienated to her in breach of CA s 37A.

99. [754]

    If Rachel had only been concerned to receive payment in full for her share of the MacDonnell Road property, she could have obtained a mortgage over the Lindfield property from Yuk Tong to secure his liability for the Hong Kong cheque. But the transaction was not structured in this way, and that was clearly a deliberate choice. By receiving a transfer of the Lindfield property, Rachel obtained ownership of the whole equity in the property, which already exceeded the amount then owed to her, and carried with it the potential for future capital appreciation. I agree with counsel for OSE that it would not be proper for Court now to restructure the transaction in a way which, with hindsight, would have been more favourable to Rachel’s interests.

100. [755]

     I also think that the approach suggested by counsel for the Shiu Parties does not really reflect the basis on which relief is being granted in this case. Rather than transferring the Lindfield property back to be formally administered through Yuk Tong’s estate, the property is being made available for division among the creditors. It is common ground that if creditors other than OSE emerge, they should participate in the division of the proceeds made available alongside OSE, rateably in accordance with the value their respective debts.

101. [756]

     If Rachel was still able to pursue her claim under the Hong Kong cheque, there would be no need for any separate allowance in her favour. She could simply prove her debt and participate alongside OSE like any other creditor. As she cannot do so, the proper course is to make an allowance in her favour which has the effect to treating her as a notional creditor for the debt which she gave up. There is no warrant for giving her some form of priority status. Still less is that so when, as I have found, she was deeply implicated in the attempt to defeat or delay Yuk Tong’s creditors in the first place.

102. [757]

     The same comments apply with greater force to the allowance which Rachel is to receive for having paid off the balance of the Lindfield loan in February 2012. Indeed, as at November 2009, being the date of valuation selected by counsel, that payment had not even been made.

103. [758]

     Again, on reconsideration my earlier views remain unchanged. Rachel’s allowance will be calculated by reference to her share of Yuk Tong’s debts as a whole, not by reference to the November 2009 value of the Lindfield property.

104. [759]

     Make-available order – issue four: Counsel for OSE submitted that if the Court determined (as I have) that Rachel should be permitted to retain a share of the Lindfield net proceeds for herself, it would be unjust to permit her to do so without “first allowing the plaintiff’s costs of recovery to be paid in priority”. In support of this proposition counsel relied upon the decision of Kekewich J in Ideal Bedding Co Ltd v Holland [1907] 2 Ch 157.

105. [760]

     Counsel’s primary contention was that OSE’s costs, on a solicitor-client basis, should be paid out before the division of the Lindfield proceeds between Rachel and the creditors. Alternatively, OSE’s costs should be paid, on a solicitor-client basis, as a priority debt out of the fund set aside for creditors. As already noted, the contention applied to OSE’s costs of the 2019 proceedings as well as the 2020 proceedings.

106. [761]

     Counsel submitted that OSE should receive priority for its costs because, but for OSE’s action, nothing would have been recovered for the creditors of Yuk Tong’s estate. Again, in the course of final reply submissions counsel cited a passage from May:

107. [762]

     Whatever other merit counsel’s contentions might have, I do not think they can possibly justify an order for priority in these proceedings for the costs of the 2019 proceedings. The claims by OSE in those proceedings were separate claims which concerned property other than the Lindfield property. I do not see how the incurring of costs in those proceedings can properly be seen, even on the most generous view, as costs necessarily incurred in creating the pool of proceeds which will result from the make-available order.

108. [763]

     Even so far as the costs of the 2020 proceedings are concerned, however, I do not accept counsel’s contentions.

109. [764]

     The decision in the Ideal Bedding case does not assist counsel’s argument. The case concerned the payment of a defendant’s costs out of the proceeds of sale the property that had been fraudulently alienated, rather than the payment of a plaintiff’s costs, as in the present case. Furthermore, in the Ideal Bedding case the defendant was a trustee, which brought special considerations into play, not present here (see at 175-177).

110. [765]

     The quotation cited by May, on the face of it, might provide some support for counsel’s argument. But a more precise statement appears two pages later:

111. [766]

     What emerges clearly from this statement is that the fact that OSE has recovered property for the general benefit of Yuk Tong’s creditors should give it priority for its solicitor-client costs before any remaining funds are distributed between itself and any other creditor who may emerge. That supports counsel’s alternative contention but not their primary one.

112. [767]

     May does say that the creditor’s costs should be paid, on a party-party basis, out of the “general fund”. But I do not think that necessarily means OSE’s party-party costs (if any award of costs is made at this stage: see below) should be paid out of the Lindfield proceeds before the net proceeds are divided between Rachel and Yuk Tong’s creditors. May appears to be speaking of a situation where the property recovered is sufficient to meet the whole of the debts owing to the creditors. That will not be the case here.

113. [768]

     Nor is it the case here that the whole of the Lindfield property will have been recovered for Yuk Tong’s creditors. The share of the net Lindfield proceeds which Rachel will be permitted to retain by way of allowance stands outside the recovery.

114. [769]

     All of Rachel’s assets, including the share of the Lindfield proceeds which she will receive as any allowance, will be available to meet any party-party costs order in favour of OSE. But I see no compelling reason for those costs to be paid as a priority debt out of her share. OSE has failed to recover that share and has no entitlement to be treated as other than an unsecured creditor with respect thereto. By the same token, any liability for OSE’s party-party costs is a liability of Rachel. It is not a liability of Yuk Tong, who was never a party to the proceedings. There is no analogy with the payment of costs out of a fund (see Maxwell v Maxwell (No 2) [2022] NSWSC 1146 at [11]-[13]; and also Catanese v La Cava (No 2); La Cava v Catanese [2025] NSWSC 1480 at [166]-[194]). I think this conclusion is consistent in Barrack v M’Culloch (1856) 69 ER 1043, discussed by May in the paragraph which follows the statement which I have quoted.

115. [770]

     For these reasons, any party-party costs order in favour of OSE will be payable by Rachel personally rather than out of the Lindfield proceeds. But if creditors other than OSE emerge, OSE’s additional solicitor-client costs will be payable in priority to any distribution from that fund. Furthermore, if OSE is unable to recover its party-party costs from Rachel, the unrecovered portion will likewise be payable as a priority debt from the creditors’ fund.

116. [771]

     More generally, this discussion points up the need to distinguish between expenses arising under the make-available order which will be recoupable out of the Lindfield proceeds before separation out of the share to which Rachel is entitled by way of allowance, on the one hand, and expenses which will only be recoupable out of the funds made available to creditors, on the other. Expenses such as the costs of sale of the Lindfield property and the costs of conducting the account of rental income will fall into the first category. Other expenses such as advertising for further creditors of Yuk Tong to come forward, and dealing with the proof of those other creditors’ claims, will fall into the second. The parties will need to ensure that the distinction is clearly drawn in the final form of the make-available order.

117. [772]

     Make-available order – issues five and six: As already noted, the Hong Kong judgments were eventually entered, with effect from June 2019, in the sums of CAD 20.6 million and HKD 12.5 million. No provision was made in the order for registration for the judgments to carry interest at any rate other than that specified by s 101 of the CPA. The judgments therefore carry at interest at that rate: see Uniform Civil Procedure Rules 2005 r 36.7.

118. [773]

     Clause 5.4 of each of the Loan Agreements deals with the payment of interest. The clause relevantly provides (emphasis added):

119. [774]

     Counsel for OSE contended that, as a result of this clause, OSE’s debt for the purpose of calculating Rachel’s allowance should include interest at the contractual rate right up to the distribution date. A notice of motion was filed for OSE in the 2019 proceedings seeking to have the Court order, effectively nunc pro tunc, that the registered judgments should carry interest at the contractual rate of 24%.

120. [775]

     As to the proper date of conversion into AUD, counsel for OSE drew my attention to the standard form of order adopted when it was accepted for the first time in England that judgment could be entered in a foreign currency (Miliangos v George Frank (Textiles) Ltd [1976] AC 443). That order provided for judgment to be entered in the records of the court in the foreign currency or the “sterling equivalent at the time of payment”. Counsel noted that the same approach had been taken in Australia (Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448). Accordingly, in counsel’s submission, the conversion into AUD for the purpose of calculating OSE’s debt should likewise take place as at the distribution date.

121. [776]

     Counsel for the Shiu Parties opposed the interest rate motion. Counsel accepted that the Court had a discretion to make such an order but submitted that in the circumstances it should not do so. Counsel did not contest the submission by counsel for OSE on the AUD conversion date.

122. [777]

     In my view, the wording of cl 5.4 leaves no possible area of dispute. The contractual interest rate applies to amounts overdue under the Loan Agreements even after judgment has been given.

123. [778]

     In the present proceedings I am concerned with the calculation of the debt due by OSE for the purpose of the pro-rata division of the net Lindfield proceeds between Rachel and the creditors of Yuk Tong (as well as between OSE and any other creditors who may emerge). I am not concerned with the quantum of the registered judgment, or indeed whether a judgment has been entered at all. It is purely a question of what is overdue under the Loan Agreement.

124. [779]

     For these reasons, I think that no question of merger arises. The outcome of the interest rate motion does not affect the present issue, which is governed by clause 5.4. OSE’s debt for the purposes of the make-available order must be calculated accordingly. I will return to the motion when I consider the other relief sought in the 2019 proceedings.

125. [780]

     OSE has thus succeeded on the arguments presented before me. But I cannot help wondering whether something has been missed. As already noted, the assumption behind OSE’s formulation of the make-available order was that interest should be calculated on the registered judgment. On my analysis, there is no foundation for that assumption.

126. [781]

     Furthermore, Yuk Tong had already died when the 2019 proceedings were commenced. No attempt was made to substitute the NSW Trustee for him as a defendant. It is difficult to see in the circumstances how the judgment could be binding on his estate at all.

127. [782]

     This leads to a further thought. Once Yuk Tong had died, his capacity to incur further debts ceased. It seems problematic to proceed on the assumption that further contractual liabilities could arise after that date, at least if no personal legal representative has ever been appointed (note in particular that liability to pay interest under cl 24 arises “upon demand”).

128. [783]

     Had an order been made for administration of Yuk Tong’s estate in bankruptcy, his creditors would have been entitled to pro-rata distributions according to the quantum of their respective debts as at the date of his death, with interest accruing after that not being provable: Bankruptcy Act 1966, ss 247A(1)(b), 248(1), 82(3B). When I asked counsel for OSE about whether this approach should be applied by analogy, he replied in the negative, saying that it was “a creature of the statute” and “therefore not a basis for working backwards”. But as Dixon J explained in Mackenzie v Rees (1941) 65 CLR 1 at 8-12, the bankruptcy rule dates back centuries, well before the law of bankruptcy was put on a statutory footing. It rests ultimately on considerations of convenience and securing “equality and justice between creditors” where there is a deficiency. The rule was in the United Kingdom made directly applicable to the administration of insolvent estates in equity by the Judicature Act 1873 (UK), s 25(1), which was re-enacted by the Judicature Act 1875 (UK), s 10: see Re Summers (1879) 13 Ch D 136; an equivalent provision was adopted in New South Wales by amendments to the Probate and Administration Act 1898 (s 46C and Sch 3, cl 2) in the Conveyancing (Amendment) Act 1930, s 43(b).

129. [784]

     It seems to me that it would be logical to adopt the same approach here. This would mean that OSE’s debt would be calculated based on the Hong Kong judgments, less recoveries, with interest thereon at 24% up until the date of Yuk Tong’s death in March 2019. Any interest due to any other creditor who might emerge would be calculated to the same date. It would seem to follow that the AUD conversion would likewise be undertaken at that date as well. I will ask the parties to re-consider whether the calculations should be done on this basis.

130. [785]

     Make-available order – issues seven and eight: As already noted, the primary contention for Rachel was that the value of the Hong Kong cheque was to be determined as at 17 November 2009, the date of the Financial Agreement. In order to calculate the precise value of the allowance to be made at that date, counsel proposed that HKD 9 million, the face value of the cheque, should be converted in AUD as at 15 April 2009, according to the then exchange rate, that being the date the cheque fell due for payment. Interest at the pre-judgment rate specified by CPA s 100 should then be applied for the period up to 17 November 2009. Alternatively, the Reserve Bank of Australia cash rate could be used to calculate the interest, resulting in a somewhat smaller figure.

131. [786]

     Counsel suggested a number of possibilities for adjusting the amount paid off the Lindfield property loan. It was suggested that a month-by-month calculation would be too costly to justify the expense of undertaking it. Counsel suggested that the whole figure should simply be treated as part of the consideration paid by Rachel for the transfer of the Lindfield property, and that figure, without any further adjustment, should form part of the calculation undertaken on that date.

132. [787]

     Counsel for OSE of course rejected the whole idea of calculating the allowance by reference to the value of the Lindfield property in November 2009. It followed from their approach on the third issue that the calculation of Rachel’s allowance should be made by comparison with the value of the estate’s liabilities to OSE under the judgment (and any other liabilities) at the point of distribution. Presumably, the allowance based on the Hong Kong cheque would, in that event, be based on the exchange rate at the distribution date, not the rate on 15 April 2009 (or 17 November 2009).

133. [788]

     But as I understood counsel’s submission, they did not accept that there should be any allowance for interest on the cheque (or on the Lindfield loan repayment, if, as I have found, an allowance should be made for that payment). Counsel in effect relied on their earlier submissions to the effect that the lapse of time was something for which Rachel was responsible, or at least about which she was not entitled to complain.

134. [789]

     In response, counsel for the Shiu Parties contended that, if the calculation was to be undertaken as at the distribution date, there should still be some adjustment by way of interest in Rachel’s favour. It would be wrong to allow interest on OSE’s debt but not Rachel’s.

135. [790]

     I agree with counsel for OSE that Rachel cannot complain about the accrual of interest at contractual rates on OSE’s debt from 2009 onwards. But I think it is going too far to say that no allowance should be made in her favour for the time value of money. As already mentioned, the division is to be made on the footing that Rachel is a notional co-creditor of Yuk Tong’s estate. To allow OSE’s debt to increase at its contractual interest rate but not make any allowance for the increase in Rachel’s notional debt would not properly reflect the benefit provided by Rachel to Yuk Tong’s creditors by not pursuing her unsecured claims against him.

136. [791]

     Strictly speaking, the proper interest rate on the Hong Kong cheque liability would seem to be the rate which would be appliable had Rachel obtained judgment on the cheque in Hong Kong in April 2009. If an Australian rate is to be used, I would have thought it ought to be the rate payable on judgment debts in this Court. But if the parties consider some other interest rate is appropriate, I will adopt it. I leave this matter to them.

137. [792]

     If, as I have suggested the appropriate date for valuing Rachel’s notional claim is the date of Yuk Tong’s death, then interest should be allowed at that rate until then. If the proper date is the distribution date, then interest should continue to accrue on Rachel’s debts for the purposes of the calculation up until the distribution date. Likewise, the date of conversion for the HKD 9 million due under the cheque should be the date of Yuk Tong’s death or the distribution date, whichever is ultimately selected.

138. [793]

     Appointment of receiver: Counsel for OSE submitted that, in order to make available to the creditors their share of the Lindfield property, the property would have to be sold. Counsel sought an order appointing a receiver for that purpose. Counsel also sought detailed directions to govern the sale of the property, dealing with the appointment of an agent, the method of sale and the like.

139. [794]

     Counsel for the Shiu Parties resisted the appointment of a receiver, at least at this stage. Counsel pointed out that if I accepted Rachel’s contentions as to the method by which her allowance was to be calculated, the share of the property to be made available to the creditors would be quite small. Rachel should be allowed the opportunity to retain the property by refinancing it, or paying the amount due from other sources.

140. [795]

     On the conclusions I have previously reached, Rachel’s share of the net Lindfield proceeds will be far less than the 90% for which counsel for the Shiu Parties contended. Indeed, it may well prove to be quite small. In these circumstances, the sale of the property is inevitable, and a receiver should be appointed to undertake this task and to administer the proceeds, both as between Rachel and the creditors, and as between OSE and any other creditors who might emerge. The receiver will need to be careful to record costs chargeable to the net proceeds separately from those chargeable to the creditors’ fund.

141. [796]

     I will leave it to the parties to consider whether Rachel should account for the Lindfield income since September 2020 to the receiver or to OSE. In the latter case the amount recovered will need to be turned over by OSE to the receiver when payment has been obtained.

142. [797]

     I do not propose to give detailed directions about the conduct of the sale at this point. I will leave this to the parties in the hope that it can be agreed. If there is any dispute, an application may be made either by the receiver or by one or other of the parties, for appropriate directions.

143. [798]

     One potentially important matter will be the incidence of capital gains tax. The Lindfield property is a commercial one. It would therefore seem that the sale by the receiver on Rachel’s behalf will generate a substantial liability for capital gains tax.

144. [799]

     This liability will be a liability of Rachel personally and will not be directly payable by the receiver. It seems to me, however, that any such liability (that is, above and beyond the tax which she would be liable for from her income in the financial year in which the sale is completed) should be paid as a priority debt out of the Lindfield sale proceeds before the respective shares of Rachel and the creditors are calculated. It is in substance a cost of the sale. Should any party disagree with this I will hear further argument on it.

145. [800]

     Cross-claim: I have rejected Rachel’s claim that there was a pre-existing resulting trust in her favour over the Lindfield property ([513] above). The parties agreed that, as a result, the claim in her cross-claim for a declaration recognising the existence of such a resulting trust must be dismissed. I was told that the remaining FLA prayers for relief in the cross-claim, which had been put aside for the purpose of the trial before me, would not be pressed; indeed, it seems that it would now be too late to do so. The result, the parties agreed, is that Rachel’s cross-claim will be wholly dismissed.

146. [801]

     Stay, release of security and injunction: Counsel for the Shiu Parties sought to have any orders by the Court stayed pending the hearing of an appeal. Counsel for OSE accepted that there should be a stay, at least for a period, to accommodate the possibility of an appeal. But there remained two issues between the parties.

147. [802]

     First, it was common ground that, whether or not I proceed to make costs orders immediately, no costs order will be made against OSE, and there will be an order releasing the security provided by OSE for Rachel’s costs of the proceedings ($220,000). Counsel for OSE submitted that this order should be excluded from the operation of the stay, so that the security would be released forthwith irrespective of the outcome of any appeal. Counsel for the Shiu Parties did not agree.

148. [803]

     Counsel for OSE relied for their contention on another aspect of the decision of Hamilton J in Lym. In that decision his Honour reviewed the authorities on the question. Beazley JA, sitting as a single judge of the Court of Appeal, had declined to exempt an order for release of the security from a stay pending appeal in Kiri Te Kanawa v Leading Edge Events Australia Pty Limited [2007] NSWCA 187. His Honour, however, pointed out that there was a previous line of authority in which such an exemption had been made and to which her Honour had not referred.

149. [804]

     The second issue arose in the following way. Counsel for OSE accepted that any order made for the appointment of a receiver would fall within the stay. Counsel contended, however, that in that event the Court should grant an injunction requiring Rachel to deposit all rent moneys received from the Lindfield account into a separate bank account, and not to use funds in that account for any purpose other than paying expenses associated with the property. Counsel pointed to evidence that the account currently being used by Rachel for the Lindfield proceeds is having funds withdrawn from it to pay what appear, on the face of it, to be personal expenses.

150. [805]

     The grant of any such injunction was opposed by counsel for the Shiu Parties. Counsel pointed out that Rachel had been in uninterrupted possession of the proceeds for many years. They submitted that there was no sufficient reason to disturb that possession.

151. [806]

     I was not referred to any subsequent authority which casts any doubt on the reasoning of Hamilton J in Lym. As in that case, the prospect of there being some further trial of OSE’s claim in the future is a distant and contingent one. I propose to follow the same approach as was taken in Lym. The stay will not extend to the order for release of the security for costs lodged by OSE.

152. [807]

     I also propose to grant the injunction sought concerning the Lindfield rent receipts. As a result of the conclusions that I have reached, those receipts should no longer be seen as Rachel’s personal property. Rather they should be seen, presumptively, as property to be administered by the receiver, and of which Rachel will ultimately receive only a small part. The fact that Rachel has been using the rental monies to fund personal expenditure (which does not appear to be in dispute) provides further justification for an injunction until the receivership commences and the accounting process can begin.

153. [808]

     Counsel for the parties agreed that, on my findings, OSE was entitled to receive an account of the proceeds of the Ultimo property, which would include proprietary relief against any property into which those monies could be traced. The formulation of the accounting orders, however, is a complex process, albeit that the principles are largely agreed. In effect, the account needs to be considered in four different but interlocking parts.

154. [809]

     First account: Of the proceeds of the Ultimo property, the sum of $235,000 was appropriated by Rachel and paid into a bank account in her own name: [308] above. Rachel accordingly is the appropriate accounting party so far as that amount is concerned.

155. [810]

     Second account: The balance of the proceeds of the sale of the Ultimo property, $2.143 million, was appropriated by Rachel and placed on term deposit: [309] above. With accumulated interest, the amount on maturity was $2.164 million: [310] above. Rachel caused this to be paid to GH2. Counsel for the Shiu Parties accepted, as I understood them, that both Rachel and GH2 should account to OSE for this sum.

156. [811]

     Third account: The Kirribilli property was acquired in the name of Joe Yin but funded by GH2 with monies derived from the term deposit proceeds which are the subject of the second account. The moneys in question were: payments totalling $257,000 which represented the purchase costs apart from the $350,000 loan obtained in Joe Yin’s name ([313]-[314] above); and $360,000 paid into the bank account into Joe Yin’s name which acted in effect as a set-off account for the loan ([315]-[316] above).

157. [812]

     As I understood it, counsel for the Shiu Parties accepted that Joe Yin, GH2 and Rachel were jointly and severally liable to account to OSE for the monies they received. It was also common ground that ownership of the Kirribilli property was the traceable product of the $257,000 in purchase costs. The parties agreed that the obligation to account so far as those monies were concerned should be satisfied by declaring a constructive trust over the property in favour of OSE.

158. [813]

     Counsel for OSE accepted that, to the extent that monies were paid out of the Kirribilli bank account to meet principal and interest payments under the Kirribilli property loan, Joe Yin was entitled to a credit. On the other hand, it would be necessary for her to bring to account the benefit of rent payments received, subject to credits for any further expenses associated with holding the property and obtaining rental income from it. This will require a separate account, as Joe Yin is not liable under the wider accounts against GH2 and Rachel.

159. [814]

     Fourth account: The $276,000 used to pay off the balance of the Lindfield property loan and thereby discharge the mortgage on the Chatswood property came from the term deposit monies proceeds which are the subject of the second account: [311] above. There was no dispute therefore that GH2 and Rachel were jointly and severally liable to account for these monies. Counsel for OSE also contended, and it was not disputed, that the monies should be traced into the Chatswood property in the form of a charge to secure repayment. Accordingly there will be a declaration that OSE is entitled to an equitable charge securing the amount in question over that property.

160. [815]

     Counsel for OSE submitted that the amount secured by the charge should also include interest from the date of receipt of the payment and OSE’s costs of the proceedings (calculated on an indemnity basis). Counsel for the Shiu Parties accepted that interest should be included, but disputed the inclusion of costs (which they contended should be deferred in any event: see below).

161. [816]

     I do not accept that OSE should receive priority for its costs by having them included in the charge. I think it would be obviously disproportionate to do so. The claim to a charge was only a relatively minor issue in the overall claim by OSE.

162. [817]

     More importantly, I think that such an allowance would be wrong in principle. OSE has succeeded in obtaining a full proprietary remedy for the sums of money which, it is agreed, are properly traceable into the Chatswood property. But that is as far as its proprietary entitlements go. As a successful litigant, assuming that a costs order is made in its favour, its entitlement to recover costs should be unsecured, although of course Rachel’s remaining interest in the Chatswood property will be available, along with her other assets, to satisfy that costs liability. As with the make-available order in the 2020 proceedings, there is no justification for upgrading that entitlement to a proprietary one. In particular, there is no analogy with the recovery of costs out of a fund.

163. [818]

     Appointment of receiver: Usually, recognition of OSE as the beneficial owner of the Kirribilli property would result in the transfer of the property from Joe Yin to OSE, which would then be free to use or dispose of the property as it saw fit. But apparently OSE has no wish to assume ownership of the property. Counsel for OSE therefore proposed that a receiver be appointed for the purpose of selling the property and paying the net proceeds to OSE, and that submitting to this order would be taken to satisfy Joe Yin’s obligations under the constructive trust declared by the Court. This was agreed.

164. [819]

     Counsel for OSE likewise proposed that a receiver be appointed to the Chatswood property to sell the property so as to pay out the charge in favour of OSE. This, however, was resisted by counsel for the Shiu Parties. They submitted that Rachel should be given an opportunity to pay out the charge from other sources, or by refinancing the property.

165. [820]

     I accept the submission from counsel for the Shiu Parties. The Lindfield property is in quite a different position from the Kirribilli property. Only a relatively small proportion of the Chatswood property is the subject of the charge. The property itself is Rachel’s family home. I think that she should have an opportunity to buy the charge out by making some other arrangement to satisfy it. If there is any difficulty or delay an application for the appointment of a receiver may be made in due course.

166. [821]

     Interest rate on registered judgment: I have already referred to OSE’s motion for an order that the judgment registered with the Court carry interest at the contractual interest rate of 24%. As already noted, counsel for the Shiu Parties accepted that the Court had power to make the order sought, but contended that, in the exercise of discretion, it should not do so.

167. [822]

     Counsel for the Shiu Parties pointed out that although all of the six defendants named in the proceedings at the time the judgment was registered had been named as respondents to the motion, none of them had been served. The Hong Kong parties (Lanco, Mr Chan, Mr Ng, Busbridge and Hale Lion) appear never to have been served at any stage (see [25] above). As already noted, Yuk Tong, the original third defendant, died before the proceedings began and no grant of representation had been obtained when the judgment was registered; no attempt was made to obtain such a grant for the purpose of the motion. Joe Wing was served in the course of the proceedings to register the judgment (see [26] above) but was not served with the present notice of motion.

168. [823]

     Counsel acknowledged that Rachel, Joe Yin and GH2, who are the seventh, eighth and ninth defendants in the 2019 proceedings, were served with the notice of motion. But they only became parties to the proceedings long after the judgment had been registered and had never been judgment debtors in Hong Kong.

169. [824]

     As I understood counsel’s submissions, the failure to serve any of the actual judgment debtors was itself a reason why relief should be refused. Counsel also noted that there was no apparent reason why the application could not have been made long before now.

170. [825]

     In my view, the points made by counsel for the Shiu Parties are well taken. In effect, OSE is seeking, retrospectively, to vary the rate of interest carried by the registered judgment. Yet OSE has failed to join the one defendant who was an active party to the proceedings at the time that judgment was registered.

171. [826]

     A further complication is that following the registration of the judgment in 2019 Joe Wing became bankrupt in 2021. It does not seem to be suggested that he could be personally liable (and therefore liable to bankruptcy a second time) for the increased quantum of the debt. Rather, the effect of the order, if made, would appear to be to increase, retrospectively, the debt provable in his bankruptcy. Counsel for OSE did not in their submissions address how this would, or could, work.

172. [827]

     I also agree with counsel for the Shiu Parties that no adequate explanation has been offered for why this application was not made at the outset, when the registered judgment was obtained. I am not willing to accept the suggestion made by counsel for OSE in the course of argument that there was no need to consider it until a claim for an allowance was made on Rachel’s behalf. I find this submission implausible and there is no evidence that this was actually a consideration that crossed the mind of OSE’s legal representatives at the time.

173. [828]

     The interest rate motion will be dismissed. I leave it to the parties to consider whether any further orders are required to clear up the garnishee and examination proceedings in 2021 (see [31]-[33] above).

174. [829]

     Stay and release of security: As in the 2020 proceedings, it was accepted that the orders for account and appointment of a receiver should be stayed. Security (in the sum of $250,000) had also been provided which, it was agreed, should be released. For reasons given above, the order releasing the security will not be subject to the stay.

Costs

1. [830]

   As already noted, counsel for OSE invited me to make orders for costs in OSE’s favour both in the 2020 and 2019 proceedings, and to order that the costs be assessable and payable forthwith. Counsel also submitted that the order made in the 2020 proceedings should be on an indemnity basis. This submission was based on an informal offer of compromise made by OSE in June 2022, which was not accepted and which, so counsel contended, was less favourable to OSE than the decree which it will obtain in the proceedings.

2. [831]

   In order to give effect to counsel’s indemnity costs submission it would be necessary to make some sort of apportionment of the costs which were common to the 2020 and 2019 proceedings. Most obviously, those would include the costs of preparation for the hearing, and the hearing itself, the proceedings being heard together with evidence in the one being evidence in the other. Eventually it was agreed by counsel for both parties that the appropriate apportionment was 50/50 between the two proceedings.

3. [832]

   Counsel for the Shiu Parties, however, resisted the making of costs orders at this point. In their submission, the proper course was to wait for the quantum payable to the creditors under the make-available order to be determined (which, as already noted, counsel submitted would be relatively small) and then consider the question of costs in that light. Similarly, the award of costs in the 2019 proceedings should await the completion of the accounts to be taken and then considered in the light of the actual financial outcome.

4. [833]

   Counsel did not articulate the arguments which they proposed to advance if, contrary to their primary submission, the Court were to embark on dealing with questions of costs now. Clearly the indemnity costs application was opposed. I gathered, however, that there might be further arguments based on the procedural history of the two proceedings, and in particular, some of the delays in bringing the proceedings to finality. It is only fair to say that the proceedings have a complex history; the Shiu Parties were only joined to the 2019 proceedings at a later stage; and the delay which took place between the hearings in October 2023 and October 2024 were the result of an adjournment which was sought by counsel for OSE to enable OSE to obtain an assignment of Joe Wing’s cause of action from his Bankruptcy Trustees.

5. [834]

   Both proceedings have reached the point where I am settling the terms of the final decree. Once made, those decrees may or may not be final for the purposes of appeal. But they will certainly be final for the purposes of the functus officio rule (Woods v Sheriff of Queensland (1895) 6 QLJ 175).

6. [835]

   Further steps will be necessary to complete the accounts contemplated under the two decrees, and other processes will be required to complete the make-available order. In that sense the proceedings will continue. But they will be proceedings of quite a different nature from the pre-decree proceedings.

7. [836]

   It needs to be borne in mind that the Court has a wide power to determine the way in which an account is carried out: see UCPR r 46.4. The parties may even be able to agree on the amounts due. If formal accounting proceedings are required they will be narrowly focussed proceedings in which not all the parties will necessarily need to participate (Joe Yin, for instance, will only need to participate in the account concerning the Kirribilli monies, if one is necessary).

8. [837]

   In these circumstances I think the finalisation of the decrees is a convenient and appropriate point at which to determine the parties’ liabilities for costs inter partes to date. I therefore propose to call upon the parties to present the remainder of their submissions on this question so that the costs may be dealt with.

9. [838]

   On 4 December I issued to the parties a further draft of the judgment to this point and invited submissions from them on the finalisation of the decrees, and, if possible, costs, in both proceedings. This resulted in written submissions and a further hearing on 11 December.

10. [839]

    For the purposes of the hearing, I invited the parties to address issues flagged in the draft judgment concerning the formulation of the decree. I also encouraged them to identify any errors or omissions in the draft judgment which could conveniently be corrected at this point in the proceedings.

11. [840]

    It was common ground that there was insufficient time before the end of term to deal with costs, and they should be reserved in the decree. The parties have agreed a post-decree timetable for the costs argument, which will culminate in a further hearing next year.

Orders

1. [841]

   Minutes of order for both the 2019 and 2020 proceedings were prepared by counsel for OSE. Their form was largely agreed. The minutes included specific reference to the deduction of capital gains tax from the proceeds of the Lindfield property ([798] above) and also contained provision for capital gains tax to be deducted from the proceeds of the Kirribilli property. Three matters remained in dispute.

2. [842]

   The first concerned the calculation, for the purposes of the make-available order, of the value of the debts owing to Yuk Tong’s creditors (including the notional debt owed to Rachel). Although this had not been argued, I suggested that the debts should be calculated as at the date of Yuk Tong’s death rather than the date of distribution. This would be consistent with the rule in bankruptcy, which applies to the administration of deceased estates which are insolvent. Accordingly, interest would only run up to, and any currency conversion would be undertaken at, 17 March 2019.

3. [843]

   Counsel for the Shiu Parties adopted my suggestion, but counsel for OSE opposed it, and contended that calculation as at the distribution date was the appropriate course.

4. [844]

   In support of this contention, counsel for OSE reminded me that no actual administration order has been made. The bankruptcy rule can therefore only be applied by analogy. Counsel submitted that the analogy is only useful to the extent that it produces a result consistent with the terms of, and the policy behind, CA s 37A.

5. [845]

   Counsel argued that calculation of debts only to the date of Yuk Tong’s death would not be consistent with s 37A. Counsel noted that typically an administration would be expected to be completed within the “executor’s year”. In the present case almost seven years have elapsed since Yuk Tong’s death (and the distribution date is still probably some distance away).

6. [846]

   In this context, counsel repeated an earlier argument that the delay resulted from the fraudulent alienation in the first place, combined with Rachel’s vigorous defence of the s 37A claim once it was made by OSE. Counsel submitted that it would be wrong for OSE to be deprived of the benefit of interest accruing during that period. The delay also had broader, non-financial consequences which were relevant. Counsel noted that Mr Alan Chu is now 87 years old and has been chasing repayment of OSE’s debts for 15 years.

7. [847]

   Counsel also reminded me that the usual date for conversion of judgments into foreign currency is the date of payment. Counsel submitted that, accepting the logic that the conversion date should be the same as the date up to which interest was calculated, this also supported the contention that interest should be calculated up to the distribution date.

8. [848]

   Counsel for the Shiu Parties urged me to reject these submissions. Counsel argued that the date of Yuk Tong’s death was appropriate because it marked the date upon which restitution became impossible. Counsel also submitted that it was incorrect to treat Rachel as the alienor; Yuk Tong, not Rachel, alienated the Lindfield property to defraud his creditors. I was reminded that the purpose of the make-available order, as with all s 37A relief, is to achieve the best restitution possible, and thereby to prevent unjust enrichment, but not to unjustly enrich the successful plaintiff, or punish the defendant ([690] above).

9. [849]

   I accept of course that the bankruptcy rule should only be applied by analogy to the extent that it is consistent with CA s 37A. But the analogy is a very close one. AS already noted, the make-available is only a shortcut. If the Court had wanted to make the order directly mandated by s 37A, it would have required that a grant of administration for Yuk Tong’s estate be obtained; the Lindfield property re-transferred to the administrator; and the proceeds divided in the normal way between Yuk Tong’s creditors. In such circumstances, the bankruptcy rule would have been directly applicable.

10. [850]

    I also think it is an oversimplification to say that Rachel is responsible for all of the delay which has occurred. There was nothing to stop OSE from bringing Australian enforcement proceedings earlier. Yuk Tong in fact died a year and a half before OSE’s 37A proceedings were even commenced.

11. [851]

    It should also be recognised that OSE is not necessarily the only creditor whose interests are involved. I have already recognised that justice requires that Rachel be treated as a notional creditor of Yuk Tong’s estate. And there is also a possibility that other creditors could emerge. OSE’s circumstances (or, if relevant, those of Mr Chu personally) cannot be determinative.

12. [852]

    It is not an absolute rule that an administration must be completed within the executor’s year. Administrations may, and do, take much longer. Why should other creditors whose debts carry interest at lower rates than OSE’s be prejudiced by further effluxion of time after the date of Yuk Tong’s death? The whole point of the bankruptcy rule is to ensure fair and equal treatment of creditors in such circumstances.

13. [853]

    For these reasons I reject the contention from counsel for OSE. The orders will provide for interest to be calculated up until the date of Yuk Tong’s death.

14. [854]

    The second point concerned the earlier contention from counsel for OSE that a deduction should be made from the allowance in favour of Rachel for income received by her from the Lindfield property between November 2009 and September 2020. Counsel took the view that no direct claim could be made for this income under s 37A, but contended that it could still be applied, by way of counter-restitution (strictly, counter-counter-restitution) in reduction of any allowance to be made in favour of Rachel.

15. [855]

    I dealt with this argument (and indeed upheld it) so far as Rachel’s claim for an allowance for the Lindfield loan payments made between November 2009 and February 2012 was concerned (see [733] above). Counsel submitted that the argument applied also to the claim for an allowance for the debt on the Hong Kong cheque, and I had not dealt with that part of the argument.

16. [856]

    Counsel for the Shiu Parties submitted that the argument had no force so far as the Hong Kong cheque was concerned. The purpose of making an allowance was to identify and value the consideration provided by Rachel to Yuk Tong in connection with the transfer of the Lindfield property. Counsel submitted that it was an error to treat the subsequent receipt of income as some sort of restoration of capital.

17. [857]

    I agree with counsel for the Shiu Parties that the counter-restitution argument does not apply to the Hong Kong cheque allowance. The income in question was income derived from the Lindfield property. As I explained at [739] above, the February 2012 loan repayment, for which I did not allow any counter-restitution, must be treated as a payment by Rachel from her own separate resources. The same is true for the cheque, which represented an advance by Rachel from her own funds. No further adjustment is warranted.

18. [858]

    The third point concerned the interest to be allowed on the Hong Kong cheque. Counsel for OSE proposed that it be calculated at the applicable rate under Hong Kong law (Bills of Exchange Ordinance (Hong Kong) cap 8, s 57). Counsel for the Shiu Parties, on the other hand, submitted that the applicable rate was the pre-judgment interest rate applicable under the Civil Liability Act. Counsel submitted that the entitlement to an allowance in Rachel’s favour arose because the transfer of the Lindfield property had taken place in, and had been set aside by order of a court of, this State. Counsel submitted that in these circumstances the Hong Kong interest rate was irrelevant.

19. [859]

    It is true that Rachel’s entitlement to an allowance arises out of a transaction and subsequent litigation in this State. But the purpose of the allowance is to value the foregone debt owed by Yuk Tong. The cheque was payable in Hong Kong. The cause of action on it therefore arose under the law of Hong Kong. Even if Rachel had sued on the cheque here, the courts of this State would have applied Hong Kong substantive law.

20. [860]

    In my view, the proper law of the debt was the law of Hong Kong. The Hong Kong interest rate is the one which should be applied.

21. [861]

    The orders of the Court in the 2020 proceedings are:

    1. (1)

       DECLARE that the transfer from SHIU, Yuk Tong of the property at 358-360 Pacific Highway, Lindfield, in the state of New South Wales, with Torrens Title folio Auto Consol 13445-232 (“the Lindfield property”) to the first defendant, registered with effect from 20 November, 2009, is void under the Conveyancing Act 1919 (NSW), s 37A.

    2. (2)

       DECLARE that the first defendant is accountable to the estate of the late SHIU, Yuk Tong for the rents and profits issuing out of the Lindfield property from 23 September, 2020.

    3. (3)

       ORDER that an Inquiry be held and Account taken to determine what has been received by the first defendant by way of rents and income of or issuing out of the Lindfield property from 23 September, 2020 and what is due therefrom from the first defendant to respectively the plaintiff and any other creditors of the late Yuk Tong Shiu, and that the first defendant do make available and pay to the Receiver appointed under these orders, the amount found due upon the taking of the said Inquiry and Account, for the purpose of satisfying the debts owed by SHIU, Yuk Tong to the plaintiff and to any other creditors of SHIU, Yuk Tong.

    4. (4)

       ORDER that the first defendant perform all acts and concur in all things necessary to make the Lindfield property available for satisfying the debts owed by SHIU, Yuk Tong to the plaintiff and to any other creditors of SHIU, Yuk Tong and for satisfying the allowance in favour of the first defendant permitted and directed by these Orders.

    5. (5)

       DIRECT the plaintiff:

    6. (6)

       GRANT liberty to each party and to the Receiver to apply with respect to Order 5 on three days’ notice.

    7. (7)

       ORDER that Desmond Wei Liang TENG of Suite 2, Level 14, 9 Castlereagh Street, Sydney be appointed Receiver of the Lindfield property and of the amounts paid or payable under Order 3 above, for the purpose of giving effect to Orders 3, 4 and 5, with the following powers:

    8. (8)

       GRANT liberty to each party and to the Receiver to apply with respect to order 7 on three days’ notice.

    9. (9)

       ORDER that from the Lindfield Net Proceeds there be allowed in favour of the First Defendant to be paid and applied in accordance with these Orders an allowance calculated in accordance with the following formula:

    10. (10)

        ORDER that from the balance of the Lindfield Net Proceeds remaining after the allowance be paid to the Plaintiff unless there be claims of other creditors notified in accordance with Order 5 of these Orders, and in case there be any such claim, then:

    11. (11)

        RESERVE further consideration of any claim by a third party referred to the Court under Order 5, and

    12. (12)

        ORDER that the Cross Claim be dismissed.

    13. (13)

        ORDER that costs be reserved.

    14. (14)

        ORDER that the funds in Court including any interest thereon be paid out to the plaintiff or as its solicitors shall in writing direct.

    15. (15)

        ORDER that Orders 3, 4, 6, 7, 8, 9 and 10 be stayed until and including 9 February, 2026.

    16. (16)

        ORDER that until further order, and during the subsistence of the stay made by Order 15 of these Orders, and during any continuation thereof or further stay granted hereafter in this Division or in the Court of Appeal, the first defendant be restrained from dealing with or disposing of the rents, income and profits of the property situate at and known as 358-360 Pacific Highway, Lindfield NSW 2070 (folio identifier 13445/232) (“Lindfield property”) save for the payment of the following:

    17. (17)

        ORDER that until further order, and during the subsistence of the stay made by Order 15 of these Orders, and during any continuation thereof or further stay granted hereafter in this Division or in the Court of Appeal, the first defendant do keep the rents, income and profits of the Lindfield property,

    18. (18)

        ORDER that until further order and during the subsistence of the stay made by Order 15 of these Orders, and during any continuation thereof or further stay granted hereafter in this Division or in the Court of Appeal, the first defendant do provide to the plaintiff:

22. [862]

    The orders of the Court in the 2019 proceedings are:

    1. (1)

       ORDER that an account be taken of the dealings and transactions of the Eighth Defendant with the proceeds of the sale of the property known as 644 Harris Street, Ultimo (Folio Identifier 9/86567) (“Ultimo”), being $2,380,000 net of GST, and the income and profits derived therefrom, including assets held by the Eighth Defendant into which proceeds of the sale of Ultimo, or the income or any profits derived therefrom, may be traced or followed, and that the Eighth Defendant account to the Plaintiff for the same, and that it be determined upon the taking of the account, whether, and to what extent, the Eighth Defendant is accountable for the property known as 4/16 Church Street, Hunters Hill (Folio Identifier 4/SP780) and its income and profits and, if not whether and to what extent that property is charged with payment of the following sums paid variously by the Eighth and Tenth Defendants:

    2. (2)

       DIRECT that on the taking of the said account the Eighth Defendant have credit for the following payments to the Ninth Defendant:

    3. (3)

       DIRECT that on the taking of the said account the Eighth Defendant have credit for so much of the sum of $360,000 paid on 3 May 2012 to the Ninth Defendant as shall be found upon the taking of the account directed by Order 13 below to have been repaid to the mortgagee of the Kirribilli property against the loan secured against the Kirribilli property.

    4. (4)

       DECLARE that the property known as 59 Hercules Street, Chatswood (Folio Identifier 1/513641) is charged with payment to the Plaintiff of the sum of $275,526.97, paid on 17 February, 2012 from the proceeds referred to in Order 1 above, and with payment of interest on the said sum of $275,526.97 under section 100 of the Civil Procedure Act, 2005.

    5. (5)

       RESERVE further consideration of the appointment of a Receiver of the Chatswood property and the powers of such Receiver.

    6. (6)

       GRANTS liberty to the Plaintiff to renew the application for appointment of a Receiver to the Chatswood property on reasonable notice.

    7. (7)

       ORDER that there be an INQUIRY to determine what part of the said proceeds of Ultimo, and the income or profits thereof, may be traced or followed into the property known as 1/394 Mowbray Road, Lane Cove (Folio Identifiers 1/SP2050 & 34/SP2050).

    8. (8)

       ORDER that an account be taken of the dealings and transactions of the Tenth Defendant with the following sums paid to it by or at the direction of the Eighth Defendant:

    9. (9)

       DIRECT that on the taking of the account directed by Order 8 above the Eighth and Tenth Defendants have credit for the following payments to the Ninth Defendant:

    10. (10)

        DIRECT that on the taking of the account directed by Order 8 above the Eighth and Tenth Defendants have credit for so much of the sum of $360,000 paid on 3 May 2012 to the Ninth Defendant as shall be found upon the taking of the account directed by Order 15 below to have been repaid to the mortgagee of the Kirribilli property against the loan secured against the Kirribilli property.

    11. (11)

        DECLARE that the property known as 602/57 Upper Pitt Street, Kirribilli (Folio Identifier 57/SP2619) (the “Kirribilli property”) is held on trust by the Ninth Defendant for the Plaintiff.

    12. (12)

        ORDER that Desmond Wei Liang TENG of Suite 2, Level 14, 9 Castlereagh Street, Sydney be appointed Receiver of the Kirribilli property and its income, for the purpose of giving effect to Declaration 4 above, with the following powers:

    13. (13)

        GRANT liberty to the Plaintiff and to the Receiver to apply with respect to order 12 above and to the parties generally on three days’ notice.

    14. (14)

        ORDER that an account be taken of the income and profits of the Kirribilli Property since the Ninth Defendant became the proprietor thereof, and that the Ninth Defendant account to the Plaintiff for the same, and that upon the taking of the account the Ninth Defendant do have credit against the income and profits for all proper expenses that she has paid in respect of the management and leasing of the Kirribilli Property, and in respect of any repayments from such income that she has made against the loan secured against that property, and that the Ninth Defendant pay to the Plaintiff the amount found due upon the taking of the account, together with interest under section 100 of the Civil Procedure Act, 2005 and costs and interest on costs.

    15. (15)

        ORDER that an account be taken of the dealings and transactions of the Ninth Defendant with the sum $360,000 paid on 3 May 2012 paid by the Tenth Defendant and that the Ninth Defendant account to the Plaintiff for the same, and that on the taking of the account the Ninth Defendant have credit for any repayments that from that fund she has made against the loan secured against the Kirribilli property, and that the Ninth Defendant pay to the Plaintiff the amount found due upon the taking of the account, together with interest under section 100 of the Civil Procedure Act, 2005 and costs and interest on costs.

    16. (16)

        RESERVE the costs of the proceedings for further consideration.

    17. (17)

        ORDER that the funds in Court including any interest thereon be paid out to the plaintiff or as its solicitors shall in writing direct.

    18. (18)

        ORDER that Orders 1 to 15 be stayed until 9 February, 2026.

    19. (19)

        ORDER that the motion filed 8 October, 2025 be dismissed with costs.