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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Henderson v. Foxworth Investments Ltd  ScotCS CSOH_66 (12 April 2011)
Cite as: 2011 SLT 1152, 2011 GWD 14-341,  CSOH_066,  CSOH_66,  CSOH 66,  ScotCS CSOH_66
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OUTER HOUSE, COURT OF SESSION
 CSOH 66
OPINION OF LORD GLENNIE
in the cause
MATTHEW PURDON HENDERSON, Chartered Accountant, Messrs Johnston Carmichael, 7-11 Melville Street, Edinburgh as Liquidator of Letham Grange Development Company Limited, a company incorporated under the Companies Acts and having its registered office at 1/4 Atholl Crescent, Edinburgh, EH3 8LQ
(First) FOXWORTH INVESTMENTS LIMITED, a company incorporated under the Companies Acts of the Province of Nova Scotia, Canada, and having its registered office at 1300-1969 Upper Water Street, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7, Canada and (Second) 3052775 NOVA SCOTIA LIMITED (Company Number 3052775), a company incorporated under the Companies Acts of the Province of Nova Scotia, Canada, and having its registered office at 1300-1969 Upper Water Street, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7, Canada
Pursuer: Moynihan Q.C.; Miss Muirs; Balfour + Manson LLP
Defenders: Sandison Q.C.; Halliday Campbell
12 April 2011
 The pursuer is the liquidator of Letham Grange Development Company Limited (variously "LGDC" or "the Company"). He sues for declarator that "the pretended standard security" granted by the second defenders ["NSL"] in favour of the first defenders ["Foxworth"] dated 6 January 2003 in respect of subjects known as Letham Grange, by Arbroath ["the subjects"], is void and unenforceable; and for production and reduction of that pretended standard security.
 The circumstances giving rise to this action are as follows. On 12 February 2001 the Company sold the subjects to NSL. An application was made to register the disposition in the Land Register of Scotland under title number ANG11868.
 In November 2002 winding up proceedings were commenced in respect of the Company in the Glasgow sheriff court. The pursuer was appointed provisional liquidator on 15 November 2002, interim liquidator on 3 December 2002 and liquidator on 14 February 2003. The effective date of the liquidation was 3 December 2002.
 In April 2003 the pursuer commenced an action against NSL in the Court of Session seeking reduction of the sale on the grounds that it was:
(a) a gratuitous alienation in terms of section 242 of the Insolvency Act 1986,
(b) a fraudulent preference at common law and/or
(c) an unfair preference to which section 243 of the Insolvency Act 1986 applied.
I shall refer to that action as "the first action".
 The first action had a lengthy procedural history, much of which is recorded in the speech of Lord Rodger of Earlsferry in Henderson v 3052775 Nova Scotia Limited 2006 SC (HL) 85. In short, the pursuer obtained summary decree in the Outer House and NSL's reclaiming motion to the Inner House was refused; but the House of Lords allowed NSL's appeal on the ground that its defences raised issues which were inappropriate for disposal by summary decree and could only be properly resolved after the hearing of evidence. The case was remitted to the Court of Session. A diet of proof was fixed to begin on 6 January 2009. In the event, the proof did not take place. In the present action, the defenders (both Foxworth and NSL) aver that, in the first action, the solicitors for NSL withdrew from acting in advance of the diet of proof, and that NSL was unable to obtain either alternative representation or a discharge of the proof diet. In the event, therefore, the court pronounced decree of reduction on 6 December 2009 in default of NSL's appearance at the diet of proof without making any substantive determination of the legal or factual issues between the parties.
 There was at one time an issue between the parties as to whether, in the present action, that decree, being by default and not being a decree upholding any one of the three separate grounds of action, could give rise to a plea of res judicata against NSL. The pursuer, rightly in my view, does not now take the res judicata point, recognising that, even if the issue were res judicata against NSL, it would not be res judicata against Foxworth. However, that still leaves a question as to the basis upon which the disposition was reduced. I shall return to this point later in this Opinion.
 On 6 January 2003, before the commencement of the first action (between the pursuer and NSL) and long before the decree of reduction of the disposition in favour of NSL, NSL granted a deed purporting to be a standard security over the subjects in favour of Foxworth. The deed is in the following terms:
WE, 3052775 NOVA SCOTIA LIMITED (Company Number 3052775) incorporated under the Companies Acts of the Province of Nova Scotia, Canada having our Registered office at Suite 1100-1959 Upper Water Street, Halifax, Nova Scotia, Canada, hereby undertake to pay to FOXWORTH INVESTMENTS LIMITED (Company Number 3037857), incorporated under the Companies Acts of the Province of Nova Scotia, Canada having our Registered office at Suite 1100-1959 Upper Water Street, Halifax, Nova Scotia, Canada, all sums due and that may become due by us to the said Foxworth Investments Limited in respect of a Personal Bond and Debt Agreement with interest from Twenty fifth January, Two thousand and one at eight point five per cent per annum payable half-yearly in arrears on Twenty fifth January and Twenty fifth July commencing on Twenty fifth July Two thousand one; For which we grant a Standard Security in favour of the said Foxworth Investments Limited over ALL and WHOLE the subjects known as Letham Grange, by Arbroath and registered in the Land Register of Scotland under Title Number ANG 11868; The standard conditions specified in Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970, and any lawful variation thereof operative for the time being, shall apply; 3052775 NOVA SCOTIA LIMITED will not without Foxworth's prior written consent, sell, lease, or otherwise dispose of the Collateral; should 3052775 NOVA SCOTIA LIMITED default on any of its obligations, become insolvent, a receiver or similar official is appointed in respect of any its property, or the holder of a charge takes possession of all or any part of its property, etc., --- Upon any of the above named defaults, Foxworth Investments Limited will immediately take possession of the Collateral and become the rightful owner of the whole subjects registered In the Land Register of Scotland under Title Number ANG 11868; Foxworth Investments Limited will not be liable to 3052775 NOVA SCOTIA LIMITED or any other Person for any failure or delay in exercising any of its rights under this Agreement; And we grant warrandice; And we consent to registration for execution.
IN WITNESS WHEREOF these presents are executed in the manner underwritten.
Subscribed for and on behalf of and signed at Taipei on 6th day of January 2003 by
3052775 NOVA SCOTIA LIMITED
Lee Fon Yi, Director
Zhiang Kwei Zhong, Witness
address: #58, Sec.3 Lane 99
39 Ran, Kanlin Road
Taipai, Taiwan, ROC"
An application was made on 20 June 2003 to the Land Register of Scotland to register that deed as a standard security.
 The pursuer now seeks to reduce that standard security. He puts forward two grounds for reduction. First, he contends that the deed does not validly create a standard security and is therefore void. That gives rise to an argument about the form and terms of the deed and its compliance with the requirements of the Conveyancing and Feudal Reform (Scotland) Act 1970. The second ground is that, even if in form and content the standard security is not thereby rendered invalid, the rights acquired by Foxworth under the standard security were not acquired in good faith even if ("which is not known") they were acquired for value. It is convenient to take this latter point first.
Did Foxworth acquire rights under the standard security for value and in good faith?
 Although the sale to NSL has been reduced, and with it NSL's title to grant any heritable security over the subjects which had been conveyed to it by the disposition, the question still arises as to the effect of that decree of reduction on rights acquired by a third party prior thereto. In the first action, the pursuer sought reduction on three grounds, two of them statutory and one at common law. The position of a third party consequent upon reduction on one or other of those grounds requires to be addressed. In so far as the ground on which a disposition might be reduced is one or other of the two statutory grounds - viz. a gratuitous alienation in terms of s.242 of the 1986 Act, or an unfair preference under s.243 - the effect of the reduction of that disposition is qualified by the provisos to those sections. However, in so far as a disposition might be reduced as a fraudulent preference at common law, the position is somewhat different. I take each in turn.
Reduction under ss.242 and/or 243 of the 1986 Act
 Ss.242 and 243 of the 1986 Act provide, so far as material to this action, as follows:
"242 Gratuitous alienations (Scotland).S
(1) Where this subsection applies and-
(a) the winding up of a company has commenced, an alienation by the company is challengeable by-
(i) any creditor who is a creditor by virtue of a debt incurred on or before the date of such commencement, or
(ii) the liquidator;
(2) Subsection (1) applies where-
(a) by the alienation ... any part of the company's property is transferred or any claim or right of the company is discharged or renounced, and
(b) the alienation takes place on a relevant day.
(3) For the purposes of subsection (2)(b), the day on which an alienation takes place is the day on which it becomes completely effectual; and in that subsection "relevant day" means, if the alienation has the effect of favouring-
(a) a person who is an associate (within the meaning of the Bankruptcy (Scotland) Act 1985) of the company, a day not earlier than 5 years before the date on which-
(i) the winding up of the company commences, or
(ii) ... ; or
(b) any other person, a day not earlier than 2 years before that date.
(4) On a challenge being brought under subsection (1), the court shall grant decree of reduction or for such restoration of property to the company's assets or other redress as may be appropriate; but the court shall not grant such a decree if the person seeking to uphold the alienation establishes-
(a) that immediately, or at any other time, after the alienation the company's assets were greater than its liabilities, or
(b) that the alienation was made for adequate consideration, or
(c) that the alienation-
(i) was a birthday, Christmas or other conventional gift, or
(ii) was a gift made, for a charitable purpose, to a person who is not an associate of the company,
which, having regard to all the circumstances, it was reasonable for the company to make:
Provided that this subsection is without prejudice to any right or interest acquired in good faith and for value from or through the transferee in the alienation.
(6) For the purposes of the foregoing provisions of this section, an alienation in implementation of a prior obligation is deemed to be one for which there was no consideration or no adequate consideration to the extent that the prior obligation was undertaken for no consideration or no adequate consideration.
(7) A liquidator and an administrator have the same right as a creditor has under any rule of law to challenge an alienation of a company made for no consideration or no adequate consideration.
(8) This section applies to Scotland only.
243 Unfair preferences (Scotland).
(1) Subject to subsection (2) below, subsection (4) below applies to a transaction entered into by a company ... which has the effect of creating a preference in favour of a creditor to the prejudice of the general body of creditors, being a preference created not earlier than 6 months before the commencement of the winding up of the company ...
(2) Subsection (4) below does not apply to any of the following transactions-
(a) a transaction in the ordinary course of trade or business;
(b) a payment in cash for a debt which when it was paid had become payable, unless the transaction was collusive with the purpose of prejudicing the general body of creditors;
(c) a transaction whereby the parties to it undertake reciprocal obligations (whether the performance by the parties of their respective obligations occurs at the same time or at different times) unless the transaction was collusive as aforesaid;
(d) the granting of a mandate by a company authorising an arrestee to pay over the arrested funds or part thereof to the arrester where-
(i) there has been a decree for payment or a warrant for summary diligence, and
(ii) the decree or warrant has been preceded by an arrestment on the dependence of the action or followed by an arrestment in execution.
(3) For the purposes of subsection (1) above, the day on which a preference was created is the day on which the preference became completely effectual.
(4) A transaction to which this subsection applies is challengeable by-
(a) in the case of a winding up-
(i) any creditor who is a creditor by virtue of a debt incurred on or before the date of commencement of the winding up, or
(ii) the liquidator; and
(b) ... .
(5) On a challenge being brought under subsection (4) above, the court, if satisfied that the transaction challenged is a transaction to which this section applies, shall grant decree of reduction or for such restoration of property to the company's assets or other redress as may be appropriate;
Provided that this subsection is without prejudice to any right or interest acquired in good faith and for value from or through the creditor in whose favour the preference was created.
(6) A liquidator and an administrator have the same right as a creditor has under any rule of law to challenge a preference created by a debtor.
(7) This section applies to Scotland only."
 The provisos to sections 242(4) and 243(5) are in materially identical terms. In both cases the decree of reduction is "without prejudice to any right or interest acquired in good faith and for value" from the transferee, in this case NSL. Mr Moynihan QC, who appeared for the pursuer, has focused in this action on s.242, but as between the two sections nothing turns on that in my opinion.
Reduction at common law
 The position at common law bears certain similarities to that under the Act. The common law position is stated succinctly at para.692 of volume 18 of the Stair Memorial Encyclopaedia, The Law of Property in Scotland:
"Voidability does not of itself impair validity, so that a person holding a voidable title is the owner of the property, and remains owner unless and until his title is avoided. A voidable title, after all, is a subsistent title. ...
For as long as he remains owner, a person holding on a voidable title can alienate the property or grant subordinate real rights in respect of it. That follows from the very nature of ownership, any limitation in his right being a limitation in obligation only. But where the grant is made without consideration or where the grantee is in bad faith, the title so conferred is itself voidable. In effect this is an application of the rule against 'offside goals', for a right of reduction is a personal right against the holder of the voidable title and its correlative obligation includes, it is thought, an implied obligation that the property should not be alienated or burden. Thus a grantee taking the property either gratuitously or in the knowledge of the antecedent personal right of reduction is subject to that personal right, with the consequence that his title is voidable in turn. Only a bona fide acquirer for value will receive an unimpeachable title."
The "offside goals" terminology derives from the opinion of the Lord Justice-Clerk (Thomson) in Rodger (Builders) Ltd v. Fawdry 1950 SC 483. As is made clear at para.695 of that volume of the Stair Memorial Encyclopaedia, the "offside goals" rule is an exception to the usual rule that a purchaser or other grantee takes property free from the personal obligations of the grantor; and see also paras.688 and 689.
 The issue in the present case has concentrated on whether Foxworth acquired its rights (under the standard security) in good faith. Little attention was paid during the proof to the question of whether Foxworth acquired such rights for value, but it was raised in submissions at the end and I shall deal with this aspect as part of my consideration of the issues as a whole.
Burden of proof
 An issue was raised as to the burden on proof. I was referred by Mr Moynihan QC to a number of the rules set out in Walkers on Evidence, 3rd Ed, at section 2.2 and by Mr Sandison QC, who appeared for the defenders, to the paragraphs in vol.18 of the Stair Memorial Encyclopaedia which I have already mentioned. Not surprisingly, each contended that the burden of proof lay on the other party. I do not think there is any real difficulty about this in principle, but the position is complicated by the fact that the decree of reduction of the disposition was a default decree.
 The fundamental principle is that the burden lies on the party who needs to prove a particular fact in order to succeed. The starting point in this case is that the disposition in favour of NSL has been reduced. But on what ground: under statute or at common law? This, to my mind, is of critical importance to this issue.
 A reduction of the disposition to NSL as a gratuitous alienation under s.242 or an unfair preference under s.243 would operate as a reduction ab initio. Subject to the provisos in those sections, the reduction of the disposition to NSL under statute means that NSL is taken never to have had any right to grant a standard security over the subjects. That is clear from the wording of sections 242(4) and 243(5). If the position were otherwise, there would be no need for rights acquired by a third party (such as Foxworth) from the transferee (NSL) to be the subject of specific statutory protection. The proviso to each of those subsections sets out the circumstances in which the third party's rights may survive the reduction of the grantor's title: that reduction is "without prejudice to any right or interest acquired in good faith and for value" prior thereto. The wording of the proviso in each case makes it clear that it is for the third party (Foxworth) to bring itself within that exception, to show that, notwithstanding the reduction of the disposition to the grantor (NSL), it is entitled to insist on its rights under the standard security granted by NSL before NSL's title was reduced. To do so it must establish that it acquired such rights in good faith and for value. The legal burden is on Foxworth to establish that. If it does not establish that it acquired its rights in good faith and for value, it will have failed to show that it comes within the proviso, and will have failed to establish that its rights acquired from NSL can survive the reduction of NSL's title.
 To that extent, the position of a third party who has acquired rights from a party whose own title is subject to reduction under ss.242 and 243 of the 1986 Act differs from that of a party who has acquired rights in comparable situations to which the "offside goals" rule applies. As is made clear from the summary of the law quoted above from vol.18 of the Stair Memorial Encyclopaedia, the susceptibility to reduction of the title acquired by a grantee from a person whose own title has subsequently been reduced is an exception to the usual rule that a purchaser or other grantee takes property free from the personal obligations of the grantor. The exception only operates if it is shown that the grant was not in good faith or for value. It is for the party seeking to reduce the title of the grantee to prove such matters. Absent proof of such matters, that party will have failed to show that the exception applies. Therefore, if NSL's title was reduced at common law, and not under statute, the burden would lie on the pursuer to show that Foxworth's rights under the standard security were not acquired in good faith or for value.
 The complication in this case arises from the fact that the default decree reducing NSL's title did not (and could not) specify the ground on which the title was reduced. Indeed it is questionable whether it was reduced on any ground other than the fact that NSL did not appear at the diet of proof. All that can be said is that NSL's title was reduced. In those circumstances, the court cannot proceed on the basis that the reduction was as a gratuitous alientation or unfair preference under s.242 or 243 of the 1986 Act so as to lay upon the defender the burden of proving that it acquired its rights in good faith and for value. It must, in my view, proceed on the basis least favourable to the pursuer. That means that the burden is on the pursuer to establish that the standard security was not acquired in good faith and for value. Nor can the pursuer seek to transfer this burden by showing that the disposition to NSL could have been reduced under s.242 or s.243 of the Act, with the consequence that it would be for Foxworth to bring itself within the provisos to the relevant subsections - the fact is that the disposition has been reduced, and the question is what effect the reduction which has in fact happened should have on the rights acquired prior to reduction by the third party (Foxworth). I have approached the matter on the basis that the burden is on the pursuer to establish that the standard security was not acquired in good faith and for value, though ultimately that does not matter, since my decision is one at which I would have arrived even if I had approached the matter on the basis that the burden of proof lay on the defender.
 The legal burden, however, is not to be confused with the evidential burden. As evidence is led the evidential burden may shift. This is of some importance, in particular in connection with arguments about the authenticity of documents. But I come to that later.
Attribution of knowledge
 In many cases, the critical question relevant to the issue of good faith is whether it can be shown that the third party acquiring some right or interest in the property did so with knowledge of the circumstances which (later) led to the reduction of the title of the person from whom he acquired such right or interest. If that were the main issue, then, subject to one point of law, it might be thought that there would be little difficulty in the present case. It is accepted that the Company, NSL and Foxworth all had at least one common director who, for present purposes, it is convenient to call Mr Liu. He is the principal actor in the events with which this action is concerned. He in fact goes under various names, including Peter Liu, Dong Guang Liu, Tong Kuang Liu, Toh Ko Liu and J Michael Colby. The second and third of those names are simply different phonetic renderings of Mr Liu's Chinese name, the fourth is a phonetic variant favoured by native Japanese speakers, while the first reflects the adoption by him of a western forename, a common practice among the Chinese community in the West. Only the fifth, J Michael Colby, is unrelated in any way to the others. For present purposes it is sufficient to record that it is accepted by the defenders that Mr Liu was at all material times a director of the Company, that he was a director of NSL from its incorporation on 24 January 2001 until after the execution of the standard security in January 2003, and that he has been a director of Foxworth since 17 December 1999.
 The question of law mentioned in the preceding paragraph is whether any knowledge acquired by Mr Liu qua director of NSL and/or qua director of LGDC is in law to be treated as the knowledge of Foxworth for the purposes of determining Foxworth's good faith in taking the standard security from NSL. Mr Moynihan accepted, on the authority of cases such as El Ajou v. Dollar Land Holdings 1994 4 All ER 685 (per Hoffman LJ at 705h-j), that the knowledge of a director will not necessarily be attributed to the company of which he is a director. He submitted, however, that, in the circumstances of this case, attention could properly be focused on the question whether the director is the directing will and mind of the company (Lennards Carrying Co. v. Asiatic Petroleum Co. Ltd.  AC 705, 713-4) or, less restrictively, to the question whether the director could be said to be the individual who had management and control on behalf of the company in relation to the act in question (El Ajou at 696a-b per Nourse LJ), or who has the authority of the company to do the deal in question (Meridian Global Funds Management Ltd v. Securities Commission  2 AC 500, 511D-E per Lord Hoffman). In such cases, the company would be fixed with the knowledge of the director. Mr Sandison referred me also to Re Hampshire Land Co.  2 Ch 743, In re Fenwick, Stobart & Co. Ltd.  1 Ch 507 and In re David Payne & Co. Ltd.  2 Ch 608. I did not understand him to dispute the general approach advanced by Mr Moynihan.
 Mr Sandison's point, however, was that the pursuer had made no averments relevant to this issue other than the simple averment that Mr Liu was a director both of NSL and of Foxworth (and, for that matter, of LGDC too). The pursuer had not averred that he was the "directing mind and will" of Foxworth or any relevant variant of that. Nor had the pursuer sought to prove anything of that sort, either by evidence in chief or by cross-examination. The issue not having been raised by the pursuer, the defenders had not adduced evidence on the point. It was simply too late for the pursuer now to argue, at the stage of final submissions, that Mr Liu's role with Foxworth was such that his knowledge acquired in another capacity should be attributed to Foxworth. The question of attribution of knowledge, therefore, had to be approached and decided on the footing simply that Mr Liu was a director of both companies. On that limited basis, there was no basis for holding that Mr Liu's knowledge acquired in his capacity as director of NSL should be attributed to Foxworth.
 I accept that the pursuer has made no averments instructing a case that Mr Liu was the directing mind of Foxworth or that he was the person at Foxworth responsible for making the relevant decisions in terms of which Foxworth acquired rights under the standard security. But the evidence adduced by the defenders themselves made it clear that this was Mr Liu's role in the company. In para.17 of his witness statement, Mr Liu described briefly the circumstances in which the standard security came about:
"In around 2003, I agreed with my wife and parents that [Foxworth], another of our family companies, would undertake some of the liability to repay them. ... Eventually, when we decided that Foxworth would assume liability to repay money to my family, I decided that I would get a fresh standard security and personal bond drawn up. Foxworth assumed liability to pay £2,000,000 in total and the personal bond was for that sum. ..."
In that passage Mr Liu referred to agreeing with his wife and parents that Foxworth would undertake the liability. In their evidence, his wife, his father and his mother each confirmed that they left the running of the family business interests, of which Foxworth was part, to him. It is clear, therefore, from this evidence that Mr Liu took all the material decisions on behalf of Foxworth and, specifically, took the decisions relating to the acquisition by Foxworth of rights under the standard security. In those circumstances I have no difficulty in finding that Mr Liu was, indeed, the directing mind of Foxworth; and, since the evidence was introduced by the defenders themselves and without objection, it is now too late for them to contend that the pursuer cannot rely upon it in support of his case on attribution of knowledge.
 I have no doubt that, in the present case, the knowledge of Mr Liu about the circumstances of the disposition to NSL can be attributed to Foxworth.
The issue of good faith in this case
 The issue of good faith in the present case is unusual. It is focused by the pursuer in Article 6.9 of the Summons in these terms:
"Through the common directorships of Mr Liu both the first and second defenders [respectively Foxworth and NSL] must have known as at the date when the standard security bears to have been granted: (1) that the Company had been placed in liquidation; and (2) that the disposition in favour of the second defenders [NSL] (and hence the second defender's title) was liable to challenge by the pursuer as a gratuitous alienation (amongst other grounds)."
I have already referred to the question of Mr Liu's knowledge by virtue of his concurrent directorships and have held that Foxworth is, by that route, taken to have known everything about the transaction between NSL and the Company. On that basis, the question appears to me to be this: were those facts, of which Foxworth was aware, sufficient (a) to render NSL's title subject to reduction; and (b) to put Foxworth on notice that NSL's title was subject to reduction?
 I have expressed the second part of the question as being whether Foxworth's knowledge of the circumstances pertaining to the disposition to NSL was sufficient to put Foxworth on notice that NSL's title was subject to reduction. Mr Sandison made submissions as to what the pursuer required to show in the way of knowledge on the part of Foxworth if he was to succeed in his case that the rights acquired by Foxworth under the standard security were not acquired in good faith. Clear knowledge of an existing fault in the title of the grantor was required. He referred me to Petrie v. Forsyth (1874) 2 R 214, 223 (per Lord Gifford) and to Price & Pierce Ltd v. Bank of Scotland 1910 SC 1095, 1109-1110 (per Lord Kinnear) and 1118 (per Lord President Dunedin). Those cases concerned the position of a third party who had acquired title from a person whose own title was subsequently avoided. The question in such cases is, as Lord Gifford said in Petrie, whether the third party purchaser had at the time he acquired his rights full and adequate knowledge of the prior transaction. But I do not need to decide the precise test. It may be that it has to be adapted to circumstances.
 I am prepared, for present purposes, to adopt the test advanced by Mr Sandison. But even applying this test, no difficulty arises in the present case, since, as I have said, Foxworth is taken to have full knowledge of everything pertaining to the transaction by which LGDC granted a disposition to NSL. Standing my conclusion that Mr Liu's knowledge is to be attributed to Foxworth, and in light of the fact that all the circumstances relating to the disposition to NSL were carried out by or on the instructions of Mr Liu, the point is probably academic. Despite Mr Sandison's argument to the contrary, it seems to me that the real issue between the parties is, ultimately, whether NSL's title fell to be reduced. Foxworth accepts that NSL's title was in fact reduced by virtue of the default decree pronounced in January 2009, but does not accept that there were any proper grounds for reduction. It took in good faith, it says, because NSL had good title by virtue of the disposition from the Company, and there was no proper basis for reducing that disposition. On the facts of the present case, no separate point on knowledge or notice arises for decision.
 It is, as I have said, accepted that the issues of gratuitous alienation and unfair preference which were raised in the first action, between the pursuer and NSL, and led to the decree of reduction in that action, have not been determined in such a way as to bind Foxworth. In those circumstances the issues in this action effectively duplicate those which were raised in the first action and would have been resolved (at least as between the pursuer and NSL) in the first action had the proof proceeded. I turn, therefore, to consider those issues.
The essential matters in dispute
 The pursuer's case is that the disposition of the subjects by the Company to NSL was not made for adequate consideration. The pleadings in the first action (that between the pursuer and NSL) were incorporated by reference into the Record in the present case. The bare bones from those pleadings are summarised by Lord Rodger in his speech in the House of Lords to which I have referred (though it is important to note that at that stage no issue arose about the standard security granted by NSL to Foxworth). They provide a convenient introduction to the issues. The subjects comprise a hotel and two golf courses. The Company bought the subjects in 1994 for a sum of £2,105,000 (the price was in fact slightly reduced from that, but nothing turns on that for the purpose of this brief summary). On 12 February 2001, at a time when it was insolvent, the Company executed a disposition in favour of NSL. The disposition narrated that the consideration for the sale to NSL was £248,100. In November 2002, the hotel and golf courses were valued as a going concern at approximately £1,800,000. The pursuer founds on the discrepancy between, on the one hand, the price paid by the Company for the subjects and the value of the subjects in November 2002 (i.e. somewhere between £1.8m and £2.1m), and the price recorded in the disposition from the Company to NSL on 12 February 2001 (£248,100). The pursuer contended in the first action, and contends now, that the consideration of £248,100 referred to in the disposition of 12 February 2001 was not adequate consideration having regard to the value of the subjects.
 In the first action NSL admitted that the Company had acquired the subjects in 1994 for a sum in excess of £2,000,000 and that the subjects had been valued at approximately £1.8 million in November 2002. It explained, however, that the Company had financed the purchase of the subjects in 1994 by borrowing from various members of Mr Liu's family and as well as from the Coquihalla Development Co Ltd ("Coquihalla") and the Sanwa Bank ("Sanwa"). It admitted that the Company had granted a disposition of the subjects in its favour, but averred that the consideration of £248,100 narrated in the disposition was in fact only a part of the consideration for the sale. In addition to the payment of £248,100, it said, it had assumed £1.85 million of debt which the Company had owed to the Liu family as a result of the loans made to the Company in 1994 to help finance the purchase of the subjects. In those circumstances, it said, it had given adequate consideration for the sale.
 In the present action the defenders (Foxworth and NSL) effectively advanced the same case. The disposition to NSL was not at an undervalue because the price of £248,100 stated in the disposition did not represent the whole consideration. The consideration for the disposition included the assumption of debt referred to above.
 The pursuer challenges this account root and branch. He challenges the assertions made by Mr Liu about the 1994 loans. He challenges the authenticity of certain letters said to evidence those loans. He challenges the defenders' case that in 2001, as part of the consideration for the subjects, NSL assumed the debt which the Company owed to the Liu family. Again, he challenges the authenticity of the documents put in place to establish this. He also challenges the genuineness of the transaction between NSL and Foxworth of which the standard security forms part. In short, the pursuer contends that the whole case put forward by the defenders is a sham.
Mr Liu's evidence in chief
 Against that background, I propose first to summarise Mr Liu's evidence in support of the defenders' case, as well as the additional evidence led by the defenders; then to summarise Mr Gardner's evidence; then to identify the other evidence given on behalf of the pursuer; and, finally, to consider the pursuer's attack in cross-examination on various aspects of what Mr Liu said.
 In his witness statement, Mr Liu said that he and his family had a variety of business interests in a number of countries, including in the golfing industry. They had interests in a number of golf courses throughout the world. In about 1994 an opportunity arose for them to purchase the Letham Grange Hotel and Golf Club. This was being marketed on behalf of receivers appointed by the Bank of Scotland. Never having previously conducted business in Scotland, they were put in touch with MacRoberts, Solicitors, and gave them instructions in relation to the proposed purchase. He then said this (in paragraphs 5 and 6):
"5. On MacRoberts' advice, a Scottish company was set up and named 'Letham Grange Development Co Ltd' ('LGDC'). That was the Company that was to make the offer to purchase the Resort. The purchase price was £2,105,000. LGDC itself of course had no money and the funding came in the form of loans made to the company by me, and by various members of my family, and by a guarantee given to Sanwa Bank from Coquihalla Development Co Ltd ('Coquihalla'). Coquihalla was a separate company controlled by my family. I lent LGDC £460,910. My mother, Liou Shiau Cheng Tzu, lent £680,000. My father, Liou Jieh Jow, lent £350,000. My wife, Liu King Hsia Chou, lent £680,000. The total sum raised was in excess of £2,300,000. The fax from MacRoberts to me dated 4 November 1994 (Production 6/63) confirms that £1,892,863.91 had been transferred to MacRoberts from the Sanwa Bank in Canada and this had come from our family accounts there. £349,988 had been transferred from my father.
6. It was clearly important that the sums lent were recorded properly. I therefore wrote letters to each member of my family on 5 December 1994 setting out the fact of the loan and the terms regarding repayment. I wrote a similar letter to Coquihalla on 8 December 1994 (Productions 6/71 - 6/75)."
It was accepted by Mr Liu in cross-examination that he was the sole shareholder in LGDC.
 The fax from MacRoberts of 4 November 1994 to which Mr Liu refers was sent by Mr Gardner, a partner in the firm. Attached to the cover sheet was a letter to Mr Liu in the following terms:
As mentioned on the telephone, the Bank of Scotland has forwarded to me various forms in connection with the opening of the bank accounts of Letham Grange Development Co Limited.
In one of the forms, MacRoberts, as the Company Secretaries, is asked to confirm that the Company's board of directors has passed a Resolution appointing the Bank of Scotland as its bankers.
I enclose a copy of the form having deleted the appropriate sections of the Resolution in accordance with what I believe to be the correct position i.e. that any one director, and no one else, is authorised to negotiate and agree services to be provided by the Bank.
In order that I can sign this form by MacRoberts as Company Secretaries, please confirm by return that the Resolution, with my deletions, is correct, and that it has been passed by the board of directors of the Company.
As to the funds which I am holding, I have received the following:-
Sanwa Bank, Canada
D L Gardner"
The total of £2,242,851.91 was in fact in excess of the purchase price for the subject, which began as £2,105,000 but was reduced to £2,075,147.38.
 The letter of 4 November 2004 provides some support for this part of Mr Liu's evidence. It confirms that MacRoberts had received those sums from Sanwa and from Mr Liu's father. But it does not indicate whether or not the funds received from Sanwa originated from Mr Liu and members of his family as set out in his statement; and, if they did so originate, in what amounts and on what terms as to repayment and interest.
 The letters dated 5 December 1994 from Mr Liu to the various members of the family who, according to his evidence, had lent the money were all in the same terms, except for the particular amount of the loan. I take as typical of them the letter to his wife. It reads as follows:
"Dear Mrs Liu
This is to confirm that you have lent Letham Grange Development Co Ltd, the sum of 680,000 pound sterling as part of the original Liu Family Loan of 2,370,910 pound sterling. The interest to be charged is 8.4% of the unpaid total (principle (sic) and interest).
This loan is to be repaid by October 25, 2004. The lender retains the right to recall any part or all of the loan whenever lender desires. It is further understood that Letham Grange Development Co Limited is obligated to immediately repay any portion of the requested loan.
Thank you very much for your support."
The letter was signed by Mr Liu (as Mr Dong-Guang Liu) as a director of LGDC and bore to be signed on the same day by his wife to indicate her acceptance thereof. In addition to letters to Mr Liu's wife, mother and father, there is a letter from Mr Liu (as Mr Dong-Guang Liu) to himself (as Mr Tong Kuang Liu) and signed by himself as acceptance of its terms.
 The letter of 8 December to Mr Brian Nichols of Coquihalla is in the following terms:
"Dear Mr Nichols
This is to confirm that Coquihalla Development Co Limited has helped us borrow the sum of 200,000 pound sterling from Sanwa Bank and lent to Letham Grange Development Co Ltd as part of the original Liu Family Loan of 2,370,910 pound sterling. The interest to be charged is 8.4% of the unpaid total (principle (sic) and interest).
This loan is to be repaid by October 25, 2000. It is understood that this loan has priority rights for being repaid there will be grave consequences if this loan and interest is not to be paid on time. The lender retains the right to recall any part or all of the loan whenever the lender desires. It is further understood that Letham Grange Development Co Limited is obligated to immediately repay any portion of the requested loan.
Thank you very much for your support."
That letter too was accepted, as indicated by Mr Nichols signing it, on 8 December 1994. The loans from the members of the family in addition to that from Coquihalla add up to the full amount of £2,370,910 referred to in the letter to Coquihalla. The main difference between the letters to family members and that to Coquihalla is that in the case of Coquihalla the repayment date was December 2000 rather than December 2004, the repayment date for family members.
 The purchase by LGDC was completed in 1994. Mr Liu appointed Deloitte and Touche ("Deloittes") to assist with the purchase and, thereafter, to help oversee matters and to act as LGDC's accountants. On their advice, according to Mr Liu, two other companies were established in about 1996 or 1997, namely Amberlom Limited and Macrocom (352) Limited, the latter to act as the trading company actually running the business. According to Mr Liu, the hotel was "very much run down" when LGDC acquired it. They spent a lot of time, money and effort to bring it up to a 4-star standard; and they employed a number of staff.
 I should set out the terms of para.8 of Mr Liu's witness statement, which explains the breakdown in relations between himself (and LGDC) and Deloittes:
"8. We identified the fact that the British Open Golf Championship was going to be held at Carnoustie in 1999 as a major business opportunity. As I say, we had done some building work to the Resort but there was still an undeveloped section of the building at the front and I thought we could create more bedrooms. We were coming under pressure (which I felt was very unfair) from the environmental agencies. I approached the Royal Bank of Scotland for funding for the proposed development and they said that in principle they would be interested but they would need to see a business plan. Alberto Laidlaw prepared something but the bank said that something more detailed was needed. I therefore agreed with [Deloittes] that they would prepare what was required. The individual dealing with things there was a Mr Williamson. I recall that the matter was not progressed properly and Mr Williamson delayed and delayed. I remember him claiming that he could not get the trading figures that he needed to complete the plan despite the fact that, as I say, they had been our accountants since 1994. In any event, by the end of January 1999, since he had still not produced any projections, it was all too late and I told him to do nothing more. Then, in April or May 1999, he suddenly came back to me to say that he had finished the plan. As I say, this was all far too late to allow building work in time for the Open in the summer. [Deloittes] then sent in bills which I felt were far too high for the work that they had done and I also recall that they claimed to have been doing work which clearly they had not done. They submitted a bill claiming to have done work in relation to an individual employee who had not actually started working for us during the period to which the bill supposedly related. We therefore fell out. [Deloittes] stopped doing any work for me. They filed returns with the Revenue but refused to lodge my accounts and statements with Companies House. We therefore had no accountants to prepare our accounts for lodging with Companies House."
 Mr Liu explained that in about 2000, Sanwa (who were now known as UFJ Bank) started asking that the sums guaranteed by Coquihalla be repaid. The sum due at that time was about £230,000 to £250,000. The original amount had been £200,000, but on top of that there had to be added the interest agreed in terms of the December 1994 letter. Mr Liu said that, because of his dispute with Deloittes, he did not have an accountant acting for him who could properly record a loan to LGDC so as to enable LGDC to repay Sanwa. The resort was operating in the black and there was no need to inject money into LGDC for operating purposes. He decided that the easiest way to raise the money needed to repay the Coquihalla loan would be for LGDC to sell the resort to another company set up by him. That company was NSL.
 Mr Liu explained the transaction between LGDC and NSL in paragraph 10 of his witness statement. In view of the detailed challenge to it, I should set out his explanation of it in that paragraph in full:
"10. In January 2001, I set up [NSL], a Canadian company, as the company to which the Resort would be sold. I contacted MacRoberts to instruct them in relation to the sale. I explained to Dan Gardner there that I was a director of both companies. MacRoberts were not able to act for both companies in the sale but they ended up preparing for LGDC an offer to sell the Resort which I accepted on behalf of [NSL]. I spoke to Dan Gardner about the price to be paid and I told him that it would be £248,100. The reason for that figure is that it was what was needed to repay the Coquihalla loan to [Sanwa]. Dan Gardner did tell me that he thought that that sum was not enough. He thought that the Resort was worth more than that particularly given the price that we had originally paid for it. I explained to him that the price originally paid had included fixtures and fittings but I also said to him that we would, if the cash price was not sufficient, have [NSL] assume from LGDC the liability to repay part of the sums lent by my family and me to LGDC. Dan Gardner eventually sent me a fax on 7 February 2001, formally setting out that he thought that the £248,100 price was too low..... In response to this, as I had told Dan Gardner I would, I arranged for [NSL] to assume liability for part of the debt due to my family. The undertaking was to assume liability for £1,850,000 of the debt and was confirmed in a letter from [NSL] to LGDC dated 28 February 2001.... I agreed with each of the members of my family that liability to repay part of the sums due to them would be transferred from LGDC to [NSL]. It was agreed with each of my family members that liability to repay £1,850,000 of the total sum lent would be assumed by [NSL] and I told Dan Gardner that. The figure of £1,850,000 was appropriate because that figure plus the £248,100 paid in cash added up to a market price for the Resort." (emphasis added)
In cross-examination Mr Liu was pressed about what he had told Dan Gardner (see the underlined passage in the penultimate sentence of that paragraph). He explained that he had told Dan Gardner that NSL would assume responsibility for repaying the loans, but he did not specifically tell him the amount of the loans or that the assumption of liability had already occurred. In re-examination he said that what he had told Mr Gardner was that he would adjust the price to what was necessary.
 The letter from Dan Gardner of 7 February 2001 was lodged in process. In that letter Mr Gardner says that he has prepared three documents, the first of which was a short contract of sale between LGDC and NSL in terms of which LGDC agreed to sell the land and buildings to NSL for £248,100 with a date of entry of 29 January 2001. Mr Gardner makes the point in that letter that it is unusual for lawyers to effect a property transfer without discussing the matter with the company's accountants, but LGDC was "between accountants" and Mr Liu did not want to wait but rather to progress the conveyance as soon as possible. He pointed out in that letter that if the transfer of the subjects was at a figure under its true value "then such a transfer could be attacked in the future by any liquidator of [LGDC]". A copy of the short contract of sale was attached, but I do not need to set out its terms.
 The letter of 28 February 2001 referred to in para 10 of Mr Liu's witness statement was also lodged in process. It provides as follows:
"Dear Mr Liu
This is to confirm that we have purchased all the assets of [LGDC] - inclusive of the golf courses, restaurants, curling rink, and related businesses on the grounds, and buildings.
This is also to acknowledge that in addition to the purchase price, we will further assume £1,850,000 UK pound Sterling of extra other debt liability of [LGDC] to the Liu Family. We will pay an 8.5% annual interest fee on the debt and it is to be repaid by February 27, 2004.
Please sign at the bottom for your acceptance of the above.
J Michael Colby
It is to be noted that this is a letter from Mr Liu, under the name of J Michael Colby, Vice President of NSL, written on behalf of NSL, to himself under the name of Dong Guang Liu, on behalf of LGDC. It is signed for acceptance by Mr Liu under the name of Dong Guang Liu. This is one of the documents the authenticity of which is challenged by the pursuer.
 In the letters of 5 and 8 December 1994, the rate of interest applied to the loan was 8.4% a year. In terms of the letter of 28 February 2001 to LGDC, NSL assumed liability for the liability of LGDC to the Liu family of £1,850,000 and agreed to pay interest at the rate of 8.5% a year. Mr Liu explained the change of interest rate in paragraph 12 of his witness statement. The change was deliberate. The reason for that change was that in China the number 4 is bad luck, since the word "4" sounds the same as that for "death". He added this:
"I noted that the debts had not been repaid to my family and thought that perhaps the number 4 was indeed unlucky so I changed the interest rate to 8.5%."
 The letter of 28 February 2001 is the first in which J Michael Colby appears as a director of NSL. Mr Liu explained in paragraph 13 of his witness statement that:
"[NSL's] records show that I resigned as director of [NSL] and that "J Michael Colby" was appointed in my stead in early 2001".
He went on to explain that:
"J Michael Colby was the name which I had by that stage decided to adopt in relation to my actings in connection with [NSL]."
His reason for adopting this name was that he felt he was being discriminated against, as an ethnic Chinese, by westerners, though he could not recall any specific instances and it was "more of a general feeling". The NSL documentation does indeed confirm that there was such a change at about that time. However, the dates are not entirely consistent. There is a document dated 25 January 2001 in which Quan Liang Investment Holding Co Limited, as the sole shareholder of NSL, state that it is the Board's decision and understanding that Mr Dong Guang Liu resigns as director "effective immediately" and that Mr J Michael Colby will become director "effective immediately". That document also confirms, however, that, notwithstanding his resignation, Mr Dong Guang Liu "has authority to negotiate and act on behalf of [NSL] whenever he sees fit". That appears to place the apparent change of directorship at 25 January 2001. However, there are statements both dated 1 February 2001, respectively by Dong Guang Liu (tendering his resignation as an officer and director of NSL "effective upon the signing of a director's resolution accepting this resignation") and by Mr J Michael Colby (consenting to act as director of NSL), which appear to date the change of directors as 1 February 2001 or later. Be that as it may, there is also lodged in process a "Resolution of the Sole Director" of NSL dated 26 January 2001 stipulating that NSL will purchase the assets of LGDC for £248,100. The resolution bears to be "a resolution in writing signed by the sole director of the company pursuant to Section 91(1) of the Companies Act." It is signed in the name of J M Colby.
 The Disposition itself was signed by MacRoberts on behalf of LGDC on 7 February 2001. The Disposition records a purchase price of £248,100. So too does a Minute of a Board Meeting of LGDC dated 29 January 2001 signed by Mr Liu (6/133 p.30), objection to which was taken by Mr Sandison QC but the signature on which Mr Liu acknowledged under cross-examination to be his. There is also, however, lodged in process a resolution of the sole director of NSL, signed by J Michael Colby and dated 7 February 2001, to the effect that:
"The company [i.e. NSL] will further assume £1,850,000 Sterling of extra other debt liability of [LGDC] to the Liu family. We will pay an 8.5% annual interest rate on the debt and it is to be repaid over three years."
The date of that resolution is the same date as the date on which MacRoberts signed the Disposition. The authenticity of this document is challenged by the pursuer.
 At the same time, NSL, acting by Mr Liu under the name of J Michael Colby made a number of other agreements. On 8 February 2001 it entered into an agreement with LGDC for LGDC to lease back the subjects for a period of one year at a yearly "lease rate" of £129,000, and for it to continue in the running of the golf courses, restaurant, curling rink and related businesses and buildings. In August 2002, when the lease to LGDC was terminated by NSL for non-payment of rent, NSL entered into an agreement with Zuccaro Limited to lease the subjects and run the businesses thereon at a rate of £199,000 a year for a period of three years commencing 1 September 2002. These documents too are disputed by the pursuer. All this bears to have been done by Mr Liu using the name J Michael Colby. According to a document dated 3 September 2002, J Michael Colby resigned as president of NSL, such resignation to become effective upon a director's resolution accepting that resignation. That resignation was accepted, according to the documents, on 22 January 2003.
 Mr Liu said that, following the sale to NSL, the sums due to Sanwa in respect of the Coquihalla loan were repaid. This was not challenged in cross-examination. LGDC continued, until replaced by Zuccaro, to run the resort under the lease from NSL. Mr Liu's son, Justin, helped out. Mr Liu said in his evidence that they had "a series of extraordinary disasters". A hurricane damaged the building very badly. The conservatory and curling rink had to be repaired. A decision was made by Robin Carstairs, one of the employees, to let all the bookkeeping staff go on holiday at the same time, as a result of which LGDC fell behind in paying its staff and local suppliers. There was a bad tempered meeting with staff, local residents and golf club members, and LGDC got a very bad press. The winding up of LGDC occurred because Mr Carstairs had incurred a liability on its behalf which he was not authorised to incur, and LGDC refused to pay it.
 Mr Liu's description of the circumstances in which the standard security in favour of Foxworth was granted is set out in paragraph 17 of his witness statement and is as follows:
"In around 2003, I agreed with my wife and parents that [Foxworth], another of our family companies, would undertake some of the liability to repay them. Foxworth had provided £300,000 or so to [NSL] at the time [NSL] had paid for the Resort and the intention was that a standard security for that sum would be taken and registered. I recall very clearly that a standard security was drawn up and signed. I did not, however, have it recorded straight away. I thought (and I may be wrong about this) that I could not record the standard security until the title deeds in the name of [NSL] had been issued. I remember asking Dan Gardner on many occasions whether the title had been issued and he told me to be patient. Eventually, when we decided that Foxworth would assume liability to repay money to my family, I decided that I would get a fresh standard security and personal bond drawn up. Foxworth assumed liability to repay £2,000,000 in total and the personal bond was for that sum. The standard security and personal bond were both signed on behalf of [NSL] by Lee Fon Yi... We continued to wait and ask if the title was issued. Eventually, we finally got a number from the Land Register and we then registered the security."
The standard security is set out in full in para. above. Mr Liu explained in his oral evidence that he himself had drafted the standard security on the basis of other documents he had seen. Lee Fon Yi, who signed it on behalf of NSL, was a friend of Mr Liu and his family and was, by this time, director and president of NSL.
 The personal bond referred to in the standard security was by NSL in favour of Foxworth. It was in the following terms:
WE, [NSL] ... bind ourselves and our successors whomsoever all jointly and severally without the necessity of discussion hereby undertake to pay to [FOXWORTH] ... or their assignees on demand in writing the sum of TWO MILLION POUNDS (2,000,000 UK Pounds) STERLING with interest and charges; and we consent to registration hereof for execution: IN WITNESS WHEREOF these presents are executed in a manner underwritten.
Subscribed for and on behalf of and signed at Taipei on 6th day of January, 2003 by
3052775 NOVA SCOTIA LIMITED
Lee Fon Yi, Director
Zhiang Kwei Zhong, Witness
address: #58, Sec.3 Lane 99
39 Ran, Kanlin Road
Taipei, Taiwan, ROC"
It should be noted that the personal bond contains no provision for interest to be paid on the principal sum.
Other evidence for the defenders
 A number of other witnesses were called on behalf of the defenders. Mr Liu's son, Justin Liu, gave evidence about his involvement in running the business after 2001 and the circumstances in which a winding up petition came to be presented. He was only 15 at the time LGDC purchased the subjects in 1994, and was still studying in the United States at the time of the sale by LGDC to NSL. Accordingly he could give no relevant evidence in relation to either of those matters. He was called principally, as I understand it, to answer allegations that he had deleted electronic files and destroyed other records relation to LGDC and NSL. He struck me as an honest witness and on these matters I accept his evidence. Lee Fon Yi, Director and President of NSL, also gave evidence. She spoke to having signed the standard security and the personal bond. She also said that she had discussions with Mr Liu in 2001, in the context of NSL's purchase of the subjects from LGDC, concerning NSL taking over responsibility for repayment of the Liu family loans. Her recollection was uncertain on this point, so much so that I did not feel able to place any reliance on it on such a critical matter. Evidence was also called from King Hsia Chow Liu (Mr Liu's wife), Jieh Jow Liou (Mr Liu's father), and Liou Shiau Cheng Tzu (Mr Liu's mother). Each of them confirmed having lent money for the purpose of LGDC acquiring the subjects; and each confirmed having been told about (and having agreed to) NSL assuming responsibility for their loans. They all accepted, however, that they did whatever Mr Liu asked them to do, and had signed earlier Affidavits (which they sought to adopt in their evidence) essentially at his request because they trusted him - none of them was able to add any detail to their bare statements so as to persuade me that they had any independent recollection of events which I should take into account in coming to my conclusions about what happened.
 Mr Gardiner acted as the solicitor for LGDC in connection both with its purchase of the subjects in 1994 and with the sale to NSL in 2001. He was called to give evidence by the pursuer. He was, in my view, an honest and straightforward witness. His evidence in relation to the initial purchase provided some support for the story as told by Mr Liu. Thus, he confirmed sending the letter of 4 November 1994, and gave evidence about the communications with various parties which enabled him to be clear as to the figures provided to him as referred to in that letter.
 He did not, however, support Mr Liu's evidence about the breakdown of the loan advanced to LGDC in 1994 by members of the Liu family. He explained that some consideration had been given to the Bank of Scotland providing an overdraft facility of £250,000. If they were to do that, they wanted to know who was providing the loans to LGDC. On 7 November 1994, therefore, he faxed Mr Liu asking him to send him a fax listing exactly who was providing the funds. According to Mr Gardiner's evidence, he received no response to this request. If so, that would, to my mind, be surprising; it was not consistent with Mr Gardiner's general approach to this matter for him simply to let the matter drop. There was lodged in process a fax dated 2 December 1994 from Mr Liu (writing as Dong Guang Liu) giving a breakdown of the Liu Family Loan. That breakdown is consistent with the letters of 5 and 8 December 1994 to which I have referred. Mr Gardiner said that he had no recollection of having seen Mr Liu's fax of 2 December 1994 or, indeed, the letters of 5 and 8 December 1994 at any time during the course of the transaction. He said, however, that the breakdown shown in the fax of 2 December 1994 and in the letters of 5 and 8 December 1994 "bear to relate to a different loan, rate of interest and repayment terms than that which Mr Liu had confirmed to me in Productions 6/87 and Productions 6/53").
 6/53 is a fax from Mr Liu (written as President of China Sports Development Enterprise Limited) confirming the make up of the shareholders of LGDC, 8 shareholders in all of whom 4 males were each to have 15% of the shares and the 4 females were each to have 10%. This does not touch directly upon the question of the loans. The other production to which he referred is at 6/87. It is a fax from Mr Liu, again written as a director of China Sports Development Enterprise Limited, dated 23 October 1995. It was sent in response to a request by Mr Gardiner of the previous day in which Mr Gardiner, having set out again the total amounts received by him, all as referred to in his letter 4 November 1994, said that he understood that £300,000 of this amount was to be applied in subscribing new shares in the company and that the balance (of about £1,800,000) would represent loans. He asked Mr Liu to confirm the terms upon which the money had been lent, as to interest and to repayment, and by whom it had been lent, and he asked him to let him know whether there were any written agreements in respect of the loans. The response from Mr Liu was as follows:
Re your fax, £300,000 will be shareholder's capital, rest will be shareholder's loans. The split of the loans are to be in the same 15% for males and 10% for females. This loan could be straight shareholder's loans or preferred stock. The interest rate will be 6%. Therefore Gie-Gow Liou, Peter Liu, John Liu and Terry Oyama have each lent the company 15% each of the shareholder's loan. Shiau Cheng-Tzu Liou, Jean Liu, Linda Liu and Maria Liu have each lent the company 10% each of the shareholder's loans. Figure out the mathematics and quickly get the information to the Bank of Scotland because they have to get back to me in the next couple of hours.
Peter D Liu".
In this fax the loans are attributed in the same manner as the shareholdings set out in the fax of 15 September 1994. They are not divided up in the same way as set out in the letter of 2 December 1994, as reflected by the letters of 5 and 8 December 1994. Further, the interest rate is said to be 6%, rather than the 8.4% stated in those letters.
 Mr Gardiner was clear in his evidence that in about January 1995 there was talk of the loans being by 8 parties. I accept that as accurate. There were lodged in process handwritten notes of a telephone conversation of 6 January 1995 referring to this. Although in the context of the Bank seeking letters of postponement for the loans, only 4 lenders were mentioned, it is clear that Mr Gardiner at least remained of the view that the loan was divided between 8 people, with 4 males providing 15% each and 4 females providing 10% each. He included that information in a letter to David Williamson of Messrs Touche Ross of 16 March 1995. He said in his evidence that had the documents of 2, 5 and 8 December 1994 showing the loans divided only between 4 Liu family members been shown to him, then he would not have sent such a letter. I accept that. However, even in that letter, he acknowledged that there was some uncertainty. Having set out the 8 lenders with their respective percentages (15% for males and 10% for females) he added this:
"Whereas it is clear that the money has been lent, there is no documentation to evidence exactly to whom the company owes the money or upon what terms as to repayment or interest. I suspect that until the equity and debt structure has been more formalized, the loans are probably on demand".
This seems to me to imply a recognition that the money being lent was all "Liu family" money, the precise attribution of which was a matter of relative indifference, certainly to Mr Liu, as were the precise terms as to repayment and interest.
 Mr Gardner gave evidence in detail about the disposition from LGDC to NSL in February 2001. The matter is covered in paras.15-27 of his witness statement upon which he elaborated in his oral evidence both in chief and in cross-examination. I do not need to set out that part of his evidence verbatim here.
 At the most basic level, his evidence gives some limited support to that of Mr Liu. He drafted the disposition and the other documentation including the LGDC Board Minutes relating to the sale. These confirm that in terms of formal documentation the consideration for the sale was £248,100. Mr Gardner explained that the price originally mentioned in connection with the sale was £321,000. It is clear from the documentation to which he referred that this was the price which Mr Liu had given to him at an early stage. It featured in notes of telephone conversations between Mr Gardner and Mr Liu and in early versions of the draft documentation. The change from £321,000 to £248,100 occurred at some point between 1 and 6 February 2001.
 Mr Gardner confirmed having sent the fax dated 7 February 2001 to which Mr Liu referred. That is the fax in which he warned Mr Liu of the potential risk of a sale to NSL at an undervalue. It appears from the fax transmission sheet that it may not have been sent until late on 7 February 2001; and it was not received until 8 February 2001. Attached to that fax were the offer to purchase dated 7 February 2001 sent by MacRoberts, on behalf of LGDC, to NSL, giving a price of £248,100; and a Board Minute of LGDC drafted by MacRoberts (and bearing the date 29 January 2001) authorising the sale to NSL for a price of £248,100, together with a leaseback of the subjects to LGDC on terms to be agreed.
 As has already been pointed out, the covering fax raises the question of whether the transfer of the subjects to NSL was at an undervalue rendering it capable of being attacked in the future by a liquidator of LGDC. Mr Gardner enlarged on this point in his witness statement at para.20a:
" ... I was raising my concerns regarding the consideration. I had acted in the purchase so I knew the approximate value of the property; the consideration for this transaction was significantly less. I am certain that the difference in the consideration had been discussed with Mr Liu who explained that the hotel was not worth as much as when he had bought it, that there had been a significant element attributable to goodwill and moveables at the time of purchase and that the hotel was not making a profit. Whilst all of these things would have the effect of making the consideration less than the £2 million, it was unlikely to have been as low as £248,100, which is why I confirmed in the fax, that if it is a transaction at undervalue, it could be attacked by a liquidator of [LGDC] and/or the amount of the value itself could be sought to be recovered from the directors personally and indeed the whole transfer itself rendered void."
In response to Mr Gardner's fax, Mr Liu sent through the signed LGDC Board Minute and the signed acceptance by NSL of the offer. The minute of the LGDC board meeting was signed by Mr Liu as Dong-Guang Liu, while the acceptance of the offer of sale by NSL was signed by him as J Michael Colby. Mr Gardner said that he was not aware at that time that J Michael Colby was a name used by Mr Liu.
 Mr Gardner said that having received the signed acceptance of the offer by NSL, signed by J Michael Colby, he would have completed the testing clause of the Disposition and sent that to the Revenue Department for stamping and thereafter sent the Disposition with a Form 4 for registration. The copy of the Disposition retained by his firm has a completed testing clause dated 12 February 2001. At the end of the disposition is the standard declaration that the transaction thereby effected did not form part of a larger transaction or series of transactions in respect of which the amount or value or the aggregate amount or value of consideration exceeded £250,000. Mr Gardner said, and I accept this, that he would not have signed this document, nor would he have arranged payment of stamp duty in the sum of approximately £2,400, if he had been told that the consideration was in fact greater than £248,100. In other words, it is his clear evidence that he was not told that in addition to paying the price of £248,100, NSL were also going to assume liability for part of the debts due from LGDC to the Liu family.
 Mr Gardner went on to say that he had never, in the course of his acting for LGDC, seen a number of the documents showing changes in the directors of the company or other documents concerning the assumption of debt by NSL, though he fairly makes the point that, since he was acting for LGDC and not NSL, he would not have had any reason to see documents which did not come to LGDC, nor would he necessarily have seen correspondence between NSL and LGDC concerning the assumption by NSL of liability for the Liu family debt.
 Cross-examined by reference to an Affidavit from David Halliday, a solicitor with Messrs Boyds, who had sought to take a statement from him, he denied having said to Mr Halliday that Mr Liu had told him that in addition to the price of £248,100 there was to be an assumption by the purchaser of debt due by LGDC. He said that he was definitely not instructed by Mr Liu that the consideration included the assumption of the loans. He did however confirm that there had been some very brief mention of the loans during discussions with Mr Liu during February 2001 - "the briefest of mentions". The loans, he said, were mentioned "as a loose end, along with the other loose ends", but he was not told that it was part of the consideration.
 I should note also that Mr Gardner accepted that he had drafted the documents relating to the purchase by NSL from LGDC of the furniture, fittings and ancillary movables at the subjects.
Other evidence for the pursuer
 The pursuer gave evidence himself and also called evidence from Mr Ellis and Ms Hamblin. The pursuer's relevant evidence was inevitably limited to an account of what he had discovered in the Company's records on being appointed liquidator and the circumstances surrounding his conduct of the liquidation in the early stages. Mr Ellis is an accountant with Grant Thornton who assisted the pursuer with certain aspects of the liquidation. He spoke to the claims presented by Mr Liu in the liquidation and as to the fact that certain of the documents relied on by Mr Liu did not feature in the LGDC files at the commencement of the liquidation. Ms Hamblin is an Audit Partner with Baker Tilly, who undertook accountancy work for LGDC in 2001 and 2002, in the wake of LGDC's fall out with Deloittes a few years previously. They prepared qualified accounts for the year to 31 October 1999, qualified because of the lack of information and a proper audit trail. They ran into difficulties trying to prepare the accounts for the following year. In order to discuss the 2000 accounts, a meeting was arranged for 29 August 2002. At that meeting Mr Liu disclosed that LGDC's entire fixed assets had been sold on 12 February 2001 to a Canadian company but provided no other details. It was apparent that there had been a breakdown in communication between auditors and client, and Baker Tilly resigned as auditors. Ms Hamblin too commented on her awareness (or lack of awareness), from acting for the Company, of certain of the documents relied on by the defenders in this case.
Cross-examination of Mr Liu
 In cross-examination the pursuer mounted a general attack on Mr Liu's credibility and also sought to show the improbability of the alleged transactions. It is convenient to concentrate on certain specific matters which, they said, undermined the defenders' case. In some cases, the points were accepted by Mr Liu. In other cases they were clear from the documentation.
(i) authenticity of the December 1994 letters evidencing the family loans
 The pursuer challenged the authenticity of the December 1994 letters purporting to confirm the details of the loans from Liu family members and others at the time of the acquisition of the subjects by LGDC. The originals of such letters had not been produced. No explanation had been given for this. Being written in English, they cannot have been intended primarily for the benefit of the members of the family, whose native language was Chinese and who had very little English. They must have been intended as a record of the loans to LGDC. Yet they were not passed to MacRoberts (who acted as Company Secretary) in 1994. They were not found in the books and records of the Company at the commencement of the liquidation. Nor were they shown to Mr Gardner when he asked about the loans. Even when he asked for particulars of the loans, he was not told of these details. Indeed, in the early months of 1995 Mr Gardner was being told that the funds made available to LGDC had come from different lenders (including the family members) and in different amounts.
(ii) what Mr Gardner was not told about the consideration for the sale
 Next, at the time of the sale of these subjects by LGDC to NSL, Mr Gardner was told that the consideration of the sale was £248,100. He proceeded with as part of the documentation on that basis. If, in response to Mr Gardner's fax of 7 February 2001, Mr Liu had decided to add, as part of the consideration, an assumption by NSL of part of the Liu family debt, why did he not tell Mr Gardner? Mr Liu's answer was that he had told Mr Gardner before the documentation was signed that he would address the question of the consideration being insufficient by procuring the NSL would assume part of the family loans.
(iii) No contemporaneous documentation evidencing the assumption of debt
 None of the documentation said to evidence the assumption of debt by NSL or its place as part of the consideration for the sale, was found in the books and records of LGDC. In particular, there was no trace in those books and records of the letter dated 28 February 2001 from NSL to LGDC relating to the assumption of the Liu family loan. By contrast, the books of the Company did contain a copy of the Minute of the Board Meeting sanctioning the sale for a consideration of £248,100. In addition, the NSL resolution relating to the assumption of debt and the leaseback to LGDC bears the date 7 February 2001. It was put to Mr Liu that, if the assumption of debt was introduced into the deal as a result of Mister Gardner's fax of 7 February 2001, that suggested that the NSL resolution has been incorrectly dated, since it is clear from the fax transmission sheet that that fax was not received by Mr Liu until 8 February 2001. Whether or not the NSL resolution was correctly dated is one thing. But the force of the point is diminished if, as Mr Liu insisted, he was told about the problem of the consideration being only £248,100 orally before the fax of 7 February 2001.
(iv) LGDC's auditors not told
 An additional point, perhaps of less importance, is that LGDC's auditors, Baker Tilly, were not told any of the relevant information relating to the sale. This prompted their resignation on 2 September 2002. I say that the matter is perhaps of less importance simply because, as I understood the evidence, Baker Tilly were not even told about the sale of the subjects by LGDC - i.e. it was not just a failure to tell them about the assumption of debt - and if one thing is clear it is that there was in fact a sale by LGDC to NSL.
(v) claims in the LGDC winding-up
 A point of rather greater significance, is that in February 2003 members of the Liu family, including Mr Liu himself, lodged claims in the winding up of LGDC. Those claims, as initially presented in the sheriff court, were for the loans in their original amount and did not reflect the fact, has now alleged by the defenders, that as part of the consideration for the sale of the subjects to NSL, NSL had agreed to take over responsibility for part of those loans.
 Mr Liu was shown a document (6/11) bearing to be a copy of claims lodged on 8 February 2003 by himself, Shiau Cheng Tzu Liou, Jieh Jow Liu and King Hsia Chow Liu in the winding-up of LGDC pursuant to Rule 4.15(3)(a) of the Insolvency (Scotland) Rules 1986. I put it in this way because this was a document to which Mr Sandison objected on the basis of the best evidence rule. According to this document, Mr Liu's claim was for £340,599, while those of Ms Liou, Jieh Jow Liu and King Hsia Chow Liu were for £1,296,412, £667,271 and £1,296,412 respectively. Attached to the claim form in each case was a copy of the relevant letters of 5 December 1994 evidencing the original loan (in amounts, respectively, of £460,910, £680,000, £350,000 and £680,000 - see para. above), together with a schedule showing how the sum presently claimed related to the amount of the original loan. In each case, apart from that of Mr Liu himself, the schedule simply showed the accrual of interest on the sums lent. In the case of Mr Liu, the relevant schedule showed the accrual of interest and certain re-payments to him in the years 1997-2000. None of the schedules suggested that liability for any part of the loan had been assumed by NSL (so as to reduce the amount owing by LGDC). Mr Liu acknowledged that the signature on his claim form appeared to be his and he acknowledged the sum claimed. But he pointed out, which was correct, that the claims had been prepared and lodged by Messrs Brodies, solicitors, on his behalf.
 In March 2003 Mr Liu (as First Noter) and King Hsia Chow Liu, Jieh Jow Liu and Shiau Cheng Tzu Liou (respectively Second, Third and Fourth Noters) lodged a Note in the sheriff court appealing against the adjudications by the liquidator (the pursuer) who, it appears, had rejected their claims in their entirety. A copy of that Note as twice adjusted (on 15 May and 25 June 2003), 6/15 of process, was shown to Mr Liu. No objection was taken by Mr Sandison to this document or other copies found elsewhere in the documents. In its adjusted form it showed claims by the Noters for a total of £1,502,456 (respectively £142,121, £540,952, £278,432 and £540,952. It gave the following explanation (all underlined to show that this was introduced in the second round of adjustment on 25 June 2003):
"The sum due to each of the Noters is calculated by taking the aggregate sum of £3,064,694 due to the Noters at the beginning of 2001 and, after adding interest to January 2001, reducing the sum due to each of the Noters proportionately by the appropriate percentage of the sum of £1,850,000. A schedule showing these calculations will be produced. The sum of £1,850,000 represent's that part of the Noters' loans which was assumed on 28 February 2001 by a Canadian corporation 3052775 Nova Scotia Limited ('Nova Scotia').
The assumption by Nova Scotia of that debt was set out in a letter of that date from a Mr Colby, the then sole director of Nova Scotia to the First Noter. The assumption of that debt was part of the consideration for the purchase by Nova Scotia of the land and buildings of the Company. The Noters agreed, by necessary implication, to the proportionate reduction of the sum due to each of them by the Company.
Previously claims were submitted to the Liquidator in different sums. The previous claims were made to reflect the loan position as shown in the last completed accounts as the books of the Company had not been written up to reflect the assumption of the debt by Nova Scotia. The previous claims were: ..." [it then sets out the claims as I have noted them in the previous paragraph]
In an e-mail to Mr Liu, Mr MacPherson noted that "this was going to be the first indication to the liquidator about the £1.85m". Mr Liu did not confirm that that was the case, but offered no reason to dispute it. The Note goes on to record that Mr Macpherson of Brodies, who was acting for the Noters, attended a general meeting of the creditors of the Company on 14 February 2003 as proxy holder for the Noters. He submitted claims by the Noters but they were rejected in their entirety by the liquidator. As a result, Mr Macpherson was not allowed to move his motion that Mr Hall of Messrs BKR Haines Watts rather than the pursuer be appointed liquidator - had the claims been accepted even in the reduced amount set out in the adjusted Note, the votes of the Noters against the appointment of the pursuer as liquidator would have carried the day and Mr Hall would have been appointed.
 Asked about why the claims in the winding-up had initially been in the full amount, without taking any account of the alleged assumption of debt by NSL in 2001, Mr Liu said that Brodies had made a mistake and, later, having recognized this, corrected it. He himself was a busy man, with business interests around the world. He did not necessarily read everything in detail before signing. Perhaps he should have done, but he trusted his lawyers and accountants to get it right. He was referred to e-mails leading up to the adjustments to the Note made on 4 June 2003, suggesting that he had in fact had detailed discussions with Mr MacPherson and his accountant, Mr Freeman, about the quantification of the claims. He said that he might have approved the numbers to go in the claim, but he was not happy with them and signed because he was told he was up against a deadline for submitting the claim in the winding-up proceedings. Neither Mr MacPherson nor Mr Freeman was called to give evidence. It was not suggested that they could not have been called. On the basis that the court is required to make inferences adverse to the position of the party who could have called a relevant witness but did not (but, obviously, only on matters to which they could have spoken in evidence), it is to be inferred, in the absence of evidence from them, that the claims lodged in the winding up were presented in a manner which reflected what Mr Liu had told them, or at any rate their understanding of the instructions given to him by Mr Liu. Mr Liu said, on a number of occasions, that Mr MacPherson recognized that he had made a mistake. In the absence of Mr MacPherson I am not able to accept that evidence. It is clear, therefore, that until about May 2003 Mr Liu had told neither Mr MacPherson nor Mr Freeman about NSL's partial assumption of the debt.
(vi) the arrangements with Zuccaro
 The pursuer also questioned the authenticity of the arrangement that allegedly entered into with Zuccaro. On the basis of the evidence given by Justin Liu, Mr Moynihan submitted that LGDC continued to operate the business at these subjects and had never given away to Zuccaro. The documentation suggesting otherwise was, he said, a sham. On this aspect I agree with Mr Sandison that this places more weight on the evidence of Justin Liu than it is capable of bearing.
(vii) lack of any clear commercial purpose
 In addition to these specific points, Mr Moynihan asked questions which reflected on the commercial purpose of all of the arrangements. This went further than the events surrounding the sale by LGDC to NSL and included the circumstances surrounding the creation of the standard security. To be fair to Mr Liu, he was not directly challenged along the lines that there was no commercial purpose - the point was developed more in final submissions.
 On Mr Liu's evidence, the purchase of Letham Grange by LGDC had been funded by loans from members of the family as well as a loan of £200,000 from Sanwa/ Coquihalla. That loan fell due for repayment on 25 October 2000 and was stated to have "priority rights for being repaid"; see para. above. Towards the end of 2000, that loan was due to be repaid. To repay the loan, LGDC needed to find some money. The development of the hotel in time for the Open golf had not worked out. Because of the dispute with Deloittes, LGDC did not have accountants who could have recorded any loan in its books. So, according to Mr Liu in cross-examination, there was only one thing they could do, and that was to sell the assets of LGDC to another company, in the event NSL, another Liu family company. NSL paid £248,100, enough to enable LGDC to repay Coquihalla (in addition, of course, according to Mr Liu, to relieving LGDC of liability for £1.85 million of the Liu family loan). What Mr Liu did not explain in detail, perhaps because he was never asked this in terms, was why, if it was all Liu family money, that sum could not have been advanced by way of a loan (whether from NSL or Liu family members as individuals) without the need for LGDC to sell the property to NSL. The absence of accountants to have any further loan recorded in the books of the Company does not appear to be a credible explanation, standing the lack of formality in book-keeping terms surrounding the initial family loans to LGDC? And in any case, by February 2001, he had been introduced to Kitsons, accountants instructed to prepare LGDC's 1998 accounts. The reason for the transaction remains a mystery. On any view, the balance of the Liu family loans plus interest, even after NSL assumed £1.85 million, remained with LGDC. By then, according to the claims in the sheriff court (see above), the total amount of the loans plus interest came to something in excess of £3.6 million (possibly as much as £5 million, according to Mr Liu in cross-examination), so even if NSL did assume liability for £1.85 million, that still left LGDC with a debt of £1.75 million plus (or, possibly, £3.2 million) owing to the Liu family.
 The introduction into this transaction, or series of transactions, of Foxworth, another Liu family company, adds another complication. It appears to have begun at the time of the sale by LGDC to NSL. Mr Liu explained in cross-examination that in order for NSL to be able to pay the £248,100 to LGDC, it needed to find money from somewhere. NSL borrowed £300,000 from Foxworth. It was not explained why NSL was introduced if it did not have the money to pay LGC, but again, in fairness to Mr Liu, he was not asked about this in any detail. Mr Liu said that in return for the loan of £300,000, NSL gave Foxworth a personal bond to record the loan and granted Foxworth a standard security over the property as security for re-payment. None of this was referred to on record, and neither that personal bond nor the standard security was produced (if they ever existed). However, in any event, that standard security (if it was granted then) was never registered.
 In cross-examination, Mr Liu sought to justify the Personal Bond, granted in 2003, by reference in part to this involvement of Foxworth in 2001. The amount of the bond (£2 million) was made up of the £300,000 lent by Foxworth to NSL in 2001 plus an assumption by Foxworth in 2003 of £1.7 million of the Liu family loans. It at first appeared that Mr Liu was saying that Foxworth had assumed £1.7 million of the debt assumed by NSL, but he was adamant under repeated questioning that that was not the case. According to his evidence in cross-examination, Foxworth did not assume any part of the £1.85 million debt assumed by NSL. Rather it assumed £1.7 million of the Liu family debt plus interest that remained with LGDC. I found this surprising, but the reasons behind it, if it be true, were not explored in evidence. Certainly, the suggestion that Foxworth had assumed part of the LGDC debt was never mentioned in the sheriff court proceedings. Mr Liu did not recall if he had told Mr MacPherson about it, and, for the reasons given earlier, I must assume that he did not. It raises the question, if true, why that sum should be included in the personal bond granted by NSL to Foxworth. NSL held all its assets on trust for an undisclosed company, but in any event its net worth was zero, the value of the golf course being approximately equal to the amount of the loan which it assumed. Mr Liu agreed that it seemed illogical but he thought that it made sense for NSL, if it owned the property, to undertake an obligation to Foxworth in addition to the £1.85 million loan it had already assumed.
(viii) other matters
 A number of other points were raised by the pursuer. Amongst them was an analysis of the documents said to evidence the various aspects of the transaction, particularly the assumption of loan by NSL. It was pointed out that certain documents, particularly those dated 8 and 28 February 2001 and 1 September 2002, were signed by Mr Liu as "J Michael Colby" in his capacity as Vice President of NSL when, in fact, Mr Colby did not have that capacity until some time later - he was President, not Vice-President, until 3 September 2002. Mr Liu sought to give an explanation in cross-examination, which he amplified in re-examination. The explanation was that he was always uncomfortable with being President in the name of J Michael Colby - he preferred him to be Vice-President so that he could more easily be replaced. What was going to happen to the company if he was President in that name and he died, for example in a plane crash, he being a frequent flyer? So he wanted to make sure that Lee Fon Yi became President. But it took some considerable time before he got round to doing this. In the meantime he constantly referred to himself (as J Michael Colby) as Vice-President rather than President.
 As Mr Moynihan QC pointed out at the beginning of his submissions, this is a case which turns on the credibility of Mr Liu. He characterised Mr Liu as "an evasively verbose witness", who tried to hide behind a lack of familiarity with the English language when in fact he had been educated in the United States and knew enough of the language to cut and paste the standard security and the personal bond. I shall come back to this question shortly.
 Many of the points made by Mr Moynihan in his cross-examination of Mr Liu were well made and, in an ordinary case (if there is such a thing) would likely be regarded as fatal to the defenders' case. I accept, for example, that there is some doubt about when the 1994 letters, recording the loans by Liu family members and by Coquihalla to LGDC, were produced, since they were not shown to Mr Gardner at the time of LGDC's purchase of Letham Grange in 1994 in circumstances where one would have expected them to have been shown to him had they been in existence at that time. I accept that at the time of the sale by LGDC to NSL in 2001, Mr Liu did not tell Mr Gardner in terms that the consideration for the sale included an assumption by NSL of £1.85 million of the Liu family debt owed by LGDC. Further, there are questions about some of the documentation relied on by the defenders as contemporaneous or nearly contemporaneous, with the sale by LGDC to NSL; none were found in LGDC's books and records when the liquidator moved in, and the signature of J Michael Colby to the NSL documents as Vice-President when he was not Vice-President until much later raises a serious question as to whether the documents were not made at the time they bear to have been made but were concocted later. Information was not given to LGDC's auditors when one would have expected it to have been given. Most damning of all, perhaps, is the fact that when presenting a claim in the winding up and pressing his case in the sheriff court proceedings in 2003, Mr Liu instructed his lawyers as to the amount of the family loan outstanding to date without any hint of there having been an assumption of part of this debt by NSL. This was a crucial element in the calculation of the sums claimed in the winding-up. If NSL had assumed part of the debt, the sums owing by LGDC would have been pro tanto reduced (the same is, of course, true of the further assumption of loan by Foxworth if, as Mr Liu contended, Foxworth assumed part of the debt remaining with LGDC rather than, as had seemed more likely, it had assumed the bulk of the loan which NSL had itself taken over from LGDC). The presentation of the claim without any reduction by reference to NSL's assumption of part of the loan, suggests that Mr Liu did not tell his lawyers and accountants about NSL's assumption of the loan until well into 2003, despite it having happened in January/February 2001. And finally there is some difficulty in seeking to understand the underlying purpose of the sale to NSL, the loan from Foxworth to NSL in about January/February 2001 and, later, the assumption of debt by Foxworth, when the ostensible purpose in early 2001 was simply to raise money to pay off the Coquihalla part of the loan. These are formidable obstacles for the defenders to overcome.
 On the other hand, although there are questions as to the timing of the letters of 5 December 1994 evidencing the Liu family loan, and equally of the 8 December 1994 letter evidencing the Coquihalla loan, the fact of the loan itself was not challenged. This is of the utmost importance is assessing much of the other evidence in the case. It is clear that there was a loan from the Liu family in the total amount shown by the December 1994 letters. This is consistent with Mr Gardner's correspondence at the time. He may not have known of the breakdown of the loan between the various family members - and it is clear that he did not - but he knew that the loan to LGDC to enable it to purchase Letham Grange had been arranged by Mr Liu and came principally from Liu family sources.
 Given that no challenge was presented to the fact that there had been a loan from members of the Liu family to LGDC, and to my mind the evidence that there had been such a loan was overwhelming, I think it surprising that, later on, in 2003, the pursuer, as Provisional Liquidator, was so quick to reject in their entirety the Liu family claims to be creditors, based on these loans. Had their claims in the winding-up been accepted (whether or not adjusted to take account of the NSL assumption of debt), they would, it appears, have been able to resist the pursuer's appointment as Liquidator and might well have been entitled to a reasonable dividend on their claims. This was not gone into at the proof, for good and obvious reasons, but it provided the underpinning for Mr Liu's constant refrain throughout his evidence that his company had been "stolen" from him by the pursuer. Whether justified or not, his upset was not difficult to understand. It appeared to me to infect his evidence. He was, I accept, a difficult witness in many ways, often reluctant to answer questions except with a question or a challenge, and frequently answered at length when the question was capable of a short answer. To that extent there is some force in Mr Moynihan's description of him as a witness. But I do not accept the conclusion for which Mr Moynihan argued, to the effect that his evidence was untruthful or at best unreliable and should not be accepted. Having seen Mr Liu over a considerable period in the witness box, and having heard him at length under persistent and skilful cross-examination, I formed the view that he was endeavouring to tell the truth, so far as concerned the essentials of his case, and that the parts of his evidence that concerned those essentials could be relied on.
 To start at the beginning, in 1994, I am satisfied that the loans were made by members of the Liu family to LGDC, in the amounts evidenced in the December 1994 letters, for the acquisition of Letham Grange. It is clear from the evidence that all decisions about this were effectively taken by Mr Liu. His family members relied on his advice. I am not persuaded that the split between the family members was necessarily decided upon by the time of the transaction (it will be recalled that different splits and, indeed, different lenders were mentioned at various times) and it may, therefore, be that the letters of 5 and 8 December 1994 were written and signed some time later. But nothing turns on this. The loans were made to LGDC and were enforceable according to the terms of the letters - the fact that letters are back dated does not invalidate them in so far as they purport to be a record of a transaction.
 I find the reason for the sale in 2001 to NSL somewhat elusive. As I have said, according to Mr Liu it was because the Coquihalla loan required to be repaid and LGDC did not have any money or the means of raising it. A loan from a family member or a third party might have been the answer, but without accountants Mr Liu could not properly record a loan in the books of the Company. Therefore it was agreed to raise the money by selling the subjects to NSL. I find this explanation difficult to believe. The 1994 loans were not properly recorded originally, and there was no reason why an informal arrangement could not have been made. But ultimately this does not matter. The fact is that LGDC did sell the subjects to NSL, whatever might have been the true reasons for that. So the elusiveness of the reasons for the transaction do not impact upon this part of the story. A sale was arranged to NSL.
 The next question is: what was the consideration for the sale. First, there was the cash price, £248,100. That is not in doubt. The question is: was there also another element agreed? The disposition in favour of NSL records that the consideration for the sale to NSL was only £248,100. So too do the missives of sale (signed for acceptance by Mr Liu, as J Michael Colby, on behalf of NSL). The LGDC Board Minute bearing the date 29 January 2001 refers to that as being the price. The missives and the Board Minute are original documents (or original copies) and, in any event, Mr Liu accepted that he had signed those documents. It is not in dispute that £248,100 would not be adequate consideration for the sale. In those circumstances, even if (contrary to my view expressed earlier in this Opinion) the burden initially was on the pursuer to show that the sale was not for value and in good faith, the evidential burden clearly shifts to the defenders to establish on balance of probabilities that, in addition, NSL assumed responsibility for repayment of the Liu family loans.
 Mr Gardner's evidence, which was not challenged and which I accept, is that he pointed out to Mr Liu that a price of £248,100 for the subjects (the sum needed to be injected into LGDC to enable it to pay off the Coquihalla loan) was too low and was susceptible to challenge by a liquidator in the event of LGDC becoming insolvent. As I understood Mr Gardner's evidence, particularly in cross-examination, and as is in any event apparent from para.20a of his witness statement, he told him this orally before 7 February 2001 as well as in his e-mail of that date. There were ample opportunities for this to have happened, since there were telephone calls and meetings in the early days of February 2001, and there were discussions, for example, about the price, which changed late on from £321,000 to £248,100. That change may have been connected with the incidence of stamp duty, though Mr Gardner thought that it was to do with the transfer of the business as a going concern. The reason does not matter. I am satisfied that Mr Liu took this on board. Whatever criticisms might legitimately be made about his awkwardness (at times deliberate in my opinion) while giving evidence, there is no doubt that he has an acute business intelligence. If Mr Gardner pointed out a possible problem with the sale, why would he not try to address that problem? Procuring that NSL, a family company, relieved LGDC, another family company, of part of its liability to repay loans to members of the family, cost him nothing. There was no need to raise any more cash - the only cash needed was the £248,100. It was simply a case of transferring money (or at least a liability) from one pocket to another.
 Mr Liu did not ultimately assert that he told Mr Gardner the amount of the loans assumed (or to be assumed) by NSL, or even that the loans had been assumed by NSL. His case was that he told Mr Gardner, before the transaction was concluded, that if the cash price was not sufficient he would have NSL assume liability for part of the Liu family loans to LGDC. Mr Gardner denied this. According to him, Mr Liu had sought to justify the reduced price, by reference to trading losses, the absence of goodwill and other factors. He said that he told Mr Liu that even taking these matters into account, there seemed to be a big difference between that price and the price paid for them by LGDC in 1994. He was then told to go ahead. Mr Gardner was an honest witness. But I was conscious that at this stage in his cross-examination he appeared guarded in the answers that he gave. He had certified that the transaction was for a value of £248,100 and that that was not part of a larger consideration. If he had been told of the additional consideration, he was sure that he would not have done this. I accept that evidence as having been honestly given. Having heard the evidence I consider that it is quite possible, however, that he was told something which, with hindsight he should have understood as a reference to an assumption of liability for the loans. I sensed that he felt his professional integrity to be under challenge. His reason told him that he had not been told of the assumption of debt. But I noted that, when asked in cross-examination whether Mr Liu might have said something to the effect of "I take that on board, I will deal with it", he replied "No" but then added that there had been some discussion about loans, though he could not remember when, or in what context. This was when he described it as "just one of the many loose ends" or words to that effect. I cannot think of any context in which the loans could have arisen for discussion at around this time other than in relation to Mr Gardner having warned Mr Liu that the consideration of £248,100 seemed rather low. Doing my best to make sense of the evidence, I conclude that Mr Liu did take on board the point made by Mr Gardner about the susceptibility of the transaction to challenge if the price was only £248,100, and did tell him that he would deal with it by arranging for an assumption by NSL of part of the family loan. He did not later tell him the amount, or that it had been done. I suspect that Mr Gardner did not think through the implications of this. He had already produced the formal documentation putting through the sale at this price, including Board Minutes to be signed by Mr Liu. Mr Liu signed them as necessary.
 It is not clear to me on the evidence when the documentation purporting to evidence the assumption of the loan by NSL was created, nor indeed when the decision was made that the amount of debt assumed would be £1.85 million rather than some other figure. Mr Liu acted for both LGDC and NSL (albeit under different names) and also took the necessary decisions so far as concerned the loans from members of his family. To that extent, once the decision was made, the documentation could follow later. It was not suggested in argument that the subsequent creation of documents to record the assumption of the loan as part of the consideration for the sale in any way invalidated what had occurred if the decision had in fact been made to assume part of the loan as part of the consideration. I find that that decision had been made.
 In coming to this conclusion I have taken account of all the various criticisms of Mr Liu's evidence, including in particular his failure to take account of the assumption of the loan when first presenting his case in the Note in the sheriff court proceedings. They do not persuade me to a different conclusion. It seems to me to be perfectly possible that Mr Liu, in instructing his lawyers in that case, did not at that moment put two and two together so as to realise that the assumption of £1.85 million of the loan by NSL had the effect of reducing the debt due by LGDC to the family members. Nor am I much concerned that certain documents were signed by Mr Liu, as J Michael Colby and as Vice-President of NSL, prior to Mr Liu having that particular status in that name at NSL. The use of different names, and the correspondence from himself in one name to himself in another date, is an unusual feature of this case. Yet Mr Liu's account of how and why he used these different names was unchallenged. I see not reason, against this background, not to accept Mr Liu's explanation of why documents were signed by J Michael Colby as Vice-President before he acquired that status.
 I conclude that the sale from LGDC to NSL was made for adequate consideration and was not a gratuitous alienation. It follows that there can be no effective challenge to the standard security granted over the property by NSL in favour of Foxworth, since Foxworth, albeit that through Mr Liu they had full knowledge of all the facts pertaining to that sale, had no knowledge of any facts rendering that sale subject to reduction or, to put in another way, had no knowledge of any fact rendering the grant of the standard security to them a breach by NSL of some obligation incumbent on it affecting the property.
 There was no live issue about whether the standard security was given for value. The position of the pursuers was one of agnosticism. But in fact there is no doubt that the standard security was granted in part at least as security for the repayment of a loan of £300,000. It was, to that extent at least, for value. Whether the standard security was also security for NSL's liability to Foxworth, on the basis of Foxworth having relieved it of part of the debt it had in turn assumed from LGDC, is not for decision here.
 In the course of the proof Mr Sandison rose on a number of occasions to object to the admissibility of documents, primarily on the basis of the best evidence rule. To save constant interruptions, Mr Sandison handed in a note of the documents to which he took exception. A revised version of that document, showing his final position, is lodged at 44A of Process. In his final submissions Mr Moynihan too raised objections to certain documents on the same basis. It is not often that the best evidence rule is raised as a central issue in a case. Both parties here relied upon it. The rule can be stated quite simply and can be taken from the headnote in Scottish & Universal Newspapers Ltd. v. Gherson's Trustees 1987 SC 27. The contents of documents must be proved by the documents themselves and not by parole evidence. Secondary evidence of the contents of documents is permitted where the original documents are not readily available through no fault of the party seeking to rely upon them. Unless that is established, neither a copy of the document nor oral evidence as to its content is admissible: see per Lord President Emslie at pp.46-8, and see also Japan Leasing (Europe) plc v. Weir's Trustee (No.2) 1998 SC 543. But if a party leads oral evidence as to the content of the document, or leads evidence by reference to a copy of a document, and the other party does not object, then the party leading it cannot subsequently complain about its admission on the basis of the best evidence rule. Mr Moynihan's objections were to documents which he himself had adduced in evidence through witnesses in cross-examination. As to Mr Sandison's objections, many of the documents to which he did object were, in the event, overtaken by subsequent documents (to which he did not object) which showed much the same thing. I do not propose to go through the documents on his list one by one. Fortunately, my decision does not turn on any such question.
Is the deed of 6 January 2003 in favour of Foxworth sufficient in form and content to create a valid standard security?
 Mr Moynihan QC identified two issues. First, did the deed properly specify the obligation secured? Second, was it "truly" a standard security?
 Both arguments involved a consideration of s.9(2)-(4) of the Conveyancing and Feudal Reform (Scotland) Act 1970, which provide as follows:
"(2) It shall be competent to grant and record in the Register of Sasines a standard security over any interest in land, to be expressed in conformity with one of the forms prescribed in Schedule 2 to this Act.
(3) A grant of any right over interest in land for the purpose of securing any debt by way of a heritable security shall only be capable of being effected at law if it is embodied in a standard security.
(4) Where for the purpose last-mentioned any deed which is not in the form of a standard security contains a disposition or assignation of any interest in land, it shall to that extent be void and unenforceable, and where that deed has been duly recorded the creditor in the purported security may be required, by any person having an interest, to grant any deed which may be appropriate to clear the Register of Sasines of that security."
There are two Forms set out in Schedule 2 to the Act. Form A is to be used where the personal obligation is included in the deed. Form A is in the following terms:
"I, A.B. (designation), hereby undertake to pay to C.D. (designation), the sum of £ (or a maximum sum of £ ) (or all sums due and that may become due by me to the said C.D. in respect of ......... (here specify the matter for which the undertaking is granted)) with interest from ........................ (or from the respective times of advance) at ............ per centum per annum (or otherwise as the case may be) (annually, half-yearly, or otherwise as the case may be) on ..................... in each year commencing on .....................; For which I grant a standard security in favour of the said C.D. over All and Whole (here describe the security subjects as indicated in Note 1 hereto): The standard conditions specified in Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970, and any lawful variation thereof operative for the time being, shall apply: And I grant warrandice: And I consent to registration for execution."
Form B is for use where the personal obligation is constituted in a separate instrument or instruments and is in the following terms:
"I, A.B. (designation) hereby in security of (here specify the nature of the debt or obligation in respect of which the security is given and the instrument(s) by which it is constituted in such manner as will identify these instruments) grant a standard security in favour of C.D. (designation) over All and Whole (here describe the security subjects as indicated in Note 1 hereto): The standard conditions specified in Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970, and any lawful variation thereof operative for the time being, shall apply: And I grant warrandice."
 Counsel approached the issue on the basis that the relevant form here was Form B, since the deed bore to grant security in respect of sums due under a personal bond.
 Developing his first point, Mr Moynihan submitted that the terms of Form B make it clear that the instrument by which the debt is constituted must be specified in such manner as will identify it. He argued that in this case the deed does not identify the personal bond in respect of which the security is given. The terms of the deed are set out in para. above. The relevant part of it is in the following terms:
"WE, 3052775 NOVA SCOTIA LIMITED ... hereby undertake to pay to FOXWORTH INVESTMENTS LIMITED ..., all sums due and that may become due by us to the said Foxworth Investments Limited in respect of a Personal Bond and Debt Agreement with interest from Twenty fifth January, Two thousand and one at eight point five per cent per annum payable half-yearly in arrears on Twenty fifth January and Twenty fifth July commencing on Twenty fifth July Two thousand and one ..." (emphasis added)
He submitted that the deed did not specify the date of the personal bond. Nor was there anything else in the deed which enabled the personal bond to be identified. To make matters worse, the deed narrated that the rate of interest payable on the outstanding sums was 8.5%, payable from January 2001, but the personal bond, the terms of which are set out at para. above, did not specify any rate of interest nor any date from which interest was to run. Mr Moynihan submitted that it could not be assumed that there was only one personal bond. Mr Liu spoke to having created more than one over the years.
 Mr Sandison pointed out that in terms of s.53(1) of the 1970 Act, it is sufficient compliance with any requirement in the Act that the deed to be in conformity with a statutory Form that the deed conforms "as closely as may be", i.e. as closely as may be appropriate to the circumstances of the case - some latitude may be allowed: see Sanderson's Trustees v. Ambion Scotland Ltd 1994 SLT 645, 650. In almost every case where a standard security referred to a separate undertaking to pay, extraneous evidence would be required to identify the document in question. The exception was where the undertaking to pay was recorded in a manner which allowed of no ambiguity, but such cases were rare. There was no more difficulty here than in many other cases. In this case the personal bond referred to in the deed was identified in the evidence of Mr Liu and Ms Li, and their evidence on this point was not challenged.
 I consider that Mr Sandison is correct on this point. What is required is that the extraneous instrument constituting the debt secured by the standard security is capable of being ascertained, by description, or by evidence, or both. It may sometimes be a question of degree whether the identification of that instrument in such a manner is insufficiently clear for the deed to be enforceable, but in the present case there is no real difficulty. The debt secured is said to arise under a Personal Bond and Debt Agreement. Clearly it is a Personal Bond and Debt Agreement entered into between the same parties, NSL and Foxworth. The evidence discloses only one personal bond meeting that description. I do not think that the fact that it is not headed "Personal Bond and Debt Agreement" is of any importance in this context. To my mind, with the assistance of evidence from Mr Liu and Ms Li, it is clear that the standard security refers to the personal bond between the parties signed by Mr Liu and Ms Li.
 Nor do I think that there is anything in Mr Moynihan's point that the standard security mentions a rate of interest and the date from which interest is to run, whereas neither are mentioned in the personal bond. It may be that there was no such agreement as to interest in the personal bond. In that case, the standard security is, in effect, a hybrid between Form A and Form B, referring to the personal bond to identify the principal sum secured (as per Form B) while setting out the obligations about interest in the standard security itself (Form A). There is no difficulty in a standard security being granted in hybrid form.
 At the end of his submissions on this point, Mr Moynihan argued that the standard security was just a sham, since on Mr Liu's own evidence he did not expect the £2,000,000 ever to have to be repaid. I have already dealt with this point. It has no further part to play at this stage. The issue for decision under this part of the argument is whether in form and content, assuming it to be genuine, the deed satisfies the requirements of the 1970 Act.
 Turning to his second point, Mr Moynihan submitted that the standard security attempted to create the type of security prohibited by s.9(4) of the 1970 Act. The relevant part of the deed provides as follows:
"... should 3052775 NOVA SCOTIA LIMITED default on any of its obligations, become insolvent, a receiver or similar official is appointed in respect of any its property, or the holder of a charge takes possession of all or any part of its property, etc., --- Upon any of the above named defaults, Foxworth Investments Limited will immediately take possession of the Collateral and become the rightful owner of the whole subjects...; Foxworth Investments Limited will not be liable to 3052775 NOVA SCOTIA LIMITED or any other Person for any failure or delay in exercising any of its rights under this Agreement; ..." (emphasis added)
Mr Moynihan's argument was that the part of the deed which I have underlined contains a disposition or assignation of an interest in land contrary to s.9(4) of the 1970 Act. To my mind that submission takes those words out of context. As Mr Sandison said, the document is headed "Standard Security". The context, therefore, is that of the grant of a security rather than that of a disposition. That is made clear by the words in the middle of the deed
"For which we grant a Standard Security in favour of the said Foxworth Investments Limited over ALL and WHOLE the subjects ..."
Read in that context, the offending words may be regarded as a clumsy way of attempting to provide some means of recourse in the event of default, or (as Mr Sandison submitted) they may be regarded as an attempt to create a remedy for enforcement which the law does not permit. But it does not follow that, properly construed, the deed as a whole should be regarded as a disposition or assignation of an interest in land. Further, the deed does not bear to be an immediate disposition or assignation (whatever happens takes effect only in the future and conditionally, upon default), or even an actual disposition or assignation to take effect upon a default by NSL (it is more in the nature of an agreement that title will transfer in those circumstances, than a disposition as such - something more, i.e. a disposition, would be needed to perfect the intended transfer of title).
 Ultimately, however, the point does not take the pursuer anywhere. Even if the deed does contain a disposition or assignation of an interest in land, it is void and unenforceable only to that extent. The pursuer does not seek partial reduction (or excision of the offending part); and this argument does not assist him in his contention that the security as a whole falls to be reduced. Mr Moynihan's only response to this was that, while that might be true in the ordinary case, it made no sense to delete only part of the offending security when the whole thing was a sham - but that, with respect, is not an answer to this point, which is concerned with a discrete legal objection to the form and content of the deed. I have, in any event, already rejected the argument that the security was a sham.
 For the reasons set out above, I shall sustain the third and fourth pleas-in-law for the defenders and grant decree of absolvitor.